Baby boomer market is from cradle to grave
Sue Kruskopf and Nancy Bush stood before a panel of investors, trying to convince them how death could become an online business opportunity.
Their website, MyWonderfulLife.com, helps baby boomers plan and personalise their own funerals, from the food to the decorations to the casket.
"We know boomers are an internet savvy generation, and we know 71 per cent of them do not want a traditional funeral," Ms Kruskopf told the judges at the $10,000 "baby boomer" business plan competition in Silicon Valley. "The funeral industry is a $14bn industry, and it's just not keeping up with what boomers want. People don't want to go to funeral homes. They want to do it online."
As 76m baby boomers in the US approach retirement age, some technology investors increasingly believe that web-based services and devices targeting the aging is a large and as-yet unexploited market. According to an analysis of 2009 US Census Bureau household income data by the MetLife Mature Market Institute, the baby boomer generation represents $3.2tn in annual spending power.
Many other mature markets, such as Europe and Japan, also face a similar demographic shift. Japanese companies in particular have long grappled with the implications of a greying market.
"We realize this is a very attractive demographic, and there's a large share of wealth concentrated in it," said Anne Hawkins, vice president of Great Hill Partners, a private equity firm.
So far the firm has invested in Vitacost, an online vitamin seller, and Legacy, an online obituary archive. But, Ms Hawkins said, it has been struggling to find larger, mature companies that target baby boomers.
Part of the reason is that venture capital investors have so far been reluctant to place early bets on such companies. Many start-ups that explicitly target a specific age group turn investors off "they want another Facebook that will appeal to all ages.
"We want a company that's day to day on people's minds, companies that have longevity with a customer," said Xander Mahoney, an investment professional at Draper Fisher Jurvetson, a venture capital firm, "not something you sign up for a year before you die."
The Valley's sometimes harsh rejection of companies targeting the elderly is an attitude that AARP, the top US lobbying group for the aging population, is trying to shift.
"There are huge industries yet to be created that explicitly address the population of people over 50," said Jody Holtzman, a senior vice president at AARP. "In the private sector, the opportunity of the 50-plus market is simply not front and centre."
Mr Holtzman has been talking to investors and entrepreneurs about how to develop technologies with older people in mind. AARP is also putting money into strategic event sponsorships, like paying for the wireless internet service at the National Venture Capitalist Association's conference so that every user will see a screen with the question, "what's your 50-plus strategy?" and covering the $18,500 entry cost of several entrepreneurs who present aging-friendly start-up ideas at Demo, the popular launch event for new technologies.
One company that has found some success in the elderly segment is caring.com, a website launched in 2008 where people can find and review carers. Many of the customers are baby boomers looking for help in caring for their parents. But Andy Cohen, founder and chief executive, said that was accidental. He targeted the problem rather than an age group, he said, and that was how he convinced venture capitalists to invest $20m in the company.
"Nobody's interested in aging per se," he said. "They're looking for the next billion-dollar opportunity, and if it happens to be in aging, then that's fine."
Mr Holtzman is adopting that approach for his lobbying effort in Silicon Valley, pushing for a "universal design" of technology, so devices are easy to use and appealing to all ages. He points to the iPad.
"It is totally intuitive â€“ it can be used by a three-year old and a 90-year old," he said. "We're not saying create a niche product for the 50-plus market, but make sure what you're creating doesn't create an artificial wall."
The founders of MyWonderfulLife, who live in Minnesota, have yet to break through the Silicon Valley ethos. They did not win the pitch contest and have not found any big funders. But they are confident they will find their niche in what they believe will be a lucrative market. Their tagline "I want/good wine/at my wake" is written as an epitaph on a virtual gravestone.
"We could be the Martha Stewart of funerals," Ms Kruskopf said.