Sanoste - active ageing and a better life
Elderly care is in crisis and elderly people feel lonely. Sanoste attempts to resolve this problem in our society. With our digital platform, we provide rehabilitating and recreational virtual services and enrich the everyday life of the elderly.
From an idea to the market
We, the founders of Sanoste, saw the increasing need to provide versatile services for the elderly to support their independent living at home. We wanted to provide the services in an entirely new way by utilizing technology. However, the market was missing a cost-effective and easy-to-use commercial solution for delivering virtual services. The owners have refined their idea starting from product development and successful pilots all the way into a digital platform that has now been launched to the market. The platform combines our advanced back end systems and our unique marketplace. This means that the services provided by the company are now easily accessible to all elderly people.
Our company will soon launch its own Android and iOS applications, which enable the elderly to enjoy the services using their own familiar tablet device. For the time being, the services can only be delivered into a senior-tablet device specifically developed for the elderly.
With our digital platform, we deliver the virtual services produced by independent professionals using teleconference technology to the exact location the elderly customer wants. Our professional instructors are available in real-time, guiding and motivating those participating in the service. We already provide a wide selection of different services, ranging from chair exercise, chair dancing, pilates and Chinese exercise to singing groups. We are expanding our selection of services to meet the wishes of the users.
A world-class innovation
The virtual services delivered by Sanoste, together with the digital platform developed for their delivery, are a unique innovation also internationally; a similar service concept does not currently exist anywhere on the market.
We are creating a completely new form of service business by combining digitally the various actors on the market – the service providers, the customers and the end users.
Even the Finnish government, in its report, calls for platform pioneers like us who can utilise new ways of interaction and changing the traditional rules of business. We believe that we will be one of the major actors in the platform business in the future.
Virtual services are easy-to-use, intensive and easy to buy
In order to participate in the service, the end user only has to answer the call from the instructor. The connection is always two-way, meaning that the instructor and participant both see and hear each other. The instructors motivate and guide all those taking part in the service, but the participant can only see the instructor.
In the opinion of our elderly customers, the communication using teleconference technology is intensive and truly interactive. The participants feel that the instructor is their personal trainer and the technology is just a means of delivering meaningful content.
The services can be bought at the marketplace created by the company, the SanoStore web shop (store.sanoste.fi), where the customers can look for and compare suitable services, and also order and pay for them right away.
Home care organisations and family as customers
The elderly person is the end user of the service. Typically, the paying customers are home care organisations, service centres or residential care for the elderly. The services provide cost efficiency for home care organisations, while service centres and residential care look for increased rehabilitation and recreational services for their customers. The service can also be bought by the elderly person or by his/her family. In such cases, the motivation for buying the services is to continue a dear hobby or to have more content in everyday life.
The new services serve a great need – we have run out of skilled employees
There are around 75,000 elderly home care customers in Finland, and on top of that around 300,000 receive help from their next of kin. The number of elderly people is rapidly increasing all over the world, and the growth is especially rapid in Finland. As soon as in eight years, we will have 50 % more people over 75 than we have now. The number of home care customers has already grown significantly, and its customers are in a more fragile condition than before. According to the latest statistics by the Finnish National Institute for Welfare and Health, every third home care customer needs more than 60 home visits per month in order to cope with their everyday life. They also discovered that the number of employees has decreased significantly and that there is a constant lack of skilled employees.
Loneliness is a great tragedy as well as an expense
Loneliness is a reality for around 100,000 elderly persons in Finland. It has been proven to be connected to memory impairment, increased use of health services and institutionalised care, among other things. This means that in addition to being a personal tragedy, loneliness adds to the society’s expenses.
There are a lot of elderly people, especially in home care, who are no longer able to, have the strength to, or dare to go outside of their homes. When their possibility to take part in the services provided by the society becomes more restricted, the elderly person easily becomes an outsider in the society. These virtual services provide the elderly people with new and meaningful communication with professionals. The services become highlights of everyday life and something to look forward to.
In 2020, rehabilitating virtual services are a recognised part of elderly care
Because of the growing number of customers, traditional home care is forced to reduce the time used for each customer already in the near future. This means concentrating on only the most vital care needed to sustain life. Our virtual services provide a significant solution to this challenge. They enable bringing interactive and recreational services that reduce loneliness directly to the customers in a cost-effective manner with high quality. At the same time, employees can concentrate on such activities that call for their physical presence.
We bring happiness and well-being to the elderly. Our vision is that in 2020, our virtual services are an established method of providing a wide range of services for the elderly.
Vår affärs- och marknadssituation
The product and the demand
Sanoste has built a unique digital platform that provides a back end system and an on-line marketplace for distributing virtual services. We describe our solution as an Airbnb of elderly services, because we provide a platform that brings together scattered networks of service providers, customers and elderly end users. They all have already shown strong interest in our services. The need for ready-made digital content for the elderly is clear. We are discussing cooperation with a number of towns and municipalities as well as with the private sector.
As the distributed financing sources will be united with the social and health reform in Finland, the importance of overall financial benefits will gain emphasis. Maintaining the functional capacity of the elderly and arranging rehabilitation services prevents incidents of falling down, reduces the need for institutional care and improves the quality of life. It has been shown that rehabilitation also reduces the need for other social and health care services by as much as 25 %.
An increased use of virtual services in elderly care is also a goal in line with the existing government programme, and there is also a social demand for it. Nearly every municipality states that one of their main goals is to support elderly people living at home. It is more economical than permanent institutional care and also more ethical. These virtual services enable the elderly to live at home longer, provide meaningful encounters, improve quality of life and reduce costs – all at the same time. The City of Helsinki has calculated that virtual home care saves 85 % of the costs in comparison with physical home care visits.
Increasing market potential
The market potential is already considerable, and with the aging of the population this potential will quickly increase. The scope of the challenge of ageing is described in the report by Moody’s, according to which there are already five countries in the world where more than 25 % of the population has exceeded the age of 65 (Finland, Germany, Italy, Japan and Greece). In ten years’ time there will be 34 such countries, including countries with a very large population, such as France, Spain, USA and Korea. According to the statistics, around 20 % of those over 75 years in age need assistance in their day-to-day activities. Since the virtual services supporting the everyday life of the elderly is a new and growing market, the actual size and growth rate are still difficult to estimate.
Revenue generation model
Our company offers a unique sales and distribution channel to the instructors providing virtual services. The instructors, acting as independent entrepreneurs, market their own services in our marketplace and the customers buy and pay for the services of their choice. Our marketplace creates a completely new and expanding customer base for the instructors. Furthermore, our automated back end system is an easy and cost-effective way for the instructors to deliver services.
The company’s turnover consists of the commissions, or channel fee, calculated from the total price of the service. The channel fee is a flat-rate percentage that is deducted from the price paid by the customer before transferring the money to the service provider. The instructors can independently price their services and the prices are displayed in our web shop.
Due to our back end systems, our business operations are extremely scalable. The technology does not restrict the number of end users participating at the same time. The number of participants is influenced by the nature of the particular service; instructors such as physiotherapists want to see the participant closer, and that is why they wish to guide smaller groups than, for instance, the leaders of singing groups. Due to the scalability, the prices of the virtual services are always competitive compared to the services that are carried out physically in a traditional manner.
Sales, production and distribution
Our first target markets are both public and private home care organisations and residential homes. We are focusing our sales efforts especially on the private sector, as they are faster in making purchase decisions than the public sector. We have also contacted those municipalities where home care has increased significantly and/or the share of aged population is exceptionally high. In addition, we have carried out targeted market measures to those customers who already have a tablet device designed for the elderly at their disposal. In Finland, there are several suppliers for such senior-tablet devices and we have developed a delivery integration for the device supplied by the company called Circly. We are also undergoing active negotiations with other similar suppliers, and there will be new delivery integrations in the near future.
We have carried out pilots of virtual services with, among others, the home care organisation of Mainio Vire Oy, a part of the Mehiläinen Group, and as a group services with Setlementtiasunnot Oy, a company providing communal living. At the moment our company has virtual services in production and customers with on-going service orders. The number of customers remains small for the time being, as our active marketing efforts are only in the beginning stages.
The virtual services are delivered to several participants at the same time. This leads to cost-efficiency compared to traditionally produced services. The independent service instructors utilise our back end system in the delivery of the virtual services. The system ensures reliable teleconference technology for each end user and it also provides excellent privacy protection. Both the management of the groups and the delivery of services are easy-to-use and fully automated. For instance, Skype is lacking all such back end systems.
We are constantly looking for new professionals to offer services to new and existing customers through our service platform. The marketing aimed at the service providers emphasises the business benefits of the platform; reaching customers has never been this easy and cost-effective, as the digital delivery has no geographical limitations. Our service platform is designed to be easy-to-use and reliable and it does not require for the service providers to make expensive hardware investments or commit to licenses.
We actively market the services delivered through the platform. We market the services partly as a large and versatile selection from which everyone can construct a suitable, interesting and engaging daily programme. We also perform targeted marketing measures for single virtual services, such as the chair dancing marketing carried out during the Lets dance- fair. In the future, the service providers will also actively market their own services to both their old and new customers.
Our virtual services differ entirely from the various health care consultation services on the market (such as tele-medicine) in terms of their content, target group and distribution model. Our virtual services are delivered simultaneously to several participants. They are considered as a part of the social services provided for the elderly.
We have analyzed our competitive position from various perspectives. The traditional way to produce services, the various alternative digital contents and organisations providing various services can be considered as our competitors.
A traditional service is produced physically, at either the customer’s or the service provider’s location. Typically, the service is provided to only one customer at a time, and in order to implement it, either the customer or the instructor has to travel. Due to the lack of resources and the increasing costs, the service providers are unable to increase the number of customers in a way that our virtual services can.
There are a vast amount of digital contents available online, such as Yogaia (virtual yoga), YouTube, or YLE’s Elävä arkisto. Unlike our virtual services, these are not designed for the elderly, they are seldom interactive, and their user interface is too difficult for many elderly people. A good example of digital rehabilitation services is the Dutch Menomoto in which the customers cycle stationary bikes in front of changing digital landscapes. However, as the equipment is expensive, it is not suitable for home use, and at the moment it is only used in residential homes.
There are also service integrators within the social sector, such as Tampereen Kotitori and Lahden PalveluSantra. They are, in fact, electronic service directories that supply physical services to the elderly. These integrators are not our direct competitors, but instead they might act in the future as a marketing channel also for our virtual services.
There are some organisations in Finland that provide their own virtual services for their clients. For instance, the City of Helsinki and Kauniala Hospital produce their services from one service point, so that all the end users need to take part in the same service. Furthermore, they lack the automated back end systems. Managing the groups manually is a slow process that is prone to mistakes, and it cannot be scaled.
The business volume based on virtual services has been so small for the time being that it has not been of interest to large mobile operators. Even though they are interested in services delivered to tablets, content production is not their core business. Indeed, our company sees the mobile operators as partners that offer an existing distribution channel, while we can offer them content that interests their clients.
The big international actors only start moving when the market has grown big enough. We estimate that in such a situation our product development has at least one year’s head start.
The population is ageing rapidly, and due to the increasing customer base, it is necessary to reduce the time used for each home care customer already in the near future. The elderly care market is in urgent need of innovative and cost-effective solutions to help the limited human labour to take care of the growing number of elderly people. This provides our company with a unique chance for growth. However, the conservative nature of the social and health care sector, the long procurement process in the public sector, and the so far underdeveloped market could delay the growth. But change is inevitable. The expensive and labour-intensive social and health care sector cannot avoid digitalisation, and the first cities have already started tendering for virtual services.
Our successful pilots with the Mehiläinen Group and with Setlementtiasunnot Oy have both generated paying customers. The expansion of the customer base and internationalisation are the most important growth paths for the company.
1. A larger customer base of elderly people with our own applications
In October 2017, the company will launch its own Android and iOS applications for tablet devices. The need for the applications came from elderly users who want to participate in the services using their existing devices. Due to the bigger screen, elderly people prefer to use tablet devices instead of smartphones. This phenomenon was also found in the new study conducted by DNA. Another finding was the strong growth of on-line shopping of the elderly.
The paying customer of the service is either the elderly person or his/her next of kin. Creating awareness and interest in our virtual services is the first step in our sales process. We have already started our marketing actions to reach these goals. We have a strong presence in social media (Facebook, Twitter, Linkedin) and we actively take part in the conversation concerning, among other things, the loneliness of the elderly, the meaning of living independently, and their impact on the quality of living of the elderly and on society’s expenses. Sanoste also writes blogs about these topics and regularly sends out newsletters.
Our own applications also give us more possibilities to support the customers’ willingness to try new services. In connection with the launch, we will reduce the threshold for participation by using various marketing measures and by offering discounts. Based on our experiences, up to 50 % of the end users who have tried our services make a long-term order.
Growing demand for services due to the ageing population is an international challenge. For instance, the EU has named the increase in the number of elderly people as one of the most significant social challenges in the whole of Europe. We aim to start internationalisation measures as soon as possible.
Virtual services are scalable by language. Our first steps of internationalisation are directed towards the expatriate Finns who live in Sweden and Spain. We can already deliver to them services produced in Finland in their own native language. Especially the aged Finns in Sweden form an interesting customer potential. There are around 700,000 Finns living in Sweden, and tens of thousands of them are going to need various services for the elderly care in the next few years. Many of them speak only Finnish due to memory impairment, and the minority act in Sweden requires that services have to be offered also in Finnish already in 59 municipalities of the total of 290 municipalities.
We are starting the actual internationalisation process through our own network in such countries where the structure of elderly care and the rehabilitation goals for the elderly are similar to those in Finland, and where the digitalisation of the society is already considerable. Such countries include, for example, Sweden, Denmark, the Netherlands and Ireland. Some virtual home care pilots have been conducted especially in the Nordic countries, but no recreational or rehabilitating virtual services have been offered. We have concluded preliminary negotiations about cooperation with some cities, including Västerås in Sweden and Copenhagen in Denmark.
In our internationalisation efforts, we continue close cooperation with companies supplying tablet devices for the elderly (such as Circly).
3. New customer groups with our own applications
The applications for the tablet device also enable entirely new user groups, giving the company the opportunity to offer services also to other customer groups than the elderly. The content can be offered to other users that have difficulties reaching services, including the disabled, those on family leave, carers or prisoners. Alternatively, our company can offer such services that are not available in rural areas (Chinese exercise, learning rare languages).
We can also offer so-called White Label products with our new applications, i.e. companies in various fields can offer their own clients virtual services using our platform. For example, a physiotherapy company can increase its competitive advantage by offering its clients virtual physiotherapy in addition to the traditional physiotherapy, using our back end system for managing groups and for delivering the services.
The growing market of those over fifty also creates a new and interesting opportunity for our company. The value of the global 50+ market is estimated as USD 15 billion. These consumers make up a market segment that possesses vast purchasing power. They are interested in active ageing and maintaining a healthy lifestyle, among other things. They are also experienced users of technology who look for new services to suit their lifestyle.
The growth paths for new customer groups need more detailed strategic planning, market analysis, and thorough examination of the product development measures needed to meet the customer expectations.
The personnel of Sanoste consists of seven professionals with expertise in a wide range of different areas, including selling, marketing, service design, communication and product development of digital services and corporate management.
The company has an active board of directors comprising of the company’s founders. The board of directors supports the organization and takes actively part in the development of the company. The members of the board complement each other’s experience in elderly care, business development, service design and financing.
Managing Director and Founder
M.Sc. (Econ.) with 20 years of experience in international business, virtual service development projects and managing organisations in the field of medical technology.https://www.linkedin.com/in/marianne-dannbom-59a150a/
Chief Technology Officer
M.Sc. (Tech.) with ten years of experience in developing information systems. A passionate developer who loves challenges. He also develops our Android application.https://www.linkedin.com/in/kari-heikkila-0066893/
Sales and Marketing Manager
Master of Social Sciences with five years of experience in developing the business and sales of the care service business. She has also worked in research projects related to service production development.https://www.linkedin.com/in/noorajuvonen/
Samir Al Kurdi
Back end system expert with more than five years of experience working in various startup companies.https://www.linkedin.com/in/samir-al-kurdi-55137226/
Bachelor of Engineering, Information Technology, Computer Software Engineering who has mainly focused on the development of e-commerce and on developing user interfaces for service providers.https://www.linkedin.com/in/janeriksundman/
Trong Triet Le
Mobile Application Developer
Bachelor of Information Technology responsible for the iOS application. Motto: “Do what you love, love what you do”.https://www.linkedin.com/in/letrongtriet/
Digital Communications Designer
Strong competence in communications, marketing and content production. Passionate about writing, photography and video production.https://www.linkedin.com/in/caro-vehmas-692308144/
Founder and Chairman of the Board
Medical doctor and Adjunct Professor for geriatrics with nearly 20 years of experience in elderly care, dementia, medical research and business.https://www.linkedin.com/in/jouko-laurila-68b9b820/
Founder and Member of the Board
Licentiate in Technology with over 30 years of experience in business management and funding.
Founder and Member of the Board
Serial entrepreneur and Master of Arts with over 20 years of experience in the media, service design and innovative assignments.https://www.linkedin.com/in/mia-marttiini/
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Naturally, there are risks involved in the activities of our startup company. We have described here the most significant risks as well as the company’s vision regarding how we are prepared for each risk.
The growth of sales will be slower than expected
It is challenging to bring a new concept that needs a new operational model to the market, where the share of public sector is dominant. The procurement process in the public sector is slow with its tendering, and its approach can be described as conservative. In addition, it favors unpaid pilot projects before new concepts are implemented. A small enterprise like ours does not have the resources to offer free pilots. The company has already started sales efforts in the municipalities where the number of elderly people will rise significantly in the near future. The sales and marketing efforts are focused mainly on private organizations, since they make their purchasing decisions faster and are more interested in new cost-effective operational models. We believe that the private organizations will lead the way also for the public sector.
The company’s own applications enable significant growth, as elderly people use increasingly tablet devices. The company has already targeted marketing measures in order to increase the awareness and interest of elderly people and their next of kin regarding virtual services and about their positive social and health effects. We are going to continue and increase these activities.
People’s aversion towards virtual services
Many people think that services delivered with the help of technology are cold and they are compared to robotics. Relatives usually wish that real people will take care of their loved ones. Our own experiences and also many pilots have shown that a teleconference encounter is both intensive and truly interactive. The participants feel that the instructor is their personal trainer and the technology is just a tool used in order to deliver meaningful content. We should also bear in mind that we need to utilise technology whenever possible due to rapid increase in the number of elderly people and the lack of human resources for the services.
In order to reduce the aversion that people may have for virtual services, we actively utilise positive user testimonials in our marketing.
We are a technology startup company, and therefore also technological risks must be taken into account. The technological risks include the functionality and continuity of the technology, as well as the operational risk of technology. The teleconference technology we use, WebRTC, has been established as the technology for large operators (such as Google), meaning that the continuity of the technology is not a remarkable risk. The operational risk is more considerable, for example in the event that our technology provider Tokbox would disappear from the market due to termination of operations or an acquisition. However, there are several similar operators on the market and we are prepared for such operational risk. The delivery of a video signal is not our core business and changing the supplier is relatively simple and quick.
The service platform developed by the company offers a possibility to deliver the right services to the right subscribers in a cost-effective manner. We have comprehensively tested our system’s resilience against malfunctions and also its capacity, and in the follow-up during the last eight months the availability of the service has been more than 99.9 %.
The company is about to issue a relatively small number of shares that does not guarantee funding in the future. According to the company’s estimate, the funding to be raised will be sufficient to open the market in the European countries mentioned, but we will need additional funding at the latest when we enter the markets of the big European countries. Should the company succeed in its goals even to a reasonable extent, it can be anticipated to be an interesting and desirable investment object.