Start-Up ideas are everywhere – even in Aged Healthcare

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Dr Ivor Blumenthal | CEO | ArkKonsult | mail me


Every loving son ages with the same question on his mind: ‘What are we going to do about my mom?’

This question follows from some lessons I learned from an interview with Jason Calacanis, an American internet entrepreneur, angel investor, author and blogger and Seth Sternberg, CEO of Honor which is a business in the USA focused on private Home Care for the elderly.

I learned even more about the private healthcare industry in the USA and what we need to look at doing in South Africa to mirror Honor’s learning in the USA, on this, our African continent.

90% of people want to stay in their homes as they age

It turns out that even in the USA, there is generally very little investment or innovation in the elderly market.

In South Africa, whereas there may be pockets of care and investment, in some communities, mostly in old age homes, there is no investment in helping older people to stay in their own homes as they age. There is good research to suggest that people do better when they stay in their own home as they age. In the USA, Honor is dedicated to just that, wanting to help people stay in their own homes as they age.

The START-UP Spectrum – High Execution versus Market Risk

Every start-up exists on a spectrum between Execution risk and Market Risk.

A High Execution Risk (HER) business, is good for a Multi-Time Founder, an entrepreneur who has initiated and built many STARTUP businesses. In a HER market, there is a massive need or demand, but the current state of the Industry is bad or non-existent. The product is very hard to deliver successfully, possibly to the extent that it has never been done before. As a High Execution Risk taker, Multi-Time Founders want a guaranteed market where there is guaranteed demand. In the case of Honor, Seth’s company, that is elderly care, where in the USA there are 45 million people over the age of 65 today and where in 25 years there will be 80 million people falling into his Total Available Market (TAM). People over the age of 80 are going to triple.

In identifying this market for his start-up, Seth looked at everything. Devices, Software…. everything. They settled on Home Care. It was a very fragmented market where the product was uneven across the entire USA continent.

Seth decided that he could do great in Home Care, build a really large business and where if he could solve healthcare for the aged, he could do a lot more for people parents and solve a lot more than simply healthcare for people. He knew his business would be around for decades if he could crack this challenge.

Multi-Time Entrepreneurs versus First Time Entrepreneurs

A Young Founder gets gets attached to their idea and is intent on building an amazing temple, in the middle of the desert. Someone who has the scar tissue of having built many new businesses knows that the challenge is getting worshippers to come to the desert.

A Multi-Time Entrepreneur (MTE) has the advantage of putting teams together really fast, raising money quickly, knowing how to hire. If you put a MTE against a really hard problem you have a massive advantage. First Time Entrepreneurs (FTE) are good at the Market Risk side of the spectrum, MICROSOFT, FACEBOOK, TWITTER, whereas MRE at the Execution Risk Side, UBER, SQUARE.

The Multi-Time Entrepreneurs are naturally attracted to the Execution Risk opportunities whereas First Time Entrepreneurs go to the Market Risk points. People should not do startups that have both kinds of risk. If there were a spectrum you would want to be in the 20% on either side of that spectrum. You never want to be in the middle 60% where there are clearly both types of those risks.

If you are doing a startup as both kinds of risk, and something goes wrong, you have no idea why the thing is not working. For some reason you’re not growing. Does no one care, or did you build the wrong thing? Am I executing poorly, or even if I did build it, will they simply not come?

People should work on the ends and recognise what they are better suited for. Which uncertainty they want to confront every day?

The Aged opportunity – it’s a massively overlooked sector of industries which we simply take for granted.

In starting Honor, Seth perceived that the challenge was not software, which was his comfort zone.

It took him a year to properly scope the market and the problem. What he finally resolved was that the Home Care market was peppered with many operators who were small. In-fact as he says, they ‘were tiny’. Home Care agencies doing less than 3 million dollars in revenue a year. Typically run by someone who worked in Home Care who decided to make a business out of it. Someone who was a retiree building a small business in helping elderly people get out of bed, get dressed and get food. Seth’s scoping settled on the Non-Medical Homecare market, where someone goes into people homes and helps with activities of daily living.

It is a $30 Billion Industry in the USA employing 1.5 million people – over 1% of the US workforce. The great ‘Execution Challenge’ that Seth wanted to address in building Honor, is that so many people don’t even know that the private HealthCare market exists.

As people get older. They hit 40. They experience this dire need because it affects their parents. They call 10 agencies. Let’s say their parents have dementia. They need help getting out of bed and being transferred to a wheelchair. They need someone who knows how to do lifting and transfer. Maybe someone a little bit stronger who has had dementia training. If you call 10 agencies, maybe one of them has an appropriate and qualified Care Giver.

In starting Honor he understood that he would need to aggregate it up. He needed lots of Care Professionals (Care Pro’s) that he could draw from so that he knew he could best-serve the next incremental customer. He understood he would need to Verticalise – to integrate Vertically. To employ the ‘Care Pro’. To properly and effectively train them. To manage the deployment of those Care Pro’s properly and route them efficiently. His mantra is ‘If you are best for that home, want that home then as a Care Pro, that’s where you should go’.

To EXECUTE properly you need to understand completely

Seth started by building a Home Care Agency in the San Francisco Bay Area to learn from the ground up.

Honor has now expanded to 60 cities in the USA. Advisors and Investors wanted Honor to just be the UBER of Health Care. He decided against it. He understood that the market needed to be re-invented and properly EXECUTED which included hiring and properly training the Care-Givers and not simply developing fancy software to deploy them. In the earliest iteration of Honor they tried making the Care-Givers contractors. In the US they refer to it as 10-99’ing them. It took them six months to figure out that they couldn’t deliver the product they wanted to execute with by having them as 10-99’s.

Our product is Our People – not software

Seth Sternberg says that the greatest lesson he learned in building Honor is that ‘Our product is our people’.

There is not a single customer who cares about the Honor technology. All he hears from customers is ‘Is this Care Pro great? How is my Mom? Is she happy?’ He says that his product, is actually ‘The Human’. “All of our technology is about how we make that human….. better.”

The parallel in South Africa is that the majority of our private healthcare workers come from Zimbabwe, Malawi and other African Countries, and that they are essentially independent contractors often not even attached to agencies to which they are accountable. In the USA they are Mexicans and Latino people and African Migrants to the USA.

There are so many parallels to draw from what Seth Sternberg has discovered about private healthcare, in building Honor in the USA, and what we need to discover about how we cater to and treat our elderly here on our own shores in Africa.

The South African advantage – a culture of inclusivity

I think however that we have an advantage he didn’t.

Ours is that we have an original African culture of wanting to include the elderly in our homes and communities instead of wanting to put them out to pasture.

The question is whether, with our new generations of politically conscious social activists, intent on a new political order in SA, we have lost those ancestral values and personal commitments to our retiree’s and aged and if so whether those values are properly enough embedded in our DNA as Africans, to recover that desire?


 

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