From Pitching in the Dark to Investing in Age Tech – Interview with Max Zamkow from Third Act Ventures



Last month I had the pleasure to interview Max Zamkow, the founder and partner in Third Act Ventures, an early stage VC that invests in Age Tech companies. The following text is an edited transcription of the recorded interview.

Can you tell us what brought you into Age Tech in general and investing in Age Tech?

What brought me into Age Tech was something that happened to my grandmother going on about 8 years ago now. I was living out in the San Francisco bay area and my family is from the East Coast of the US, so my grandmother was in New Jersey. She was at that point where she couldn’t take care of herself anymore. My grandfather had passed away a couple of years before, and the house she was in was just too big for her to manage herself, started to fall, all the classic things that happen to us as we get older.

And so, my father and his siblings did what most people do in this country if they can. They looked around for a nice senior facility and they moved her in. And without putting too much blame on the facility, the fact that she was being taken out of her home that she was in for 70 plus years, and away from her family- her sister used to live ‘round the corner from her and she would see her and they talk for hours every day. All of a sudden she was in this whole new place all by herself and she just instantly sank into depression and she didn’t have the energy to meet new people, to make a new community. It was shocking how instantly, overnight, she became a different person.

And so, me being on the West Coast as soon as I realized this I wanted to do something about it. I couldn’t be there every day or even every week. So I looked around for technology that would help me stay in better touch with her. And it was frustrating how little existed 8 years ago. And it was deeply frustrating for me because my background is in mobile engineering. I’ve been making iPhone applications since Apple started letting third parties do that and I’d been seeing toddlers use their parents’ iPhones and giggling happily. There was no reason why, in this day and age, where technology no longer comes with a 50-page manual, it’s just turn on, tap and go, that my grandmother couldn’t be getting a lot of benefit from this. Besides the fact that no one was thinking of her. No one cared about her, her and her peers. So that experience kind of sat with me as I went through my career transition. So when I started investing I checked back in on the space and found that we’re getting there but there’s still a lot that needs to be done.

What’s your background? What did you do before this?

I started my career as a local software developer. Again, right around that time that Apple started letting anyone make iPhone applications and I had friends- I was in college at the time- dropping out left and right, so it was just insane and crazy and so much fun. So I started my career working at a small startup. That was in mobile advertising. So if you’ve ever seen those little banners at the top or bottom of your iPhone application, I’m sorry. I helped make some of those.

Then I worked at a couple of other companies at early stage started by university friends of mine, and ex-colleagues of mine all in a local space. So another one I was doing: mobile application discovery. So at that time, within a couple of years, there had already been an explosion to like, I think it was like a hundred thousand plus apps? And that was thought to be a lot. And so we were trying to help people sort through it by trying to surface what their friends were using, use it as a proxy, suggest it for the fact that if your friends are using it you might find it useful too. How many billion apps in the app store.

So obviously that problem still exists but we were trying to solve that a little bit. We raised a bit of capital money for that which is pretty cool. We pitched in the dark, which is pretty interesting. So all the lights- There was like a blackout all over Central Road. We were pitching and the lights went out, the power went out. We were conversing with companies, other offices in Hong Kong and I believe Shanghai. And we ended up finishing the pitch by illuminating our faces with our phones, and we got it, which was pretty cool.

It’s good practice, honestly. Considering how often presentations don’t work. Every entrepreneur should get used to just giving their pitch without any kind of visual aids, without any slides because it’s gonna happen, and you just gotta roll with it.

Tell us a little bit about the fund, when you it raised, size, if you’re willing to share.

I’m still raising it and it’s my first fund so I know it’s gonna take a while. I’m the only partner so it’s just me which makes it really easy. It means I can be fast in making decisions, which is great. I’ve raised just under three million now but I am still going. This area needs a lot of funding. A lot more than that.

What’s your aim? Where are you planning on getting?

That’s a good question. I would love to reach ten million. That would be a good first fund size. That would help me reach, not only into the seed that I’m doing. It would help me push it a little bit more into that A-round. Which I’ve seen a lot of Age Tech companies have some trouble with. Once you reach past that A-round, generally, you’re on that professional VC path and you can get those later investors involved and people get to know you. But until that point, it will be challenging. And that’s my goal: To kind of fill that funding gap.

I think your one of the very few if not the only VC that invests in pre-seed or seed Age Tech startups. Am I correct?

Yup. As far as I’m aware I think there are a couple of others. There’s Katy Fike’s Generator Ventures. And I don’t really know how far she goes but I believe she goes very early. And then there’s also Ziegler-Linkage, but that’s really why I’m in this space. I saw this funding gap and this need to help entrepreneurs get off the ground and to create more innovations ecosystems. So that’s really where I come out in focus. (To read about the funds mentioned above and others, go here)

What are you looking for in a company?.

Broadly, I’m interested in any company whose main goal is to improve the lives of older adults and/or their caregivers. And so I have to keep it pretty broad because there are a lot of things out there, a lot of different ways that older adults are living and need help. And so whether they need help aging in place and staying in their home, whether they need help with home care, whether they are in certain facilities and need some help… Like my grandmother who’d get out of depression by meeting other people. Maybe help with the staff be more efficient too or drive the cost down. Anything across that spectrum interests me.

And then, in terms of what I look for, what I look for are three pretty simple things. The first thing I look for is I need to know if you can build what you say you’re gonna build. If you say you’re gonna build this product I need to see at least a prototype or something. Secondly, I need to know that what you’re making is hitting a need to the point where people are going to pay for it. Recognizing that my background is not in this industry. All the research I do doesn’t necessarily mean that I’ve had a great sense of what the market needs. So you need to show me that you’re down to convince at least a few players in the space to pay you some money. Even if it’s not a lot.

And then third- often in this space, people that are paying for your product are not the ones that are using it every day. Often it’s the administrator or someone higher up whereas a caregiver or a senior themselves is using the product. I need to know that they enjoy using your product because this space is littered with many great products or great intentions and end up sitting in drawers or going unused because they weren’t designed to make the end-user happy. So those are three things I would say.

What made you make the investments you currently have in your portfolio?

It honestly was some combination of that- a lot of it comes down to the last two. In my process, I always make sure to talk to both the people that have bought the product as well as the people that are using it ’cause that’s the only way I can get that information. And when I hear a lot of excitement from both of those; that’s when I get excited. So when I hear a lot of excitement from the buyer who says “this is really solving a problem, thanks for making our job easier, or making a residents so much happier,” I can extend from that user, from that person, and see how they can market this, how many people are like that, how many firms are out there. That gets me excited. And then if I’m also talking to the end-user whether it’s the older adult or caregiver, and they are excited about using it and they are telling their friends and they’re begging for more, that’s when I get excited.

So the startups that approach you need to have some traction

In general, if you’re selling B2B, I need to see at least a few pilots that have converted into successful sales. And that shows me again, that there’s a marked gap there. You’re solving a need. If they’re consumer, I need to see at least a prototype and ideally, some early sales. The hardest thing about work in this industry, at least for me, I have to constantly remind myself that I am not their target user for any of this. Unfortunately, my grandparents have passed away now. Fortunately, my parents aren’t there yet. My opinion doesn’t matter because it’s not made for me. They’re not supposed to help me. So I have to take my own subjective opinions out of it and just look at the numbers. Are the people that this product is made for, are they getting benefit from it? Are they willing to pay for it? So I need to see some early facts to know that it’s getting a market because again, what I think of something doesn’t matter.

If I’m an entrepreneur and I want to fill a gap in the Age Tech market what are the current gaps you suggest I go after?

One of the biggest gaps in the market right now is there’s a huge caregiver shortage across the spectrum: senior living, healthcare, even family caregivers, honestly. And there are no real good answers to solving that. One of the biggest issues in both those industries right now is employee turnover. I forget the number off-hand but I believe that the home care industry adverse turnover reached- in the US- was a high 82% percent recently, which is insane. It means that four-fifths of their employees turn over, get changed every year at a higher gap than any.

I mean, they just lose so much knowledge and they spend so much money retraining, re-hiring and losing these people. Anything that can be done to help retain those employees, keep them happy and reduce staff turnover will be huge. Additionally, on the other side, anything you can do to help bring more caregivers in or increase the supply.

Other areas that I have an interest in- one is, it’s a big challenge. Most senior facilities are running on software that is not particularly efficient. They have these kinda big, bloated, kind of health record systems that they’re using that don’t do what you expect them to do and in particular, don’t focus enough on making the workflow easy and seamless. Instead, they’re kind of patchy and don’t make the facility more efficient. So anyone who wants to take on that challenge would be welcome. It’s certainly not easy but there is room for some disruption there as well.

For sure. About the caregivers, the employee turnover, here in Israel I know that employees just switch companies, they don’t necessarily stop being caregivers. What is it like in the US?

You see some of that. And particularly in times when, as a caregiver- particularly we’re looking at home care- if your client for whatever reason is no longer a client of that organization because they passed away or they move to a new building or something else, their company often doesn’t have another client just ready to go for you. And they’re not gonna just sit around for months not being paid. They’re gonna go and move on somewhere else. So that happens a lot. Also, a lot of employees don’t feel particularly supported by organizations and they’re kind of thrown into their jobs without a ton of training. And dealing with some individuals is particularly challenging.

If you are assigned to someone who has mild dementia and you’ve had no kind of training in their everyday needs and how best to take care of them, you’re going to be in a really challenging situation where you feel like you’re not really being put in a place where your company’s really helping you out. You’re gonna go find someone where you feel more supported. The other thing, a lot of people are moving into other kinds of jobs that are service jobs. There is talk in the industry now about caregivers are leaving and starting to work at fast-food restaurants- McDonald’s or Amazon warehouses- at minimum wage, it’s a much easier job in those places, maybe more physically demanding but emotionally much easier.

Where do you see the Age Tech space in five to ten years?

That’s a good question. I can tell you where I’d like to see it and then I can tell you where I think it will be.

Where I’d like to see it, I’d like to see every senior facility having Wi-Fi. I know it’s crazy to think that in this day and age, not every facility has it. Everywhere you walk into now, every restaurant you go into has Wi-Fi now, but so many senior facilities do not have even basic infrastructure. And without the basic infrastructure, you can’t build any other technological solutions that can improve that facility for the residents, for the staff, for efficiency. I would love to see that happen. I don’t think that we’re going to be there in ten years but we are certainly getting closer.

I would like to see organizations who employ caregivers in this industry investing a lot more in training their workforce as well as investing in employee happiness, investing in actually valuing their workforce, connecting with them, figuring out how to keep them happy and supporting them. Because this is not an easy job to be in and it doesn’t pay a lot so you need to be so thankful and reward your employees better. I think we’re starting to get there and companies are starting to realize how important this is. I know of a few facilities and organizations that have hired a VP of people, which is phenomenal. We’re still a long way off but I think we’re gonna see a lot more of it.

So that’s your wishlist. And what do you think is going to happen?

We’re still going to have a lot of facilities that don’t have Wi-Fi. We’re still gonna have a lot of turnovers. I think it will go down in the next 5–10 years- I mean, it’s hard to imagine it going up from 80+% — but I think it will go down. I think we’re also going to see more facilities adopting technology. I think of course that we’re gonna see some big tech flops. Recently there was the Care.com Scandal where it turned out that they weren’t doing a background screening for the caregivers which is just not acceptable. I think we’re gonna see- a lot of technologies being processed now, to the one AI. Some buzzwords get stalled and don’t live up to the hype. And we’re gonna see a lot of organizations that feel burned kinda shun technology for a while which just kind of sets us back a little bit. But I also think that there’s gonna be a lot of meaningful work and so we will see progress as well as setbacks.

I’ll take that. If you can give one piece of advice to entrepreneurs in aging, what will it be?

I’m gonna cheat and give two. The first I’m going to give is to make sure that you are including your end-users in the design process, make sure that you’re always testing your products with your end-users. Unless you are of the appropriate age or life situation for end-users, your opinion of something, just like mine isn’t the most important. What matters is the end-users and whether they enjoy using your product so make sure you’re constantly testing with them. And then the other thing I’ll say, make sure that you’re not only testing to see whether the product has improved their life or helped them. Make sure it also fits into their image of who they are. It’s kind of a wishy-washy thing to say but there are a lot of products that are developed that don’t take into account the fact that no one wants to feel old or frail- I don’t care if you’re 25 or a hundred and five- products that make people feel that way don’t get used. I can’t tell you how many people I’ve met who don’t use walkers or won’t take them outside when they leave the house because they don’t want to be seen that way. And there are other products- I’m not gonna name names- that do the same thing, put them on and it’s like admitting that you’re old and frail so they go unused even though they could provide so much benefit. So make sure that your product fits in with people’s images of themselves. It makes them feel happy, cool, not judged, etc.

That is very good advice. And I think we’re seeing more and more products do just that than we used to five or ten years ago.

We are.

Max, thank you so much for your time and valuable advice. You can find Max on Medium and sign up to his newsletter. He’s doing an excellent Age Tech round-up once a month, right?

Yup. Once a month.

Max, thank you so much.

Thank you. I appreciate it.

To sign up for Max’s Age Tech Roundup, click here. Feel free to follow me on LinkedIn or Twitter. If you have any comments on this interview, or if there’s anyone else you think I should interview on this topic, please feel free to contact me by using this contact page.