Tech Tales of Tenacity

Features of Independa’s television-based interface include medication reminders and video chatting with family members. Electronics giant LG, an Independa investor, supplies the HDTVs deployed by the company. Features of Independa’s television-based interface include medication reminders and video chatting with family members. Electronics giant LG, an Independa investor, supplies the HDTVs deployed by the company.

Successful entrepreneurs seeking to change seniors’ lives learn success comes slowly and often at great sacrifice

By Eric Taub

When you think of “venture capitalist” or “tech startup,” the last thing that probably comes to mind is a senior living community. 

With the relatively minor size of the market, investors have little interest in considering small-bore deals for the elderly when multimillion-dollar Silicon Valley returns from the Millennial generation look to be just within their grasp.

It’s a lesson that Allen and Diana Arseneau, a married couple in their 30s, quickly learned when they set out to raise money for their startup, Jamber. 

The Arseneaus figured they had some strong credentials going in: Diana was the first person in her Milford, Conn., high school to attend Harvard. Allen and his brother were the first in his working-class family of any generation to graduate college and the first to attend graduate school. In Allen’s case, that meant Stanford University.

They believed they had a potential winner on their hands: a revolutionary design for a coffee mug that seniors with physical disabilities could easily hold and manipulate without pain. It seemed like a natural win.

“The venture capitalists said ‘we don’t invest in non-tech companies,’” Allen recalls, despite the fact that the company had spent months accumulating biological and ergonomic data on how people hold cups. Looking to raise $100,000, “we were told we were looking for too little money. Many investors were looking for a tech start-up that would turn into the next Facebook.” 

While entrepreneurs in the high-tech consumer space may dream of cashing in and driving Lamborghinis, those working to succeed in new businesses that will serve the assisted living industry and its residents appear to be motivated by loftier goals. Financial riches are an afterthought, or not a thought at all. 

 

Sources of inspiration

Many became attracted to the seniors housing industry after experiencing the physical challenges that a close, elderly family member faced. For Allen, that moment came while watching his then-84-year-old grandfather, a Korean War veteran and his “hero,” struggle to hold a coffee mug without shaking. 

“He said to me, ‘my wrist hurts, my elbow, everything hurts,’” says Allen. 

Jake Reisch, a 26-year old graduate of Cornell University and entrepreneur, saw his elderly aunt struggle to hear what was happening and stay engaged whenever she got together with her friends at her assisted living home.

And Jack York, the co-founder of It’s Never 2 Late, saw that he was able to change the lives of the elderly by donating computers to a nursing home. But he also saw how difficult those computers were to master.

In all cases, the companies’ founders thought that they could improve lives. But that often unintentionally resulted in their own lives becoming considerably worse. 

To get Jamber up and running, the Arseneaus maxed out their credit cards, borrowed money from their family and ate rice and beans — often. For the first several years, they took no salary.

“It was very challenging,” says Allen. “We’re a consumer products company, and a lot of venture capitalists don’t understand the senior living market.”

Eventually, the Arseneaus were able to raise angel investor funds thanks to their connections made through the Stanford University and Harvard University alumni networks, the two colleges they had attended. 

Thanks to their naiveté, Allen cold-called the former head of the American Occupational Therapy Association, not realizing that her workload was so heavy that she scheduled discussions in 15-minute increments and was always booked. 

Almost by accident, the executive answered the phone, heard the pitch and advised the couple to start collecting data to prove their assumptions. “We spent months getting the ergonomic data we needed.”

Because his grandfather lived in the Evans Park Benchmark Senior Living property in Newton, Mass., Allen approached Benchmark with his idea. Arseneau was introduced to Guy Hemond, vice president of culinary & dining services at Benchmark headquarters, and the company subsequently agreed to try out an early prototype.

“We spent months adapting our data to the mug’s design to figure out how humans interact with a cup; we even bought a 3D printer to make models,” explains Allen.

The mug is now in production. In July, Benchmark decided to replace all of its more than 15,000 cups and mugs across its communities with Jamber cups.

While Jamber looks to be on the road to success, the Arseneaus found the process very isolating and exhausting. 

“There were definite highs and lows, and there are always naysayers,” says Allen. “And you have to be okay with taking $50,000 and throwing it to the wind.”

 

Private equity to the rescue

Beginning in 1999, York, the former head of a large Silicon Valley sales organization, and two other partners saw that introducing computers to the elderly could be “life changing.” But he wanted to figure out how to make them easier for assisted living residents to use.

Sourcing content, creating original content and redesigning the computer’s standard interface, York created It’s Never 2 Late to package his reimagined PC. But success was slow in coming.

“I was in the right space, but at the wrong time,” says York, who was forced to self-fund the company for the first 10 years, investing close to $900,000 of his own money. 

“We were ahead of ourselves in technology, consumer acceptance and price point. It was so slow going that if I were an employee, I would have been fired in year three.”

By 2006, all the cash was gone. Fortunately he interested a private equity firm in making an undisclosed investment that kept the company afloat. 

Today, the company has 34 employees, 30 percent year-over-year growth and an expected $10 million in revenue for 2016. The service has become so popular that customer retention is 97.8 percent.

Assisted living communities pay an upfront cost for the hardware — whether that’s a computer tablet, a desktop machine or TV — an additional optional fee for training, and then a monthly subscription fee for continually updated content and 24/7 maintenance.

It’s Never 2 Late’s computer terminals are in more than 700 Brookdale Senior Living communities, and 2,500 communities total. The terminals are mostly located in memory care units. “If I were choosing a community for my parents I’d be much more interested in one that kept them engaged,” says York.

While York entered the market before it was receptive, he believes that his continual presence has helped would-be customers trust him.

To make the business work, “we simply listened to our customers. We listened to what was appropriate content, what was appropriate equipment and what was appropriate functionality. The senior living industry has technology skeptics, and vendors that come and go. We’ve done right by our customers.”

 

‘Seven-year overnight success’

Even when an assisted living community finds a product attractive, that doesn’t mean that it will become a customer. 

“You can confuse excitement with opportunity,” notes Kian Saneii, founder of Independa, a company that provides a health and social engagement platform to the elderly using a compatible television as the resident’s interface.

Users of the Independa platform are able to receive reminders to take their medicines and vitals, share photos and video chat with others all via their TV screens. 

“Excitement happens right away. But opportunity happens over time,” says Saneii. “There needs to be a ‘must have’ business decision.”

Saneii defines Independa as a “seven-year overnight success.” Founded in 2009, Saneii self-funded the company for the first year and then demonstrated its product at the Consumer Electronics Show in 2012. The product did not ship until the end of the following year.

“We had multiple patents, but we were running out of money,” recalls Saneii. A venture capitalist introduced Saneii to Korean electronics giant LG, which then invested in Independa in 2013 and supplied its HDTVs to be used by the Independa platform.

“That was a huge validation for us,” says Saneii. “They took their TV appliance and turned it into an engagement window.”

Independa’s solution is now engaging residents and increasing their interest in the communities in which they live, while also attracting new residents. 

“We need to respect the industry where it is,” explains Saneii. “A better gadget with no business benefit and no return on investment is not good.”

 

Embedded entrepreneur

One way to improve a return on investment is by creating a happy atmosphere within the community, one where residents feel engaged and stimulated.

Reisch noticed that that was not always the case for his elderly aunt, who would often go to group gatherings in her assisted living community and leave disappointed, feeling isolated because she was unable to hear what was being said.

Reisch, 26 years old and a recent Cornell University graduate, co-founded Party Headphones in 2012, a company that offers party attendees wireless headphones to create “silent discos,” events where attendees listen to music over headphones rather than through speakers.

Using a similar model, Reisch started Eversound, a venture that gives senior living residents the ability to hear better in social events by wearing headphones specially tuned to increase those treble-range frequencies typically lost by the elderly. To increase the ability to hear, every user can also adjust the headphones’ volume to his or her preference. 

For funding, Reisch turned to Red Bear Angels, an angel investment group that looks for startups created by Cornell graduates.

To understand what seniors needed in the way of headphones, Reisch spent several months living in senior living communities, asking questions and observing resident behavior “until they kicked me out.” 

 

Operator encourages innovation

Through its Entrepreneur in Residence program, Brookdale Senior Living offers the heads of startups the opportunity to stay in a Brookdale community for five days. “This gives them a structured experience to interact with family members and residents,” says Andrew Smith, head of the program. “They can do focus groups and product demos while there.”

Brookdale takes no ownership position in the chosen startups, nor does it commit to purchase any product. The only advantage to Brookdale is an early look at new technology.

While not part of the Brookdale program, Reisch’s stay at various communities “gave us a lot of credibility with investors,” he says. 

Eversound has raised $1.5 million and employs seven people. He’s placed 1,000 headphone units in over 90 locations owned by 20 assisted living companies.

As an entrepreneur, Reisch likes to move quickly, but he found that that doesn’t always work. “The hardware has to be built right,” he says. “If not, you’re going to get stuck with inventory, or have to pay for expensive retooling. Do we have setbacks? Always. Every week.”

For these startup entrepreneurs, the rewards have been worth the headaches.

 

Heartwarming stories

“We had one family member tell us that ‘if my mother had had your cup, she’d be alive today,’” says Jamber’s Allen Arseneau. “He said that because his mother’s mug was so difficult for her to hold, she stopped drinking, became chronically dehydrated, and then died because of a urinary tract infection.”

Reisch has found that once people try his headphones, they understand the benefit. “One user said to me that ‘this time, I can actually hear.’ Another said that before using our headphones, they never thought they’d be able to get through to their loved one.”

If there’s one trait that’s common to entrepreneurs, it’s perseverance. And that’s especially true when working in assisted living, a market that receives little attention from the financial community and one beset with constant financial constraints.

“I met a guy once at a urinal,” recalls Allen Arseneau. “We started talking while we were both using them. It turned out he was with a Boston bank, and was a potential investor. You have to network like crazy.”