Dr. Koop among the leaders as celebrities flock to the Web
Miriam Hill, Dr. Koop among the leaders as celebrities flock to the Web Big names are bringing marketability to the Internet, The Inquirer, 29 Jun 1999
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Celebrities have been flocking to the Internet as if it were an Oscars party, so don't be surprised if the next wave of initial public offerings includes a slew of famous names.
Earlier this month, Dr. C. Everett Koop, former surgeon general, took his company, Drkoop.com Inc., public in an initial public offering that raised $84.4 million for the company, which provides health-care information on the Internet.
The next expected celebrity IPO is Drdrew.com. Its Web site features health information and counsel from Dr. Drew Pinsky, the Pasadena, Calif., internist and host of MTV's Loveline advice show.
A typical exchange between Pinsky and a caller:
"Who have been your favorite guests?"
"I like Tom Arnold," Pinsky responded. "Lots of pathology and not afraid to talk about it!"
Although Drdrew.com is little more than a few Web pages at this point, the concept has attracted several big tech names, including Microsoft chief financial officer Greg Maffei and Guy Kawasaki of Garage.com, a venture capital company.
And there's more: Lou Dobbs, host of CNN's Moneyline and president of CNN Financial, recently quit both jobs to join Space.com, a Web site launching July 20 devoted to space that undoubtedly will capitalize on Dobbs' reputation as a financial guru. There are even rumors that Martha Stewart will dot-com herself even richer by taking her Web site public.
The question for investors is whether names more often in lights than in Web addresses add any oomph to an initial public offering.
Some observers say yes, as long as the celebrity brings legitimate marketing potential along with the flash.
"I'd say it does - as long as there's substance behind it, because branding is so important on the Internet and Dr. Koop creates such a strong, credible brand," said Walter Buckley 3d, head of Internet Capital Group, the Wayne venture capital group that funds Web businesses.
Stephen DeNelsky, an analyst with BT Alex. Brown, said that while Koop gives the Web site visibility, the company must still offer a better product than its myriad competitors.
"Celebrities are marketable and the Internet is a good way to tap into that," he said. "Remember, you're buying into a company, not a concept."
Drkoop.com, for example, faces competition from WebMD, which recently merged with Healtheon, from Medsite.com, and even from the Web sites of prestigious organizations such as the Mayo Clinic.
Despite such competition, Drkoop.com stock sold for $9 in the IPO and closed at $16.4375 on its first day. After trading as low as $10.44 since, shares rose $2.125 yesterday to close at $16.125 on news that the site would help recruit patients for drug trials.
The company's Web site - www.drkoop.com - hopes to make money through sales of advertising, and by linking consumers to pharmacies and drugstores for prescription refills.
Koop, 82, the surgeon-in-chief at the Children's Hospital of Philadelphia from 1948 until 1981, laughed when asked about his newfound wealth. His shares in Drkoop.com are worth more than $40 million.
"The media seems very interested in my wealth," he said, "but I never see any headlines that say Dr. Koop lost $30 million today," a reference to the stock's volatility.
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©1999 Philadelphia Newspapers Inc.
