Obamacare: The Gazillion-Dollar Startup Machine

Seth Sternberg was visiting his 65-year-old mother in Connecticut when he got the idea for his home-health-aide business, Honor. She’d picked him up at the airport, and he noticed that she was driving really slowly. He asked why. “And she was like, ‘Well, driving’s just harder than it used to be,’ ” he recalls. This got Sternberg’s mind working. What if his mother were 75 or 85, and tasks like driving or bathing were not just harder but impossible? Would she need to move into assisted living? “If I ever said to my mother, ‘You need to leave your house,’ she might kill me,” he says.

Sternberg, 37, had sold his previous company, the messaging service Meebo, to Google for a reported $100 million in 2012. He and Meebo co-founder Sandy Jen were looking for a new startup idea, together with two of their Stanford friends, Plaxo co-founder Cameron Ring and Monica Lo. They wanted their follow-up act to be something important, so they started researching the state of in-home senior care through interviews with geriatricians, private-duty caregivers, and senior-center administrators. They learned that it was ripe for improvement. It was hard to get a health aide for less than four hours, because agencies usually paid them minimum wage and they spurned jobs that would earn them just $20 or $30. Finding qualified aides involved hours of sifting through resumes and interviews–and was still a crapshoot. Records languished in spiral notebooks. Sternberg’s team realized an Uber-like logistics algorithm could match patients to local caregivers, making shorter visits cost effective. Digital records could reduce mistakes and ensure continuity of care. User ratings could make for easier vetting. On the strength of the idea and the co-founders’ track records, they raised $20 million from Andreessen Horowitz and others to launch Honor. They built two mobile apps–one for consumers, the other for caregivers–and a software back-end to connect them, then recruited care pros and seniors for a pilot program in Walnut Creek, California. Honor is now up and running in the Bay Area and parts of Los Angeles.

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