Do Investors Really Prefer Painkillers Over Vitamins?

By David Hassell

While I was seeking our most recent round of fundraising, some investors passed on the opportunity stating that we are a “vitamin” and not a “painkiller”. I tried to explain that we are actually a communication tool, but the humor was lost along with the money.

The vitamin vs. painkiller dichotomy is a common metaphor in Silicon Valley, especially among venture capitalists. Despite the fact that the market for vitamins is 10X that of painkillers, many venture capitalists are convinced that it’s better to invest in a quick-fix problem-solver than a preventative measure.

Health care companies know that paying for preventative care equals more profits, because healthier patients need fewer costly interventions. Why can’t Silicon Valley see this same concept?

Take 2 of these and call me in Q3

“Painkiller” companies ostensibly provide immediate relief to customer and this helps them to drive more revenue or lower the cost of running their businesses. “Vitamin” enterprises, on the other hand, are seen as a nice to have, solving a pain-point that doesn’t feel all that painful. These companies are perceived as a risky investment for not being driven by intense customer needs — ones likely to drive immediate revenue.

This paradigm is precisely what’s wrong with the common approach to business growth.  If you want to increase revenue, you have to diagnose the barriers. Is communication stifled? Are people unclear on their goals? When you just get rid of the pain, you numb your ability to adequately gauge the symptoms.

Revenue directly results from performance, and performance suffers when managers are disconnected from their employees. Solving internal communication dysfunction may be seen as a nice-to-have, but it’s actually a main factor impacting performance. And unfortunately there is no quick-fix.

Numbing the pain prolongs the disease

Ever have a painful headache? You will do anything to end the throbbing as soon as possible. So you open a bottle and pop some pills in your mouth. Ahh relief!

What happens six hours later or the next day? The headache returns, because the painkiller was insufficient. The real issue might be that your computer screen is too bright, maybe you need more rest or water, or it could be a sign of a serious health issue. The pain seems to be getting in the way but it is actually helping you by making you aware of an underlying problem.

The same is true in business. Managers are looking for a high level of output from employees. When productivity is low, they can yell and threaten people or they can promise a bonus. But if employees are unappreciated and unsupported, or people are not working in roles aligned with their passions and skills, the promise of a bonus won’t have any significant impact on performance.

‘Vitamins’ can lead to profits

In the real world, painkillers mask the symptoms. They can get us through the day while our health is silently deteriorating. If a headache originates from dehydration, tylenol makes us temporarily feel better but we should really be chugging water. Don’t just look at the symptoms, look at the cause, because prolonged dehydration over months or years can result in kidney and liver issues.

Likewise, when performance is low, managers may try to solve it quickly by offering a bonus or threatening staff with termination. Maybe this will influence productivity for awhile, but without asking questions or having a conversation the situation can worsen. Unhappy employees could spread their discontent throughout the organization and vital staff members could leave the company en masse.

Solid employee communication is not just a nice to have, and it’s more than just a vitamin. It’s a diagnostic tool that pays dividends in healthier, happier workers that are more productive, innovative, and profitable. In fact, the best places to work in 2014 had an average revenue increase of 22.2% and added new employees at a rate five times that of the national average.

Instead of asking how can we get the most out of people regardless of what’s going on beneath the surface, managers can ask employees what they want. Give them a voice to declare their triumphs. Provide a safe and inviting platform to share challenges and issues so that managers can provide direct support.

Streamlining communication may not be considered a painkiller, but it has proven vital for nearly a thousand of our customers and counting. And I am happy to report that 15Five successfully raised an additional $2.2 Million last October. It looks like there’s value to taking your “vitamins” after all.

A modified version of this post appeared on Entrepreneur.

Image Credit: Mike Mozart

Are you an investor or an entrepreneur seeking funding? Tell us what matters most to you in the comments below.

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