With Honor, Seth Sternberg and team hope to redefine how we care for our elders
After selling his first company, Meebo, to Google in 2012, Seth Sternberg was actively on the hunt for a new idea. Meebo was fun — it helped publishers engage readers through chat and advertising — but Sternberg and his co-founders wanted to have a larger impact with their second company. They came up with three criteria: First, the company had to make people’s lives fundamentally better. Second, the company had to be really hard to build, but address a real market need (as opposed to creating a new need, like Facebook did). And third, the company had to be have the chance to be really big — like $100 billion big.
These were the questions turning over in Sternberg’s mind as he visited his mother several years ago. Almost immediately, he noticed she was having trouble driving, and realized she’d need help if she was going to stay in her own home back in Connecticut. Sternberg had built a life and a career on the other side of the country, in Silicon Valley — he couldn’t be around to care for his mother every day. Who could he trust to help?
That’s when Sternberg discovered that there are roughy 40 million seniors in the United States today, and that number is predicted to roughly double over the next two decades. From there, his research led him to a realization that the senior care market in the US is deeply broken — and that there was a huge opportunity to fix it. The result is Honor, an 18-month old senior care platform that combines the platform approach of an Uber with the algorithmic matching of a Work Market, but with a twist: All of Honor’s workers are W2 employees — bucking the on-demand economy’s trend toward “gig labor.”
Sternberg views Honor as a net creator of high quality new jobs — taking care of people is better done by people, not robots. In fact, he predicts we’ll need at least five to seven million qualified care givers in the coming decades, and his goal is to build the platform that aggregates both the demand for and the supply of those care givers. Sternberg sat with us for the first episode of Shift Dialogs’ second season. Below is both the video and the transcript, edited for length and clarity.
John Battelle: How did you came to the core idea behind Honor?
Seth Sternberg: I was working at Google — I’d sold my last company to Google. My friends and I started thinking about what would the next problem be that we’d work on, and we had some criteria. The most important was to be able to look a human in the eye and know that we’re going to make their life fundamentally better.
Why was that the number one criteria?
The only thing we all really cared about anymore is figuring out ways to help other people. Like, why are we getting up in the morning? Why are we going to work? It was by far the most important criteria.
It (also) had to be what we believed to be an execution risk play, not a market risk play. We wanted to know that it was very, very hard to build, but if we built it there was clear demand and a clear problem, as opposed to, “We could build it, but we don’t know if people want it.” The early Facebook or Twitter, they didn’t know, right?
Then the third criteria is that we had to believe that it could be a $100 billion market. And our reason for it was it’s actually easier to build that company. You can get more resources, better people, more capital, and it’s a measure of the size of the problem. Why work on a problem that can only be a billion-dollar company? It’s not as big a problem.
I went for a drive with my mother. She picked me up at the airport in Connecticut when I went to visit her, and she was driving slow. She literally used to get speeding tickets in Montana. In Montana, it’s really hard to get a speeding ticket. I was like, “Mom, why are you driving slow?”
She said, “Driving’s harder than it used to be,” and that’s how we discovered that the elderly space is pretty broken in general, and then narrowed into home care with the goal of helping our parents stay in their homes as they age.
Tell me a little bit more about what Honor does.
Honor is re-making a category called non-medical home care. As we get older, there are these activities of daily living: getting out of bed, getting dressed, getting food. Most of us do them all day every day, hundreds of them. We take them for granted.
But if you can’t do one, two, or three of them, you can’t live alone anymore. As you get older, you’re going to want to live in your home. You probably want your parents to live in their homes, and they probably want to live in their homes. How do you enable that?
You have to get someone to go into their home and help them. Turns out it’s a $30 billion industry in America. Turns out there are 2.5 million paid care pros in America who help the elderly stay in their homes, but it’s just a very, very broken industry. This is a classic case, actually, of a market where it is clear the demand is much larger than the current size of the market.
Similar to Uber and taxis.
Similar to Uber and taxis, because it is so disastrously broken as an industry that if you make it a great product for people you will expand the size of the market.
Tell me a bit about how it’s broken.
The biggest thing is that your mom and my mom probably have different needs. Maybe my mom has dementia and cats in her home, and maybe your mom speaks a specific language and maybe she’s heavy. That means they need different care pros.
With 50,000 agencies across America, it means that the individual agency’s very unlikely to have the right person to match the needs of your mom and the needs of my mom because they are so unique. It’s so heterogeneous, the needs, and the capabilities.
That’s piece one that is broken. Piece two is that the care professionals who go in and help our parents, they’re treated really poorly. They’re wages are extraordinarily low. Fifty six percent are on government assistance programs. We have societally put them in a place where they can’t really care for themselves. If you can’t care for yourself, how can you care for someone else? We need to enable the care pros to be comfortable in their own lives, amazing at their jobs so they can then provide amazing care to our parents.
Fifty six percent of care givers are on government assistance programs. We have societally put them in a place where they can’t really care for themselves. If you can’t care for yourself, how can you care for someone else?
And you’re actually paying a living wage. Honor has full time employees. They’re not contractors.
W-2 employees. They can be part time or full time. It’s up to them.
How did you come to that decision?
The biggest issue around 1099 is that we could not train the care pros. While you see there’re 2.5 million care pros today in America, the elderly population will double in America in the next 15 to 20 years. We’re going from 40 million to 80 million. We’re going to need at least five million care pros, except like I said, this market is actually probably larger than we think it is. We probably need seven million care pros.
We believe we have actually screened 30 percent of all registered care pros in SF Bay area. We’re accepting five percent of people who apply.
Then you’ve got a real problem.
We got a huge problem. It means that we need to create care pros, and to do that you need to be able to train people. Really, training people is also about moving people up. We’ve had people churn out of Honor, but it’s actually to go become registered nurses — because we enabled them to get real world experience.
It’s like upward churn.
It’s the kind of churn you want. You’re creating paths forward for people which is, I think, something that we’re missing in America in general right now. We have a whole population of people that we’re doing a very bad job lifting up. We need to do that, to enable folks to be amazing.
But it is more expensive, and you have a minimum wage that you’re paying, I understand.
Yep.
You told me earlier that Honor was an intentionally hard company to start.
That’s right.
Then you discovered it was even harder than you imagined, right?
Yep.
You’ve raised $60+ million, but are you concerned that you’re going to need more capital for much longer time than a traditional venture-backed company? That there’s going to be this funding desert in the middle years of your company, where maybe it’s going to be hard to raise money and justify the ongoing expense of the operations?
Great question. When you work on a problem this big you know your time horizon is long. There’s a known thing about being an entrepreneur: If you don’t stay extraordinarily focused, you will die. You will fail to solve the bigger problem that you’re trying to achieve.
If I can make Honor today what I want Honor to be ten years from now, I’d be so thrilled, but I just can’t do it yet. We have to stay focused, and we have to win at serving the elderly, serving the care pros in the markets that we’re in. Then you can actually get through that chasm you’re talking about.
If you did try to do the build it all from the moment at which you start, I think we would fail because of exactly what you’re talking about. It is so big, it is so hard. But if we create reasonable milestones for ourselves… we’re fixing the system for the elderly in San Francisco, LA, Dallas right now.
When you mentioned that seven million job number, it made me think of another number — six million — which is roughly the number of drivers and truck drivers that are estimated to be put out of work because of autonomous cars and trucks. It strikes me that the jobs you’re creating are jobs that probably never could be replaced by robots.
It is a fascinating point you’re making. We’re in a world where structurally some of the technology that we’re creating is taking away millions of jobs.
Honor very specifically is creating technology so that we can train people better, treat people better, pay people better so they’re in a better place in their own lives. So, they then provide a better service that people will pay for. This is a human service.
We will absorb some number of truck drivers, some number of veterans, and some number of people from the existing industry. I actually see Honor, partially, as a mechanism to be able to help folks who are being dislocated by technology. We’re using technology to create more, better jobs. I think that more industries need to figure that out.
I actually see Honor, partially, as a mechanism to be able to help folks who are being dislocated by technology. We’re using technology to create more, better jobs. I think that more industries need to figure that out.
The core of it, it strikes me, is that what you’re delivering human to human connection.
That’s exactly right. It’s important because our customers think of Honor as the care pro who walks across the threshold of their door and says, “Hello, I’m from Honor.” Honor is not technology to our customers. It’s the care pro. In a lot of Silicon Valley companies, the stars are the engineers, but in Honor, our products — our stars — are the care pros.
We realized one of the most important things we have to look for in people we bring into the company is that they believe in enabling the care pros to be amazing. The technology our engineering team works on, it’s fundamentally to enable the care pros. We enable them then the customers get a great experience.
Tell me about the technology — what’s my experience if I want to use Honor? There’s a platform that I interact with that it helps me understand how the care is going, right?
Yep. As a customer, you’ve two choices. You can go kind of an app, our app, get it in the app store, our website, or you can call our call center and talk to someone. A lot of people choose to do that and say, “Here are my parent’s needs.”
It might be that you’re coming from a hospital, and a social worker says, “You might need help at home. You might wanna use home care like Honor.”
Then you start talking to Honor. We put the needs of either you or your parent or your loved one into our system, and then it figures out who are the relevant care pros in Honor, who work for Honor for your particular situation. That’s the first screen. Then it sets up care over time. It’s not just about that match. It’s also about the notes after every visit. You probably don’t live with your mom, right?
No.
But you want to know what’s happening in your mom’s home. That would be good, right? So, you’ll get a note after every visit. It can be texted to you, emailed to you, or you can see it in your app. Our technology is watching to make sure that the care pro’s arriving on time. At the same time it actually protects the care pro, and this is all about like I said, how do we treat the care pros really well? Because sometimes our customers have dementia. They don’t remember.
So it can’t be just like Yelp, a five star rating or something like that because it doesn’t work because there’s so much nuance.
Our customers absolutely rate the care pros and vice versa. Let’s say someone has advanced dementia, and they always rate care pros poorly in a given home. That says nothing about those care pros. We have to look for other signals like, how long was the note that they wrote to the family, are they timely, or how engaged are they in the app.
The technology platform is there to both enable a great match, but also to enable great care delivery over time. I think that that’s really important, but the end goal is the human experience.
It’s funny because when we first launched, people inside the home care industry had an initial response to Honor. They (would say) “Oh, it’s technology, and this is a human business.” But no, this is technology to make the humans better. We are not replacing humans with technology. With Honor, rather, it’s technology to make the humans better.
When I think of elder care I think of a lot of awful stories about things that have gone wrong, about neglect and abuse. How do you handle things like that?
We do see things sometimes that are really challenging. It ranges from times when we do see what we think might be abuse, to times when we do see an elderly person who we’re serving who is abusive. Maybe through no fault of their own, they might have some advanced cognitive impairment.
We have different processes depending on what that situation is. I think the important thing in all this is we don’t have great systems today as a society to help get rid of the fraud, abuse, and mistreatments on all sides of elder care. That’s a big part of what we’re building on.
When you first realized this might be a big idea that checks the three criteria, at what point did you realize that it was way harder than even you realized?
It’s funny. I thought that the first time Honor would have to deal with something like death would be months and months and months after we launched. I was wrong. I think it happened within the first month. A care pro was in someone’s home when they naturally passed away.
My goodness.
In home care that happens. I didn’t realize that that would happen in month one. It’s kind of like, what do you do as a company, as a service? How do you help the family?
You didn’t have a protocol yet for that.
Right. How do you help the care pro? Because they just lived through that too. It’s somewhat traumatic. It turns out great care pros usually have experience in dealing with death. They are usually really great at helping the families, because the family usually doesn’t have experience, but the care pro usually does.
There’s just all these little nuances. Turns out some customers love care pros who are very talkative. Other customers really don’t like it if that care pro wears perfume. There are all these nuances.
You must always be adding parameters to how someone chooses a care pro.
Yes, the awesome thing is that a lot of times you can’t ask the customer explicitly because they don’t know the answer. If I said to you, would you prefer a care pro who is amazing at customer service, but not quite as skilled in the technicalities of advanced care? Or would you prefer a deeply skilled but a little more gruff? One of those really good people who is like “get out my way, I know what I’m doing.” You probably don’t really know which one you would want for your parents, you might have a gut, but the data can actually tell you, the answers become very clear.
If your mother’s reasonably healthy and just needs a little companionship, you care about customer service, you do not care much about advanced skill. If your mother has advanced dementia, and this care pro is the only person who can get your mom to get up, go for a walk outside the house and get her physically moving, you don’t care if that care pro is a little bit gruff.
You’re in an industry that has 50,000 mom and pop shops. There was no data collection across that industry, right?
Effectively not. It’s spiral bound notebooks on kitchen tables for the most part.
It’s pre-Internet in a way. The nodes were not connected, so now you are seeing a network of connected nodes, and you are seeing data…You have the ability to leverage insights in a way that couldn’t be done before. This is very similar to Alt School. Like that company, you’ve also taken a vertically integrated, full stack approach to the business.
Full stack basically means we want to control the end to end experience. We employ the care pros. It is our software that runs the entire system. We are the interface with the customer. Honor is the full of the experience that a customer and a care pro have with us.
We looked actually at hey, should we take the easy route? Should we just write software? Let’s just do a little bit of technology. Our challenge with that is that we actually saw the industry is so fundamentally, structurally broken, we didn’t believe we could simply hand technology to the industry and fix it.
Very similar to education and schools, you can’t just hand some technology to a public school and expect it to work.
I think that’s right. We’ve talked to a bunch of folks who run pretty good home care companies. Honor’s retention rate on care pros is almost always substantially better than theirs.
You unpack how we manage care pros versus how they do it. There’s no one thing we do that that agency could kind of replicate and have much better retention rates. It’s the totality of the system.
How many people are in Honor now as employees? Push it out three or five years, where does that go?
We don’t release head counts. We believe we’re the largest home care company in San Francisco Bay Area, by number of homes served on daily basis, monthly basis. We got there in about a year, we believe. We’re growing extraordinarily fast. To give you a sense, last week we literally grew 10 percent week over week. The week before that was five percent.
I have actually never heard of a week over week growth like that.
Week over week 10 percent. Week before that was five percent, week before that was 10 percent. We won’t be able to maintain that for forever, but the growth is pretty staggering. Imagine the operations, the logistics behind that.
I think if we have a super deep bench of care professionals, we can make their lives so much better because we can have them work close to home for customers that they are compatible with. That helps the care pros.
My father had a caregiver who was a two-hour bus ride away. She would come twice a week, and, literally, it was eight hours of commute. It just struck me as crazy.
That’s exactly right. It’s very hard especially for a caregiver, they may not have a car. If we can get proximity, and then match that care pro with the right customer around personality and skills…Let’s not put care pros in homes of people who have cats when the care pro is allergic to a cat.
With scale, we’re going to make the world so much better for the care pros. Then we’re going to make the world so much better for the elderly and their kids. A few years out I hope that we’re doing that many, many, times more than the scale that we’re doing it today.
I imagine you might wince if someone wrote an article about Honor and said it’s the Uber of elder care.
It gets me, and then I do wince.
What do you make of Uber — it has become kind of our Rashomon for the tech industry for massive social change and for possibly great things like drunk driving and other things, but it’s also accused of being rapacious and demonstrative of a sort of unalloyed capitalism.
Yeah, great question. What I’m deeply impressed with around Uber is that they showed that it was possible to use technology to help manage a very very large portion of labor. They’ve made the world better for the riders, like certainly in San Francisco it’s a lot easier to get from point A to point B than it was before Uber.
If you talk to the drivers, most drivers I talk to they say, “I get income, either part time income or full time income.” That they can just go pick up some extra income is a big deal, and that is amazing. The reason I wince at the Honor-Uber comparison is that they look on the surface similar but they are totally different, Uber is very transactional, you don’t form a relationship with your driver. You do form a relationship with your care pro.
We are a relationship-based company. Uber showed that it was possible for technology to help with labor. Home care is a little more complex. It’s probably a lot more complex. There are a lot more nuances around making that right match, but it absolutely is possible.
Has being a purpose driven company with a very big mission helped you recruit people who otherwise might work at the large tech companies in a comfortable job?
Yep, that was the biggest benefit that I did not expect. There were parts of doing Honor that are much harder than I thought they would be. The part that was massively easier is we literally have people who email incessantly saying, “They are great people. I really want to come to Honor, like is there a role that fits me?”
Someone who spent their whole live working on something that maybe they are not super passionate about, all over sudden they see an opportunity to work on something for the same economic advantage that could change the world for the better, that’s a great recruiting tool.
What happens if a big private equity fund or some large health care company seeing the opportunity that you have now defined comes in and says, “That’s awesome Seth, here’s a check for $10 billion.”
Literally, the goal of Honor is that it outlives the founders. That was one of the very explicit goals. It outlives us. To your point, we did found other companies. We sold those other companies. And fundamentally those companies don’t exist anymore. One of the reasons why we wanted to work on something so big is if you sustainably change the world for the better, working on a problem that’s that large, that is a company that will outlive you. Facebook is going to outlive Zuck, Google is going to outlive Larry, and we want Honor to outlive us.
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