Nice Wins (especially in healthcare).

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I have always wanted to invest in a company whose product was kindness. How can you argue against the product market fit for kindness? But how do you build and deliver a “kind product”? At first, it seems impossible. But the more I thought about it, the more I realized that kindness and being a nice person has been integral to every company’s product I have ever invested in. Much of this realization came when Waterline actually invested in a company called “Nice Healthcare”. While the company name itself is a perfect fit for this story, when I met Nice’s co-founder and CEO, Thompson Aderinkomi, I knew that he was the perfect product manager of kindness. Thompson, and the Nice Healthcare team, was core to our overall investment thesis at Waterline: Nice people will win in healthcare.

You are probably in one of two camps on this idea: 1) Robbie, you are completely wrong. There are nice and not-nice leaders, some are good, and some are bad. Being nice has little to no impact on whether a company is successful or not. Or 2) of course this is true, Robbie. Being nice will help a company in any industry be successful, regardless of whether it is a healthcare company.

Perhaps these rebuttals are both true. Although let me present my evidence for why healthcare is different.

For those that have been working on the business side of healthcare for a large part, if not all, of their career (like I have been), you know that things work differently in this industry. We have an overly complex system, with lots of acronyms, little transparency, and extremely difficult to understand payment methodologies and practices. This complexity is what drives innovation. And who drives innovation? Entrepreneurs. I believe that the best healthcare entrepreneurs score very high on the Niceness Scale.

In healthcare, there are two key elements that create this incredible need for humility and being a nice person. The first is that every healthcare business either directly or indirectly touches a person’s wellbeing. There is nothing more personal than this. The second is that in the love triangle of the payor-provider-pharma landscape, you are usually dealing with at least one non-profit entity (government payors included).

In most supply and demand markets, a better product being sold for the same price will almost always win. But in healthcare, that’s not the case. Why? Because with so many non-profit entities, we are working in a world without perfect market conditions. Have you ever seen the user interface of an EMR? It looks a lot more like Windows 95 than Windows 11. EMRs are the most expensive technology platforms a hospital will buy, and yet they still can’t hold a candle to basic software products in other industries.

Let’s take a hypothetical situation, where a new software platform that helps hospitals automate filling vacant nurse shifts, is being presented to the Chief Nursing Officer (“CNO”). We can call this hypothetical company Andgo (which happens to have the same name and product as a Waterline portfolio company). The CNO’s priority is the wellbeing of his/her workforce, and to deliver better care to the hospital’s patients. Whether or not the new technology platform has a sleek user interface is not the priority. The platform working and delivering value is obviously critical for the sale, but just as important is the relationship the CNO has with whoever is selling this new platform. This hypothetical company’s CEO named Tom (who once again just happens to have the same name as Tom Ross, the CEO for our portfolio company Andgo selling a nurse staffing platform) equally needs to impress during the sale process with the CNO. Because if this new program or platform is “successful”, the CNO isn’t going to get a bonus, the enterprise value of their non-existent stock options aren’t going to increase, and they are probably not going to get a raise. Instead, they are going to get a pat on the back from their team, and immediately be expected to move on to solve the next problem. Hopefully this relationship that was built between Tom and the CNO leads to Tom being asked to help solve the next problem.

If you are in the shoes of a healthcare executive choosing a new technology or service platform, wouldn’t you only want to work with nice people? Isn’t that going to be a huge part of your decision-making process? I have spent several years working with major health systems both as an investor and as an operator. In my operating days at Shields Health Solutions, I can tell you that niceness didn’t always get me in the door, but it was definitely the reason that I was invited back.

When I meet with entrepreneurs, their “nice” factor is the first thing I evaluate.. Since the founder/CEO is usually the lead sales person in early-stage companies, it is even more important that they are the one that is oozing niceness. Niceness compounds in a company because this ends up being a trait founders look for when they are recruiting their team.

Back to Thompson, who I mentioned at the start. When I met Thompson in March 2020, I was blown away by his charisma and passion about wanting to build a company that made healthcare a “nice” experience for patients receiving primary care. He aptly named the company “Nice Healthcare”. Thompson wanted to flip the model, bringing care to people, in the most convenient way possible:

Virtual | At-home | Free for patients

Sounds pretty great…

Thompson praised his employees for having a 90%+ NPS score for their work at Nice. He was even more proud to have an equally high 90%+ NPS score for his patients. All of this stemmed from Thompson’s personality, and him instilling a culture of being nice to employees, patients, and customers. The companies clinicians all demonstrate these qualities, and they then deliver an outstanding patient experience for each member that they care for.

This was reminiscent of a saying that I would hear Jack Shields (founder of Shields Health Solutions and co-Chairman of Waterline Ventures) say countless times around the office: “we treat patients the way that you would want your grandmother to be treated”. And he meant that. Jack encouraged his employees to go the extra mile, do whatever it takes to solve problems for patients, and make them feel loved. Sometimes this meant daily phone calls or visits between patients and clinicians. Or realizing that a patient may be dealing with an issue having nothing to do with the services that Shields delivered, but still helping them figure out a solution. That is such a great foundation to build a healthcare businesses off of (and is why Jack ended up winning E&Y Entrepreneur of the Year). This compassion for helping people is why doctors and nurses became doctors and nurses. It’s also what we as investors and operators in the space need to remember when building companies working inside the healthcare system.

When we invested in RubiconMD several years ago, I wrote in my investment memo that co-founders Carlos and Gil were “two of the nicest people in the healthcare IT world”. I believe this is why they were so successful. I feel lucky to have been able to work with Carlos and Gil, just like I feel lucky to be able to work with Thompson, Tom, and all of the entrepreneurs in the Waterline family. As I grow as an investor, I find it harder to think that I could ever invest in someone who was not a nice person. And this also goes both ways. I believe that I have to pass the same “Nice Test” for entrepreneurs to choose and trust me as an investor.

So here is my takeaway: Nice wins.