Zona Research Indicates Microsoft Internet Explorer Share Now 28 Percent
. . . A Zona Research study released today reports that use of Microsoft Internet Explorer in corporations has more than tripled to 28 percent of total use in the past three months . . . Independent studies confirm corporations moving to Microsoft Internet Explorer from Netscape Navigator . . .
Microsoft Press Release - Jan. 28, 1997
When we started Neoforma, Jeff and I considered ourselves, in part, to be champions of the small company...
Most of the companies we worked with were small. They had the most to gain by our alternative to a direct sales force. But as we grew, we did work with some big companies too. At first this was with small divisions of large companies. Eventually, our connections with one division in a company would lead us into other divisions.
We discovered quickly that, in the eyes of these companies, Varian was just a stubborn little company that had captured a lucrative market by luck. These other companies were willing to lose a significant amount of money fighting for a foothold in Varian’s market. It was a matter of pride.
It took us awhile to adjust to the idea that there were bigger fish out there than Varian — in the form of some huge, multinational equipment manufacturers. Then we had to adjust to even bigger fish. Some of the healthcare distributors were absolutely monstrous in size, with tens of thousands of employees.
We were only familiar with the equipment market, but began to bump into the supplies companies quite early. They often had a small selection of items that we considered to be equipment. We assumed that the distributors would not be threatened by us. Equipment was a very small part of their business. We would just be providing one more channel for them to sell within. And it was about that same time that we became familiar with the group purchasing organizations, or GPOs.
In the early 1980s, healthcare providers had banded together into groups of up to thousands of hospitals, in an effort to control the soaring prices they were paying for supplies. They had grown into powerful forces in the healthcare industry, with several managing tens of billions of dollars in annual purchases.
GPOs negotiated good prices with manufacturers in exchange for a commitment to a certain volume of purchasing. Since the GPOs were often owned by the hospitals they served, there was great pressure within hospitals to support these agreements.
While the GPOs primarily saved money in the supplies market, they also had a large influence over the equipment manufacturers. I knew very little about GPOs from my days at Varian — other than the fact that they were disdained, feared and treated with reluctant respect. The loss of a single contract with one of the large GPOs could doom a company’s financial results for years.
Because most equipment was purchased in irregular cycles, as part of large projects, most capital equipment items had not been successfully aggregated by the GPOs. Since capital equipment was our area of focus, we were quite comfortable that we would not be seen as a threat by the GPOs.
What we didn’t know — what we didn’t have the egos to imagine — was that Neoforma had started showing up on GPO and supplier strategy whiteboards in early 1997 — quite literally under the category of Threats.
As part of our Web strategy, we had created a messaging system on top of our catalog. We knew that we would eventually be able to capture revenue from buyers of equipment when they had become accustomed to using our website to source their products. So we began channeling carefully framed leads from our site visitors to thousands of suppliers. The leads went via email to those few companies that had email addresses, the rest went via an automated fax system. We did not charge for this service.
At first, most companies were very irritated with us. How dare you get in between our customers and us? But as the leads increased in quantity and quality, manufacturers and distributors were more cautious in their response to us. They had seen what the GPOs could do to a company that resisted them. They didn’t know what to think of us.
Two years later, when interviewing executives from these companies to fill positions at Neoforma, I was astonished to hear how much we had been dreaded and feared.
In those days, we had assumed that nobody was paying much attention to us, but many were already working on ways to keep us out of their game. When I discovered later how much attention we had been getting, I thought, If only they had just come to speak with us then, we could have all worked together to solve some of the big problems facing the healthcare system!
Of course, the businessman in me knows that it doesn’t work that way, but I have never been able to shake the piece of naïveté that embraces the idea of mutual benefit.