How my death startup died — in ten not-so-easy steps.

Some of you might have read the title and thought — “Gah, another tech bro sob story on Medium about how his company failed.” While this might not be entirely false, I am really writing this post for those people who have reached out and are thinking about starting a company in the end-of-life space. I have had a lot of folks reach out requesting more information and, unfortunately, I just don’t have time to respond to everyone. I’d like to tell the whole story — both to respond to all the requests I’ve received and because I think it’s important to explain how a person ends up starting a company in the death industry. To be honest, I never planned on, or previously had any interest in starting a company in the end-of-life industry. One day, I felt and saw the pain points in the space and realized this was a great opportunity to use technology to make it better.

The death industry is changing. Consumer preferences are changing traditional business models and consumer experience faster than the funeral industry conglomerates can keep up with. As baby boomers age and American society begins to embrace the full circle of life, I believe a startup will emerge in the end-of-life space and successfully redefine how we deal with death. It just wont be Halolife.

In May 2015 I founded Halolife — an online platform to help people find, plan, and pay for a burial or cremation service online. After bootstrapping for a few months then going through Y Combinator and 500 Startups, I eventually had to shut down Halolife toward the end of 2016 due to lack of traction and funding.

On a weekly basis I have people reaching out asking questions about my experience such as — Did you figure out your customer acquisition strategy? Does it work? Why did it fail? Can you send me what you have?

TLDR: the three key takeaways.

First: Marketplace vs. platform — Initially I planned to generate revenue through referral fees from the funeral homes. The plan was to scrape nationwide funeral home pricing data, create a listing for every funeral home in the U.S, provide a lead, then request a referral fee once we had helped the family choose a funeral plan, receive a quote, and complete all the paperwork electronically. However, there were many funeral homes that weren’t willing to provide us a referral fee, even after giving them a lead. They figured they were going to get the business anyway. So, we pivoted to an exclusive platform that provided listings of funeral homes that were willing to work with us. Unfortunately, hospice providers were not onboard with promoting an online platform that didn’t host all available options for their patients’ families. Most hospices require that social workers provide information for all funeral home services in their area. The current process usually entails a social worker handing a family a paper sheet with the names and phone numbers of all the local funeral homes, and the social worker pointing to one or two listings. Most of the time those funeral homes are recommended because while they “don’t negotiate on prices” they will lower prices to help families coming from certain hospices because its either the right-thing-to-do or its good for business to maintain the relationship with the hospice.

Second: Pre-need vs. At-need — It’s difficult to know exactly, but between 80–90% of individuals deal with death in an at-need scenario. This means the individual has already passed or the end is very near. The tricky part to building a product for the at-need scenario is that some states, including California, have laws against “steering” families to use one funeral home over another. Its important to note that these laws were put in place long before Google.

Pre-need funeral planning involves funding an insurance policy prior to death. By working with a company-provided planner, the individual makes their own final arrangements from their own home. When their time comes the money is transferred from the insurance company to the funeral home. The pre-need industry has faced some heavy scrutiny due to a few pre-need insurance companies bending the rules. Halolife attempted to service at-need and then pre-need situations, and could not find a successful customer acquisition strategy for either.

Third: Changing consumer behavior — In the U.S. I believe the stigma around death is fading. Its not an easy topic for anyone, but as a society we are beginning to talk about death more and this in turn is changing the industry. For some people, talking helps them embrace the full circle of life and for others the process of planning ahead serves to make life easier for the loved ones they leave behind. Fewer people want to spend $10,000+ on a traditional burial that requires a casket and burial plot. There are dignified cremation and green burial options that are often less than half the price of a traditional burial. This shift in demand drives down the profit and margins of traditional-style funeral homes. This is why some larger funeral homes closed and smaller, lower overhead, retail style storefronts opened in their place.

Further, consumers are demanding upfront honest pricing (there are also laws in some states that help with this). The Funeral Consumer Alliance did a survey a few years ago and found that in the major metropolitan areas in the U.S the same exact funeral service cost varied over 150%. Transparent competitive pricing is going to dramatically change the sales tactics used by larger funeral companies. In my experience I found that there are a growing number of individuals that prefer to handle end-of-life affairs over the phone, without even setting foot in a funeral home. The main demographic dealing with the death of a loved one is still 70+ years of age. I came to the conclusion that when your customer persona is over 70 and isn’t using technology in other areas of their life, it would be impossible get them to adopt an online platform. You can’t bet a venture-backed business on changing consumer behavior that drastically.

So those are the CliffsNotes. If you want to get a deeper understanding of how we tried and how we failed, keep reading.

Where did I get the idea?

I got the idea while working at another early stage two-sided marketplace — Storefront. Storefront is an online marketplace that connects brands with short retail space. During my time at Storefront I sadly lost two of my own grandparents. These events made me realize how difficult the process was and prompted me to research the end of life process and industry.

It didn’t take long to figure out that planning for end-of-life is not only inherently difficult but I saw two major issues with the process. (1) There is no price transparency among funeral providers and plans. (2) The planning, paperwork, and payment are all mostly done offline, which is costly in both time and money. I set out to solve those two problems — to create price transparency, removing the need for people to shop around and preventing large companies preying on people at their most vulnerable. And second, to create an easy process to help families and individuals plan the logistics of an end-of-life celebration so they can get back to what’s really important, spending time with family. Think Turbotax for end-of-life. Halolife guided users through a finite decision tree with options to review and choose from. Because like your taxes, the process is too difficult to navigate without assistance.

The ten not so easy steps of starting (and shutting down) Halolife.

Step 1. Ideation

After I had throughly researched the market, the competitors, and the current end-of-life planning process I knew I only had one thing left do, quit my J.O.B.

Step 2. Burn the boats

Contrary to a lot of advice from people, I decided I needed to burn the boats to show true grit and completely dedicate myself to making this company happen.

Step 3. Get my hustle on — identify stakeholders

I didn’t know it at the time, but the next year and a half would be one of the most personally challenging, intellectually, psychologically, and emotionally. I now know why Y Combinator doesn’t admit many solo non-technical founders. Simply put, it’s really hard and most fail.

The U.S end-of-life industry is valued in the range of $20–22 billion/year. This market is driven by the roughly 10,000 people that die a day in the U.S.

I focused my research on the following list of individuals and groups with a major influence in the death industry before building an MVP:

1. Individuals— some people choose to pre-plan their own funeral so their family doesn’t have to deal with planning a burial or cremation when they pass. Its difficult to get accurate numbers but my research indicated 10–20% people actually preplan their own funeral.
2. Families — the majority of individuals don’t pre-plan, so the remaining family member(s) end up making the final arrangements.
3. Hospices — when an individual is given a doctor’s diagnosis of 6 months or less to live they go into hospice care. Hospice also provides families a social worker to help with funeral planning among other logistical items.
4. Nursing/assisted living/retirement homes — these are all different types of facilities catering to different demographics and conditions but are similar in that in vary capacity provide housing care for elders.
5. Funeral homes & cremation societies — these are businesses that take care of all arrangements, paperwork, permits, planning, and preparation.
6. Insurance companies — if an individual pre-plans their funeral they can do so by funding a pre-need insurance policy.
7. Estate lawyer — is a bar certified attorney who specializes in estate planning and assists clients in drafting and implementing legal documents, including wills and trusts

Before I went about building my product, I wanted be able to empathize with and completely understand all stakeholders. I spent a few months on the phone and running around San Francisco talking to these groups. I volunteered at retirement homes and assisted living facilities, even offered to drive the bus. I visited hospice patients, worked with hospice social workers, took courses on how to provide mindful caregiving in the hospice. I toured funeral homes. On one tour — I nearly passed out seeing my first dead person. I walked into a room, saw all the bodies, walked out, and everything went white. I barely held my feet on the ground. But I think it was valuable to understand the process inside the funeral home. I spoke to (or at least tried to speak with) hundreds of funeral directors, chaplains, hospital executives, insurances companies, and estate lawyers.

I met some amazing people along the way, in all the previously mentioned categories, but I must say that some of the most grounded and heartwarming folks I’ve ever met work in hospice.

Step 4. MVP — Minimum viable product

The first Halolife MVP was a landing page with a link to a Wufoo form with the same questions a funeral home would ask an individual planning a funeral.

I then took my learnings from the stakeholder interviews to develop a user flow diagram, which became wire frames and mocks ups then became V1, V2, and eventually a functional product. I had a few contract engineers and designers helping out, but I was running the show. From product, design, recruiting, finding customers, doing business development, accounting, etc. That was when I learned the hard way that having a founding team able to divide and conquer is the key to success as well as preserving sanity. Each founding team member should have an equal and vesting interest in the success of your company.

Our V2 homepage

Before I outsourced scraping funeral pricing data to overseas contractors, I spent many nights in my apartment doing data entry. There were a few nights when I was super exhausted and I’d catch myself doing data entry for a service like embalming pricing and I’d ask myself, “What am I doing? Why don’t I get a normal job.” As I mentioned earlier, I never planned on, or previously had any interest in starting a company in the end-of-life industry. One day, I felt and saw the pain points in the space and realized this was a great opportunity to use technology to make it better.

Step 5. Bootstrap

Initially, I had no funding. Inspired by the story of the Airbnb founders, I leveraged the ol’ credit cards to get me through the first few months. I do not recommend this strategy. But if you don’t have the means to close a “family and friends round” then sometimes you gotta do what you gotta do.

Two months after I quit my job and started Halolife, I submitted a late application to the Y Combinator accelerator program. I was accepted a month after the summer 2015 class had already begun. Nonetheless, in addition to $120,000 in seed funding, Y Combinator provided an unparalleled community of partners and founders. Hands down one of the best experiences of my life. However, they do not guarantee success.

6. Get traction > analyze > iterate

Once I had money in the bank and a functional product, I decided that my approach would focus on helping hospice social workers provide families the best patient experience possible. This is hard because there really isn’t anything more difficult than losing a loved one. I tried a bunch of channels with limited success;

1. Email campaigns to hospice executives and social workers
2. Distributing and mailing brochures (the paper kind)
3. Targeted GoogleAd words and Facebook campaigns
4. I even held informational sessions for retirement home individuals, families and workers

At the end of YC summer 2015 I decided that I didn’t have enough traction at YC demo day S15. With help of YC I was able to defer my demo day to presentation winter 2016.

7. Fundraise

I met with over 100 investors. And while I didn’t get any term sheets I learned a lot. I’m pretty sure I even met Russ Hanneman from the TV show Silicon Valley. And I could be wrong… but I think he only has one comma, not three (O, and he’s from LA).

I learned the difference between a good investor and a bad investor.

Good investors that agree to take the time to meet with you, will listen — I mean really listen. They are super sharp. They meet with you because they are interested in your space and business. The first step is an exchange of information. You share your learnings and knowledge and in return they help by providing feedback. In my case, this included why they weren’t investing, and what I should focus on. At the very least, both parties walked away with new learnings.

Bad investors waste your time. Drag out negotiations. Ask for more information with little or no feedback. And when you ask about their process they say something like, “Let me get back to you next Tuesday after our partner meeting… er.. wait I actually think we have our next partner meeting in three weeks.”

8. Pivot

We started out focusing on the at-need market. I designed and implemented a three month pilot program with a prominent hospice provider whereby social workers took an iPad onsite while meeting with families during end-of-life planning. We faced a number of difficulties but the most notable was the technology barrier; hospices only wanted to endorse a true marketplace and not an exclusive platform. And even if we could have found a way past that marketplace vs. platform dilemma, I realized that the amount of friction caused by forcing social workers and 70+ year old family members accustomed to an offline process to use a online platform would take more time than we had the runway for.

So — we pivoted to the pre-need market. It started with a 48 hr cram study session to take a pre-need licensure exam. I passed. I needed the license to sell pre-need insurance policies in the state of California. The goal was to generate leads through 1) retirement homes and 2) online educational content about pre-planning your own death. In hindsight, and for the record, I am not 100% convinced pre-need insurance holds real value.

Shortly after pivoting, I landed myself in conversations with a potential strategic investor: a pre-need insurance company. I spent weeks discussing Halolife’s research, roadmap, and resources. Looking back, this was not a good use of time but I was desperate. It wasn’t until I arrived at an onsite with company executives that I was able to connect the dots. They were doing a couple hundred million dollars in revenue a year entirely on direct mail lead generation, ie. sending out postcards. An individual would see the ad in their mailbox and call to schedule an in-home session with a funeral planner and then wrote a check to fund their insurance policy for their funeral in advance. I had heard a similar story re. snail-mail-lead-gen from another pre-need insurance company while attending a funeral industry conference in New Orleans. This company even acknowledged that average age of their customer was 70+. At that moment, I came to the realization that the disruption of this space still needs a few more years before the technology savvy baby boomers are planning for their own celebration.

9. Denial

Failure really didn’t cross my mind until I had less than a grand left in the bank. Its hard coming to terms with failure after investing so much financially, professionally, and emotionally.

10. Shutdown

After scrambling for a few months and failing to get a term sheet or close a deal — I finally shut down Halolife. It was bittersweet; feeling relieved I wouldn’t be stressed out 24/7 but also like a complete failure for not achieving what I had set out to do.

It’s hard to describe in words how difficult it is to shut down your own company. Logistically, on the spectrum of shutdowns Halolife was easy. If you had to compare shutting down a company to taking a part a building piece-by-piece, Halolife was a LEGO log cabin. While a much more scaled-up company, take Jawbone for instance, would be akin to taking apart the Sydney Opera House piece by painstaking piece. Regardless shutting down a company is brutal for any founder. As irrational as some startup ideas seem no one sets out to fail.

If you have made it this far, it probably means you’re interested. Here are my last few pieces of advice.

1. Start small — focus on getting your first five paying customers. As Paul Graham would say, “Do things that don’t scale.” You can be building out a an MVP while you are doing this.
2. Seek to understand the pain points of all the stakeholders involved in the process. For example, most funeral homes aren’t digitally savvy and need to do a lot of paperwork that could be done electronically. Most families have to plan while their loved one is still in hospice. And all hospices send out surveys to patient families on the experience from which the hospice is graded on. So ask yourself, how can your business help improve patient experience?
3. Don’t waste your time trying to get media coverage, making T-shirts, or going after strategic partnerships. Large companies will want to talk to you about investing because the industry is changing faster than they can. Focus on your product and building something people want. Nothing else matters.

If you are still interested, connect with me here.