Bezzle Watch: “1099s and Tenderness” – Papa Health Has Wacky Ideas About Elder Care

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Yves here. Jared Holst worries that a new senior-targeting gig service called Papa Health, which apparently also intends to become the giant vampire squid of health care data, sticking its blood funnel, um app mandible, into your info veins.

I see Papa Health very differently, as a slightly retrograde hanger-on in the time of Peak Bezzle. We’re awash in cons and idiocies like NFTs and imaginary art, which make sense only if there is a money laundering angle. Oddly, in a sanity outlier, SPACs fell from favor faster than I anticipated.

Papa Health has more of the Juiceroo or late stage dot com feel to it. There was about an 18 month when a team of not-yet-minted MBAs or even college students could raise $5 million with a five page business plan. Whether it could ever make money was of no import; all it had to have was the prospect of reaching eyeballs.

One of the critical elements of that era was extreme buzzword intensity, combined with the use of computer jargon. Mind you, I’ve been party to many meetings in foreign languages, as well as with very sophisticated technologists who were speaking over my head. But it was clear information was conveyed, often at a high bit rate.

By contrast, these dot com pitch meetings were at such a level of abstraction that they were hypnotic or soporific, depending on how jaundiced you were. One in a while, these meetings reached an apotheosis (as can be done in Japanese, but even then it’s hard to keep up for any length of time) of conveying absolutely no content, just a mish-mosh of of sexy-sounding buzz phrases recombined and spun about, as if they were money glitterballs.

Papa Health is like that. As we’ll see soon, it has a thinly sketched out service concept for oldsters (and no clear advantage over incumbents) but is supposed to be a breakthrough because app and because gig workers and because health data. We’ll explain how none of those work much or even at all in practice.

So in practice, even though Jared Holst worries that Papa Health could be a big accelerant of the rush to the bottom for senior care, this looks like the sort of firm that won’t even get far enough to do that much damage to investors, who are the real marks here. The one bit of good news is the company has raised only $92 million, which is couch lint in tech land.

Before you try the default defense for ventures like these, “Because innovation,” let me remind you that very powerful players with lots of dough and connections who actually do know something about tech have fallen on their faces with some grandiose-sounding ideas. Remember Facebook’s new currency Libra? Remember the joint venture between Amazon, JP Morgan, and Berkshire Hathaway to Do Something Big with health care data? ‘Nuff said.

In a departure from how I usually present cross posts, we’ll turn the mike over to Jared to describe Papa Health a bit further, and then I’ll resume to question why there isn’t much there there to Papa Health, business wise.

By Jared Holst,  the author at Brands Mean a Lot, a weekly commentary on the ways branding impacts our lives. Each week, he explores contradictions within the way politics, products, and pop-culture are branded for us, offering insight on what’s really being said. You can follow Jared on Twitter @jarholst. Originally published at Brands Mean a Lot

Globally, there are few cultural traits as commonly prioritized as the reverence of and respect for the aged. No matter what region of what country, it’s a near guarantee one of the reasons the local culture reveres grandpa is because he’s reached age 80. As those around them pass on or move closer to their immediate families, many elders are left vulnerable to loneliness and the psychological effects therein.

There are also more seniors relative to other age groups than ever before. This means taking care of grandpa isn’t just culturally important, it’s a juicy revenue opportunity. Bullshit Economy contributing factors such as Americans working longer hours, and the Millennial and Gen X cohorts having less wealth means grannies’ and grampies’ children have less time and money to spend looking after them. Add in the absurd cost of healthcare and you have three hearty blows in the artificially ballooning eldercare market.

Source: U.S. Census Bureau, decennial censuses and vintage 2017 population projections (2020-2060)

Resting arthritically at the intersection of all this is Papa Health, a homecare startup that’s received $92 million in funding which:

“…pairs older adults and families with Papa Pals for companionship and assistance with everyday tasks.”

Papa’s ‘companionship as a service’ offering is only unique if you neglect to consider the world’s oldest profession. Instead, the confluence of dismal economic circumstances, the proliferation of two-sided marketplaces supplied by 1099 labor such as Uber and TaskRabbit, and the insatiable need for data has Papa asking the question, “What if we paid college students $15/hour to take grandmas to coffee, track how it goes, then sell the data to insurance companies?”

Papa’s true differentiator is that it’s striving to meld tech’s hottest paths to profit:

  1. A marketplace model with contract labor that skirts industry regulations (Uber, Airbnb, TaskRabbit, etc.)
  2. The collection and selling of user data to third parties (Facebook, LinkedIn, Google, etc.)

Feed The Insurance Co’s

As evidenced by the market caps of companies like Facebook and LinkedIn, the potential for products whose business is ingesting our data for free and then repackaging and reselling to 3rd parties is enormous. One such 3rd party hellbent on its need for data is the insurance analytics industry. Currently at a market size of just under $8 billion, it’s expected to grow to over $22 billion by 2027. It was only a matter of time until our sense of duty to the aged crossed paths with data’s tantalizing margins.

“You’re so kind to me, I really wanna tell you truthfully, you did a marvelous job taking me to the store and on my chores that I had to do. I appreciate it.” – Sam Cirrincione, Papa Health user

Papa’s ‘Papa Platform’, allows the company to collect data on behalf of families and of course, health plans, with the goal of increasing quality of life. About the product, Papa’s CEO has this to say:

“I think what’s exciting about Papa is that we’ve become the eyes and ears of the plan.” 

Papa, according to its CEO, is aspiring to be the hall monitor for insurance companies. Deranged.

Papa’s quest to report on both the 1099s who provide the service and the old people that hire them opens the door for a feedback loop in which insurance companies could begin providing instruction to Papa caregivers on the optimal way to interact with the elderly.

Source: Papa website. Annotation and curiosity therein, author’s own

Hoping this Loop Goes Nowhere

This has some disturbing implications, especially in the context of existing facial recognition technology and devices’ ability to listen and track us à la every phone and smart-home device on the market. Will Papa’s caregivers, upon request from Aetna, be instructed on the optimal curvature of their smiles and the most pleasant pitch and tone of voice? Which earlybird specials are in-network on Anthem plans?

Photo: Eye of Sauron/Insurance

By virtue of being 1099 employees, Papa’s labor force is especially vulnerable to the whims of its employers. Since the ‘Papa Pals’ messaging is aimed at recruiting young people (18 and up) whose main requirements for participation are only a clean criminal record, a command of English, and a driver’s license, it’s reasonable to think that Papa is working with untrained clean slates when it comes to what does or does not constitute effective and kind interaction with those in their care. As such, it’s easy to see how Papa could end up

As of January this year, Papa’s available in all 50 states—the market for cheap labor with high value continues its growth unabated. It’s no secret that every app tracks our data, but few so brazenly pair tech’s two highest margin strategies—low paid 1099 labor and selling data—in such a genial manner.


Yves again. Jared is far too kind. Any market anywhere for this barmy idea will be vanishingly small.

First, this space is already well occupied by home health care agencies who are much more attractive by offering a broader menu of services, most importantly various forms of hands on care. The window when old people have stopped driving and need help with errands but are otherwise fit enough to function on their own is small. And even those individuals often want the aides who help them with shopping do light housekeeping, meal prep, and companionship. Agencies generally require a four hour minimum and the clients appreciate not just seeing a familiar face, but having them sit with them a bit for a coffee or a meal.

Second, not only is this silly Papa Health limited by conceiving of itself as a shopping service for the aged, it clearly does not envision its gig workers going into homes. No one with an operating brain cell would let people (and the Papa Health says they are male people!) would let someone who’d not been subjected at least a credit check. Not only are most older folks cautious about who they let into their houses, but in many cases, children make care arrangements for their parents, and they’d be particularly skeptical of this service.

Again, the home health care agencies do more vetting precisely because the aides will be mainly working in the client’s home.

Third, what is the evidence that there is any need for a stand-alone shopping service? One hates to mention Amazon, but they are the 800 lb gorilla in this space. Some pharmacies will deliver store goods along with drugs.

Third, an app is a negative for many old people and conversely, the ones that are tech adopters will already have access to and be familiar with competing delivery services like Instacart and Doordash.

Finally, the idea that there is any insurance or medical data angle here is deranged. Home health care agencies, which are all over their customers, are at the tail end of the medical information chain. Unless their staff are nurses, the don’t administer meds, so they either don’t ask about patient medications or do so only as an odd matter of form, since they aren’t HIPPA complaint and can’t send on any data. They should have their name of the primary care physician and emergency contact numbers, but in an health crisis, they call 911 and at most direct the EMTs to the client’s preferred hospital.

Oh, and in Alabama, transmitting any medical information via an app is illegal. The only permitted options are patient downloads from secure portals, and for doctors and labs to transmit information to third parties (like insurers or other doctors), they can use only encrypted e-mail and fax. We can’t be the only state to have restrictions like that.

Finally, I am at a loss to comprehend the reference to Aetna, which I assume Jared got from Papa Health. First, due to Papa Health not actually providing anything even dimly approaching health care services or services authorized under long-term care plans, as indicated above, there is no reason for insurers to be in contact with or paying Papa Health. They very best they might do is provide “drive to the doctor” services under Medicare Advantage plans, but only 4% offer than as part of the bundle.

In addition, the information they could collect from such limited interaction has zero value. People over 65 are mainly in Medicare, Medicaid, or VA insurance. None of those do any underwriting. Medicare already requires that providers of Medicare-covered services not bill patients and accept Medicare negotiated rates.

In other words, I’ve heard of a lot of dumb ideas, but this one looks to have been cooked up by promoters who did zero investigation of what old people need, what the incumbents serving that market do and what Papa Health would need to do to create a competitive advantage, and whether insurers might be part of their market. This looks to have been dreamed up by kids. The only thing that is more surprising is that anyone gave them a dime. But in this cray cray world of paying for vaporware, even obviously implausible propositions get funded.

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  1. Eelok

    They’re in all fifty states because their 1099s are limited to providing companion care and unable to assist with ADLs like dressing, bathing, mobility, etc. I worked in this space for three years and the market for people who can’t touch the client is extremely limited. $92 million is not much but I’m honestly shocked that they’ve even raised that much.

    Most people will pay for care for their aging parents out of necessity, only when they reach a point where they cannot perform physical tasks on their own or have reached a cognitive state that requires supervision and physical contact. Building a huge, successful business out of just the companion piece ain’t happening.

    This was already tried and failed six years ago. There was a home care startup in California (I’m blanking on the name) that briefly offered HHAs as independent contractors a la Uber. Their rates were much lower than the agency rates at the time, but the rules got clarified very quickly and they had to switch to the same model every other player was using, where the aides had to be licensed, bonded, and ensured employees. HHA licensing and the regulations are totally inadequate but in this case at least, people could see that the “Uber of senior care” was a terrible idea.

    I know that Yves has had a lot of firsthand experience with how challenging it is to find and employ the right aides. It’s an excruciatingly difficult, highly localized business with razor-thin margins and bonkers levels of churn. There are no revolutionary disruptions or huge efficiencies to be created by applying technology to this space, aside from perhaps services for the very rich who can shell out $15,000-30,000/year who also have sophisticated clinical care systems in the big metros.

    1. Yves Smith Post author

      The post had to launch before I completed it; I have the further analysis I had in mind but could only add later that is 100% consistent with your overview. And I agree that even though $92 million is bupkis for a tech venture, even this much is ludicrous.

      And who would want them for companion care? They don’t screen people well enough to let them into your house. The gig nature of the app says you are unlikely to have much/any continuity, while the home health care agencies, despite the aide turnover, endeavor to have the same person or people coming out. They work to avoid turnover on the client end, while Papa Health seems no to control for that.

      And the ads suggest most of their staffers will be men. That is a non-starter.

  2. Robert Hahl

    If I’m running a fund with lots of money to invest, failure to find suitable ideas would be counted as failure, but finding silly ones to put the money in would be counted as success, and open the door to raising the next fund. As a corollary, managers must put this money to work quickly or loose their reputation for seeing superior deal flow. Sounds easy enough. Maybe I’ll come out of retirement and start a fund.

  3. Kevin Carhart

    I think it would be good if we got out of compartmentalization in writing critically about misclassification/1099 startups and other startups. I like the article, but I get deja vu. We’ve been writing one-off progressive criticisms of the gig economy for many years and the principals don’t give a s* if we do or don’t. Alyson Shontell did it, Kevin Roose did it, Tiku Montgomery & Biddle did it, Sarah Kessler did it in Fast Company. Other than the chance of the Pro Act and a nationwide ABC test, what are we doing that doesn’t whack a mole? Have we learned anything broad? I spoke on the phone in 2013 with Kevin Cruz, a Taskrabbit alum (not from the 1099s, from the elite FTE tier who have their photos on startup websites, preferably on a background of exposed brick.) He had just lied on Yelp as a form of growth hacking. He refused to talk about Taskrabbit saying he had since left. He said “I now work at Tendertree” which according to Dealroom, was “a Platform for finding in-home caregivers for patients and the elderly.” It didn’t go far, it raised a seed round at the end of 2012 but the premise sounds similar to Papa or vice versa. They used 1099. “‘Why should I offer my services on TenderTree?’ … ‘TenderTree helps caregivers supplement their income by providing a network of clients in need of high quality caregiving. TenderTree markets your skills and helps you build a customer base so you can focus on what you do best: providing care.'”

    There are others, like Honor, “In-home senior care”. “Eldertech”. They’re somewhat different. They just raised $140m in October from Bailie Gifford and T. Rowe Price. I’m in favor of getting down to brass tacks and having more continuity in these things from story to story and across people and firms.

    They’re too anonymous. It goes down a memory hole. The people responsible who are named as Papa Technologies people are Alfredo Vaamonde, Andrew Parker and Jake Rothstein. So are these the people carrying out the bad, to me outrageous idea which may fold like Tendertree but can hurt people during that interim? Who are Initialized Capital, Canaan Partners, Comcast Ventures, Sound Ventures, Scott Belsky, Magnify Ventures and Pivotal Ventures? Papa’s latest round is a Series C just in April by Tiger Global Management. Thuto said yesterday, “Tiger Global, with its fast and loose, hands-off and low due diligence funding model, is the next [Softbank].” If the Vision Fund is a precedent then bad ideas could go far.

    I’d like to fight the adversary more effectively. Even if a startup is doomed and ultimately headed for “laggard” or “walking dead” or “deadpooled” status, well even Tendertree could have done some damage if they were around for a year or two. What is the reach of an organization when they are at a seed or Series A,B,C level? I assume it varies. Early projects have an ethos of being too small to worry about, but I think this can be misdirection sometimes. Interims are real time. A real senior can be hurt by an organization that is going to eventually fail or was thought up by kids. The people at the accelerators are often kids. Homejoy came out of Y Combinator – apparently so did Papa in 2018 – and they had precarious 1099s out in the world before they folded and a lot of their business was scooped up by Handy, who also misclassified.

  4. Sound of the Suburbs

    Who’s been messing about with the economics?

    Any serious attempt to study the capitalist system always reveals the same inconvenient truth.
    Many at the top don’t create any wealth.
    That’s the problem.
    Confusing making money and creating wealth is the solution.
    Some dodgy economics was developed to perform this task, neoclassical economics.

    This has always been the problem with neoclassical economics.
    It doesn’t tell you what wealth creation is, and this leads to all sorts of problems.

    This is the second time around and it has already been done.
    In the 1920s, the economy had been booming, the stock market had been soaring and nearly everyone had been making lots of money.
    In the 1930s, they were wondering what the hell had just happened as everything had appeared to be going so well in the 1920s and then it all just fell apart.
    They realised they needed a better guide as to what was actually going on in the economy.

    The real wealth creation in the economy is measured by GDP.
    The transfer of existing assets, like stocks and real estate, doesn’t create real wealth and therefore does not add to GDP.
    Real wealth creation, involves real work, producing new goods and services in the economy.

    All this messing about transferring existing assets around was the problem they had in the 1920s.
    Existing financial assets, e.g. real estate, stocks and other financial assets, are traded and bank credit is used to fund the transfers. This inflates the price.
    The money creation of unproductive bank lending flows into the economy making it boom
    You end up with a ponzi scheme of inflated asset prices that will collapse and feed back into the financial system as it did last time.

    It doesn’t really matter what it is.
    You just pass these financial assets around, pump up the price by using bank credit to fund these transfers, and everyone makes money for a while.
    It does show up in the private debt-to-GDP ratio, but no one looks at that.
    1929 and 2008 stick out like sore thumbs.
    At 18 mins.
    As you head towards the financial crisis, the economy booms due to the money creation of bank loans.
    The financial crisis appears to come out of a clear blue sky when you use an economics that doesn’t consider debt, like neoclassical economics.

    When you use bank credit for productive purposes debt grows with GDP, like the UK before 1979.
    What happened in 1979?
    The UK eliminated corset controls on banking in 1979, the banks invaded the mortgage market and this is where the problem starts.
    The transfer of existing assets, like real estate, doesn’t add to GDP, so debt rises faster than GDP until you get a financial crisis.

  5. Lambert Strether

    Why the smile? Because (a) there are some ideas that are so stupid that’s all you can do, and (b) these nice young people don’t really understand that what I’d really like is my teeth back.

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