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Market Overview for Technology for Aging in Place

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Aging in place tech firm Lively is out of business – what can we learn?

Lively’s failure is making other market entrants nervous – so let’s consider.  This past week, the remaining assets (no people) of the Silicon Valley firm Lively (mylively.com) were acquired. So let’s take a few moments and reflect on what might have happened. What can startups and current players learn from this? Actually, not too much -- Lively was not typical of the industry it entered. It was founded in late 2012, launching in the spring of 2013 and sank quickly, going out of business just last week.


The firm had the trappings of great potential. It was founded by the successful Iggy Fanlo (AdBrite, Shopping.com) and others, with $2.8 million seed funding from Maveron LLC and another $4.8 million from funders that were led by Cambia Health. Laura Carstensen, professor in Stanford’s Longevity research, was on the board. Much advice was available – Lively was in the Aging 2.0 GENerator portfolio. The design was attractive in a segment not always known for its beautiful products. The initial offering included a LivelyGram, a family-written attractive print mailing sent to the elderly user.


But multiple mistakes were made and others should learn. Lively’s failure could surely shake investor and startup confidence in the aging tech market. So why did it fail, given all of the factors (high profile founder, board members, VC funding, nice design, great PR)?


  • Initial direct-to-consumer approach was wrong. For sensor-based home monitoring and PERS, the channel sales approach has been the only viable approach. By 2013, the sensor-based home monitoring market had never seen a single splashy direct-to-consumer success. Millions were invested in previous approaches for Wellcore and QuietCare – these and almost everyone in the PERS market (which Lively eventually attempted to enter) depended on resale and referral by channel partners. And as for success overall in direct-to-consumer, it’s very costly and takes time – few in the aging-related space (other than Lively's acquirer, GreatCall) could afford it on their own.
  • The founders had no background in the senior care space. This seems to be a Silicon Valley cliché: we liked your last company and we like you, so regardless of the market category, we will fund you because you’re one of us. This is most recently underscored by the $20 million VC investments in Honor (Meebo) and a cool $23 million in Home Hero (Flowtab) – neither with experience in the home care sector. But as with Wellcore, WellAware, QuietCare, and others, VC investors can lose patience if a company is not sold fairly quickly. This was no doubt a factor in the rapid collapse of Lively.
  • Institute for the Ages study was inadequate.  A much heralded but tiny (29 units) in-market pilot with consumers was held with the support of the now-defunct Institute for the Ages in Sarasota in April, 2013. What were the learnings about the utility of the product and whether the majority of the devices worked as designed? At any rate, Lively plowed on -- no doubt pushed by investors, still committed to a direct-to-consumer approach, raising another $4.8 million and launching 5 months after the pilot in September, 2013. Instant success was not forthcoming, despite an impressive amount of news coverage. And so (just like the failed Wellcore), Lively decided too late to offer a PERS watch in a market dependent on the resellers it had yet to recruit.
  • Did the founders see problems with their hardware? Here are Iggy Fanlo's own comments, posted the day that the assets sale was announced: "Hardware is HARD. Our friends at Apple have raised the consumer expectations bar so high that it's difficult to achieve that goal at startup scale. The cliché is true: the journey IS the reward." Interesting but not related to the Lively 'journey', considering that its market had no resemblence to Apple's consumer 'expectations.' But Mr. Fanlo was well-trained in startup-babble, Silicon Valley’s "failure is the new black" mantra, and its insider culture of serial startups.

[Additional observations/reasons/comments are welcome!]

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Comments

Lively simply did not provide a product anyone wanted. It was a me-too product that was marketed as being cool. Honor is disruptive and solves a major problem in a very convenient way. No one heard of Honor until they issued a press release announcing their huge funding round. Lively was over-hyped from day one. Lively was a cool product chasing a market. Honor is a needed platform for home care.

Honor is going to get sued just like Uber. You cannot have a 1099 business model in a regulated and controlled business environment. Look at th new law AB1217 in California and ask how Honor can meet those requirements starting in 2016? Good luck and happy feeding to the shark labor lawyers. They are going to feed on the "big" pot of money that Honor has. 

Their product was definitely better looking than previous iterations such as Quiet Care, but if the underlying business model does not work it does not matter.  Outside of institutional living, I am not sure there will ever be a large consumer base that wants a sensor network in their home.

Home sensor networks have the promise to keep seniors at home longer.  Seniors will invest a lot to avoid institutional living and families will invest a lot if their burden of seniors' home care is eased substantially.  Keeping that promise, however, is what makes this space difficult.  Single products that operate in isolation (data silos) abound.  As helpful as they might seem to be, they do not actually allow senors to remain at home longer or substantially reduce caregiver burden.  Calendar organizers, triggers, and data dashboards are rarely the answer to critical needs, like falls or wandering, although sometimes they can be helpful.  

Advances in low power short range IoT sensor networks, data aggregation, transmission and data mining are all necessary, but not sufficient technical hurdles. Two technologies are missing: algorithms for predicting critical adverse events and effector technology that applies this information early to begin gradual mitigation.  Human caregivers are expert at recognizing the development of a potentially adverse pattern.  Good caregivers begin intervention early, using prompts and suggestions that encourage the senior to engage in activities to reduce the risk (e.g., risk of a fall).  

Mimicking the interpretations and actions of a caregiver will be the most important technologies in this space.  Like any new technology, someone must invest in it, first.  

 

Tone-deaf angel and VCs that want to pump the margin by being DTC to this audience seldom understand the enormous operational and marketing costs nor the alienation to the sales channels that have trusted referral mechanisms. As Ms. Orlov often points out, the Silicon Valley Flu forgets that family loving care for one of their own is not a high tech solution but a high touch decision about that high tech.

I was an early "interested party" who tried to get Lively to establish a formal reseller program to support folks like me out in the field.  This was soon after their Kickstarter campaign ended without reaching their target funding goal.  This didn't deter me because I believed in what they were all about strongly enough to pursue a B2B relationship with them.  Yes they were hip & I particularly liked the LivelyGram idea to foster greater engagement between friends and family members.  But, like many other tech startups before them trying to cater to the burgeoning (perceived?) AIPTech marketplace, there seems to be an aversion (missing part of the fundamental business model perhaps?) to building & deploying a dedicated sales team in-house to formally qualify, establish, groom and support a solid and incented-to-sell VAR channel.  Yes this sort of thing takes time.  More time then it takes to nail up an online storefront to sell direct-to-consumer 24/7/365; more time than an impatient VC investor might be willing to wait.  No doubt family caregivers are the key people to cater to as they make the majority of the final purchase decisions for their loved ones.  Truth be told, they are an elusive tribe to try and reach even in my own fertile back yard.  It just takes time and a long-term view. AIPTech innovators in general need to learn from the missteps that Lively took .. and also take your keen observations to heart Laurie!

Seems like simple math to me: Only offering a media kit (-) not offering preferred pricing for a VAR (-) outsourcing one's attempt at creating & administering a reseller program (-) not offering to provide a territory rep to actually go out into the field to help press the flesh/generate local buzz (=) lackluster approach to building an additional sales pipeline to help contribute to an already eroding bottom line.  The minus column rapidly adds up.

Laurie, Thanks for a great autopsy on Lively.  Much richer for us as you place it in the deeper context of your "start-upology".  In past AIPT blogs, I think you have shown us some of the same start-up lessons.  Either memories are short, or there was no learning.  

Few questions needs to be answered - Was lively a good product too early or go to market strategy went wrong or market is not looking for such solutions. What can other start ups learn from this and importantly what  do these companies need to adjust in their strategies to avoid such a fate.

If you are going to take on the design and manufacturing of your own custom hardware -- you must be VERY well funded and be in it for the long run. ie. You must have enough funding to get you thru 5 years of development; and ramp up. So you would likely need in excess of $20+ Million of funding upfront.

If iN2L would not have been self funded for our first 9 years, we would have been shut down.  The curse and the blessing of senior living is slow to adopt, but remarkably loyal once engaged…  That has served us well now, but it took more patience than traditional investors are going to have.

A very important consideration related to the success of new innovations in aging technology is timing.  The market for home-based technology solutions to help people age in place has shown moderate growth over the past couple of decades, despite the introduction of several relevant innovations.  Successful entrepreneurs backed by Venture Capitalists have taken the risk to develop and launch new innovations in the hope of catching the "age wave" so cleverly defined by Ken Dychtwald several years ago.  Those that have not fared well are those that focused on the direct to consumer market, and did not validate the solution via the closely related healthcare channels that have so much authority in the lives of seniors and their caregivers.  There has been some measure of success in the past few years with clinically oriented sensors and monitoring platforms, but only those that have partnered closely with healthcare providers.  The companies mentioned in the article that were pushed by their investors to pursue the perceived massive consumer market ended up the victims of timing.  As the 60 - 70 year old age group transitions into higher intensity healthcare needs we will see greater demand for consumer-oriented innovations in the homes.  And, with healthcare providers starting to embrace digital health solutions based on emerging payment models driven by the ACA, in particular state Medicaid programs (and some private insurers), the market will vastly improve for the innovators.  All of these factors reflect elements of timing.  At Tunstall, the world leader in connected healthcare, we are seeing adoption of innovative home technology solutions in many countries around the world.  Eventually, the US will catch up and the innovators will catch the wave.  It's just a matter of timing.

Direct to consumer is hard and expensive…something most SV folks just don’t seem to understand and if you are talking about the older generation, using customer acquisition models that were based on acquiring 20 somethings just aren’t going to work…

Great observations as always, Laurie.  Investor patience is one thing, but also needs to be tied to reasonable and potentially small steps forward, until the model is perfectly proven.  The challenge with hardware, more than software, is the cost and time involved to iterate through it.  Two things neither VCs or young companies have in general.  Combined with very high burns I'm sure, then you're really swinging for a home run or a strike out.

Jack's comments are well taken, too.  The structure of investments / funding over time makes a difference.

 

   

Thanks for the good article.  I think the observations are very insightful.  

In addition, one very important question is:  was the product any good?

Looking into the technology I have serious doubts that the product was able to deliver what it was designed for with reasonable reliability.  Even if it did, in my opinion this would have been very limited and not really provide enough value to the users/families.  So in addition to all the other challenges in acquiring customers, my guess is that they should have had a problem retaining customers and to have those customers enthusiastically recommend the product to friends and family.

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