November 8, 2022
Welcome to Perspectives, Leerink Partners’ signature podcast, where we share our insights and interview leaders across the industry to get their perspective on how they’re driving innovation. We’ll also be digging into the backstory to learn more about what has most influenced their success. Be sure to check out all episodes by Leerink Partners.
Thad Davis: Hi, my name’s Thad Davis. I’m a senior managing director at Leerink Partners, and I’m joined today by my friend and client, Seth Sternberg, co-founder and CEO of Honor technologies. It’s good to see you again. It’s been a few months, Seth, so thanks for taking the time to, I think this is actually our second podcast, actually, that you’re going to be the guest of, so.
Seth Sternberg: No kidding. Wow. Well, thanks for having me.
Thad Davis: Yeah, pleasure. So, Seth and I have done a little bit of business together and I’ve been involved in some of the work that Seth’s been doing, but it’s been exciting to reach out, to bring Seth on to the podcast here. And, and frankly, what we’re trying to do on the podcast, Seth, here, is to bring your perspective. There’s a large body of information about what Honor’s doing, and we will hit on that a little bit, but it has a focus on founders and innovation, what drives the leaders behind who is shaping the innovation economy today? So, we’re gonna start out a little bit about your background. Maybe some topics that haven’t been hit on by others over time, you’ve taken quite the road, an entrepreneur’s road, no question. But the first thing I wanted to kind of figure out, like you’ve been through you, you had a, a great resume that goes from Yale, IBM, a stint at Stanford, shall we say? And then Meebo, Google and then onto where you’re at now with the co-founders and, and Honor, but going into a deep dive, I’m gonna take it all the way back. Tell me about your childhood, Seth, where did you grow up? What is going on? What were you into as a kid? Were you a technologist by heart? An inquisitive person by heart? And your parents, your upbringing. Tell us about the background here.
Seth Sternberg: Yeah, I guess the first time I remember trying to start a business is when I used to jump off ramps with my bike at my, where I lived initially, which was near New Haven, Connecticut. I lived there until I was eight. So, this must have been when I was six or seven, and I wanted to charge my neighbors to come watch me do a bike show.
Thad Davis: Did you offer a subscription?
Seth Sternberg: No, I was not aware of the subscription model. Yeah, subscription concept was not yet there. Then I remember my father somehow had us do this business. He was a professor where we would make these like art trinkets for, I think his grad students, because I remember delivering them to his, to their mailboxes and I’m pretty sure we sold them for like a quarter a piece or something like that.
Thad Davis: Wow.
Seth Sternberg: Yeah. And that must have been when I was sub 10 years old. And then I think
Thad Davis: You said your father was a professor actually. A professor of what?
Seth Sternberg: Psychology.
Thad Davis: Psychology. Okay. That’s quite interesting, actually.
Seth Sternberg: Yeah. Well, and there’s this, so my father definitely, one of the reasons that he likes being a professor is he runs his own show. He doesn’t really have a boss and he’s extremely driven, but he, you know, kind of controls how he channels that energy. And I think that that probably passed on to me because from a, yeah, it was like,
Thad Davis: Sounds like an entrepreneur.
Seth Sternberg: Yeah. I mean, I actually realized I went on a program very early in my Meebo days in Washington, DC, that was just a very few entrepreneurs, mostly PhD candidates. And I remember thinking, wow, these PhD candidates, they actually take a lot of risk because most of them will never kind of break through, right? Their theories will never break through. And a very few of them will. And that was kind of the moment when I realized, oh, my father, the professor who I always used to think of as very risk averse is actually a lot more like me, or I’m a lot more like him than I realized. So I think it’s this mix of you have a lot of energy, you have a lot of passion, but you really wanna channel it your way. And that might be how I formed as a child.
Thad Davis: No, it makes sense. You never thought about like actually going down the PhD route or anything as came up? You’re like, I picked it up from my father but I’m not going to be my father.
Seth Sternberg: Yeah. I actually didn’t really like school. In the middle of Yale, Uh, I found lots of ways to get off campus, get to New York City and I was running a business for like half my time at Yale that was out of New York city.
Thad Davis: Where were you doing at Yale on a business?
Seth Sternberg: I was running a college consulting company where I was helping high school kids get into good colleges. And it was mostly based in Queens, New York. I was not interested in stuff that seemed impractical. I wanted like a, this is the way the world actually functions kind of major. And probably the other one that I could have done was economics, but that’s pretty much where that formative thing came from.
Thad Davis: You’ve done a lot of very practical things. The degree pursuit, practical more real world versus, you know, ideology focused or pie in the sky.
Seth Sternberg: Yeah. I think that just comes from spending my time on things that I think will affect other people. If you wanna talk about childhood, I don’t remember exactly how young I was when I went through the existential crisis of why do I exist and what’s the point of life? it was like high school or college. And I decided for me it was improve other people’s lives. Because I’ve, I was kind of born reasonably lucky, like to, you know, kind of a middle class, upper middle-class family. And I had a really great education, which my parents helped me get. And so, I remember really disliking what I perceived to be injustice. And that injustice was different people of different backgrounds, basically by virtue of who their parents were, like, where they were born, getting access to completely different opportunities. Like somehow from a very young age that rubbed me really the wrong way.
Thad Davis: Politics never latched onto you to go pursue like a policy direction previously?
Seth Sternberg: I thought about it. And the problem that I perceived in that is I wouldn’t be able to have enough change. So, if you think about what Honor does, Honor helps older adults, you know, age, the way they want to age in their homes, but it has this side effect of creating truly, I believe the best job for home care aids, which we call care professionals. Like in the country.
Thad Davis: I think it’s a direct it’s control of direct impact.
Seth Sternberg: I prefer fast and direct. So, go start a company that has a good side effect.
Thad Davis: And then, and then IBM, you came out, like I gotta get a job IBM’s, you know, right around kind of down the road, so to speak and then Corp dev. there for a period of time.
Seth Sternberg: That was actually pretty interesting. I literally got rejected by like every single company I applied to. Like I did the classic apply to all the consulting firms and iBanks, um, and they’d passed me through their first interview. Like the, you know, the quick skills-based interview pass through those. And then the second interview that, which was more the personality one they’d come back and they’d be like, you will be miserable like you wanna go start a company. You do not wanna be like running spreadsheets all day.
Thad Davis: There’s a joke about big blue in here, somewhere about like, so you went to IBM, the most flexible
Seth Sternberg: I got so unbelievably lucky. I was supposed to run spreadsheets there and I had basically the two best bosses that a kid like me could have possibly had. Like unbelievably lucky. And they realized that the wrong way to utilize me was to have me do spreadsheets. And the right way was to let me do things I wasn’t supposed to do at my age. And so I think eight months in, I was running my first M&A deal like end to end. Yeah, they gave me a total turd and it turned to a $30 million, um, help us make the quarter deal. So, I got very, very lucky when I went to IBM.
Thad Davis: That, that’s good. This is the transition to the valley at this point. So, Stanford, which is just, I mean, like the timing of you being at Stanford is like a very unique version of Stanford, what that had been historically.
Seth Sternberg: Yeah it was. The world had just fallen apart. Right. Um, and it was still in a little bit of recovery mode cuz I got there in 2004 and the valley was very dead. But for me, going to Stanford was you have two years to start a company, or you failed. So that, that was like literally my inbound thing I was saying to myself like that your failure is to not start a company before you lose Stanford. And so, I ended up starting one in between first and second year. That was Meebo. Uh, we launched it, and it just got a lot of traction very quickly.
Thad Davis: That had like a great trajectory at the time. And then it went through, I mean, more importantly, it had trajectory through the Great Financial Crisis as well. I mean, you pile it all the way you left. Pile that all the way up until 2012.
Seth Sternberg: Yeah, 2012. And then Google bought it. Yep. That’s right.
Thad Davis: Yeah. I mean having a company actually go through the Great Financial Crisis and come out the other side, that, that itself is a victory.
Seth Sternberg: Yeah, that was tough. I remember we, I actually had to raise around in 2008 and, um, I still remember Matt Marshall on Venture Beat. He wrote a blog post that was kind of like about a rumor that we were raising money and he said, in a post, he said, I will eat my hat if they raise, you know, money at this valuation.
Thad Davis: Did you send him a hat?
Seth Sternberg: And no. And then like, literally a month later, when the news came out that we raised that round, he put a picture up of the hat. I mean, he is like, I have to eat my hat. Yeah.
Thad Davis: So that’s good. That’s good. He at least stood by as is what he said. He’s like, I can’t believe it. They got it done. Yeah. So that just shows the strength of that model. And then after then you folded into Google. At that point, what was the transition inside of Google?
Seth Sternberg: Yeah, when we got there, Google wanted to acquire Meebo into Google plus because we had figured out how to get social widgets embedded throughout websites, like all over the, the web at that time, Facebook at the time had a lot of widgets all over the place. Google did not. When I got to Google, the thing that was most important in my mind that Google was missing was actually the identity play across the internet. Um, and so there was kind of sign in with Facebook everywhere, but there was no sign in with Google anywhere. So, I relaunched that product. So, I did that for 18 months. Got that launched, got that kind of in good shape and then I switched over to, uh, Google X and it was fun being at X and seeing the way Google approached innovation. And then I ended up popping out from X to form Honor.
Thad Davis: When did the thesis emerge for Honor?
Seth Sternberg: Yeah, so the process we ran was kind of like let’s get together on a regular cadence and figure out what we wanna actually do and what we’d be passionate about. Our rules of the road for what we would do next like the second major startup we would do was we had to be able to look a human in the eye and know we would make their life fundamentally better. It had to be millions of people, not just one. And it had to be something that was hard because we really wanted societal impact and we’re second time entrepreneurs. So, we can bite off a harder problem, that’s like a big world problem. So, it should be something that uniquely we could do. And we spent 18 months ideating. And really, we were trying to find this space that we were passionate about. Cause there’s this other issue of being an entrepreneur, which is, I mean, startups are hard, growth equity companies are hard.
Thad Davis: You gotta be into it. You’re like I’m gonna make a massive time and energy commitment.
Seth Sternberg: You will burn out if you’re not really passionate about the problem. And so we waited a long time to find the problem we were really passionate about. Then it turned out because we were just older, cause we’d done our first startups that we were starting to get to the point where we were getting concerned about our parents. And that’s how we ended up centering on let’s think about older adults and then ultimately let’s help our parents stay in their homes as they age because that’s what they would really want.
Thad Davis: And that, that’s been the most impressive thing kind of transitioning over to Honor is that, that there’s a core thesis at the base of Honor, which is that you’re like the friction elements between finding, getting great care in the home for an aging adult, and then unifying that with a person that wants to provide that care as their profession and making it easy for the care provider and the care recipient, which goes beyond what a lot of people assume they say, oh, it’s simple. You just, you’re just matching people. I’m like, it goes a little bit beyond that. Like they’re like, well, I picked my caregiver for my parents. You’re like, can’t do that. You are not good at your parents.
Seth Sternberg: Yeah. You’re pretty good at your kid, but you’re not that good at your parents. In fact, you’re probably so bad at your parents that we formed a rule way early in Honor, where we require us to do an in-home visit with your parents. It’s not enough to just talk to you because you will get it so wrong that when we instantiate care for your mom or dad, we will send the wrong person. We will send the wrong skillset and then things won’t go well, because you didn’t really know the full extent of what your mom or dad actually needed.
Thad Davis: You remember your parents as a kid and you have impressions of them as they age. They’re not the same person overall. And more importantly, how, that you don’t take care of them. They took care of you. So why don’t you let us help you with that?
Seth Sternberg: Well, and also your parents can frankly be pretty good at hiding stuff from you. Right? When they start to realize that they may have something going on, they’re pretty good at not letting you realize that they may be starting to need help.
Thad Davis: One of the things that’s sort of captivated me is that this is a messy problem. This is an extremely data intensive muddy world. Where you actually have to spend time running this as almost a pilot to gather the right data, to understand the problem. I would assume that there was not a massive amount of available no data or a concern, you actually had to research this issue.
Seth Sternberg: We wanted to help make home care amazing. We didn’t know what the real problems were. We knew no agency ever scaled. Like it was an industry that had, that was massive, but without any kind of scale player in it of note on an owned and operated basis, and we had some inbound theories. So, we literally just launched an agency with very veneer level technology, because we just didn’t know what to build. One of the things we found is, you know, the stories in home care are really, really poignant. Cuz you can have these stories about amazing relationships between care pros and clients or terrible things that have happened. And those stories cloud people’s kind of analysis of what’s actually happening. And because of the lack of technology platforms and the lack of ability to collect data, the stories actually often lead to very incorrect conclusions as to why.
Thad Davis: It’s like literally a cognitive bias issue. It’s that it’s an anchoring cognitive bias, you know, hindsight issues, things like massive amount of behavioral economics and, behavioral psychology in there.
Seth Sternberg: Yes, exactly. And so, we have done so much work to just try to get at the real why behind a lot of things that happen in home care. And even when you get ’em, I’ll tell you like the industry often says, no, no, no, your data must be wrong because they’re just the cognitive bias.
Thad Davis: I feel, it doesn’t feel right.
Seth Sternberg: That’s right. The cognitive biases, you’re saying so strong that it’s oftentimes hard for people to accept. Well, look like when you measure it over a thousand or 10,000 instances, this is what it actually looks like. And it’s kinda like, no, no, no, it must be wrong. like at the end of the day, our bias in analyzing the data is purely so that we can improve our care platform again and again, and make it constantly better.
Thad Davis: I don’t think that people, especially at the transformative, the transaction that you guys did, you guys recently acquired, merged with Home Instead who’s the largest, you know, franchisor who provides support services to independent care providers and the independent folks still have the same scaling issue that you experience whenever you were forming Honor. But the, the actual people, I think when they look at the combined company, they lose track that the amount of actual data and spend behind what you’re doing like now with actually we’re delivering, we have one side of us that delivers or has the ability to deliver and facilitate that and then we have the actual overlay engine and analytics to improve the operations on that side. It’s like taking the example of agency scaled. Now we have massive scale of data in our, I’m assuming the team is just ingesting, the data analytics team, is just ingesting massive amounts of data right now.
Seth Sternberg: Yeah, what’s amazing is we, so we now have a, you know, a worldwide network that’s over 2 billion, really close to 2.5 billion in GMV. And so, we just, we have the largest data set by, you know, probably an order of magnitude in home care, in senior care. And we have it both in the form of the traditional franchise network where it’s in, you know, it’s a franchisee that is operating their business kind of independently and in the form of the businesses that our care platform supports and runs for those agency owners. So, we get different levels of fidelity of data. And then we also see the differences between a business that’s run on our care platform with a lot of technology backbone versus a business that’s run kind of the traditional way. And it’s amazing.
Thad Davis: Because within the network you have folks that are not on the platform that that should be on the platform. It, it, to optimize their performance. So, it’s, it is like an in-house AB test. Here’s one guy that has technology. Here’s one guy that doesn’t have technology, how do they run?
Seth Sternberg: Even down to the same market. So, we can look at different agencies within the same market and understand, oh, okay this is the difference within that market one way versus another way. So, it’s just incredibly powerful and it kind of lets you get to ground truth. Um, and then with that you can make the right decisions to ultimately, I mean, ultimately what we have to do is increase society’s capacity to care. Right? Cause we’ve such a wave of people turning older, right? Who will need help, such a massive wave.
Thad Davis: Yeah. There’s a, there’s a big trust bridge. That’s one thing that’s like, it is beyond the commercial. I guess you can create that trust bridge, but the trust bridge of like people hear about like, here’s the care providers, that’s a human to human contact touch. And then there’s a, an engine that runs behind that in having a level of trust built where people actually say like, Honor, what they do improves the trust of what happens to my, the person, either myself I’m getting cared for or the people that I’m paying to have cared for. That capacity to care is, do you find that you have to fight that, or do you like, do you have to sell that or is that more about just making sure that you surf the trend correctly? I then it’s not, it’s not like it’s not like down into the right. It’s up into the right for perfect care demand.
Seth Sternberg: Yeah. I mean, a big thing that we’ve tried to bring to home care is transparency. So, what you find in many, many traditional home care agencies is the you and I, like the sons and daughters, don’t have a lot of visibility into what’s happening with mom’s care and she may be quite far away. And we’re relying on what mom says, which is not always super reliable, especially if she has dementia. So, a lot of, many features that we built are about providing the sons and daughters more transparency, for example, wellness check, where we’ll ask the older adult that we’re serving, you know, how many meals have you had in the last 24 hours? And what’s your state of mind? Are you happy or sad, et cetera. And then we’ll report that to the sons and daughters. Or even something as simple as letting the sons and daughters see, like here’s the care provider who’s going, here’s their note with an after-visit summary, as opposed to being in a spiral bound notebook, that’s left on the kitchen table. It’s now, you know, in your app. So, um, that trust probably gets built through transparency with the clients. And that goes as much for the care professionals, right? Building trust between them and Honor as it goes for the clients building trust between them and Honor.
Thad Davis: How many door entries is the combined Honor network now up to on like a daily or quarterly basis? How many homes are you going into effectively?
Seth Sternberg: Probably in a year in America, it’s or in a month in America, it’s probably in the 60,000 zone of houses that we would walk into and then under the brand worldwide, it would be probably another 50,000 or so. So you’re probably at, you know, walking into, in a given month, in the hundred, 110,000 houses zone
Thad Davis: On a repetitive basis as well?
Seth Sternberg: On a repetitive basis, yeah. You’re walking in every, you’re walking in either every day, sometimes multiple times a day, extraordinarily rare that it’s not multiple times a week right? So can a three, three times a week is usually the minimum that we’re walking into a home
Thad Davis: I think that this has been my pet statistic with, my pet statistic with Honor, is that there’s organizations that are doing door entries probably more on a, you know, huge basis, like other, just raw services, non-healthcare oriented. But in the healthcare space, I would be challenged to find somebody that’s doing this kind of in-home work at this scale on a repetitive basis. Maybe on the skilled side, something like that.
Seth Sternberg: The big difference there is their average visit would be, you know, 30 or 45 minutes in ours is about six hours. So, we’re in the average home for 28 hours a week. So, we just, we spend so much time with each individual client. Uh, and that is very different. Like that is not something that you tend to find anywhere else in healthcare.
Thad Davis: Yeah. I mean, that kind of home access is just unparalleled.
Seth Sternberg: Yeah. So, I think there are a few things. The goal when we set Honor up was to literally change the way society cares for our parents. Like truly fundamentally improve that. And the thing that we have to do on an intermediate basis is expand our capacity to care. Right? So today, individual agencies are really capped at how large they can get when they run kind of the traditional human way. They can’t serve very many people because from a logistics and ops perspective, they get scaled out very quickly at a pretty small size.
Thad Davis: Higher quality care on a higher scale.
Seth Sternberg: So that’s what we need to do. Like we need to get these agencies to be able to provide care to many, many more people than they currently can today so that we can fix the societal problem of, we literally will run outta the capacity to care for people who are turning older, which is like a huge issue. Then you think about, okay, well, if we’re already in people’s homes, how else can we help care for them? Like, how can we take care of their home? How can we take care of their environment? How can we navigate them into the healthcare ecosystem? So, let’s go beyond ADL supports. Let’s go beyond just, I’m helping you with rote home care on the activities of daily living side into a broader set of services. But like first we just have to get it to a point where society can simply care for the number of people that it needs to care for.
Thad Davis: Going back to like, that’s the thesis re-expressing itself. We have a thesis that this is a problem. The solution to the thesis is solved through greater caring capacity to a higher quality level. You can’t take your eye off that core goal, because if you don’t execute on that, then the rest of it’s not as scalable.
Seth Sternberg: Yeah. So, like the things internally I said to the team, the two things that kind of slow us down, so to speak, like the caps on our growth are quality and ethics. We cannot break ethics. We cannot break quality, right? As long as we have those two things, then we can keep growing at whatever rate we are able to grow at. And that’s super important because we do need to fix this problem for society. That is, I see it as kind of laying the plumbing, right? It’s laying the pipes to then ultimately be able to do much more around caring for older adults than just home care.
Thad Davis: I don’t think I’ve, I mean, I’ve spent a lot of time in healthcare. I just wrote that down. I don’t think I’ve ever heard express that growth limitation expressed in quite that way before. I think that’s actually, just to point out that to point out the little, little algorithm you came up here, the quality, ethics and I added in transparency.
Seth Sternberg: Cause you’re doing something in healthcare in general is just so operational and it is easy to out scale your ability to serve people
Thad Davis: And coming back around full circle here, so born of a household of thesis and independent mindedness, and then into several paths through entrepreneurial, but you’ve been also successful in managing. Do you actually think of yourself as like a creator entrepreneur or a growth operator?
Seth Sternberg: It’s a good question. All of the founders are always watching for when we think our skillsets may scale out. And when I scale out is either because I see that my skillset is becoming not appropriate for what I need to do, or when I lose interest in the job that I have to do. And so therefore I would not do it well. So those are the two ways that you can scale out. On the skillset side, the thing that I need to keep me going is the core skillset of always hiring people who are much better at a given job or role than I am. So, I literally describe it as people on my team who report directly to me, they have to be like fundamentally better at their job or their role or their area than I am. Um, and if that’s true, then they’re a really good person to have in that role. Um, that allows me to scale, right. Because I, I can’t do the things that people who report to me do. Right? Those people could potentially be scaling out, which, you know, if you have the right people, they kind of self-reflect and self-recognize on that. And then you find someone else who’s more appropriate for another stage of the company.
Thad Davis: I think now you’re beginning to bring in more and more people, especially as the organization’s company. That the, the like more and more people to augment and bring that back. It sounds that you’ve become actually more into the core thesis. Now you’re coming back to what are the problems that we need to be focused on solving here now that the organization is scaling, I’m augmenting my capabilities here or bringing on people that are building a better team.
Seth Sternberg: Bringing on amazing talent is probably, or almost certainly my number one focus and has been for the last probably six months. Like that’s effectively been at, the first six months, post team building post, you know, purchasing Home Instead was just the integration of the two companies and making sure they work together the right way. The second phase has been okay, we are at really massive scale now, like we are by far have the most advanced technology around older adult caring for older adults in the world, running a distributed labor force that cares for older adults. So, we have this amazing set of, you know, assets now, right? Brand, distribution, uh, employees, et cetera. It is on us to leverage those to improve the way society cares for older adults. Right? But we, we have them.
Thad Davis: Best talent for the best problem
Seth Sternberg: Best talent for the best problem that’s exactly right.
Thad Davis: Yeah. Yeah, exactly. So is the last little bit here is, so I’ve definitely taken like multiple calls with you where you’re like on a bike and you’re like pedaling somewhere. So, like, like I’ve never really delved into this before but, cycling, is this a side hobby, a deep passion is something that I do every morning for four hours. Like where are we at on the, where are we at on the scale of, uh, cycling love psychosis?
Seth Sternberg: Yeah. Cycling’s high on the list. I mean, I, I kind of say I have time for three things in life and family and Honor are the two defaults. And so, there’s one more. And the one other is basically making sure I stay in kind of physical shape. And as a kid, I’d get on the bike and disappear when I was. 10 or 12. And then I probably have been doing a lot, like really long distance, you know, 40 miles would be a normal ride. A weekday morning would be like 20 miles with 2000 feet of climb and a big ride would be 60 miles or 6,000 feet. And that started maybe 10 years ago now.
Thad Davis: It’s a lot of vert.
Seth Sternberg: It’s a lot of, yeah. I like climbing.
Thad Davis: That’s amazing. Well, I appreciate it, thanks for taking the time today. It’s been great. And hopefully the, the audience learned a little bit more about yourself and kind of the, the thinking that led up to and is continues to lead the, the absolutely fantastic success at Honor, which is, I, I think a very, like we said, it’s a thesis, it’s an important thesis that needs to be solved in a very real way and Honor’s to taking that on so
Seth Sternberg: Working on it. Thanks for bringing me on this Thad. It’s been a lot of fun.
Thank you for listening to this episode of our Perspectives podcast. If you are interested in participating in future podcasts or would like to learn more about Leerink Partners, please email us at info@leerink.com
