Read Time: 15 minutes
Welcome to Episode 36 of Students vs. Startups. This week, moderator John Gilroy talks with the CEO and Founder of Homecare.com, Todd Walrath. After working in the homecare industry for the past ten years, Todd realized that the industry was quite dated in its online presence. With an extensive background in digital marketing, Todd blended his two worlds and created Homecare.com. Listen below to hear his story.
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John Gilroy: Welcome to Students vs. Startups showdown on the Potomac. My name is John Gilroy. I'll be your moderator today. Let's have a big round of applause for show No. 39. Yeah, 39. Wow. Same as my age, Maura, isn't that something?
Maura Imparato: Me too.
John Gilroy: It's the same as my age, it's incredible. We are sitting at the offices of Eastern Foundry, and we just took over a conference room here. As you've heard this before you know we have a conference room, a table. On one side of the table we have three students. The other side of the table we have a startup. A little 26-minute conversation and we walk out of here as friends. Sound kind of fun Peter? Yeah, really, really good.
What I'm going to do is introduce my students, then introduce the startup. Our first student has a little bit of an accent, and I'll tell you why, his name is Peter Pilawa. Tell us about your background Peter.
Peter Pilawa: Yeah, so I'm German so there's my accent from. I'm in the Technology Management Program at Georgetown. I love the program, can highly recommend this. I collected a couple of degrees so I have that as a hobby and I currently work for Audi, a car company, in the strategic planning and analytics department.
John Gilroy: BA, MBA, all kinds of degrees, huh? My, my, my.
Peter Pilawa: A couple of titles behind that.
John Gilroy: Yeah, we know that too. Good. Our second student is Rahul Bhardwaj, and Rahul tell us about your background. You got a little education background too, don't you?
Rahul Bhardwaj: Sure, sure. Rahul Bhardwaj, also in the Tech Management Program. Really enjoying the program. Exposure to a lot of things within the Georgetown Community. Previously I've done some degrees in finance, and in management as well.
John Gilroy: In the classroom, I gave Rahul a special project and he worked with a local non-profit and they implemented his decisions in London and big changes in the small non-profit because of some insights that Raoul brought. Speaking of insults, insights? Speaking of insights, Maura Imparato. No insults for you Maura. Tell us about your background please.
Maura Imparato: Thank you John. I finished the Masters in Technology Program a little while ago and I became faculty for them. I'm halfway toward my doctorate in neuroscience. I'm very interested in health sciences so I'm happy to see you today.
John Gilroy: In your spare time.
Maura Imparato: Right.
John Gilroy: No spare time.
Maura Imparato: Right there's plenty of it. With the website consulting, yeah sometimes it's slow but not this month.
John Gilroy: No, not this month at all. Well great, these are our students. On the other side of the table we have a startup and we have Todd Walrath here and his company is Homecare. He's the CEO and founder so tell a little bit about your background before we start please?
Todd Walrath: Sure. I've been in the senior care space for about ten years now. I like to think I'm an unlikely person to be working in senior care at my middle age here. But prior to that I've been in digital for a while. I was one of the first employees at weather.com back in the beginning of the Internet. And then I worked at AOL a little bit in this area and then have been doing startups since about 2003. So for about 15 years now.
John Gilroy: Oh all kinds of startups floating around the table here. And so if you're sitting next to me in the metro, and I turn to you and say well tell me what business problem does your company solve, what business problem do you solve Todd?
Todd Walrath: Well I've been working with families trying to get senior care for their loved ones now for about ten years and came to the conclusion that the home care industry is a little bit dated in its business model and its use of technology. Also in its ability to pay its workers. So we set out about three years ago to try to create a different work environment for the typical caregiver and have used a lot of technology to try to help change that.
John Gilroy: Yeah. I'll make a sexist statement and look right at Maura. A lot of times the responsibilities of the oldest daughter or the female in the family isn't it I mean and they're going to look over. Forget about Peter. Forget about Rahul, look at you. So this is what happens isn't it?
Maura Imparato: I've been looked at for that.
John Gilroy: The burden's on the woman, yeah.
Maura Imparato: Well I have parents like many of the people in this room and I'd like to know what got you started?
Todd Walrath: In health care everybody has a story about how they get into health care. In my own case in 2007 I was looking for care for a family member. My parents live down in North Carolina. My family member lived in Philly so I kind of inherited being the closest living relative to my family member and what I thought was going to take me three days over a long weekend like we just had, ended up taking me about two months. I had stack of brochures sent to me in the mail. Some of those brochures had been printed ten years ago and it was the least digital, least transactional experience that I've had. I just thought boy there has to be a better way to use technology and the internet to kind of inform people. Everybody's out kind of inventing the wheel every day in senior care so we were trying to develop some of the brands that might help people with that in the future.
John Gilroy: So Rahul, classic problem/solution here huh? What do you think?
Rahul Bhardwaj: Absolutely very interesting and my hats off to you. Congratulations for your success. The first quick question is obviously baby boomers are going to exit the workforce and they're going to be looking for health care solutions. Is that an addressable market for you or are you just primarily focused on geriatric care from what it seems like?
Todd Walrath: Well it's a pretty big spectrum. You're going to have the people actually getting the care but typically the people who would use our solution are actually the adult children. And in Maura's defense typically the adult daughter is our customer so our average customer is probably a 55 to 65-year-old woman who's looking for care for either her own family or the in-laws. That's basically the addressable audience. From what I read and what the statisticians will tell you that is about 40 million people today going to 80 million people by the early 2030s. So over the next 10 to 12 years you'll see a doubling of our addressable market to 80 million people. There's only about 300 million or so people in the U.S. That's a pretty big chunk of people that move into this market segment over the next ten years.
John Gilroy: So Peter being raised in Europe you probably have a good perspective on all this. Why don't you ...
Peter Pilawa: Yeah so in Europe obviously home care is a little bit more socially organized, it's not as privatized but that brings me to the question. The care providers that you have in your network, are they somewhat pre-screened for quality? How do you secure that when I sign up to your website and whoever I go with at the end of the day, somebody that you can put your name behind?
Todd Walrath: Sure. Well there's a couple dynamics. The first is that there are about 20,000 home care agencies who are training the caregivers that are in the marketplace now. There's about two million plus caregivers that do this as their chosen field. So they're very well trained. The problem is that the average caregiver in the U.S. last year only made about $10.25 an hour so it's a very high turnover market. 65% of the caregivers turned over last year in fact.
So what we're ... An app that we've developed actually attracts the most experienced caregivers because they don't want to work for $10.00 an hour after you have five, seven, ten years' experience. You're not going to go back and work for the agency for $10.00. So those are the most likely people so we're kind of self-selecting into a segment who are actually the most professional of the caregivers so that helps us from a quality perspective. And then we put the belt and suspenders on it where we're background checking, license checking, reference checking. We keep ratings and reviews on the caregiver so that we're able to really track who provides the best services. Who shows up for work every day like they're supposed to. Who doesn't call out sick?
So the cross between those two factors starting with a really good group and then being able to put credentialing and technology on top of that is giving us a high quality product to the ultimate families who are using it.
John Gilroy: You know Maura big trend in software development is DevOps is transparency, transparency. It says on his website exactly what it describes isn't it?
Maura Imparato: Transparency is very important especially with such a delicate subject as taking care of your own family when you're not there to help. I'm very supportive of the digitizing and I'm sure that 55-year-old average woman is probably working and on her lunch hour is trying to get care for her parents or family members. So I'm very impressed with this business model. Have you seen the trends? I've heard that for instance aging in place is very popular. So it seems like more and more people would be using your service. Are you finding that, more customers?
Todd Walrath: Yeah well they call it the sandwich generation for a reason. You have this typically 55 to 60-year-old woman who's actually providing care for her parents but also taking care of her own family member right? She's kind stuck in the middle of the sandwich as they say. Yeah we've been ... You know there's nobody who's bragging about their home care agency. You don't go on the ... You know the best service providers in the market and find that people are saying, "Oh my gosh I would swear by this home care agency," or that home care agency. Most as we got into this, a lot of families said, "Hey they're kind of all the same. They don't treat the caregiver very well. There probably has to be something that we can do to change this over time."
So we're trying to be that disruptive force in the market that gives a family yet another option that they don't currently have today. You know like I said we track and measure our customer satisfaction on an ongoing basis month over month. And when you have 50,000 caregivers that you can set up a family with on any given moment, if they're unsatisfied let's get somebody in there that can do a better job. The average home care agency only has one or two people on the bench so if someone calls them today and says, "I might not be happy with my caregiver," they don't have that many options. They're going to have to go out and start the whole hiring process again.
Whereas through mobile technology we're able to kind of send that job out to a specific group of local caregivers. We can already see who the four and five star ones are. If they raise their hand we can actually go back to that family and say here's another option for you. And people like that optionality. They feel empowered by having choice. They get to interview all their caregivers before they start. They're already more experienced than your typical ones. They average about ten years of experience. So in the stew you mix all that together and you get something that's powerful in terms of choice for consumers.
John Gilroy: Rahul.
Rahul Bhardwaj: I mean this is interesting. So it sounds like you have an a la carte service for home health care run by a digital platform. Is there some kind of ... You referenced a little bit of metrics in all that. So from a data perspective, data collection, data analytics perspective, do you have that type of process embedded in your platform and if so what kind of data are we looking at?
Todd Walrath: Well it's full of data so we can now see how many hours each caregiver is working each week. We can see how many different clients they work for. We can see the ... they actually track what they do in the home which has kind of been obscured from view. How many beds are being changed? How much laundry is being done? How many meals are being prepared? What medications are being taken? What is the compliance?
When you look at hospital readmission rates, the top three reasons people get readmitted back to the hospital, they don't go to their doctor's appointment. They don't take their meds. They have a fall in the home. And we like to think that a caregiver can kind of mitigate all three of those so maybe we're actually contributing to the overall quality and outcome of the health care system because fewer people get readmitted back to hospitals if they stay on their program. Caregivers can help with that.
So those are some of the things that we measure. We measure if our patient gets readmitted back to a hospital. We're not part of the Medicare or Medicaid payer system. We are a private pay so we don't necessarily get penalized or have a dog in that particular fight but we are interested in having great outcomes for the families that we work with. So those are some of the things that we measure but we also get all the analytics of how long caregivers spend on our app. How many sign up each day? What locations are more interested in having services like this than others? All those kind of fun things that are just because it's digital give you that.
Rahul Bhardwaj: Primarily your business operations.
Todd Walrath: That's correct.
Rahul Bhardwaj: Is there an incremental growth potential by positioning this data to let's say a private care like a health insurance company or to create incentives to pay for or even generate a new business line for you?
Todd Walrath: Yeah I think when you start an operational application like we have, you think in the out years well where could this evolve to and really probably for around ten years from now our most valuable asset will actually be the data that we're creating for insurance companies, health care providers, managed care organizations. All the different participants kind of in the spectrum of care. That's what we're ... we're just trying to create those capture points now so that later on we can help tell the whole story of what's going on in the home.
Rahul Bhardwaj: And last question. In terms of growing your business here in Virginia and Maryland, are you planning on going beyond the DC metro or are you ...
Todd Walrath: Sure. Well one of the beautiful things about operating in a mobile environment is that we don't .. You know the home care industry has been built ZIP code by ZIP Code, brick and mortar storefront by brick and mortar storefront and we're able to move into geographies essentially without even being in that geography. We operate in North Carolina and Texas. We're moving into Florida. We operate throughout the mid-Atlantic. Our costs are lower because we can just do that with cloud-based technology instead of having staffers and customer service people in every single ZIP Code. That's one of the reason the cost of home care has a higher cost basis and we're able to compete on price because we don't have to replicate those costs in the 3000 ZIP Codes that we current serve.
John Gilroy: So Todd your LinkedIn profile says one of your skills is strategic partnering. So do you have any strategic partners in order to be successful in your business?
Todd Walrath: We do and the traditional health care system is where most of the families who need care are already, right? They're in hospitals. They're in doctor's office, subacute, rehabs, SNIFs, all the different places that you're going to find people who need the care that we provide. So most of our families contact us through the internet but now we're finding that the biggest opportunity is really just to form relationships with traditional providers. In this area it's the Inova's and the MedStar's, the Sunrise's, the HealthSouth's who have all the relationships with the current families and let them introduce us to their clients. It's a great way to grow our business as well as service the need and we don't have to buy Super Bowl ads to let people know who we are. We can just go to where the need already is.
John Gilroy: Peter.
Peter Pilawa: So tell me a little bit about what talents do you look for your company? What is your current staffing model? Obviously it's lean hence you can pay premium salaries but what are you currently looking for? How does the staffing look and how will that evolve over the next say five years?
Todd Walrath: In terms of our own in-office employees?
Peter Pilawa: Yes.
Todd Walrath: Well we're a sales and market company. We have about half of our employees are either on feet on the street sales calling on the health care providers or inside sales which actually works with ... You know we get contacted by 3-4,000 families per month right now and we have to field all those calls. Follow up with those families, make sure that we understand what they need and try to set them up with an interview with a local caregiver. So a lot of sales and marketing people.
We also have the back end of the process which is really the staffing and customer service functions. So making sure that we're getting our mobile blasts out to the caregivers that are on our app. Then setting up interviews with the families and then once they become a client we want to stay close to them because it's an ever changing ... You know the caregivers even though they make $15-16.00 an hour on our platform, they're still barely making it, you know making $30-32,000 a year if they're working a full schedule.
So based on that, they're still going to have challenges with their care or paying rent with their own daycare. So getting to work on time, doing their job on a daily business is still a challenge for them. We have a lot of customer service after the initial caregiver shows up to make sure. And if you're in need, if you're a complex case, you can't go without care. If you don't have a family member close by, a neighbor you can count on, you have to have backup care in place so we're spending a lot of time on that.
John Gilroy: So Maura he's getting 3,000 leads a month. I mean they're doing something right huh?
Maura Imparato: Yes I'm very curious how you got started if someone were to copy your business model? It sounds like you don't have a lot of staff and-
John Gilroy: It can't be copied Maura. It's so much technology in here it cannot be copied.
Maura Imparato: I'm so interested. It sounds like it must have taken you awhile to get off the ground but that it's kind of a lean operation now.
Todd Walrath: My background is in lead generation so I always felt that I would be able to find the families looking for care. I had done this assisted living in some other adjacent categories over the last ten years. But what I didn't know was could I recruit caregivers. I've never done that before. I've never built a mobile app for caregivers. I didn't know what they were looking for. And truth be told the first three employees we hired were recruiters and they were going to recruit these caregivers and in the first month the recruiters signed up about 500 caregivers which I thought was pretty good. And we also got 500 that just signed up on our website just by putting up the site so we thought well okay. So this is a pent-up demand-
John Gilroy: Wow.
Maura Imparato: First month.
Todd Walrath: ... Yeah so there's really a pent-up demand for the caregivers. They want to work. They know what kind of work they want to do but they just don't get presented the opportunities to earn a living wage. So now we're really just presenting them that option and the pent-up demand is sort of finding us at this point. All the caregivers it's like a mafia. They all know each other. Whether you're dealing with-
John Gilroy: We'll explain Mafia to you later.
Todd Walrath: ... especially in this area you have ... I mean Washington D.C. a very diverse ethnic area but you have in Long Island you have Russian caregivers and in Miami you have Russian caregivers. You have Caribbean caregivers. You have West African caregivers really from all different parts of the globe and they go to where they have family and friends. So once you make inroads with a particular group of caregivers, it's going to spread pretty quickly into their communities so that they're going to tell their friends this is an opportunity. And we have ... you know the best marketing we get is probably from the caregivers that already work on our platform.
John Gilroy: Peter, I got a hundred questions. I'll let you ask.
Peter Pilawa: So my question for you is if I were to be in your shoes and look five years out, what would you define success?
Todd Walrath: That's a good question. I don't tend to get the luxury of looking that far out. I'm usually looking about five days or five weeks out at each time. But I want to be able to have a utility that people know about. Today people only know one way to buy home care and it's go in the Yellow Pages or online and type in home care agency. And I want them to be able to know that they can hire privately a caregiver that's just as good, hopefully better and at a cost-effective price that works for both the buyer and the seller and to really create the largest marketplace that people can access.
And just like we access marketplaces for vacation travel and for buying cars and all the other things that we need to make our life better and simpler, I want a caregiver marketplace to exist so that people have the same ability to join in if you want to work in that marketplace and participate as a buyer as well. I think that would be ... If that was sort of if they used Uber for taxi travel and Homecare for caregivers interchangeably, that would certainly be a success.
John Gilroy: Rahul, this business model would work in Kentucky or Austin or Washington D.C. I just have all kinds of questions. Why don't you go after him?
Rahul Bhardwaj: Just a couple of quick question. When you say caregiver what kind of certifications are you typically onboarding into your network?
Todd Walrath: Well we started with the most basic group that nobody had paid attention to for 30 years which is the private duty caregiver that is not a nurse and is not someone who is in the traditional health care system. These are called certified nurse's assistants. They're called home health aides.
John Gilroy: ACHC is that the accreditation body?
Rahul Bhardwaj: CCMA?
Todd Walrath: Well they're usually credentialed by each state credential them. So in Maryland in our area here the nursing certification board also certifies certified nurse's assistants. In New Jersey they have something called a home health aide designation so each state is a little bit different. But they basically do the same thing. You can get this accreditation in six to eight weeks at a community college, allied health program, Red Cross. Those are kind of where these people typically get trained. They typically are not college graduates but they're hard working. They're sort of ... They have skills that innately make them interested in taking care of people. That's one thing I have noticed about them. It isn't about the money and it isn't sort of their ... It's more of a heart than a brain or an economic decision that they're making when they join this kind of-
John Gilroy: Maura, final question real quick.
Maura Imparato: Well I'm really happy to hear about this service because I've been through something similar with looking for nannies and people would poach each other's nannies and talk about if you know one nanny they all live together and like you were talking about all the neighborhoods are all clustered together. So it sounds like your marketing scheme has completely worked and if I ever need this service I'll call you up.
Todd Walrath: Well I appreciate that.
John Gilroy: That's good. We're running out of time here. Now Todd if someone wants to find out about your company, what website should they visit?
Todd Walrath: Sure they can just to on homecare.com and there's phone numbers there and we're there all the time. We're a seven day a week business so when people need us-
John Gilroy: I looked at the website I thought you were huge. I mean it's a very well done website. It's all kind of information there isn't there? Homecare.com, easy to remember too.
Todd Walrath: Yes thank you John. Appreciate that.
John Gilroy: Good, good, good. Now if you'd like show notes for the show you get links and transcript at theoakmontgroupllc.com.
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We are hosted by the Eastern Foundry. It's a community of government contractors who are bringing innovative solutions to the government marketplace. For more information go to eastern-foundry.com.
If you would like to participate as a student or startup, email me email@example.com and thanks for listening to Students vs. Startups, Showdown on the Potomac