Medical supplies supply the next B2B wave
Take the temperature of the medical equipment supply industry and you’ll sense the next hot batch of business-to- business IPOs... Neoforma.com filed Friday for an IPO... In its filing with the U.S. Securities and Exchange Commission for a $75 million IPO, Neoforma.com disclosed that it received a final $70 million round of private funding this month...
Red Herring
October 16, 1999
Somehow, I ended up on the outside, looking in.
An initial public stock offering (IPO) represents a company’s official launch into the delightful realm of public scrutiny. It is the time when a company steps into the public limelight, drops its drawers, and says — Look at me. Here’s what I intend to offer you. To competitors, it is the first real glimpse at the company’s pricing and positioning strategy. To investors, it is the first chance to evaluate whether this new offering represents a chance to make a killing...
An initial public stock offering (IPO) represents a company’s official launch into the delightful realm of public scrutiny. It is the time when a company steps into the public limelight, drops its drawers, and says — Look at me. Here’s what I intend to offer you. To competitors, it is the first real glimpse at the company’s pricing and positioning strategy. To investors, it is the first chance to evaluate whether this new offering represents a chance to make a killing...
As Neoforma’s IPO documents were being sketched out, I kept hearing talk about the “Printer.” I assumed that it was jargon for something I should already know about, so I just went along, nodding and smiling, without asking what it meant.
The Printer was actually a specially designed place where public companies’ massive reporting documents are assembled by large teams of people, then electronically submitted to the SEC. Several companies are usually involved in various filings at the Printer at any given time. Each is assigned conference rooms and given access to an assortment of food and beverages.
Almost twenty-four hours a day for weeks, an amazingly large group of young lawyers, accountants and investment bankers — almost none of whom I knew — had been enthusiastically gathering and assembling mounds of obscure Neoforma information into crowded conference rooms.
A private company can have many secrets. There is very little requirement for the public disclosure of information. But once you go public, all of that changes. A public company can have very few secrets. And even those secrets are controlled by all kinds of legal restrictions.
The team of mostly young professionals assembling those mounds of information hardly acknowledged my presence when I visited. I don’t know whether it was that they didn’t know who I was, whether they were simply being polite, or whether this was such a common situation for them that I was barely worth their notice. Personally, I would’ve been incredibly interested in what might be going through the head of someone about to make a ton of money. And, in no way had I connected that someone with me.
They seemed so engaged in the process that it made me feel proud — if somewhat surreal — to be a part of it. I was impressed by how they could put so much into a process that they wouldn’t directly benefit from. They seemed to be driven simply by the knowledge that they were at the heart of a unique and very exciting time.
Jeff and I were only bit players in the filing process, but we did visit the Printer several times to go over minute events in the early history of the company. Our biographies and the financial history of our investments in Neoforma were also being included. This would be the first time that anyone outside Neoforma would have complete visibility into my ownership of Neoforma.
I am a private kind of guy. I didn’t like the idea of my personal information being published to the world in so raw a form.
Typically, only founders, investors and their lawyers and accountants know the ownership make-up of a private company. This would be the first time for almost everyone inside Neoforma to see the ownership position of any of the corporate officers, including me.
My own position was pretty staggering: four million shares of company stock. That is what I owned. I hadn’t thought much about it before. But we were rumored to be filing a starting price at up to $10 per share. It didn’t take much for me — and everybody else — to figure out that I might soon be filthy rich.
Because the bits of information requiring disclosure were changing constantly, it was impossible to pinpoint the day that the filing would take place. If we changed anything — made any strategic decisions, considered any new acquisitions, were party to any new legal actions, or even changed our snack policy — the filing date would be pushed back so adjustments could be made.
Our strategic funding round, which we were announcing in parallel with the filing statement, was a complex mess. All of the funding details, including any operational adjustments made to accommodate it, had to be included in the final filing document.
As we neared the second week of October, we knew that everything was almost lined up. Each day was going to be The Day. Then something new would rear its ugly head. Each day the tension would increase, even as each issue was resolved.
On the evening of October 14, just after finishing dinner with my wife, Anni, and my sons, Weston and Reece, I received a call from Jeff. He told me, “We’re filing tonight! You might want to come down here.”
I really hadn’t thought that the actual submission of documents to the SEC was such a big deal. Anni and I talked it over. Of course I wanted to go, but there had been so many nights where Neoforma had intruded into our lives that I had lost perspective on what made this night any different than the rest. We agreed that I should go to the filing.
When I arrived at the Printer, there was a crowd of thirty or so people standing around, mingling. Only a small number of them were Neoforma employees. The atmosphere was electric, celebratory. Everyone was drinking expensive champagne. One of our PR employees recognized me and energetically handed me a glass. She told me that they had just completed the document and were ready to submit it.
Leading me through the crowd to a small cubicle. Jeff was there already. She pointed to the keyboard of a simple computer terminal. She told us that all we had to do was: “Push that button!”
The aisles were filled with unfamiliar, excited faces. Someone had a camera aimed at us. I felt silly, but proud. It was heartening that this group of intelligent people were giving up their evening to be here to watch us push a button. I was glad I had come and shocked that I had considered not being here.
We pushed the button — to cheers and toasts. In a month or so, we might be a public company.
I found out then that, despite the late hour, a group of thirty or so Neoforma employees — mostly long-time employees — had gathered at the company offices to celebrate. I drove there feeling quite disoriented.
At the door, someone handed me a Nerf gun. Slightly inebriated people were racing through the maze of cubicles, laughing freely, firing soft darts and balls at each other. The stress created by hyper-growth had been building for a long time. A lot of stress was vented that evening. I was a favorite target. I fired at a few satisfying targets too.
This is the email message Bob, our CEO, sent to Neoforma employees that evening:
Today at 6:45 p.m. we closed on our Series E Preferred Stock financing in the amount of $70 million. At 6:50 p.m. we pushed the button (literally) and transmitted our S-1 registration statement to the Securities and Exchange Commission. At 7:03 p.m. we received confirmation from the SEC that they had accepted our filing with a filing date of October 15. Any of these events is a big event in the life of a company — having them all occur on the same day, within minutes of each other, is a pretty rare thing.
It wasn’t until I read that message the following morning that I realized the filing date hadn’t been the 14th. Instead, the filing was registered on the next business day, the 15th, my fortieth birthday. Forty was a big deal to me. Not because I was getting old, that didn’t happen until at least 41, but because, ever since I was ten years old, I had always considered forty to be the age at which wisdom was achieved. I had told myself as a child that I would be ready to write my first book when I was forty. I believed that life experience would take that long to ferment. I am still waiting for the wisdom, but I have quite a bit of experience.
It was on that day that I made a formal resolution to write a book about my experiences at Neoforma. I believed that the richness and peculiarity of my experiences during these times was worth trying to communicate. It certainly felt strange enough to me to be worth exploring.
The Printer was actually a specially designed place where public companies’ massive reporting documents are assembled by large teams of people, then electronically submitted to the SEC. Several companies are usually involved in various filings at the Printer at any given time. Each is assigned conference rooms and given access to an assortment of food and beverages.
Almost twenty-four hours a day for weeks, an amazingly large group of young lawyers, accountants and investment bankers — almost none of whom I knew — had been enthusiastically gathering and assembling mounds of obscure Neoforma information into crowded conference rooms.
A private company can have many secrets. There is very little requirement for the public disclosure of information. But once you go public, all of that changes. A public company can have very few secrets. And even those secrets are controlled by all kinds of legal restrictions.
The team of mostly young professionals assembling those mounds of information hardly acknowledged my presence when I visited. I don’t know whether it was that they didn’t know who I was, whether they were simply being polite, or whether this was such a common situation for them that I was barely worth their notice. Personally, I would’ve been incredibly interested in what might be going through the head of someone about to make a ton of money. And, in no way had I connected that someone with me.
They seemed so engaged in the process that it made me feel proud — if somewhat surreal — to be a part of it. I was impressed by how they could put so much into a process that they wouldn’t directly benefit from. They seemed to be driven simply by the knowledge that they were at the heart of a unique and very exciting time.
Jeff and I were only bit players in the filing process, but we did visit the Printer several times to go over minute events in the early history of the company. Our biographies and the financial history of our investments in Neoforma were also being included. This would be the first time that anyone outside Neoforma would have complete visibility into my ownership of Neoforma.
I am a private kind of guy. I didn’t like the idea of my personal information being published to the world in so raw a form.
Typically, only founders, investors and their lawyers and accountants know the ownership make-up of a private company. This would be the first time for almost everyone inside Neoforma to see the ownership position of any of the corporate officers, including me.
My own position was pretty staggering: four million shares of company stock. That is what I owned. I hadn’t thought much about it before. But we were rumored to be filing a starting price at up to $10 per share. It didn’t take much for me — and everybody else — to figure out that I might soon be filthy rich.
Because the bits of information requiring disclosure were changing constantly, it was impossible to pinpoint the day that the filing would take place. If we changed anything — made any strategic decisions, considered any new acquisitions, were party to any new legal actions, or even changed our snack policy — the filing date would be pushed back so adjustments could be made.
Our strategic funding round, which we were announcing in parallel with the filing statement, was a complex mess. All of the funding details, including any operational adjustments made to accommodate it, had to be included in the final filing document.
As we neared the second week of October, we knew that everything was almost lined up. Each day was going to be The Day. Then something new would rear its ugly head. Each day the tension would increase, even as each issue was resolved.
On the evening of October 14, just after finishing dinner with my wife, Anni, and my sons, Weston and Reece, I received a call from Jeff. He told me, “We’re filing tonight! You might want to come down here.”
I really hadn’t thought that the actual submission of documents to the SEC was such a big deal. Anni and I talked it over. Of course I wanted to go, but there had been so many nights where Neoforma had intruded into our lives that I had lost perspective on what made this night any different than the rest. We agreed that I should go to the filing.
When I arrived at the Printer, there was a crowd of thirty or so people standing around, mingling. Only a small number of them were Neoforma employees. The atmosphere was electric, celebratory. Everyone was drinking expensive champagne. One of our PR employees recognized me and energetically handed me a glass. She told me that they had just completed the document and were ready to submit it.
Leading me through the crowd to a small cubicle. Jeff was there already. She pointed to the keyboard of a simple computer terminal. She told us that all we had to do was: “Push that button!”
The aisles were filled with unfamiliar, excited faces. Someone had a camera aimed at us. I felt silly, but proud. It was heartening that this group of intelligent people were giving up their evening to be here to watch us push a button. I was glad I had come and shocked that I had considered not being here.
We pushed the button — to cheers and toasts. In a month or so, we might be a public company.
I found out then that, despite the late hour, a group of thirty or so Neoforma employees — mostly long-time employees — had gathered at the company offices to celebrate. I drove there feeling quite disoriented.
At the door, someone handed me a Nerf gun. Slightly inebriated people were racing through the maze of cubicles, laughing freely, firing soft darts and balls at each other. The stress created by hyper-growth had been building for a long time. A lot of stress was vented that evening. I was a favorite target. I fired at a few satisfying targets too.
This is the email message Bob, our CEO, sent to Neoforma employees that evening:
Today at 6:45 p.m. we closed on our Series E Preferred Stock financing in the amount of $70 million. At 6:50 p.m. we pushed the button (literally) and transmitted our S-1 registration statement to the Securities and Exchange Commission. At 7:03 p.m. we received confirmation from the SEC that they had accepted our filing with a filing date of October 15. Any of these events is a big event in the life of a company — having them all occur on the same day, within minutes of each other, is a pretty rare thing.
It wasn’t until I read that message the following morning that I realized the filing date hadn’t been the 14th. Instead, the filing was registered on the next business day, the 15th, my fortieth birthday. Forty was a big deal to me. Not because I was getting old, that didn’t happen until at least 41, but because, ever since I was ten years old, I had always considered forty to be the age at which wisdom was achieved. I had told myself as a child that I would be ready to write my first book when I was forty. I believed that life experience would take that long to ferment. I am still waiting for the wisdom, but I have quite a bit of experience.
It was on that day that I made a formal resolution to write a book about my experiences at Neoforma. I believed that the richness and peculiarity of my experiences during these times was worth trying to communicate. It certainly felt strange enough to me to be worth exploring.
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