So, when the time approached for the IPO, I had no idea what to expect. Bob and Frank ended the Road Trip where they had begun—in New York. Anni and I, along with Jeff and his wife, Julie, were planning to meet them there.
The IPO was scheduled for Thursday, January 20. We were flying to New York on Wednesday. Since this was our first trip to New York together, Anni and I were planning to do two days of exploration after the IPO.
I called each of Neoforma’s angel investors the day before our flight to New York and said, “Whatever happens Thursday, I want to thank you for believing in us so early in the game. We would not have made it this far if not for your faith in us.”
I meant it. And I took some satisfaction in the fact that not one of them said they were surprised we had made it this far.
I did not call the VCs. Their investment in Neoforma had not, for the most part, been a personal matter. It had been all business. They could have called me to say thank you, but none of them did. They were busy calculating how to use their contribution to the Neoforma IPO for leverage in their next deal.
I spoke only briefly with Alexander and JP. They were cursorily congratulatory, but, somehow, in a self-congratulatory way. They really seemed to believe that they were responsible for the IPO, as if Jeff and I had simply been good actors for their show. This was especially hard to swallow. After all, we had started this business, had risked everything to be here and worked the 20-hour days and . . .
Well, come to think of it, the IPO was simply the opening day, not a proof that the show will become a classic. Alexander and JP had been the producers, whose job was to ensure that the show was a commercial success. And the truth was that Jeff and I certainly had not once thought of going for an IPO before they’d mentioned it. They made it clear right away that the IPO was their ideal goal.
JP was still focused on this goal. The VCs were absolutely focused on the IPO.
Denis, Wally and Jack, on the other hand, were certainly happy about the IPO and took pride in it. But it meant much more to them than that.
Neoforma had become personal to them. Alexander had wanted to be a dispassionate investor, but couldn’t. He cared too much to be completely detached. His great passion had forced him to care about the results of his efforts to help the company. It drove him—and us—nuts sometimes. It was bad enough to have two overly passionate control freaks — Jeff and me. But Alexander’s personal interest meant a lot to us.
I had to admit that they really were the ones who had gotten us here — to this IPO. We had been going over there. But they had convinced us that the way to make the most impact on humanity was over here, where we could control the eventual large-scale implementation of our vision. It was as if we’d been making a cool little indie flick and they’d teased us, supported us and helped us get the funding to make Star Wars.
OK, so they did have reason to think that this was their show.
Later that day, the day before we would be flying into the unknown, I received an email containing the next bombshell.
A company with “forma” in their name had filed a lawsuit against us. They had just filed it—no calls, no questions, no discussions. They sent us a letter—two days before our IPO—saying that they were suing Neoforma for name infringement. They asserted that their reputation and brand recognition had been irreparably harmed by the fact that we had “forma” in our name. They claimed that a customer had called them once to ask if they were related to Neoforma.
And then, just before our IPO, this company appears out of relative obscurity, the day before we are flying to New York, and claims we’ve stolen their name—so that we could leverage their brand identity!
The inconvenient timing of the lawsuit and the lack of preceding dialog instantly triggered suspicion in me and Jeff. By this time, we had been fighting against powerful, unseen forces for long enough to learn that not all paranoia is delusional.
Our first results when searching the Web for information about this company was a page hailing its partnership with Ventro, a Kleiner Perkins (KP) company, and this company that was suing us. This smelled like more than coincidence, but it seemed silly to imagine some great conspiracy. And the company firmly denied any knowledge of our IPO timing or outside influence. They claimed this was a simple matter of clearing up customer confusion, even though there were dozens of other medical companies with “neo” or “forma” in their names. But when Jeff confronted their president on the suspicious timing of the lawsuit, they immediately scrambled to give us written assurance that the issue should be able to be resolved without us having to change the company name.
In any case, our entire team of consultants was thrown into an intense debate. Was this an event that had a material impact on our IPO? However indignant we were at the impersonal, but seemingly malicious, nature of this attack, we had to acknowledge that the outcome of the issue was unpredictable. The ultimate question was: Would it have a significant effect on the company . . . if we had to change our name?
Our conclusion was no. Ventro, a public company, had recently renamed itself. The public impact was mostly positive. We did not consider our company name to be inseparable from the company and we had the other company’s assurance that minor logo adjustments should be able to address their concerns, so we simply added the disclosure to our final documents. However, adding doubt over this issue to a load of other concerns did not enrich my wait for the IPO.
Neoforma splurged on first-class seats for us. That was good, because our nerves were so taut that the flight would have been far less bearable without the wine they served us.
We were taken from the airport to the Palace Hotel in a limousine—always an awkward experience for me, since I like to open my own doors. The surreal opulence of the old establishment hotel added to my feeling of detachment. Marble floors, classical details—the place was drenched in tradition and formality. Contrary to my usual behavior, I allowed the bellman to carry my luggage up to the room, but only because Anni had all of her stuff too.
The bellman told us that Prince, a musician we enjoyed and for whom we had great respect, was staying there too. We whimsically wondered if, since we were all guests of the same establishment, we could just knock on his door and introduce ourselves. I thought not.
This must be happening to someone else. There is no connection here . . . between my past and my future . . .
The four of us—Bob, Frank, Jeff and I—along with our four wives, met in the lobby before dinner. As we were gathering, Bob told Jeff and me about a call he had received from the CEO of our major competitor, Medibuy, informing him that WebMD was not going to renew their agreement with us when it expired later in the year. Instead, WebMD was going to partner in a very visible way with Medibuy.
WebMD was the physician portal that had acquired Healtheon in its acquisition frenzy. Healtheon had been started by Jim Clarke at about the same time we started Neoforma. By acquiring Healtheon, WebMD had acquired a partnership with Neoforma. They had even tried to acquire us, but our price was too high.
The fact that WebMD was not going to renew our agreement was no surprise to us. KP had a substantial investment in Healtheon. Once KP invested in Medibuy, it was only a matter of time before Healtheon would be pressured to terminate a previously upbeat partnership with Neoforma. WebMD had been telling us that it would cost us tens of millions of dollars to renew the previously cashless agreement. In addition to the fact that our links to the WebMD site had been nearly worthless, we had calculated that all physicians whom WebMD was planning to aggregate would have to buy all of their supplies through Neoforma for more than ten years for us to break even. The economics didn’t make sense.
So it was no big deal. The WebMD partnership had not been included in any of our financial projections. It was a non-event. But, on the night before our scheduled IPO, this guy called Bob out of “courtesy” to tell him that he was going to take over the WebMD partnership.
The deal wasn’t even due to expire for six months. Clearly, they had rushed into an agreement in order to take some wind out of our sails. It didn’t succeed, but it was just enough to raise goosebumps at the thought of the degree to which some people would go to try to knock us down. We vaguely wondered what Medibuy had paid to rush this deal through. We found out later that it had been an astronomical amount.
We were laughing at the transparency and pettiness of this ploy when the rest of our group joined us in the lobby. Everyone was introduced. We were four couples, brought together under this most bizarre of circumstances.
Anni and I did not sleep that night. The adrenaline coursed though us at unprecedented levels. We lay next to each other, tossing and turning all night, our minds grasping at shadows for something solid on which to anchor.
Continued in Part 3
Go back to Part 1