It was once a hot market. Is it still?
The top two executives at Hometeam, a once buzzed-about startup that tried to transform the senior care industry, are leaving their roles at the company in a major leadership and business model shake-up, Recode has learned.
Company president Matt Marcotte, who Hometeam said in an November press release would “play a critical partnership role” with its CEO, quietly left the startup entirely after only five months. And that CEO, Hometeam co-founder Josh Bruno, is in the process of leaving his job as well, a company spokesperson confirmed. He could end up staying in the company in a different role.
The back-to-back departures raise questions about the future of Hometeam, which has raised over $40 million in venture capital. Hometeam, which connects in-home caregivers with seniors needing assistance in the New York and New Jersey area, says that the leadership changes are not motivated by any struggles but by a desire to reorganize the company around a different business line.
Bruno declined to comment through the spokesperson. Marcotte did not respond to requests for comment on the reasons for his departure.
The leaders will be replaced by people who are better equipped to manage the business now that it is switching from a direct-to-consumer model to one that works through existing insurers, the spokesperson said.
The four-year-old company initially made money by paying their caregivers a smaller hourly rate than what the client directly paid the company. But in 2017, the company launched a second business line catered toward the elderly who are “dual eligible” — or people who qualify for both Medicare and Medicaid — and started being reimbursed by insurers, which also award bonuses to Hometeam on occasion.
Claiming success, the New York company shifted its business model entirely to this payer-focused model at the beginning of this year. The company declined to offer data on how the new business is faring.
Last month, the company took on $7.5 million of convertible debt financing, according to PitchBook.
Elderly healthcare was once a hot market for startups: Hometeam and Bruno were once described as “turning the senior care industry on its head” amid the industry’s brightest days. Several similar startups launched around 2013 and 2014 to tackle the same challenge, but the companies have struggled to cope with regulatory changes and have had to pivot their business operations several times. One of Hometeam’s direct competitors, Homehero, shut down about a year ago.
”To break away with enough escape velocity in home care, a company needs to effectively leverage technology to deliver a faster and better experience at a drastically lower price,” Homehero CEO Kyle Hill wrote last year when his company ended operations. “Currently, none of the venture-backed home care companies have been able to do that. Not one is price-disruptive.”
Hometeam also confirmed that it has terminated some employees earlier this year as it switched directions. It declined to specify the number of roles eliminated, but said the company currently has 400 employees if you include the caregivers.
Bruno has not yet stepped down as CEO but is expected to once his successor is chosen. He is helping the search for his replacement, which is in late stages, and will remain on the company’s board of directors, although it has not yet been determined if he’ll stay in an operational role at the company once it has a new CEO, the spokesperson said.
Marcotte, who became president of the company in October, left it in February, according to his LinkedIn page. He previously served as an executive at Apple and Tony Burch, where he led its direct-to-consumer program. That background made him less of a fit at Hometeam once it pivoted, according to the company.
Backers of the startup include Lux Capital and IA Ventures.