Former Sun CEO's New Venture: A Healthcare Locker for the "Sandwich Generation"

Jonathan Schwartz, the former Sun Microsystems CEO who sold the server-and-software maker to Oracle for $7.4 billion in 2009, was in the hospital for surgery a couple of months ago. When he went to get an MRI, he noticed that the imaging machine was hooked up to a Sun workstation. Sun’s most famous tag line was “the network is the computer,” so it was a bit ironic when Schwartz left the MRI suite and the radiologists handed him his scan on a CD-ROM. “Then wherever I went, they would ask me, ‘Do you have the disc?'” he recalls.

That didn’t sit well with the former math-and-economics major. So Schwartz hacked the file format for the MRI data, uploaded his image files to CareZone, and gave his doctors access to his account. Network restored—no more carrying around a physical copy of his medical files.

But what’s CareZone, you might wonder? It’s Schwartz’s own new startup, and it provides private, online data lockers intended to help people keep track of their family members’ medical care. The San Francisco- and Seattle-based company made its public debut today after more than a year and a half in stealth mode.

In effect, Schwartz the surgical patient was acting as a private alpha tester for his own product. He says he doesn’t expect other CareZone users to hack and upload their MRIs—“I don’t consider that within the norm,” he jokes. But the episode does illustrate an important aspect of modern-day healthcare, namely the fact that patients and/or their family members are expected to handle more and more of the recordkeeping and logistics that go along with an illness.

CareZone is designed with one particular audience in mind, Schwartz says: middle-aged people who are caring either for sick children or aging parents, or both. “I am a card-carrying member of the sandwich generation,” he says—he and his wife have two young children, one of whom was born with a chronic health issue, and they are also responsible for the care of five parents, including one step-parent.

“When our child was born, we faced the same problem every parent is faced with—where do we do all this?” Schwartz says. “You can e-mail some documents around, but realistically, there is a big drawer in the desk that fills up with the stuff you know is important. On the other end of the spectrum, if you have ever been in a situation where your parents have turned to you and said ‘we need some help,’ it’s a very private conversation with you and your siblings and your parents, and it can be really complicated.”

A contacts page on CareZone

At CareZone, caregivers—the startup calls them “helpers” to distinguish them from medical professionals—can set up separate online profiles for each family member under their care. For each care recipient, helpers can store key reference and contact information, medication lists, medical and legal documents, to-do lists, care instructions, and journal observations. There’s also a Facebook-like news stream where everyone with access to the account (say, a group of siblings) can leave updates and messages.

But that’s where the resemblance to Facebook ends. There’s no targeted advertising within CareZone and no complicated system for modulating privacy levels. Accounts are private, period. “It’s designed to be an entirely private space where we do not permit advertising and we can give assurance to our customers that only they are in charge of their data,” Schwartz says.

In fact, while Schwartz describes CareZone as a social network, he took great pains during an interview with Xconomy on Monday to draw contrasts between his company and other social networking players like Facebook and Google. He doesn’t have kind words for either company. (See the full interview below.)

“If you take a step back and look at the Internet over the past 15 years, it’s characterized by two things—narcissism, where everything is about me, me, me, but also by the productivity-privacy tradeoff,” Schwartz says. “We’re told ‘We will give you products for free in return for the ability to harvest information about you that we can sell to the highest bidder.’ If you think about these businesses, privacy is really toxic to them. They are faced with the paradox that their users are their product and their advertisers are their customers.”

CareZone, by contrast, will make money solely from subscriptions—access to the service will cost about $50 per year per care recipient, Schwartz says. “I wanted to build a company where my customers were my users,” he says. “That way I won’t have to spend my time lobbying in Washington to weaken privacy legislation and then tell my users that it’s good for them.”

CareZone went through a couple of stealth names before it came fully out of the closet today. It used to be called Informed Biometry, and was also known as Picture of Health. It’s Schwartz’s first startup since he founded Lighthouse Design in 1989. (That company made software for Steve Jobs’s NeXT Computer, and was bought in 1996 by Sun, where Schwartz’s first job, interestingly, was working for Eric Schmidt, then head of Sun Laboratories.)

Schwartz’s co-founder at CareZone is Walter Smith, who is also co-founder and chief technology officer at Jackson Fish Market, the Seattle-based Web and mobile development studio and user-experience design consultancy. Schwartz says Smith is one of his oldest friends. In addition to that distinction, Smith was part of the team that developed the original Newton PDA at Apple, and was a developer and architect at Microsoft from 1996 to 2007.

The seven-employee company is self-funded, although “we are always on the lookout for folks who can help us grow the business more rapidly,” Schwartz says.

Here’s an edited version of my interview with Schwartz.

Xconomy: I have a friend who was working with his siblings in two different states to coordinate care for an ailing parent. He asked if I knew of a place to share all the paperwork. I suggested, which worked okay for them. Why is there a need for a dedicated place for healthcare information?

Jonathan Schwartz: Folks in Silicon Valley might say that or Dropbox are really easy to use. Now try explaining it to your non-technical sibling who lives in Iowa and is really busy and just wants to know what is the URL. We are big Dropbox users ourselves, and it’s a fabulous service, but there is not one hammer for all nails. Right now a lot of this communication may take place over e-mail and other channels. We wanted to bring it together in one place.

X: How big is the market for this service?

JS: From what we have heard, people have parents all over the world. Also, from what we have heard, people have children all over the world. So it’s a very big market. To the extent that we can capture the requirements of people who are caring for their loved ones, and help them be more efficient and effective so they can worry less, we will be successful.

X: Describe the business model for CareZone.

JS: For an introductory period of 30 days—through March 17—a three-person account is available for free, without limitation on the number of helpers who can join, for one year. We will invite a bunch of people in during that free period and that will be the charter group for us. After the 30 days, a subscription is available for $5 a month or $50 a year, prepaid. That is per person being cared for, with volume discounts that we haven’t rolled out yet. It will likely be $8 per month for two people, $10 for three, et cetera.

X: No ads, ever?

JS: We will never sell ads, we will never sell your data. We don’t have access to your data—only you have access to your data, since it’s encrypted. Now, the reality is that we can generate a password for someone who forgot theirs—so it’s our policies and practices, not just our technology, that protect you.

X: You haven’t started a company since 1989, when you founded Lighthouse Design. What possessed you to go back to being an early-stage entrepreneur?

JS: I cared a lot. I saw what was going on with the people I cared about, both in my own family and the people I’m surrounded by.

And there’s always the reality that some of the most interesting business problems we faced at Sun were centered around helping customers deal with very large-scale audiences. Whether you are a government agency trying to delivery an update to your citizenry, or a bank with 20 million customers or a telco with 50 million subscribers, or a social networking company with 80 million users—it was kind of clear that the network-connected consumer is one of the most powerful forces on Earth.

I also wanted to go back and focus on end users for a while. I had spent 25 years focusing on enterprises, and it’s a great business, but it also has very high switching costs, and at times it can be really slowed down by complexity. Whereas consumers are making buying decisions every day. This is a greener field, and it’s one where we can make a difference in how we bring our technology to the marketplace. I have to admit I’m watching closely the debates over privacy legislation around the world. We are just getting to the point where people are realizing that privacy matters. We have the opportunity to not only solve a social problem in building people a safe place, but to do so in a way where we promise to protect people’s privacy.

X: Just from the brief look at the product you’ve given me, it seems like the kind of thing—given the state of Web development in areas like social networking and document sharing—that wouldn’t be all that difficult to build, or for someone else to replicate. So do you think of the privacy promise as your main competitive advantage?

JS: Well, three things. One, it’s harder than it looks to do this at scale and to do it gracefully. Two, we are not standing still—you are looking at our 1.0 implementation, and we have a long road map in front of us. Three, we hope to be able to convey to consumers something that will be difficult for others to convey, which is that we are entirely focused in their privacy and on servicing them for the long haul. We have lots of capital; we are very well funded. This is a business we are building to be durable, not the next disposable startup. Those are things that are hard to compete against.

X: There’s a lot of innovation going on in the healthcare IT space—as you know, there’s a whole startup accelerator in San Francisco, Rock Health, devoted to that. And a lot of the companies entering that market today are looking at health plans and insurers as their customers, the ones who will pay for all these services. You weren’t tempted to go that route?

JS: Like I said, I like being able to know that my users are my customers. As soon as you start dipping into “the payers are my customers” or “the pharma companies are my customers” you end up with a motivation that may not be in alignment with your users. Healthcare is a $7 trillion global market, but it’s also a two-syllable word. I don’t view us as a health company. We are a care company. Plenty of people will focus on health—including great institutions like the Mayo Clinic and the Cleveland Clinic and UCSF. We want to help families take care of their ailing members.

X: Is CareZone compliant with federal privacy regulations like HIPAA? If a family wanted to invite a doctor or nurse access to their account, would they legally be able to share patient data through the system?

JS: It’s not HIPAA-compliant today, but I believe we will be compliant shortly. The only reason we are not now is that I have not seen any user say it matters to them. I don’t think doctors are going to want to spend a lot of time engaging with a social network. We are more focused on what happens in between doctor visits. But to the extent we can, we want to interact with the other systems our customers care about. That may be just as likely a medical supply company or a pharmacy as a doctor’s office.

X: These days, people are gathering more and data about their own health. At the extreme end of that, you have the quantified self movement. It doesn’t sound like CareZone is really intended for them.

JS: When we looked at the market for self-care, we found it was divided into two groups. On the one hand there are people who care about their health, and they tend to be healthy. On the other hand you have people who don’t care about their health, and the problem is that they are not healthy and they don’t care. So you are left with the conundrum of serving either people who don’t need you or people who don’t care about you. The sliver of people in the quantified self movement is really tiny. [At one time] we wanted to build a platform that allows them to aggregate their data, but it turned out that is not a business, it’s a service.

We wanted to follow biology and not try to fight it. With CareZone you don’t have to tell someone what your value proposition is. You just have to tell them “it helps you take care of your child” and they immediately understand what you are talking about.

Xconomy goes the extra mile to bring you the most in-depth coverage of technology and entrepreneurship. Compare this story to:

Jonathan Schwartz Launches CareZone, A Simple Caregiving Site With Big Plans (TechCrunch)
Jonathan Schwartz returns with new start-up focused on caregivers (San Jose Mercury News)
Former Sun CEO Schwartz Back With Startup CareZone (Wall Street Journal)
Ex-Sun CEO launches CareZone (San Francisco Chronicle)
Health Help: Former Sun CEO Jonathan Schwartz Talks About New CareZone Start-Up (Video) (AllThingsD)

Wade Roush is a freelance science and technology journalist and the producer and host of the podcast Soonish. Follow @soonishpodcast

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