A Virtual Turf War . . .
. . . is breaking out in the healthcare industry as emerging dot-com companies, established manufacturers, distributors, and traditional brokers scramble to establish competing Internet marketplaces for buying and selling everything from Band-Aids to JPI machines. At stake are potentially billions of dollars in revenue, savings for hospitals and their IT departments, and a controlling interest in the way health care goods are bought and sold in the future . . .
InfoWorld, July 3, 2000
The Internet can be an amazing thing...
Only a few years ago, the idea that we would be able to shop for just about anything and at the same time find reviews of that thing by actual customers would have been unimaginable. That a large percentage of these reviews are articulate and useful is absolutely amazing.
Of course, not all of these reviews are quite so useful. Some reviewers are clearly biased or ignorant, or both. They’ve got a gripe with someone or something and they have found a place to vent, if only for a few seconds. With the good, we have to accept some bad.
When I was studying the stock market in preparation for our IPO, I had been surprised to see how many investors had shared their own reviews of public companies, via the broad assortment of Internet message boards tied to stock information.
A single company might have hundreds or thousands of people submitting their two cents’ worth of information. And that is about what the information was generally worth.
Only about two out of a hundred messages had any real value to an investor. The rest seemed to be written by individuals who had lost their debate team finals and were out to angrily prove themselves in front of the broadest possible audience—but had instead demonstrated why they had failed.
The first time I saw Neoforma mentioned in these message boards was just after we filed for the IPO.
At the very moment Neoforma became NEOF, message boards sprung up everywhere. At first, I was fascinated by these dens of ignorance and anger. Whether for or against Neoforma, the participants on the boards laced their mostly mundane comments with spite and insults. Once in a great while someone would post something accurate and informative, but the vast majority of comments were false and empty of anything but venom. I couldn’t imagine why people were expending so much energy to say so little.
Despite myself, I often became angry as I read some of the ridiculous comments. I didn’t like getting angry, so I had stopped reading the message boards long before the IPO. But many of Neoforma’s employees had continued to read the message boards. They’d come into my office and ask me if I knew anything about the latest rumor someone was posting. I’d tell them to stop reading the boards. “Nothing good can come of it. Nothing."
But sometimes, they couldn’t help themselves. And, as a result, they inadvertently empowered a few anonymous idiots with control over their own emotional well-being.
Bob knew what I thought of the message boards, so he could not resist forwarding a summary of one of the current message threads: “Quite a dialogue on one of the boards today about an $800,000 house you’re buying with the proceeds of your sale!”
Now that the six-month lockout period (the period after the IPO during which company employees and private investors cannot sell any of their stock) was over, I was anxious to pay off the debt that had weighed my family down for so long. Several Neoforma execs and Board members urged Jeff and me to sell as little of our stock as possible. Many of Neoforma’s early investors were already selling their stock. They did not want us to increase the amount of Neoforma stock available to an already unstable market.
At the same time, every financial and business advisor we had was telling us to sell most of our stock immediately—arguing that our sales would have no impact on the stock whatsoever.
Jeff and I had argued with each other about this issue. Jeff was adamant that we would be foolish to ignore our own interest by continuing to keep our entire assets in one volatile stock. “We aren’t controlling the company anymore. Why would we put ourselves at risk when we have no ability to affect that risk?” He pointed out that we had put our assets into the company years before the other investors who were now selling stock at a substantial gain.
I saw the logic of his arguments, but I couldn’t quite get myself into that frame of mind. It didn’t seem right for us to reap large financial returns when the dreams of so many others had been shattered.
Jeff reluctantly deferred to my optimism that the stock would eventually recover and we both agreed to set up plans whereby we would sell a small amount of stock over a long period time. Based on the stock price at that time, my family could still be out of debt by the end of the year.
While I was no longer an officer of the company, I had been one less than ninety days earlier. That meant that each time I intended to sell stock, I had to file a document with the SEC stating the maximum number of shares I might sell in a particular period.
But one of my brokers made an administrative mistake. Instead of filing a series of these documents over time, he filed a single document. That made it look to the outside world as if I were going to sell a large number of shares all at once.
Jeff hadn’t been an officer of the company as recently as I had been, so he wouldn’t need to disclose his activity.
Through Bob and others, I heard that the message boards had a field day. But they weren’t the only ones snarling at my perceived greed.
I noticed it on the morning that the SEC filing was made. Before I’d even heard about the erroneous public disclosure, I observed that many Neoforma employees were avoiding eye contact with me as we passed in the aisles. Finally, one employee I considered to be a friend came into my office and said, bluntly, “You’re the talk of the morning. Nobody can believe that you are dumping that much stock at so low a price. They’re very upset. They think you’re selling out.”
The power of the Internet thrives under two primary motivations — the delivery of pleasure and the alleviation of pain. On multiple levels, Neoforma had been formed to alleviate pain. We had sought to ease the distraction and burden that hospital personnel faced when they tried to locate and buy the tools of their trade. And their trade was focused on the alleviation of pain.
So, in the early days, most of our employees had believed in what we were doing with an uncommon passion. When their belief was assaulted by the realities of business in a hostile climate, their pleasure at relieving pain was harshly obscured by unimagined forces. We had shared so much enjoyment together in the early years that we could not help but feel our dissociation from our ideals and from each other very intensely.
But I had great difficulty believing that their morale was still linked to me. Jeff had long ago been the designated leader. I had assumed that most employees had transferred their devotion to him long ago and were now well along the way to transferring it to Bob. I had seen very few signs to the contrary.
My first reaction to my workmates’ indignation was anger. I could ignore the idiocy of the message boards, but I couldn’t accept the ire of so many Neoforma employees.
I thought, surely they know how bad my financial situation was! But, then I remembered how careful I had been to avoid sharing that with anyone, except Jeff. They didn’t know that we had taken low salaries and few benefits. They didn't know Jeff was selling the same number of shares. How could they?
My anger gave way to resignation. Much as I wanted to hold onto the idea that I had some ongoing role in directing the story called Neoforma, everything was easier when I didn’t. I considered the employees’ rejection of me to be a natural element of their acceptance of new order.
In the end, Jeff and our financial advisors had been correct. Had we sold more stock, there would have been absolutely no negative impact on the company stock. The financial price Jeff and I paid for what we believed was the morally correct — though rationally incorrect — decision was high, but we did okay. Our goal had been to make enough money to buy a house and we did. We received a good return on our high-risk investment. We just didn’t get the emotional residuals we had hoped for.