The First Celebrity Internet IPO
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I was mocked last Friday, vilified, when I predicted that soon every person in America would be their own Internet IPO. And then along comes a former Reagan Cabinet member to support my thesis and salvage my tattered pride.
Serendipity's name in this case is Dr. C. Everett Koop, once U.S. Surgeon General and now arguably the most admired medical professional in the country, the lone possible exception being that tall, thin guy with the round glasses on "ER."
Koop also is chairman of an Austin, Texas-based online health and medical information start-up that bears his name.
The company, formed in July 1997 as Personal Medical Records and now known as drkoop.com, filed with the SEC last Friday to go public under the Nasdaq symbol "KOOP." (Note: They scoffed when I laid out a scenario in which people would be given their own ticker symbols.) Drkoop.com and underwriters Bear Stearns, William Blair & Co. and Wit Capital hope to raise $50 million in the offering.
In the short, storied annals of Internet stocks, this is nothing less than the branding play of all time. The bet being made here is Dr. Koop is so well-recognized and trusted - think Abe Lincoln meets Marcus Welby -- that people seeking medical information will flock to his health care portal before all others.
And why not? Just look at the direct competition: Companies with names like accesshealth.com, healthgate.com and intelihealth.com. Nothing there to quicken the pulse. In contrast, if you close your eyes, you can hear the chant on the trading floor: "Koop, Koop, Koop..."
Drkoop.com's business model involves a mix of advertising, subscription and e-commerce transaction revenues drawn from advertisers, vendors, and health care organizations. Multiple income streams are nice, but in drkoop.com's case they are mostly a fervent wish - revenue in 1998 was a paltry $43,000.
That figure isn't quite as bad as it looks. The site went live last July, but didn't start generating revenues until November, when it launched a subscription-based Web site co-branding service for local health care organizations. And the first banner ads on drkoop.com didn't appear until December.
Ultimately, drkoop.com's prosperity will be determined by its ability to drive traffic for advertisers. To that end, the site offers visitors an impressive variety of healthcare content on an easy-to-read, inviting home page. Besides information and tips on nutrition, fitness and chronic illnesses, drkoop.com features access to medical databases and a network of more than 100 hosted chat support groups.
In addition to its content, other traffic generators include links to drkoop.com from Internet portals and other Web sites, as well as health care organizations.
The company reports that through last month, drkoop.com drew more than 2.6 million unique users, of which more than 83,000 are registered.
Of course, the magnet that will most effectively draw health care consumers to the site is the man and the brand. Much of the proceeds from the IPO are intended for a costly advertising and marketing campaign to promote koop.com. Expect to see Dr. Koop all over the media in coming months promoting his site, which is billed as "Your Trusted Health Network."
As for Dr. Koop himself, he will own 11% of the company after the IPO, but has a five-year deal in which he lends his image, name and likeness to drkoop.com in return for 2% of the revenue. The biggest shareholder will be CEO Don Hackett, a former executive at Physician Computer Network who is in line to own 30%.
Drkoop.com, with no track record and no proven model of success, is asking investors to make a large leap of faith. But it is a damned intriguing one. Expect a big buzz as the company builds to its splashy offering.