The First Celebrity Internet IPO

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 Koop we trust

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.

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