SIPA Presentation

Pavan Nigam

How the Internet Changed my Life

Healtheon Background

Founded in 1996 by Jim Clark and Pavan Nigam

Business Plan - Connect everyone in $1.2 Trillion health-care industry and make some money in TBD fashion

R1.0 (96-end) connected employees, employers & plans

ahead of the curve, limited success

initial euphoria leads to despair

Recruited CEO (Mike Long) in mid-97

R2.0 (98-end) connected providers, labs and plans

vision update rallies company

real and significant revenues

Oct 98 IPO attempt unsuccessful due to market conditions

R3.0 (mid-99) simplifies offerings as consumer & provider portals

finally every employee can recite the Healtheon elevator-pitch

Highly successful IPO in Feb/99 ($2.5B company on opening day)

Announced $7B acquisition of WebMD on 5/99

Market cap of Healtheon/WebMD has moved within $7B-$26B range

Top 10 Lessons Learnt/Enforced

Constant assessment and refinement of Business Plan is important

Real test of Leadership is during the down times

It’s never too early to acquire Domain expertise

A True Internet company’s growth has to be tied to the Internet’s growth

It is easier to migrate an installed base than to acquire new customers

A revenue-enhancing value proposition is easier to sell than a cost-cutting one

Go for short-cycle staged product development where possible

Simple ideas have a better shot at winning than complex ones

Cut your losses early (especially when it comes to senior mgrs)

There is nothing like too much Communication

Things to Remember

advisors, board, VCs, management, partners, customers

use equity liberally (pie growth test)

funding, early customer/partner, domain experts, savvy mgmt

actual users and actual revenue-customers

applies to VCs, bankers, analysts, industry experts also

revenues, profits, execution, execution, execution

Most of the Internet-era Wealth Creation is still Ahead of us