About the Hippocratic Oath and VC Investing
As the daughter of two physicians, I was never able to explain to my father what it is exactly that we do in venture investing. In his eyes, investing money in great ideas hoping that the people leading them will grow them to be amazing companies, takes as long as it takes him to instruct his banker to buy stocks of a specific traded company. It is what we actually do during the work day (while he is in the operating room), which remains a mystery to him.
I must say that other than the professional necessity to be curious and always be learning new things (and what a privilege it is) — there aren’t many similarities between what my parents do in their day-to-day and what I do.
However, after a couple of years in this industry, I find that there is one fundamental basic that applies to both.
First, Do No Harm
Hippocrates was a Greek physician, from the ‘fun in the sun’ little island of Kos. He is thought to be the father of medicine, establishing medicine as a stand-alone profession, and as such (indirectly and centuries later) created my two overachieving parents who are 100% in love with their jobs and at least one daughter (but probably all three) who truly believes with all her heart that no profession in the world is as rewarding or as important as medicine.
Hippocrates wrote the Hippocratic Oath, which sets the 4 fundamentals of medical ethics. One of them, nonmaleficence, is “first do no harm”.
While this sounds like an obvious, almost trivial statement, it is not in medicine nor in venture investing.
When a suffering patient goes to the doctor, it is against every bit of the doctor’s nature to not treat them. However, in some cases this is exactly what is expected of them. When treatment cannot better the situation for the patient and may even have an overall detrimental effect, the doctor is expected to back off and do nothing.
Wikipedia explains the scenario further stating “given an existing problem, it may be better not to do something, or even to do nothing, than to risk causing more harm than good.” It reminds physicians to consider the possible harm that any intervention might do.
Don’t (always) Put Your Mouth Where Your Money Is
We as investors like to “add value”. Not only do we enjoy contributing our money, but also our wit and experience. Furthermore, we like to be involved with building a company and (hopefully) driving impressive returns for our investors. A smart founder will know how best to use their investor(s) and drive as much value as they can from that firm, which has vast visibility in the market. In the currently booming private investments market, it has become a sellers’ market. With abundance of money available, it is really the additional mentoring and networking aspect of the founder-investor relationship that is meant to serve as the “casting vote” in choosing one investor over another.
But a good advice, even by a smart and experienced person, needs to be given when it truly does add value, and this isn’t always the case.
Embracing That Knowledge Is Power
An investor must assume that a founder that sits with her/him on a bi-weekly meeting is more knowledgeable about her/his technology, market, and domain than the investor.
Why?
Because this person eats, drinks, and breaths the industry of her/his startup for a significant portion of her/his life, and when (s)he sleeps — (s)he dreams it. And frankly, if this isn’t the case, then you made the wrong investment.
This isn’t to say that an investor never has anything to contribute to the founder’s business. An experienced investor has seen dozens of companies. They have seen the founders struggle through planning the right go-to-market and executing it, the challenges in growing a technology company into a revenue generating business, and many times (because statistics don’t lie) the pain in letting everyone go and shutting down.
But sometimes, as in those very rare cases when a doctor cannot do anything for their patient, a founder has an actual plan which is built on a deep and thorough understanding of her/his target market — and an investor must come to terms with the fact that there is nothing they can do for their founder. A smart investor knows when they have no value to add, when they better stand off and do nothing, so as to first do no harm.
Because when an investor chooses to speak her/his mind, and when the investor often also has a seat at the board table, a founder can sometimes get confused between receiving advice and instruction. If the founder isn’t experienced enough to tell these two apart, (s)he is likely to follow the advice of the more experienced though less knowledgeable person around the table. And in that case, harm may be caused.
And us investors, like physicians, should always aspire to first do no harm.
