By Jacquelyn Kung
I have been in the aging space for over two decades. Some of those years have been in the role of starting new companies. As a result, I have had the pleasure of meeting and advising many entrepreneurs.
I see 10 big mistakes that many "newbies" to aging make. These mistakes mostly refer to startups with new products, often tech-related - and not startup real estate senior living sites. These points apply to both greenfield companies and larger companies looking to start or grow a business line in aging. Please add your own insights from when you have been approached by or advised (tech) startups!
1. Going to market with a B2C business model:
Many (tech) startups in aging seem to assume their end buyer and customer is a consumer, whether it is a family member or a senior citizen. 99% of the time this will not work, and there is a graveyard of startups who ran out of funding, time, and resources pursuing this route. If you are part of the 1%, more likely than not you are already a large consumer goods company with distribution channels in place. Want proof for this statement? Name a recent large start up in aging targeted towards consumers. (And no, Philips Lifeline does not count as it is old and definitely not recent.)
2. Assuming it is a sad state of affairs in the senior care space:
It is immediately obvious that someone is a "newbie" to aging when they talk about how depressing the space is. Broadly, this may be true. But it is clear they have not explored the retirement communities looking to deploy self-driving cars on the premises or which have nightclubs with bottle service and red carpets as part of their social agendas. Or the organizations with older adults who are DJs or teach wilderness coaching.
3. Assuming that families and seniors will pay for something:
"Families or seniors will buy this because it helps them so much.” Usually, this sentiment is never true. As one of my mentors taught me, basics aside, seniors usually only pay for things that make them prettier, smarter, and have better sex. J . . . And maybe stuff related to the grandkids too. Families often don't or can't pay, and family dysfunction (such as siblings squabbling about what to do and who pays for what) gets in the way.
4. Assuming seniors are lonely and want more/better social communication:
Have you ever met a senior who tells you that he or she is lonely? You will rarely, if ever, hear that. People assume that seniors are lonely and isolated and again, this may be true. But without realizing their needs, seniors do not need or want what you have to sell them. Often these entrepreneurs or intrapreneurs manifest in a communication tool or 'hub' service to connect with family and others -- and sometimes collect/store useful data. Frankly, it's easier and cheaper for people to use Dropcam/FaceTime/Facebook -- or, more clever and dexterous. They also can jerry rig an Android to automatically answer so seniors don't have to fiddle with answering when family member(s) call.
5. Assuming seniors ARE or ARE NOT tech savvy:
Senior citizens are not one categorical block when it comes to technology and usage. Some senior’s bank online; others do not. Some seniors use iPhones; others prefer landlines. Some seniors cannot be pulled away from their Angry Birds game; others can't be bothered when they see technology. The only commonality is that fingers and eyes get a little bit stiffer or weaker, so seeing, typing, and/or hitting certain words on small screens becomes harder. But these physical challenges are not necessarily the reason for the masses to buy a product.
6. Assuming one persona for "senior":
Persona means a lot, but let's simplify it to look at age/sentiment alone. There is no agreed upon age range for what being a senior in the U.S. means. Sometimes it means age 50+; sometimes age 65+; sometimes age 75+. With many people living to well over 100 years old, even if we were to take 65+, it means a 40-year range of what a senior is. That's the equivalent of saying a two-year-old is like a 42-year-old. Or a 20-year-old is like a 60-year-old. It is simply not true at best, misleading at worst.
7. Assuming facilities or home care agencies will want to buy the product or service:
There are three core problems with this assumption. First, the false belief that there are many potential buyers that you can reach. Of the 20,000-25,000 non-medical homecare agencies in the US, approximately one in four go out of business or offline in some way each year. So getting a hold of them is tough. Second, the numbers are misleading. Of the 40,000-50,000 assisted living facilities in the US, a significant number of them are 6-10 bed facilities that are really care homes, or houses where multiple seniors live. Third, most products lie on the expense side, and do not provide enough demonstrated revenue lift to be worth it. Given how senior housing properties are valued, any decrease in EBITDA or net income translates into a multiplier effect decreasing the valuation of a property. Sure, you can sell that your product or service will increase occupancy or you can sell as an ancillary revenue source, but usually, it is either not significant enough or not sustained/demonstrated enough.
8. Assuming senior care is a large and attractive market and you can get to it by getting AARP as a partner:
Yes, there are over 10,000 people a day turning 65 and 50 million seniors in the US alone. But how will you get to them? This is another version of the B2C issue mentioned above, but it is often spoken with the idea of partnering with AARP to reach and sell to this large and growing market. AARP gets over 10,000 requests to work together per year, and they have a for-profit division called AARP Services, Inc. One of their strategic objectives is revenue to help some of the advocacy and other work of AARP. So, do you have $1 million to front a partnership with no guarantee of revenues or sales that you will get? Moreover, many people forget that once you stop working full time, you live on a limited or fixed income. So this large and attractive market is limited in ability to pay. And the affluent sector of it, well, they have many great choices of what to buy.
9. Focusing more on product and delaying making an actual sale with real payments:
This mistake is not singular to startups. It is that entrepreneurs focus so much time -- years in fact -- on getting the prototype right that they actually do not try selling it. Therefore, they fail to bring in real money and miss out on actual feedback from paying customers.
10. Talking about iPads for seniors or sensors for monitoring:
Can we not talk about this? I'm sick of talking about iPads for seniors or sensors for monitoring for aging. Thank you.
(If you like this piece, and if you are bombarded by entrepreneurs asking for your time or to "pick your brain," feel free to bookmark this piece to paste/send to them as your own tips or thoughts to help save you time. We are all about reclaiming some of our time!)