Latest / Vanguards of Healthcare by Bloomberg Intelligence / Honor Utilizing AI to Scale Home Care, Kinking the Quality Curve Higher

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Honor Utilizing AI to Scale Home Care, Kinking the Quality Curve Higher · Vanguards of Healthcare by Bloomberg Intelligence

0:16
Speaker 1: Welcome to another episode of Bloomberg Intelligence's Vanguards of Healthcare podcast,
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Speaker 1: where we speak with the leaders at the forefront of
0:22
Speaker 1: change in the healthcare industry. My name is Jonathan Palmer,
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Speaker 1: and I'm a healthcare analyst at Boomberg Intelligence, the in
0:27
Speaker 1: house research arm of Bloomberg. I'm very excited to welcome
0:29
Speaker 1: today's guests Seth Sternberg. He's the CEO and one of
0:33
Speaker 1: the co founders of Honor Technology, which is both the
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Speaker 1: technology platform and, through its subsidiary, home Instead, a leading
0:40
Speaker 1: home care network for older adults. Honor is in Seth's
0:43
Speaker 1: first foray into entrepreneurship. He previously co founded Mibo, a
0:46
Speaker 1: communications platform acquired by Google back in twenty ten. Welcome
0:50
Speaker 1: to the podcast, Seth.
0:51
Speaker 2: Yeah, thanks for having me. It's great to see you.
0:53
Speaker 1: So why don't we start off with the mission statement
0:55
Speaker 1: of Honor and kind of where you fit in the ecosystem.
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Speaker 2: Yeah, a little over ten years ago when we started
1:01
Speaker 2: on her, it was really simple changed the way society
1:04
Speaker 2: cares for older adults. That came out of an experience
1:07
Speaker 2: I had with my mother and then before that, an
1:09
Speaker 2: experience I had with my grandmother, and as I was
1:12
Speaker 2: starting to get older, and like you mentioned, I did
1:14
Speaker 2: my first company. I wanted to work on something that
1:16
Speaker 2: really was like meaningful for the world and could change
1:18
Speaker 2: people's lives. And I realized that tech Land society in
1:23
Speaker 2: general was really really bad at caring for older adults,
1:26
Speaker 2: and that would be a really hard problem that maybe
1:28
Speaker 2: a second time founding team could work on and try
1:31
Speaker 2: to really make change.
1:33
Speaker 1: Where did that white bolb really go off when it
1:35
Speaker 1: was when your family members were having some of these
1:37
Speaker 1: issues getting.
1:38
Speaker 2: Care, Yeah, I mean I realized it when my mother
1:40
Speaker 2: picked me up at Bradley up in Connecticut and she
1:42
Speaker 2: was driving me home to our house in West Hartford,
1:44
Speaker 2: and she was just driving slower than she used to drive.
1:47
Speaker 2: And that was kind of the thirty girl version of
1:49
Speaker 2: me that realized, WHOA like things happening, things are changing, right,
1:52
Speaker 2: like it's gonna things will invert in years. But there's
1:55
Speaker 2: this experience when I was a lot younger, I think
1:58
Speaker 2: I was eighteen or nineteen, we had to move my
2:00
Speaker 2: grandmother from Great Neck to a facility in West Harford
2:04
Speaker 2: because she was getting very very old and she was
2:07
Speaker 2: pretty near passing away. And there was experience, this experience
2:10
Speaker 2: where I remember she we were in her room and
2:13
Speaker 2: she reached out to my mother and she pulled my
2:15
Speaker 2: mother closer to her, and she said, in a pretty
2:18
Speaker 2: weak voice, can you ask my roommate to turn down
2:20
Speaker 2: her television? And I'm there as an eighteen year old,
2:23
Speaker 2: and I'm like, oh my god, my grandmother is having
2:25
Speaker 2: roommate issues and she's about to pass away. And so
2:28
Speaker 2: it's just like hard to overemphasize how broken we are,
2:32
Speaker 2: how we care for older adults. Neither you nor I
2:35
Speaker 2: want to have roommates roommate issues when we're a week
2:37
Speaker 2: or two away from passing away, and so we have
2:40
Speaker 2: to fix that.
2:41
Speaker 1: So with that in mind, what was the first initial
2:44
Speaker 1: idea when you pitch the venture capital you were thinking
2:48
Speaker 1: about what product you were going to build? What did
2:50
Speaker 1: that look like?
2:51
Speaker 2: Yeah, so you can't go too wide initially or you
2:55
Speaker 2: die because you must focus if you want to do
2:57
Speaker 2: big change, which sounds counter yeah, but it like that
3:01
Speaker 2: that is actually the way it is. And the first
3:04
Speaker 2: thing we went to was kind of hardware devices, and
3:06
Speaker 2: we actually unfortunately blew a million of like half a
3:09
Speaker 2: million dollars trying to figure out a hardware device that
3:12
Speaker 2: would kind of work to help people live in their
3:14
Speaker 2: homes more comfortably. Then we found this non medical homecare
3:18
Speaker 2: space and we realized it was a huge opportunity because
3:21
Speaker 2: it was a very, very fragmented market. So there was
3:23
Speaker 2: no singular network that had kind of central control where
3:26
Speaker 2: we could then use that network to bring other goods
3:29
Speaker 2: and services, like how could you form a platform or
3:32
Speaker 2: at base where then you could fix food, drugs, healthcare, right,
3:36
Speaker 2: like all the things that make it hard to age
3:38
Speaker 2: in a home, and homecare to us looked like it
3:41
Speaker 2: was it. The problem was no one had ever scaled
3:44
Speaker 2: home care in history. It had never been scaled. We
3:47
Speaker 2: didn't quite know why. So we just launched a homecare
3:49
Speaker 2: agency to figure out why does it not scale? And
3:52
Speaker 2: initially it can tell you it absolutely did not scale.
3:54
Speaker 2: It was pretty bad.
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Speaker 1: So what are the root causes for why it doesn't scale?
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Speaker 2: Yeah, it's one part. You know, healthcare usually is reimbursed
4:05
Speaker 2: and people take what they get. But when it's private pay,
4:08
Speaker 2: which home care for the most part, is people have
4:11
Speaker 2: choice and so the service level that you have to
4:15
Speaker 2: deliver to someone is much higher than in normal healthcare,
4:19
Speaker 2: right because they have choice. And then at the same time,
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Speaker 2: you have very heterogeneous needs of the older adults, you
4:27
Speaker 2: have very heterogeneous capabilities of the care pros. And it
4:31
Speaker 2: turns out in a system where you have choice and
4:34
Speaker 2: high heterogeneity on both sides, is very hard to make
4:38
Speaker 2: that market meat, especially at scale. So humans can do
4:42
Speaker 2: it at low scale in their heads. That's called the
4:44
Speaker 2: Dunbar number. They can do about one hundred and fifty
4:46
Speaker 2: humans in their heads. But the moment you pass that,
4:49
Speaker 2: it turns out it's AI or bust because you have
4:52
Speaker 2: to replicate. This is ten years ago AI, so is
4:54
Speaker 2: kind of what we used to call mL machine learning exactly.
4:57
Speaker 2: It's how do I replicate kind of the way human
5:00
Speaker 2: and think about a problem and all those levels of
5:02
Speaker 2: nuance in a machine to get it to actually scale.
5:05
Speaker 1: Okay, So taking that to the next step, So you
5:07
Speaker 1: have this epiphany that you need you need the technology
5:09
Speaker 1: layer the scale. So then what do you do? What
5:12
Speaker 1: do you build after that? Yeah? I know, you build
5:15
Speaker 1: a platform, but what is that platform going to do?
5:17
Speaker 3: Yeah?
5:17
Speaker 2: So you know, we were breaking at the seams. We
5:20
Speaker 2: were up to like ten million in revenue at the time,
5:22
Speaker 2: and I just thought we'd have to shut down because
5:24
Speaker 2: quality was bad, and care pros were calling off left
5:27
Speaker 2: and right, and customers were unhappy, and we just kind
5:30
Speaker 2: of figured it out. We're like, you know, why is
5:31
Speaker 2: this care pro today saying she will take a shift
5:34
Speaker 2: and tomorrow she bails in the shift? Why does missus
5:37
Speaker 2: Jones like Janet but missus Smith hates Janet? Right? The
5:40
Speaker 2: care pro is it just it was intractable as a problem.
5:44
Speaker 2: And the reason we went to mL is actually that
5:46
Speaker 2: we could not figure it out ourselves, right. We were like,
5:49
Speaker 2: how can we predict if Janet is actually going to
5:53
Speaker 2: stick with this job? She says she's going to, but
5:55
Speaker 2: will she really? How can we predict missus Jones is
5:59
Speaker 2: going to life this next care pro we give to
6:01
Speaker 2: missus Jones even though Missus Smith would not. Those are
6:04
Speaker 2: the kinds of problems that you have to be able
6:06
Speaker 2: to predict, you know, tens of thousands of times over
6:08
Speaker 2: and over with a high degree of accuracy if you
6:11
Speaker 2: want to get home care to scale.
6:13
Speaker 1: So let's maybe talk about that scale. Can you define
6:16
Speaker 1: the market for US across the US and maybe in globally.
6:18
Speaker 2: Yeah, non medical home care today I would call it
6:22
Speaker 2: in air quotes small, It's eighty five billion dollars in America.
6:26
Speaker 1: It's helped over yet.
6:27
Speaker 2: It's pretty big, but it's small because there's a statistic
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Speaker 2: that there is eight hundred billion dollars of care provided
6:36
Speaker 2: to older adults by their neighbors, family members, friends for
6:40
Speaker 2: older adult issues. It's small at thirty billion in America
6:45
Speaker 2: eighty five billion worldwide because the potential is eight hundred billion,
6:48
Speaker 2: but the market has not yet been unlocked because of
6:51
Speaker 2: certain things that have to get built to really solve
6:54
Speaker 2: for the middle class. Okay, so in the world today
6:58
Speaker 2: private pay homecare frankly the wealthy folks or people on
7:02
Speaker 2: Medicaid where it is reimbursed, who can get private pay
7:05
Speaker 2: home care. And one of the things that we've been
7:07
Speaker 2: working on since day one, literally is how can we
7:10
Speaker 2: bring what we do. We're the largest player by far,
7:13
Speaker 2: like in private pay non medical, we are larger than
7:17
Speaker 2: anyone else by two to three x. Right, so great,
7:21
Speaker 2: but how do we bring that into the middle class
7:24
Speaker 2: and create real affordability and the ability for everyone to
7:27
Speaker 2: be able to stay at home comfortably as the age
7:29
Speaker 2: is the thing I'm really passionate about.
7:31
Speaker 1: From my understanding, is there an interplay or an intersection
7:34
Speaker 1: there between the government or the reimbursable side and what
7:37
Speaker 1: you're doing on the non medical side.
7:39
Speaker 2: Yeah. So, I mean there are lots of interplace between
7:43
Speaker 2: reimbursed and private pay, but I think it's a fool's
7:47
Speaker 2: errand to say, will you know, government or some other
7:50
Speaker 2: payer step in and help the middle class, you know,
7:53
Speaker 2: like that, Look at what's happening in Washington right now,
7:55
Speaker 2: look at what's happening around the world. They will not, Right,
7:58
Speaker 2: So we have to in a market space system figure
8:02
Speaker 2: out how to deploy the service that is deployed really
8:05
Speaker 2: really well for people who can pay frankly, pretty large
8:09
Speaker 2: sums of money into other areas of the market where
8:13
Speaker 2: people don't have that ability to pay such large sums
8:15
Speaker 2: of money. The good news is that technology can absolutely
8:19
Speaker 2: be a solution for that. Right the same technology that
8:21
Speaker 2: we have built to actually be able to scale home
8:25
Speaker 2: care at the kind of let's call it the wealthy
8:28
Speaker 2: end of the spectrum can also be used to then
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Speaker 2: deploy more efficiently and more cost effectively into the middle class.
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Speaker 2: And that's it's not a tomorrow thing for us, but
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Speaker 2: that is a problem that we will solve at scale
8:40
Speaker 2: as soon as we can.
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Speaker 1: So maybe let's dive in a little bit deeper on
8:43
Speaker 1: the technology. What does your platform do with it? How
8:45
Speaker 1: does it enable that better care or cheaper care or
8:47
Speaker 1: some combination there up.
8:49
Speaker 2: Yeah, So the big thing is when you're again and
8:52
Speaker 2: again sending care prosent to homes of older adults, you
8:55
Speaker 2: have to ask what does the older adult really want? Okay,
8:59
Speaker 2: what does the care really want? And it's based on
9:02
Speaker 2: observed behaviors, right, So if I observe this care pro
9:06
Speaker 2: never happens to take a shift Tuesday mornings, there's probably
9:11
Speaker 2: a reason why, and so you don't try to get
9:13
Speaker 2: that care pro to work Tuesday mornings. Or if you
9:17
Speaker 2: talk to ten thousand care pro so to speak, and
9:20
Speaker 2: you see that they really care about knowing what's behind
9:23
Speaker 2: the door before they walk in, because otherwise it's scary
9:26
Speaker 2: and they're going to do a worse job. You build
9:28
Speaker 2: a lot of technology to give that care pro information
9:31
Speaker 2: about what's behind the door before they walk in. For
9:34
Speaker 2: that older adult, consistency really matters. So building a technology
9:39
Speaker 2: kind of logistics system that figures out which care pro
9:42
Speaker 2: is really going to enjoy that job and is going
9:45
Speaker 2: to stick with that job for a long time, so
9:48
Speaker 2: that the older adult gets the same person going back
9:50
Speaker 2: to their home again and again, and that person is
9:54
Speaker 2: kind of the right skill sets and right motivations for
9:58
Speaker 2: the care that that particular old or adult needs. These
10:01
Speaker 2: are things that seem like they should be easy, and
10:04
Speaker 2: again at small scale they are sure.
10:06
Speaker 1: If you're managing an office of.
10:07
Speaker 2: Ten twenteen, no problem. But then you know the problem
10:11
Speaker 2: with the ten, fifteen, twenty person offices is that you
10:14
Speaker 2: then get that next customer and they have very specific needs.
10:17
Speaker 2: And if you're small, you're probably not going to actually
10:20
Speaker 2: have the right care pro for that person. But if
10:22
Speaker 2: you've got tens of thousands of care pros to choose from,
10:25
Speaker 2: then you probably do have that right care pro for
10:27
Speaker 2: the person. It's that you need to know that you
10:29
Speaker 2: have the right care pro because you can't in your
10:31
Speaker 2: head no ten thousand, right, But AI can. And that's
10:35
Speaker 2: one of the big things is being able to leverage
10:38
Speaker 2: volume to create more personalized, more precise service for people.
10:43
Speaker 1: So if I take a step back and think about
10:45
Speaker 1: the business model, you have the platform, you're selling it
10:48
Speaker 1: to the different agencies that are out there.
10:50
Speaker 2: Yeah, so right now you give it away, it goes
10:52
Speaker 2: into home instead so we have only home so we
10:55
Speaker 2: have We bought home instead four years ago and that
10:58
Speaker 2: was the largest franchise network and the way it was
11:01
Speaker 2: organized is frankly the best franchisees Like, we did really
11:04
Speaker 2: need diligence because there are lots, there are a number
11:06
Speaker 2: of franchise networks were could have bought homes That was
11:09
Speaker 2: just the best by far, best owners, you know, best quality,
11:12
Speaker 2: largest size per office. They were already the best, but
11:15
Speaker 2: still couldn't scale past you know, a certain number because
11:18
Speaker 2: home care just did not scale all the technology. We
11:20
Speaker 2: bought it, and then we started injecting our AI into
11:24
Speaker 2: the local offices. Right. We would go to the local
11:26
Speaker 2: offices and say, hey, do you want to run on
11:29
Speaker 2: this new AI platform that'll let you be able to
11:32
Speaker 2: serve people better, serve people faster, serve more people. And
11:35
Speaker 2: we actually have different levels that each office can use.
11:37
Speaker 2: They can use demand based software, they can use the
11:39
Speaker 2: logistics software which we call care platform, and we just
11:43
Speaker 2: go build homecare right to the local offices or in
11:46
Speaker 2: their markets. They might be in Boise, Idaho, for example,
11:48
Speaker 2: and they will find people who need home care locally
11:51
Speaker 2: and then give them great home care.
11:52
Speaker 1: So maybe I want to rewind a little bit because
11:54
Speaker 1: I have a whole bunch of questions about Home Instead.
11:56
Speaker 1: You said, you said, you know it was the best
11:58
Speaker 1: of breed out there. I'm sure you were watching it
12:01
Speaker 1: from afar for a number of years. I was, Yeah,
12:03
Speaker 1: what made you guys the right buyer? And I guess
12:06
Speaker 1: the Pogan's Lauri and Paul, Like what did they see
12:09
Speaker 1: an honor that maybe they didn't see with I don't know,
12:11
Speaker 1: a pe sponsor or somebody else.
12:13
Speaker 2: Yeah, that's a great question. So Lauri and Paul, who
12:15
Speaker 2: were the founders of Homestead, they'd been approached, Like they
12:18
Speaker 2: told us, it was something like once a week they'd
12:20
Speaker 2: get a paying hey can we buy your business from you?
12:23
Speaker 2: From a private equity sponsor. And their reaction was always known,
12:26
Speaker 2: not a chance, you're just going to destroy my business.
12:29
Speaker 2: And when I called up the CEO of home Instead
12:33
Speaker 2: at that time when I realized that we really should
12:36
Speaker 2: buy a home care franchise network, you know, they of
12:39
Speaker 2: course knew about us. It turned out they had slides
12:40
Speaker 2: about how we were the thing that might kill them, right,
12:42
Speaker 2: and so they were very careful about us. Yes, and
12:47
Speaker 2: you know I probably shocked them a little bit when
12:48
Speaker 2: I said, what if we buy you? And we flew
12:52
Speaker 2: out to Omaha to meet everybody, and we're like, look,
12:54
Speaker 2: we are building technology that can allow all the local
12:58
Speaker 2: homestead locations to provide better service and scale. And what
13:04
Speaker 2: the Hogans realized is that we could take the thing
13:07
Speaker 2: that they had built as a seed to create something
13:10
Speaker 2: much much bigger. And this gets to kind of you know,
13:14
Speaker 2: what is your fundamental driving motivation as someone who leads
13:18
Speaker 2: a system, Like is it money extraction or is it
13:23
Speaker 2: fundamentally mission and growth? And mine is fundamentally mission and growth, right,
13:29
Speaker 2: Mine is I want to change the way society cares
13:31
Speaker 2: for older adults. That is what I shoot to as
13:34
Speaker 2: a north star. The money is just an output to me, right,
13:38
Speaker 2: It's not the goal score card, Yeah, it's it's the scorecard,
13:41
Speaker 2: and it's an important scorecard because the more money we get,
13:44
Speaker 2: the more we can dump it back into innovation, right,
13:47
Speaker 2: Like we are very evadah positive it all gets dumped
13:51
Speaker 2: back into innovation. And that is because I want to
13:53
Speaker 2: keep building stuff to work on this big, hard societal
13:56
Speaker 2: challenge as opposed to kind of extract rend and turn
14:00
Speaker 2: it into some kind of distributions or whatever. That is
14:03
Speaker 2: not the goal, right, The goal is how do we
14:05
Speaker 2: really keep growing and changing the world. If we do that,
14:09
Speaker 2: then find the business follows. And that's kind of the
14:11
Speaker 2: fuel that lets the whole thing work. It's the innovation fuel.
14:15
Speaker 2: But that's what the Hogan saw, right, They saw fundamental
14:18
Speaker 2: motivation is not extraction, rather its growth innovation. Take what
14:23
Speaker 2: they had built and use it as a seed with
14:25
Speaker 2: a bunch of really advanced technology to be able to
14:28
Speaker 2: change the game.
14:28
Speaker 1: Yeah. I want to come back to that innovation ethos,
14:31
Speaker 1: but maybe just thinking about the home instead model. You know,
14:34
Speaker 1: he educate me, who doesn't know that much about home care?
14:38
Speaker 1: You know, why has this always been a franchise model? Yeah,
14:41
Speaker 1: you know, why hasn't somebody built centers or you know,
14:45
Speaker 1: agencies everywhere?
14:46
Speaker 2: Yep, it's a great question. So it actually for the
14:49
Speaker 2: same reason that home care could not scale, So people
14:55
Speaker 2: had not recognized, probably pre honor, that individual locations simply
15:02
Speaker 2: were not scalable past a certain size, like an office
15:06
Speaker 2: without really AI could not get pasted too, maybe three
15:11
Speaker 2: million dollars locally for all sorts of reasons. Even if
15:14
Speaker 2: you tried to stuff in another staff can't do it. Yeah,
15:19
Speaker 2: like you could, you could have multiple offices across multiple geos,
15:24
Speaker 2: but you cannot stuff it into an office and serve
15:26
Speaker 2: the same area because what happens is if you say, well, hey,
15:29
Speaker 2: I'm going to build more and more staff you add
15:33
Speaker 2: more staffers, but then the staffers have to talk to
15:36
Speaker 2: each other and they have to do that the way
15:39
Speaker 2: you and I are doing it right now, and that
15:40
Speaker 2: is not actually very efficient compared to what a computer
15:43
Speaker 2: can do, right, and so the whole thing would break
15:46
Speaker 2: because you'd end up with these basically micro units within
15:50
Speaker 2: an existing physical office, and you'd have, you know, each staffer. Actually,
15:55
Speaker 2: as you scaled, each staffer could handle less and less
15:58
Speaker 2: volume because of the quarter nation tax. So franchise network
16:03
Speaker 2: worked because you could say, hey, I'm just going to
16:06
Speaker 2: like lend you a brand and lend you an operating manual,
16:10
Speaker 2: and and that has power, right because brand does matter
16:13
Speaker 2: create the wheel exactly. But I'm going to do that
16:17
Speaker 2: in exclusive territories, and we're just going to end up with,
16:19
Speaker 2: like in the case of Homestead in America, six hundred
16:22
Speaker 2: and fifty offices in America and then like another six
16:24
Speaker 2: hundred and fifty offices around the globe. That's good. That
16:27
Speaker 2: like that lets you scale a brand. The thing is,
16:29
Speaker 2: it doesn't let you scale locally, right. It means every
16:33
Speaker 2: office is is going to be you know, two million,
16:36
Speaker 2: three million dollars if you want each of those offices
16:40
Speaker 2: to then be able to grow from there, because that
16:42
Speaker 2: at that scale, they've got like five percent of the market.
16:45
Speaker 2: And actually Home instead did better than anybody else. So
16:47
Speaker 2: their average office size was twice as big as anybody else's. Okay,
16:51
Speaker 2: so they really did better, but they had reached the
16:54
Speaker 2: scaling point for those local offices exactly. And so then
16:57
Speaker 2: it's the job of AI to be will come in
17:00
Speaker 2: right and say, hey, actually I can also get that
17:03
Speaker 2: local office to scale, right. I can get that local
17:05
Speaker 2: office to keep providing better and better care. I can
17:08
Speaker 2: create better efficiencies with the use of technology.
17:11
Speaker 1: So maybe just dive into a little bit establishing a franchise.
17:15
Speaker 1: Let's say I looked near where I am, and there's
17:18
Speaker 1: some in some counties but some not some in others.
17:20
Speaker 1: Who's the ideal franchise owner?
17:22
Speaker 2: Yep? Yeah, So we look for people who are like
17:24
Speaker 2: fundamentally empathetic, who actually come from some kind of care background,
17:30
Speaker 2: who want to get out there in the community and
17:33
Speaker 2: find people who really need care. And you know, if
17:36
Speaker 2: you have that combination, like you need the person who
17:39
Speaker 2: loves talking to people because they have to find folks
17:41
Speaker 2: who know people who need care, right, but you need
17:45
Speaker 2: the person who's also very very empathetic. And if you
17:48
Speaker 2: have those two combinations with and I have been in
17:51
Speaker 2: care and I understand kind of the fundamental dynamics of
17:54
Speaker 2: a care ecosystem, that would tend to be quite a
17:57
Speaker 2: good franchise operator.
17:59
Speaker 1: And so then once when these franchise, well you establish
18:01
Speaker 1: a franchise, how long does it take to get the scale?
18:03
Speaker 2: Yeah, so you can do it actually pretty quickly, like really, oh,
18:06
Speaker 2: we have had offices that go from zero to two
18:10
Speaker 2: million in like a year, year and a half on
18:13
Speaker 2: just even without the AI. Right when we established Honor
18:17
Speaker 2: initially we went zero to ten million in eighteen months
18:20
Speaker 2: with technology, right, So the the.
18:24
Speaker 1: Speeds maybe hitting that mark, I'd say the barrier.
18:29
Speaker 2: Is are you really aggressive about finding people who actually
18:32
Speaker 2: need care? As one human element still does It's still like, yeah,
18:36
Speaker 2: find people who need it. And then on the operation side,
18:39
Speaker 2: you know, on the human side, you'll you could see
18:41
Speaker 2: it go like going fastest maybe to you know, one
18:45
Speaker 2: and a half two million dollars in eighteen month period,
18:47
Speaker 2: because you're doing a lot of heavy lifting logistics as
18:51
Speaker 2: you try to get the system off the ground. If
18:53
Speaker 2: you've got technology assisting you, you can kind of outsource
18:56
Speaker 2: a bunch of that thinking to the machine and concentrate
18:59
Speaker 2: less on how do I get the right person in
19:01
Speaker 2: the right place because the machine can help with that,
19:03
Speaker 2: and more on how do I find the right people
19:06
Speaker 2: who need care? So let's the human focus on what
19:08
Speaker 2: the human's good at, and then it lets the kind
19:11
Speaker 2: of machine do the thing that machines tend to be better.
19:13
Speaker 1: So once you reach steady state, I guess, what is
19:16
Speaker 1: the biggest challenge?
19:17
Speaker 2: You know, I think the biggest good question. I'm not
19:19
Speaker 2: sure if there's the biggest challenge at steady state. It's
19:22
Speaker 2: more like who cares about steady state? You should be growing, right,
19:26
Speaker 2: you should be serving more people. And the biggest challenge
19:29
Speaker 2: there if you're in a human run system is it
19:32
Speaker 2: will start in. Everybody in home care would understand this.
19:36
Speaker 2: Without the AI giving you a big assist, it will
19:40
Speaker 2: start to feel like you cannot find enough care pros
19:44
Speaker 2: to fulfill on the demands of the clients. That's what
19:47
Speaker 2: people feel. It's actually not what's happening, though, which is
19:51
Speaker 2: super fascinating. What's actually happening is the logistics engine matching
19:56
Speaker 2: the care pros with the clients is breaking down because
19:59
Speaker 2: you're starting to put the wrong care pros into the
20:02
Speaker 2: wrong homes because your human staffers are breaking, like their
20:06
Speaker 2: heads are, their like minds are not able to keep
20:08
Speaker 2: up with. Okay, now I've got too many care pros
20:10
Speaker 2: to track, so they'll start putting the wrong care pro
20:13
Speaker 2: into the wrong home and they'll start getting really high
20:16
Speaker 2: rates of care pros bailing. Interesting, right, that's gonna that's
20:20
Speaker 2: gonna be the thing that breaks. They're going to feel
20:22
Speaker 2: like I can't keep up with the demand I have.
20:25
Speaker 2: I'm unable to get enough supply. But if you look
20:27
Speaker 2: on to the surface, what's happening is no, no, you're
20:31
Speaker 2: putting the wrong people in the wrong place. And now
20:33
Speaker 2: certain of your metrics, like the rate at which a
20:36
Speaker 2: care pro will not stay with a client for the
20:38
Speaker 2: first thirty days, we'll spike up.
20:41
Speaker 1: Well, maybe dive into that a little bit more, because
20:42
Speaker 1: I'd be curious to learn, like, what are the key
20:44
Speaker 1: metrics to running one of these franchise. What's like the
20:47
Speaker 1: what's the north star you know that you start with,
20:49
Speaker 1: and then maybe down from there, what are a couple
20:51
Speaker 1: of the follow ons that that are really important?
20:53
Speaker 2: Yeah, so if you go to the highest level, you
20:56
Speaker 2: have to ask, how do I know if my care
20:58
Speaker 2: pros are happy? How do I know if my clients
21:01
Speaker 2: are happy? And by far the easiest way to look
21:03
Speaker 2: at that for both sides in the market is are
21:06
Speaker 2: you staying with me? Are you staying with each other?
21:10
Speaker 2: So you can simply look at over different time periods,
21:14
Speaker 2: what is the turn rate of a client? What is
21:16
Speaker 2: the turn rate of a care pro? And then you
21:18
Speaker 2: can even go more fine grained than that, lots of
21:20
Speaker 2: interesting detail. But once you figured those things out, so
21:24
Speaker 2: I know of my north star is how happier clients
21:27
Speaker 2: is measured basically by do this day with me? Because
21:29
Speaker 2: remember it's private pay, they have choice. How happy are
21:32
Speaker 2: my careposts? Because remember it's a massive market, they have choice, right,
21:36
Speaker 2: and they have other industries that they can go work into.
21:39
Speaker 2: Once you know that, then what you do, and this
21:41
Speaker 2: is what we do in technology all day, is you say,
21:44
Speaker 2: what are the things that are making them less likely
21:47
Speaker 2: to stay with me? What are the top five things
21:49
Speaker 2: that makes a client less likely to stay with me?
21:52
Speaker 2: What are the top five things that makes a care
21:53
Speaker 2: pro less likely to stay with me? And now I'm
21:56
Speaker 2: going to actually work on those five things on each
21:58
Speaker 2: side of the market, and I'm going to try to
22:01
Speaker 2: get those things to be as good as they can
22:03
Speaker 2: possibly be so that I've got the care pros and
22:06
Speaker 2: the clients wanting to stay with me over long term.
22:08
Speaker 1: Maybe generally speaking, what are those pain points? And I'm
22:11
Speaker 1: sure they're different in every franchise, every provider, patient or quiet,
22:16
Speaker 1: but generally speaking, what are the big ones? Yeah, are
22:19
Speaker 1: the pain points on each side.
22:20
Speaker 2: So for the care pros, by far, and this is
22:23
Speaker 2: a thing that I really wish everybody would understand, by far,
22:26
Speaker 2: the biggest thing is stability. Okay, So it's if I
22:31
Speaker 2: am expecting to get let's call it, forty hours of
22:33
Speaker 2: work a week from you at this pair rate, how
22:36
Speaker 2: confident and I am? I then I'm going to still
22:38
Speaker 2: get that forty hours next week, how confident, And that
22:42
Speaker 2: I'm going to still get that forty hours eight weeks
22:44
Speaker 2: from now, because they are really concerned that a customer
22:48
Speaker 2: of theirs may pass away, might move into a facility,
22:52
Speaker 2: might stop care because they get better, Like you know,
22:54
Speaker 2: maybe someone's posted acute, they had a hip you know, replacement,
22:57
Speaker 2: and then boom, they're fine three weeks later and they
22:59
Speaker 2: don't need you anymore. So the care pros want to
23:03
Speaker 2: know that they're still going to have a stable source
23:06
Speaker 2: of income over the long haul, Okay, for care posses.
23:09
Speaker 2: That is the number one thing. For clients, it's this,
23:12
Speaker 2: it's having the right person consistently over time. Okay, right,
23:17
Speaker 2: So it's it's not I said very specific words there,
23:21
Speaker 2: the right person consistently over time, right, And those actually
23:26
Speaker 2: are kind of three different things, because now, if you're
23:28
Speaker 2: not doing a good job giving care pros what they want,
23:31
Speaker 2: you lose the overtime because they will leave consistently. Means
23:36
Speaker 2: you have to have a logistics engine that figures out
23:38
Speaker 2: how to get the right care pros to the right
23:40
Speaker 2: clients and keep that as kind of a steady match
23:43
Speaker 2: over time, even as the other scheduling pieces of that
23:47
Speaker 2: care pro change, even as the needs of those clients change.
23:51
Speaker 2: And then the right care pro is, how do I
23:53
Speaker 2: figure out proactively with a whole bunch of data who
23:56
Speaker 2: actually is going to be that right person for you.
23:58
Speaker 2: So there's a bunch of math, believe it or not,
24:00
Speaker 2: behind every single one of those.
24:02
Speaker 1: Yeah. So maybe going back to the first problem, how
24:05
Speaker 1: do you solve for the stability and the runway on
24:08
Speaker 1: the income?
24:09
Speaker 2: So yeah, so what's so interesting is scale is actually
24:14
Speaker 2: the way you solve for all these problems. But you
24:17
Speaker 2: have this mega catch twenty two because you can't scale
24:21
Speaker 2: without the AI. So this is what this is why
24:23
Speaker 2: on our works right. Yeah, it's like you've got this
24:28
Speaker 2: industry that everyone's got a good heart, everyone's trying really hard,
24:33
Speaker 2: but they get to this point where they're like, I
24:35
Speaker 2: am just knocking my head against a brick wall. I
24:37
Speaker 2: cannot grow this thing. And the fundamental reason is you
24:42
Speaker 2: hit a point where you can't get more scale because
24:44
Speaker 2: the logistics break. But you need more scale to create
24:46
Speaker 2: a better service, right because the scale lets you keep
24:50
Speaker 2: care pros consistently, you know, engaged with consistent pay over time.
24:56
Speaker 2: The scale lets you have enough care pros to be
24:59
Speaker 2: able to get the right care pro for that next
25:01
Speaker 2: person's very specific needs. But without the AI, you can't
25:05
Speaker 2: scale do it. And this is why you need Honor.
25:08
Speaker 1: So well said, So maybe thinking about the market, how
25:11
Speaker 1: has the landscape changed with your success? I mean, are
25:14
Speaker 1: people taping your philosophy and are you seeing others try
25:19
Speaker 1: and do things that are somewhat similar to Honor.
25:21
Speaker 2: Yeah, it's really interesting. So you've got you know, ten
25:25
Speaker 2: years ago when we launched Honor, you had the classic
25:28
Speaker 2: you know, three startups, five startups all have the same
25:32
Speaker 2: idea at the same time, and you know, there were
25:34
Speaker 2: three or five of us and we all go and
25:37
Speaker 2: all of the rest of them die and we don't,
25:39
Speaker 2: and we kind of become the big technology based, you know,
25:42
Speaker 2: home care provider. I think the reason, if you were
25:46
Speaker 2: to just kind of go simple ten years ago, why
25:49
Speaker 2: those those ones didn't work is that this problem was
25:52
Speaker 2: actually too hard. So we had this thing when we
25:55
Speaker 2: started our next company, after we saw their first one,
25:57
Speaker 2: we said, we only want to work on a hard
25:59
Speaker 2: problem that second time founders could possibly do, and we
26:03
Speaker 2: knew that trying to fix how does society care for
26:06
Speaker 2: an older adult was one of those problems. And it
26:09
Speaker 2: turns yeah, and it turns out it's very complex, and
26:11
Speaker 2: there were a lot of like it looks like a
26:13
Speaker 2: good idea, but it's actually a bad idea, and with
26:16
Speaker 2: that kind of second time experience, you couldn't know ahead
26:19
Speaker 2: of time it was a bad idea, but you really
26:21
Speaker 2: needed that experience of like ten years of hard knocks
26:24
Speaker 2: to like no, don't no, no, no, don't go do
26:26
Speaker 2: that one.
26:26
Speaker 1: Well, so, what's an example of the of you know,
26:28
Speaker 1: you applying that framework from you know, your first company
26:31
Speaker 1: to your second company. Is an example that, yeah, is
26:33
Speaker 1: so crystal queer.
26:34
Speaker 2: Yeah, oh, there's so many of them. One example the
26:37
Speaker 2: top ten. Sure, yeah we can do. I'm serious, we
26:40
Speaker 2: do a top ten. One is you you never rely
26:44
Speaker 2: on a monopoly or an oligopoly for distribution. Like that's
26:47
Speaker 2: a huge no no as an entrepreneur. So you know,
26:50
Speaker 2: one place you saw a bunch of our early competitors
26:53
Speaker 2: go is, oh, I'm going to try to get distribution
26:55
Speaker 2: from either government or government provider or commercial insurance you
27:00
Speaker 2: know so payer or you know big provider system. And
27:03
Speaker 2: it's like, no, you will die. It's they will chisel you.
27:08
Speaker 2: Your margin will get ground down, it'll seem big, and
27:10
Speaker 2: then you'll get no volume. There's all sorts of reasons
27:13
Speaker 2: why monopolies and oligopolies are really really bad for distribution
27:17
Speaker 2: for entrepreneurs full stop in any industry, and that is
27:20
Speaker 2: true for home care too, so that that would be
27:21
Speaker 2: a good example. Another one was always try to have
27:26
Speaker 2: a brand relationship with an end client. Do not go
27:30
Speaker 2: to a place where really the client doesn't care about you,
27:33
Speaker 2: because when the client doesn't care about your brand, when
27:35
Speaker 2: the client doesn't care about the relationship with you, you're very replaceable.
27:39
Speaker 2: So you're going to bed every night scared that you
27:42
Speaker 2: know something's going to change.
27:44
Speaker 1: And were some of the competitors doing that where they
27:46
Speaker 1: white labeling themselves, Oh yes, provider network or managed care.
27:50
Speaker 2: Yes, or all of a sudden becoming staffing companies for
27:53
Speaker 2: like all sorts of stuff, yes, and it and they
27:56
Speaker 2: all it's all fail And these are just like I
28:00
Speaker 2: can't overemphasize how much these are just true lessons and
28:02
Speaker 2: over the arc of time, if you go that route,
28:06
Speaker 2: you are not going to have a sustainable, valuable business.
28:09
Speaker 2: And there are also lessons about how do you actually
28:11
Speaker 2: run the company. So, for example, when you're a kind
28:14
Speaker 2: of you know, air quotes, young founder, you are going
28:17
Speaker 2: to hire people who have much more experience than you do.
28:20
Speaker 2: Knowing how to balance your gut and your beliefs with
28:26
Speaker 2: their experience and their input is really important. And you
28:32
Speaker 2: see lots of startups die because they just get that wrong. Right,
28:38
Speaker 2: Like that interplay between the original founding team and then
28:41
Speaker 2: kind of the senior executives that that founding team ultimately
28:44
Speaker 2: brings in to help them run the company.
28:45
Speaker 1: Is that because they're thinking, isn't tactical enough or are
28:47
Speaker 1: they just too focused on maybe old ways of doing things?
28:51
Speaker 2: So I think what happens is the get You'll get
28:54
Speaker 2: two kinds of founder mistakes. On the extremes, one will
28:59
Speaker 2: be I just hire that experienced person, I have to
29:01
Speaker 2: listen to everything that they say. That is a bad
29:03
Speaker 2: idea because the founder really does have this special thing
29:08
Speaker 2: around the vision of this is the thing I am
29:11
Speaker 2: trying to accomplish, and this is inbounds and this is
29:13
Speaker 2: out of bounds. On the other hand, the other extreme
29:16
Speaker 2: of the mistake is you know, I know all and
29:20
Speaker 2: I hire you with your experience, but I Am not
29:22
Speaker 2: going to listen to you because I am the founder
29:24
Speaker 2: and you're going to do what I say. The media
29:27
Speaker 2: there is this is a case where you've really got
29:29
Speaker 2: to find the happy medium. And that's the thing you
29:30
Speaker 2: learn over time. Right. I learned it really well through
29:33
Speaker 2: school hard knocks on my first company. Uh So there's
29:36
Speaker 2: there's all sorts of lessons like this, you know, how
29:38
Speaker 2: do you hire for these kinds of people? How do
29:40
Speaker 2: you fundraise? Who are the right kinds of people that
29:42
Speaker 2: you put behind the company? Who do you want on
29:45
Speaker 2: your board? I mean there's so much too. When you're
29:48
Speaker 2: doing a hard, hard problem, how do you get that Melia?
29:53
Speaker 3: Right?
29:54
Speaker 2: You know, you could you could say that there are
29:56
Speaker 2: these companies that are working on these very very hard problems,
30:00
Speaker 2: and you look at the path of those companies and
30:03
Speaker 2: they're always really hard for the first ten years, and
30:06
Speaker 2: then they tend to hit this like INFLA. It's actually interesting.
30:08
Speaker 2: It's kind of like a ten year overnight success is
30:10
Speaker 2: the term, and it tends to be a company that's
30:13
Speaker 2: working on a really hard, big problem. But you can
30:16
Speaker 2: then kind of see it at like year ten. Like
30:18
Speaker 2: you have to remember Tesla for example, right, I mean,
30:21
Speaker 2: it wasn't doing much meaningful in the market for its
30:24
Speaker 2: first head years, right, and then exploded. Palanteer is actually
30:27
Speaker 2: the same, right open AI you know, for its first
30:30
Speaker 2: kind of eight years wasn't doing much right. It was
30:33
Speaker 2: all behind the scenes building a lot of great technology
30:35
Speaker 2: and boom. So when you're working on big world change,
30:37
Speaker 2: so those things are very very hard. And you if
30:40
Speaker 2: you look at the founding teams behind every single one
30:42
Speaker 2: of the companies I just mentioned, all multi time founder, right,
30:46
Speaker 2: because there's so much to navigate in there.
30:48
Speaker 1: Well, that brings up a good point. I mean, how
30:50
Speaker 1: did you collesce around your team?
30:52
Speaker 2: Yep?
30:52
Speaker 1: And was it because you would already work together that
30:55
Speaker 1: you wanted to go forward with this group of people
30:56
Speaker 1: and you guys all had the same mission in mind.
30:59
Speaker 2: Yeah, a lot of the team. So actually we have
31:01
Speaker 2: a unique story, not as unique as people think, but
31:03
Speaker 2: it's actually two married couples who ended up doing it.
31:05
Speaker 2: Why because in my first company it was me with
31:09
Speaker 2: Sandy and she and I are not married, but I
31:13
Speaker 2: met her through my friend her now husband, like twenty
31:17
Speaker 2: years ago. And then when we were deciding to do
31:19
Speaker 2: this one, we said, okay, let's like, you know, send
31:22
Speaker 2: like founding team of my old company back together cam
31:26
Speaker 2: her husband wanted to join up, my wife wanted to
31:29
Speaker 2: join up, and we were like, hey, this is a
31:30
Speaker 2: family business. We're working on how to you know, help
31:33
Speaker 2: people care for their parents. This makes total sense. And
31:38
Speaker 2: so it was one part, you know, we had actually
31:40
Speaker 2: literally worked together for over a decade before. It was
31:44
Speaker 2: another part we actually had all the right complimentary skills.
31:48
Speaker 2: And this is a thing that I say to you know,
31:50
Speaker 2: founders again and again, and I just feel like people
31:53
Speaker 2: don't always listen enough. And this is so important. To
31:56
Speaker 2: be a good founder. One of your qualities has to
31:58
Speaker 2: be that you like to hang out with people who
32:00
Speaker 2: are not like you. And if you look at Cam
32:03
Speaker 2: and Sandy, Monica and me, the four founders, oh my god,
32:07
Speaker 2: do we have different skill sets, Like we are different
32:09
Speaker 2: human beings. But that's really powerful when you're trying to
32:12
Speaker 2: solve a hard problem because you can each work on
32:15
Speaker 2: your part of the problem.
32:16
Speaker 1: No, that's well said. You know, I was going back
32:19
Speaker 1: to the ten year journey and you've had, you know,
32:21
Speaker 1: the pivot from running a care center to the technology
32:24
Speaker 1: platform to then owning you know, the franchise home instead.
32:28
Speaker 1: How have your investors approached those pivots? And I guess
32:33
Speaker 1: was there any concern during that journey that maybe you
32:36
Speaker 1: weren't making the right choice, and how did you get
32:39
Speaker 1: comfortable around each one of those decisions.
32:42
Speaker 2: You know, it's a really good question because this is
32:45
Speaker 2: where having that founder vision thing really really matters, because
32:52
Speaker 2: if you have that vision, you don't even see those
32:56
Speaker 2: as pivots. You're just like, look, I need to change
32:58
Speaker 2: the way society caresfolder adult. The first thing I obviously
33:01
Speaker 2: have to do is go learn why this stuff never scales.
33:06
Speaker 2: So I'm just gonna launch home care agency. I have
33:08
Speaker 2: no choice. I can't. I can't build a technology platform.
33:11
Speaker 2: I don't know what technology to build. I don't know
33:13
Speaker 2: what the problems actually are. And if I go talk
33:15
Speaker 2: to the humans, they'll tell me stuff. But is it true.
33:18
Speaker 2: I'm not capturing their data. I don't know. Right, you
33:20
Speaker 2: need ground truth. You have no choice. You have to
33:23
Speaker 2: launch a home care agency. So then you do that
33:26
Speaker 2: to learn and then you discover, Okay, I actually can
33:29
Speaker 2: build an AI system that lets this think scale. I
33:32
Speaker 2: am going to build that and I'm going to give
33:34
Speaker 2: it to as many people as possible. Right. That was
33:36
Speaker 2: what we called HCN. So that was when we created
33:38
Speaker 2: our first AI system that we allow third party agencies
33:41
Speaker 2: to use. Because I've now built the thing like the
33:43
Speaker 2: purpose of me having built my own agency has been served.
33:47
Speaker 2: I can now serve more people much faster if I
33:49
Speaker 2: can just distribute out my you know, my AI system
33:52
Speaker 2: to as many people as possible. And then you're doing that,
33:55
Speaker 2: you say, oh, I've learned something really important in here.
33:58
Speaker 2: I want a single consistent brand because this is really
34:01
Speaker 2: like in home care and caring for an older adult,
34:04
Speaker 2: caring for your mom. That matters a lot. And so
34:07
Speaker 2: what would be the fastest and most efficient way for
34:09
Speaker 2: me to get a single brand. I'll buy the largest
34:12
Speaker 2: home the largest franchise network, which fundamentally is one very
34:16
Speaker 2: big brand. So when you've got that founder vision, and
34:22
Speaker 2: when that founder can then go to investors and say, hey,
34:24
Speaker 2: the next big step I am going to take his
34:26
Speaker 2: bla here's why. Yeah, it doesn't even come across as
34:29
Speaker 2: a pivot, right, it's just like, that's the next obvious
34:31
Speaker 2: step that we will make. And I actually call those
34:33
Speaker 2: things kink the curve and so. And this is one
34:37
Speaker 2: of the things that I still do in the company today,
34:39
Speaker 2: and this is important. I like with the quality team
34:42
Speaker 2: that we now have, I don't do much on the
34:45
Speaker 2: day to day ops of the company any longer, like
34:47
Speaker 2: I am not as good as the people that we
34:50
Speaker 2: have running the company now. They are better at that
34:52
Speaker 2: than I am.
34:53
Speaker 1: I mean, I would hope so for stuff like accounting.
34:56
Speaker 2: But also like operations and building AI systems and knowing
34:59
Speaker 2: what to build next. Like, you know, we've got the
35:01
Speaker 2: guy who built Amazon Fresh. He is our president Ian,
35:03
Speaker 2: he is awesome. He literally pitches Jeff Bezos, he gets
35:06
Speaker 2: ten million bucks, he starts Amazon Fresh, he creates the first,
35:08
Speaker 2: you know, profitable grocery delivery system in the world. Okay,
35:12
Speaker 2: that dude is substantially better at building really AI intense
35:17
Speaker 2: logistics systems so that I am and I will never
35:20
Speaker 2: compete with that, and he can run that Enche team
35:22
Speaker 2: that's building for that better than I can. But what
35:26
Speaker 2: I tend to be kind of uniquely good at is, Hey,
35:29
Speaker 2: if we did this thing different over here, I think
35:33
Speaker 2: that that would dislocate our current kind of mission curve
35:37
Speaker 2: and kink the curve, kink it up to a higher
35:40
Speaker 2: slope so that we can now move and hit mission
35:44
Speaker 2: even faster. And I still do that today, But none
35:46
Speaker 2: of those are pivots are just yeah, it's just.
35:48
Speaker 1: The next iteration. Yeah, So maybe with that in mind,
35:50
Speaker 1: what are you kinking the curve on right now? If
35:53
Speaker 1: if you think about the roadmap for the next couple
35:55
Speaker 1: of years, where do you want to be.
35:57
Speaker 2: Yeah, so I think it's really we're in for us
36:01
Speaker 2: to move as quickly as we can on getting our
36:03
Speaker 2: technology out into the network as fast as possible, because
36:07
Speaker 2: we need the network to be able to scale a
36:10
Speaker 2: but we need to be able to have a scalable
36:14
Speaker 2: way to push more high quality innovation out into the
36:18
Speaker 2: network to start solving some of these problems, like, for example,
36:21
Speaker 2: were talking about it earlier, how do I better care
36:23
Speaker 2: for the middle class, or how do I integrate with
36:26
Speaker 2: devices in the home, or how do I really solve
36:28
Speaker 2: the problem that it's hard to even get food into
36:31
Speaker 2: your mother's home, Like this's a real challenge. Drugs are
36:33
Speaker 2: one of the number one reasons people give up on
36:36
Speaker 2: living in their homes because it's too hard to manage
36:38
Speaker 2: the drugs. The only way to scalably be able to
36:43
Speaker 2: do that is to have technology that's out there that's
36:47
Speaker 2: allowing for instead of a human kind of hamster behind
36:50
Speaker 2: the machine doing it like you write it in code,
36:53
Speaker 2: and then it can happen that you're then able to
36:55
Speaker 2: deliver food or that you're able to deliver services at
36:59
Speaker 2: lower cost or whatever it might be. So just pushing
37:02
Speaker 2: on bringing the technology out even faster.
37:05
Speaker 1: What's the limiting factor there? Because I guess you mentioned
37:07
Speaker 1: before the franchises have their own ability I guess to
37:11
Speaker 1: take on what they want to take on or maybe
37:12
Speaker 1: not utilize the full stating, the.
37:15
Speaker 2: Biggest limiting factor has been how fast are we willing
37:20
Speaker 2: to allow it to go?
37:21
Speaker 1: Interesting?
37:22
Speaker 2: So you know, I said, founders have the mission in
37:26
Speaker 2: their mind, and founders have guardrails, and I have two
37:31
Speaker 2: core guardrails that I just told us to and the
37:34
Speaker 2: guardrails are, we can grow as fast as we want
37:36
Speaker 2: to grow, as long as we maintain quality, right, as
37:40
Speaker 2: long as we maintain ethics. If we're maintaining quality and ethics,
37:44
Speaker 2: we're good. We can go as fast as we want to.
37:46
Speaker 2: And when you look at the AI systems when we
37:49
Speaker 2: bought home instead, home instead was a different level than
37:52
Speaker 2: pretty much anyone else in home care, like it was
37:55
Speaker 2: the best and home instead outperformed the AI when we
37:59
Speaker 2: bought it, Like if if you looked at the quality
38:01
Speaker 2: metrics and the outcomes that they were having, it was
38:04
Speaker 2: better than the AI, and so we spent a bunch
38:06
Speaker 2: of time then working on the AI to get it
38:09
Speaker 2: to be as good as home instead, which is different
38:13
Speaker 2: than the industry average. Now the AI systems are as
38:18
Speaker 2: good as are often better than Home instead. Okay, that's awesome.
38:22
Speaker 2: So then you are comfortable to say, all right, I
38:25
Speaker 2: can now step on the gas and as you do that,
38:27
Speaker 2: in a care model, you're always careful, right, You're always
38:31
Speaker 2: careful that as you add more volume and you add
38:34
Speaker 2: more scale, it's still maintaining its quality levels. So that's
38:39
Speaker 2: but you know, our growth rate also has been pretty
38:40
Speaker 2: damn good. So it's been pretty damn good. But we
38:44
Speaker 2: can probably go even faster now.
38:46
Speaker 1: So one of the things you mentioned was, you know,
38:48
Speaker 1: how you've hired the right people and where you're spending
38:50
Speaker 1: your time. How has that shifted over the last couple
38:52
Speaker 1: of years, because I imagine there was a big chunk
38:55
Speaker 1: of time, you know, post pandemic, post home Instead, we're
38:58
Speaker 1: focused on integration and really wrapping it all together. You know,
39:02
Speaker 1: where's your focus today?
39:03
Speaker 2: Yeah, when you hire people into an earlier stage startup,
39:07
Speaker 2: you're usually hiring people who are kind of tactically superior
39:11
Speaker 2: to you at a job, Like they're better at b
39:13
Speaker 2: D in talking to people than you are, but often
39:16
Speaker 2: strategically you are guiding them. Still, when you hit a
39:19
Speaker 2: certain point, which we have now hit, where you really
39:22
Speaker 2: have let's call it the right to win. You have
39:24
Speaker 2: the right assets, you have the right brand YEP marketing position,
39:27
Speaker 2: all of a sudden boom, you can hire people who
39:29
Speaker 2: are not just tactically superior to you, but they are
39:31
Speaker 2: strategically superior to you too at their jobs. And that
39:35
Speaker 2: is a huge unlock because the company is then able
39:38
Speaker 2: to outperform you as a human. That is huge. So
39:43
Speaker 2: a lot of my time has been spent on going
39:46
Speaker 2: across the entire team and making sure that we find
39:49
Speaker 2: like the absolute best people for every single position that
39:52
Speaker 2: reports to me, and then the positions that report to
39:55
Speaker 2: those people who literally are tactically and strategically superior to me.
40:00
Speaker 2: That like that has been actually a huge chunk of
40:02
Speaker 2: my time.
40:03
Speaker 1: So what's an example of like one of those wins.
40:07
Speaker 2: Yeah, Like we just had our new chief Legal Officer join,
40:11
Speaker 2: Sean Lindquist, and Sean is awesome. Like what's actually amazing
40:14
Speaker 2: is our previous GC, Sharon She and I had worked
40:16
Speaker 2: together for seventeen years. She was at my previous company too,
40:20
Speaker 2: and when she and I started together on Honor, she said,
40:23
Speaker 2: I will be your GC until you know, we're getting
40:26
Speaker 2: to that really late stage as a company, and then
40:29
Speaker 2: you know, I don't want to kind of continue past that.
40:32
Speaker 2: That was a ten year run. Sharon is still at
40:35
Speaker 2: the company and working on things that only Sharon could
40:37
Speaker 2: possibly do. But now we've brought in someone who has
40:39
Speaker 2: just like a mega scale for the next leg of
40:42
Speaker 2: the company. Yeah, and so like literally he just joined.
40:45
Speaker 2: There's another position that I'm about to do this with too,
40:47
Speaker 2: but it's not announced yet. So you know, Ian was
40:50
Speaker 2: probably the first in this new iteration. The person I
40:53
Speaker 2: mentioned to is our president, who literally like he was
40:57
Speaker 2: employee I think number one thousand in Amazon and he
41:00
Speaker 2: got there and he's like, my first I think you
41:02
Speaker 2: said his first job was to start selling women's dresses,
41:05
Speaker 2: but they only had thumbnails for hardcover books as like
41:10
Speaker 2: a way to show you what you're gonna buy. And
41:12
Speaker 2: he's like, how do you sell a dress? And I've
41:13
Speaker 2: got a thumbnail for a hardcover box, right, So it
41:16
Speaker 2: was like re architect Amazon kind of stuff that he
41:19
Speaker 2: was working on. He was probably the first in just
41:21
Speaker 2: what became a series of folks that that became real
41:24
Speaker 2: U great. And you know, this is the thing I
41:25
Speaker 2: think investors no but maybe underappreciate, is if you look
41:29
Speaker 2: at what's happening at the team level of a company,
41:33
Speaker 2: you can actually just tell what the director trajectory that
41:35
Speaker 2: company is like. When that company is just like in
41:39
Speaker 2: constant kind of up level mode on its most important positions,
41:44
Speaker 2: those people all have lots of choice, right and then
41:47
Speaker 2: they're making a choice to join that. They're making it
41:50
Speaker 2: your yes and your goals or where yes. And the
41:52
Speaker 2: company has the right assets in its right position. And
41:55
Speaker 2: if you know they all execute, they know what they
41:57
Speaker 2: can create.
41:58
Speaker 1: So maybe take me ten years down on the road.
42:01
Speaker 1: What is Seth doing?
42:02
Speaker 2: Yeah, yeah, I think it's I think as a founder CEO,
42:07
Speaker 2: you what I've learned is you basically never leave this
42:12
Speaker 2: spot of you can be the person that does what
42:14
Speaker 2: is the purity of the mission, Like that is in scope,
42:17
Speaker 2: that is out of scope? We should do this, We
42:18
Speaker 2: shouldn't do that. A B. I think you're never stopping
42:22
Speaker 2: to work on team like I spend so much time
42:25
Speaker 2: on do we have the right people, Are they in
42:27
Speaker 2: the right seats? Should we kind of like change the
42:31
Speaker 2: responsibilities of the different people on the team. How do
42:34
Speaker 2: I find that next amazing person? I think that never stops.
42:37
Speaker 2: But then I think that the really important stuff is
42:39
Speaker 2: how do you keep doing these kink the curve moves?
42:43
Speaker 2: Like you, as the founder CEO, occupy this unique position
42:47
Speaker 2: where you get to never be happy unfortunately, And it's
42:50
Speaker 2: kind of my personality, Like I.
42:51
Speaker 1: Don't know, you seem like a pretty happy guy. You're
42:53
Speaker 1: smiling a lot.
42:54
Speaker 2: Yeah, but like growth.
42:56
Speaker 1: Is off the charge.
42:58
Speaker 2: Positive, I don't need anyone. Yeah, it's like this is good, right,
43:02
Speaker 2: Like I've never in my life had a company at
43:05
Speaker 2: this scale, or like literally we don't need anyone for
43:07
Speaker 2: anything anymore. We can do it all ourselves if we
43:09
Speaker 2: want to. That's great. However, like my default personality is, oh,
43:13
Speaker 2: good we did that? Who cares? Like you know it
43:15
Speaker 2: actually to a fault. Who cares? We accomplish that? Awesome? Okay,
43:18
Speaker 2: celebrate for five seconds and next right and next to me?
43:23
Speaker 2: Is so important because everyone has their own Why at
43:27
Speaker 2: the end of the day, maybe ten, fifteen, twenty years
43:31
Speaker 2: ago I realized, simply for me, what matters, is like,
43:35
Speaker 2: how am I going to feel about my life when
43:36
Speaker 2: I'm like two weeks away from death? Because when you're
43:38
Speaker 2: two weeks away from death, your money doesn't matter, your
43:41
Speaker 2: power doesn't matter, Like, none of that stuff matters. The
43:43
Speaker 2: only thing I think that matters is did you leave
43:46
Speaker 2: your family in a good spot? Did you have positive
43:49
Speaker 2: impact on the world? Like it's basically what kind of
43:51
Speaker 2: legacy or leave you leaving behind? And I think you
43:53
Speaker 2: have to care about your family, and I think you
43:55
Speaker 2: have to care about the world at large. And if
43:58
Speaker 2: I'm two weeks away from dying and I say, whow
44:00
Speaker 2: big impact on the world? My family is well set up,
44:03
Speaker 2: I will feel good about my life. And so that
44:05
Speaker 2: means while I'm productive, I need to do as much
44:09
Speaker 2: as I can to keep kinking that curve. Otherwise, why
44:14
Speaker 2: am I doing what I'm doing? Someone else could just
44:16
Speaker 2: do it?
44:17
Speaker 1: No, it makes perfect sense. And you skipped ahead. This
44:19
Speaker 1: was the you answered the question I was going to
44:20
Speaker 1: ask you at the end about what drives you. So
44:22
Speaker 1: I think maybe we'll skip that for this episode. What
44:26
Speaker 1: you know? Using my analyst hat and I'm a finance guy,
44:28
Speaker 1: you know what KPIs? Do you looll get on a
44:29
Speaker 1: day to day or month to month basis just to
44:32
Speaker 1: manage that growth, Like what's most important to you?
44:34
Speaker 2: Yeah, so we actually look a lot at the quality metrics.
44:38
Speaker 1: Oh really, it just goes all the way down to that.
44:40
Speaker 2: It goes down to, yeah, are you desten a quality service? Right?
44:45
Speaker 2: Because if you're like, you can't build a great company
44:51
Speaker 2: that scales and grows quickly unless you have an amazing
44:55
Speaker 2: product Like that has to be the core. And so
44:59
Speaker 2: if you have that amazing product, especially in an industry
45:03
Speaker 2: where frankly it's the qualities really uneven out there, you
45:09
Speaker 2: can grow something really special. So we look at like
45:12
Speaker 2: if you look at our wbrs or Weekly Business Reviews,
45:15
Speaker 2: which is a thing that we totally lifted from Amazon
45:17
Speaker 2: as a as a you know, operating way of going,
45:20
Speaker 2: we spend more time than anything on just the quality
45:23
Speaker 2: and what we call the defect rates and like, this
45:25
Speaker 2: thing is wrong over here, and that's affecting this thing
45:28
Speaker 2: over there, and so therefore we have to make that better,
45:30
Speaker 2: and we're going to focus on it, and we're going
45:31
Speaker 2: to build a system that makes it sustainably better over time.
45:35
Speaker 2: So when you say, you know what do you really
45:37
Speaker 2: really look at what do you spend time on. It's
45:39
Speaker 2: actually the product level stuff, it's the quality level stuff
45:43
Speaker 2: and that drives everything else.
45:44
Speaker 1: Huh So maybe just shifting gears. And we touched on
45:47
Speaker 1: it before we started, But how does regulation and Washington
45:51
Speaker 1: interplay with your business? And I guess where do you
45:54
Speaker 1: see the uncertainty coming out of Washington these days? You know,
45:58
Speaker 1: impacting you guys? And I guess maybe are you is
46:00
Speaker 1: there anything that you're hopeful for from a regulatory perspective?
46:03
Speaker 2: Yeah, I guess there's there's two things on that. One is,
46:06
Speaker 2: you know, it kind of goes back to my never
46:07
Speaker 2: rely on monopolies or a logopolies thing. You know, we
46:11
Speaker 2: very intentionally created a private pay business because I wanted
46:16
Speaker 2: a relationship with clients. I didn't want to have stroke
46:19
Speaker 2: of the pen risk as people call it. Like, I
46:22
Speaker 2: wanted a business that I controlled. And you know, the
46:25
Speaker 2: things that are happening right now around CMS et cetera,
46:29
Speaker 2: they do not impact us because we are you know,
46:32
Speaker 2: there are home care rags. Often it kind of as
46:35
Speaker 2: state by state level with varying degrees of you know, importance,
46:41
Speaker 2: but it's none of it is kind of is your
46:43
Speaker 2: business going to survive tomorrow? Is the business viable? It's
46:46
Speaker 2: it's not like O, well, and therefore it just disappeared
46:49
Speaker 2: or your margin just got cut by this much. That
46:51
Speaker 2: that kind of stuff just doesn't, you know, really exist
46:54
Speaker 2: when you're in private pay land. That was important to me,
46:56
Speaker 2: right because I wanted to sustainable business. The other what
47:00
Speaker 2: is really important is you want to create a real
47:02
Speaker 2: relationship with your customer, right you want to be the
47:05
Speaker 2: thing they are choosing to buy. They're choosing to buy
47:08
Speaker 2: your brand because they like your brand. If you occupy
47:12
Speaker 2: that space, that is a very different space to occupy
47:16
Speaker 2: than you know, people have three choices and they kind
47:18
Speaker 2: of have to do it and it's kind of a
47:20
Speaker 2: tense relationship or an afterthought. I think the biggest thing
47:24
Speaker 2: on regulations that I'm hopeful for is actually around the
47:27
Speaker 2: immigration stuff that's happening right now. There is we need
47:34
Speaker 2: to find a way to bring in more immigrants into
47:39
Speaker 2: the United States to work in home care, and for
47:43
Speaker 2: the current government's kind of philosophies, we still need to
47:48
Speaker 2: find policies that will allow immigrants to come in and
47:52
Speaker 2: work in this space because there are not enough Americans
47:55
Speaker 2: and they are not even enough people who have immigrated
47:58
Speaker 2: into the United States who are working in this sector.
48:01
Speaker 2: This is the sector of what they call personal carriads
48:05
Speaker 2: and home health AIDS is now the largest sector in BLS.
48:09
Speaker 2: Of any sector, is the biggest job category. It's bigger
48:13
Speaker 2: than retail workers.
48:15
Speaker 1: Really, yes, wow.
48:16
Speaker 2: There are three point nine million of them, according to
48:19
Speaker 2: the BLS, and the growth rate over the next ten
48:22
Speaker 2: years is projected to be twenty one percent, which is
48:25
Speaker 2: a higher growth rate than almost as a percentage than
48:28
Speaker 2: almost anything else in BLS. Because it's and it's already
48:32
Speaker 2: the biggest and it's because it's scaling at the rate
48:35
Speaker 2: of population aging, not population overall. Right, population overall are
48:40
Speaker 2: driving that. Yes, it's demographics, because you're going to basically
48:44
Speaker 2: triple the number of people over eighty in the country
48:46
Speaker 2: over the next twenty five years. You're going to double
48:49
Speaker 2: the number of people over the age of sixty five.
48:51
Speaker 2: But population as a whole only grows it like what
48:53
Speaker 2: two three percent a year, right, So this workforce is
48:58
Speaker 2: going to grow, except only fast. And we literally simply
49:03
Speaker 2: do not have enough people in the United States of
49:05
Speaker 2: America full stop. You know, born in America, naturalized, to
49:09
Speaker 2: US citizenship immigrants. We don't have enough people. And every
49:14
Speaker 2: developed country around the world, like Japan, Northern and Europe,
49:18
Speaker 2: they have created visas very specifically for this workforce because
49:24
Speaker 2: it is such a big problem, and we need to
49:27
Speaker 2: do the same, Like we need to find a politically
49:30
Speaker 2: workable solution that will bring in more people, Like we
49:34
Speaker 2: create better jobs, right, So I'm like us as a company, Hey,
49:37
Speaker 2: we're good. We'll poach from other people, right, because we
49:40
Speaker 2: can create better jobs, we can hire them from our competitors.
49:43
Speaker 2: But that's not that's not structurally sustained exactly. It's not
49:47
Speaker 2: structurally sustainable. And we have to follow that solve that
49:50
Speaker 2: structurally sustainable issue.
49:53
Speaker 1: Interesting, and there's a lot to impact there.
49:55
Speaker 2: There's a lot come back there. Yeah.
49:57
Speaker 1: Well, we're wrapping up on the hour and I don't
49:59
Speaker 1: want to take much more of your time. But you know,
50:02
Speaker 1: when you think about where you're going to be five
50:04
Speaker 1: years from now, and I have to ask this as
50:06
Speaker 1: an analyst, but you know, is there an exit in mind?
50:08
Speaker 1: Is do you want to continue running the company? I mean,
50:10
Speaker 1: you have a fair number of investors. Everybody's looking for
50:13
Speaker 1: a return at some point.
50:14
Speaker 2: Yeah, So when we started the company. We literally had
50:17
Speaker 2: a rule it had to be a legacy business. Like
50:20
Speaker 2: the whole thing was, it's got to be solving such
50:23
Speaker 2: a big important problem that it will outlive us. It
50:26
Speaker 2: has the right to outlive us, and so honor you know,
50:30
Speaker 2: to me, it just needs to be you know, how
50:32
Speaker 2: do I find something you know, Google, ortchatch ept these days?
50:36
Speaker 2: How do I go somewhere uber? How do I help
50:38
Speaker 2: my mom? Honor? Like, it just needs to occupy this
50:41
Speaker 2: very simple place in people's minds around Hey, it's thus
50:44
Speaker 2: solution for how do I help my mom or my
50:47
Speaker 2: dad or my loved one? Is they age if we've
50:50
Speaker 2: done that or good, that's a legacy company. There'll there's
50:54
Speaker 2: liquidity along the way, and there's like lots of stuff
50:56
Speaker 2: you can do. But I think that that come has
51:00
Speaker 2: a right to outlive me.
51:02
Speaker 1: Excellent and well said. You give me a lot to
51:06
Speaker 1: think about. And it's interesting. My parents are, you know,
51:09
Speaker 1: kind of getting that age where things are becoming a
51:11
Speaker 1: little harder. My wife's parents the same thing. And I've
51:14
Speaker 1: learned so much today about about this industry and I
51:18
Speaker 1: can't wait to sign somebody.
51:19
Speaker 2: Up totally well home instead just you know, go to
51:22
Speaker 2: homesded dot com and you will find someone in your
51:25
Speaker 2: area locally. I promise we are absolutely the best, really
51:29
Speaker 2: are so yeah.
51:31
Speaker 1: So thank you so much, Seth. I appreciate all the
51:33
Speaker 1: this that you shared with us today. It was really
51:35
Speaker 1: educational on both the industry and your company. I can't
51:38
Speaker 1: wait to see what you guys do next.
51:39
Speaker 2: Awesome. Thanks for having me. It was really great to
51:41
Speaker 2: see you.
51:41
Speaker 1: That's Seth Sternberg, co founder and CEO of Honor. Thank
51:44
Speaker 1: you so much for joining us for our latest episode,
51:46
Speaker 1: and please make sure to quick the follow button on
51:48
Speaker 1: your favorite podcast app or website so you never miss
51:51
Speaker 1: a discussion with the leaders in healthcare innovation. I'm Jonathan Palmer,
51:54
Speaker 1: and you've been listening to the Vanguards of Healthcare podcast.
51:57
Speaker 1: Until next time, take.
51:58
Speaker 2: Care on.
52:26
Speaker 3: MUSICSUS ses us must chess bases.