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DrKoop.com: A Dot-Com Cautionary Tale [Podcast]
- Historian and ethicist Nigel Cameron discusses his article, "How DrKoop.com rose and fell: the untold story behind the Surgeon General's startup." The conversation chronicles the dramatic history of...
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The rise and fall of Dr. Koop.com serves as a crucial cautionary tale about brand credibility and startup hubris, revealing how ethical missteps can quickly erode public trust. This podcast episode delves into the dramatic history of the dot-com era company,founded on the unparalleled reputation of former surgeon General C. Everett koop. Learn how the startup’s strategy led to a triumphant IPO, raising over $84 million, quickly followed by a rapid collapse. Discover how blurring lines between advertising and facts, alongside undisclosed financial arrangements, led to significant reputational damage and financial loss, ending with Dr. Koop’s name being sold off in a fire sale. Understand the dangers of overextension and the importance of ethical conduct. We at News Directory 3 provide insights into the factors that led to the ultimate indignity Dr. Koop faced, accumulating over $200 million in losses. Discover what’s next for digital health ventures.
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Historian and ethicist Nigel Cameron discusses his article, “How DrKoop.com rose and fell: the untold story behind the Surgeon General’s startup.” The conversation chronicles the dramatic history of the iconic dot-com era company, from it’s modest beginnings as a personal medical record system to its meteoric rise as the world’s top health site. Nigel explains how the company’s core strategy was to leverage the unparalleled credibility of former Surgeon General C. Everett Koop, leading to a wildly triumphant IPO that raised over $84 million. The discussion then details the company’s rapid collapse, focusing on the ethical blunders, like blurring the line between advertising and information, that eroded public trust. This episode serves as a cautionary tale about brand credibility, startup hubris, and the ultimate indignity Dr. Koop faced when his name and brand were sold in a fire sale after accumulating over $200 million in losses.
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Kevin Pho: Welcome to the show. Subscribe at KevinMD.com/podcast. Today we welcome back Nigel Cameron. He is a historian and ethicist. He is the author of the book,Dr. Koop: The Many Lives of the Surgeon General. we are going to talk about an excerpt from that book today on KevinMD, “how Dr. Koop.com rose and fell: The Untold Story Behind a Surgeon General Startup.” Nigel, welcome back to the show.
Nigel Cameron: Great to be here, Kevin.
Kevin Pho: What is this particular excerpt about?
Nigel Cameron: Koop stepped down as surgeon general in 1989, but he was not done. He was just getting moving and he had all kinds of projects, and one of them, which could have been the biggest of all, was to set up the top health care site on the internet, working with a bunch of other guys who were more business-minded than he was. Briefly, it was amazing.And then, it was a bad time to be doing this. This was the late 1990s, 2000 .com boom and .com bust, and he was riding that wave.
Kevin Pho: So we are talking about the late 1990s and early 2000s, and ther were not very many health sites on the web. So maybe he was a little bit ahead of his time. Dr. Koop.com and having a site with reliable health care information back then was something that was pioneering.
Nigel Cameron: It was, and actually, the original project that these business guys put to him and he got involved with was much more modest. it was about enabling people to have their own medical records on their own home computers because the internet was pretty young then; there was not a lot of bandwidth and so on. So originally the company, founded, I do not know, in the mid-1990s, was called Personal Medical Records, Inc. And it was so you could have your records on your PC, which of course we certainly know is difficult enough anyway, but that was what they were trying to do.
Then they came up with this web-based strategy and they cleverly decided to use the brand, Dr. Koop.com. I think it was *The Wall street Journal* having mentioned that that their basic play was to use the name of the feisty Dr. Koop to give the whole thing credibility and make it stand out from other nascent websites. Pretty good idea.
Kevin pho: So what happened? As I remember this was around the time that I was in residency in the early 2000s, and I think even I heard of Dr. Koop.com. So how big did it initially get?
Nigel Cameron: They got big. They had an IPO and they raised, I think, $80 or $90 million in the marketplace. At one point, Koop’s share was worth well over $100 million nominally. And it seemed to be going very well. Bear Stearns did the IPO. They were known for being a pretty much out-there, gung-ho merchant bank, but they did it and it floated fine.
And they began doing deals with AOL and with other players in the web marketplace. There were criticisms of what the managers did. A guy called Donald Hackett, whom I have spoken to, was very helpful with my book. He was candid about this. They had business challenges because this was a very novel thing. But what they had was this incredible, best-known and most-trusted doctor in the English-speaking world chairing the board and using his actual name for the product.
And so they really had a lot going for them, but it did not actually go very well. And whereas a lot of companies were going up and down in the .com boom and.com bust, there were some special factors here that can be a bit embarrassing.
Kevin Pho: So at its heyday, at the height of its popularity, what exactly was Dr. Koop.com? If you went to that website, what exactly were you getting?
Nigel Cameron: It had a ton of stuff. They had very early discussion groups; there were all sorts of things where you could ask people questions. They would have 20 reasons why you should not drink and drive. But it was also a lot of interactive stuff going on. The things that got embarrassing were, they had, for example, a list of, I do not know, maybe the 10 top hospitals in the U.S. And someone discovered that these were hospitals that were paying, I do not know, $10,000 or $15,000 to advertise. at that time, there was very little agreement about how you deal with editorial versus advertising on commercial websites. This was pretty early days. It was a bit of a Wild West, and when that criticism came, Koop responded very interestingly.
he was thinking strategically,and he said,let’s get together all the other websites doing this kind of stuff,and let’s come up with some terms of reference,with some protocols. And they came up with a statement called Hi-Ethics, which is health care internet ethics, saying that they would specify, this is advertising, this is editorial. But by then, the word about this little scandalous association had gone out, and the press were jumping on him because this guy was so well thought of. He was a superb target for a journalist with a pen who really wanted to have some fun.
The other real issue with the website was that they discovered he was getting a commission on everything sold through the site, and they were selling various medical apparatus and so on and so forth. Now, that does not seem unreasonable, but it was not declared.
And so with these twin particular criticisms, Koop had this incredible image. The more incredible your image, the higher they fly, the further they fall. And so I think it was a Boston paper that had this list of winners and losers at the end of every year.And for Koop they said he has lost his chance of sainthood because of this criticism.
Another problem with the whole thing was he tried to do everything. I think at one point a journalist said he was in his office-or one of his offices; at one point he had five offices in five states. This guy was in his eighties, and there were 35 nodes on an institution chart on the wall.
So the day the IPO launched and they pulled in his $87 million or whatever it was, Koop was not hunkered down in the offices in, I think, Austin, Texas with the guys for three or four days. No. He was going to other meetings on other projects.He had this plan for a medical museum on the Mall that was the evening of that day and so on.
And so the people around the company did not see very much of him. And this was a big strategic mistake on his part. But on the other hand, the market was going up and down, so I think he did some