The New Old-Age Economy
WHY YOU SHOULD CARE
Because boomers and seniors spend more than $5 trillion a year — and this is where more of their money is going.
When Kim Farlin gets home at night from her job as a maintenance supervisor, she fires up her computer and checks on her 86-year-old dad, who lives in the nearby John M. Evans senior-living community in Pekin, Illinois. There she’ll find out if her dad has gone bowling or played bingo, and maybe she’ll see a photo of him, all thanks to a software program called Caremerge that was introduced about a year ago. “It just tells me he’s staying busy,” says Farlin.
But few programs like this exist for this population, and the biggest overlooked opportunity in today’s hot new economy could just be the elderly. Boomers and seniors spend more than $5 trillion a year — more than five times that of millennials, even though 90 to 95 percent of advertising is aimed at this younger group, says Jody Holtzman, senior vice president at AARP. Yet some companies have started figuring out who’s really got the dough and are finding ways to apply the latest tech to the oldest of problems. Call it the new old-age economy.
Normally the “aging population” is talked about like a disease, and sure, future calls on Medicare and Social Security will be a challenge. But as retirees spend down their nest eggs, they’re also inspiring an enormous source of growth and innovation, including some cool tech solutions. And infrastructure to support senior-oriented investment is starting to take shape.
Look no further than AARP’s annual LivePitch conference for new venture ideas. Last year’s judges’ winner offered up a spoon with a fat handle that housed a computer, motion sensors and tiny motors capable of canceling more than 70 percent of the shaking caused by hand tremors, making it possible for many sufferers of Parkinson’s disease to eat a normal meal sitting at a table. The spoon’s maker, Lift Labs, was scooped up in September by Google X, the arm of the search engine giant that focuses on long-shot technologies like the driverless car. Meanwhile, GeriJoy puts a friendly cat or dog avatar on a tablet computer, enabling it to serve as an around-the-clock companion to a senior with declining mental abilities. Its conversation is guided by off-site staff who are always on call and linked by the Internet.
The fastest-growing market may be in seniors who choose to age in place rather than relocate to retirement communities.
Some innovations have been inspired by folks in the field who’ve taken care of their own loved ones. Asif Khan, for one, is Caremerge’s founder and CEO, and he says he got the idea for his company’s software while visiting his parents in rural Pakistan during a health crisis involving his mother. There his father had no access to real-time medical information, though Kahn soon realized the situation wasn’t much better in the U.S. either. “We are as tech-backward as my parents in the middle of nowhere,” he says.
With $6.5 million in investment capital, Caremerge, now 3 years old, is serving 125 senior communities with its software. One of those includes the John M. Evans facility, where the computer program provides prompts so caregivers know when to administer, say, blood tests or medicine. Meanwhile, family members like Farlin can get access to a cellphone app and the possibility of sharing data with medical providers and insurance companies.
Of course, sharing health-related information or details about everyday living is a great idea in principle, especially for worried adult children. But ensuring privacy for seniors remains a challenge at some companies with technology like this. And, as in any industry, failures in this sector will likely outnumber successes — by a wide margin.
Even so, behind Khan is an emerging network of venture capital companies that’s just starting to focus on the sector, and it includes interesting alliances. One of Caremerge’s investors is a $26.6 million joint venture established last year by the Chicago investment bank Ziegler and Cincinnati-based Link-age Ventures — and Link-age is a for-profit company owned by a network of nonprofit senior communities. Its bread-and-butter business is saving money on purchases of goods and services for its members. But Link-age’s CEO, Scott Collins, figured the company could use its understanding of the market to find promising new businesses. “What we’ve done is uncover a largely ignored segment of the consumer space,” he tells OZY.
Indeed, the fastest-growing market may be in seniors who choose to age in place rather than relocate to retirement communities, and execs like Collins see a bigger prize ahead as seniors live longer and healthier in retirement. Between 1990 and 2012, health care spending by seniors between 65 and 74 expanded ever so slightly, according to the National Center for Policy Analysis, while the fastest areas for growth included education, entertainment, vehicles and hobbies. At the same time, a global online survey by Nielsen, the consumer-research company, found strong dissatisfaction among the elderly when it came to how many businesses targeted them with ads, labels, packages and the delivery of a host of services. That, experts say, suggests a big opportunity. AARP’s Holtzman cites the famous “follow the money” line from All the President’s Men: “Why aren’t they doing that?” he asks.