Koop's earlier video venture at least carried the prestige of the Time Life name and a Sixth Avenue address; his foray onto the Internet came with no such flash. When Zaccaro and Hackett were courting Koop, the company was run out of Hackett's home in the Austin hill country. Hackett paid the bills from his own pocket.
The company, still called Personal Medical Records, was developing technology for an electronic personal medical record, or PMR. An April 1997 business plan that Hackett showed to potential investors described how consumers could use a PMR stored online or on their computers to share health information with physicians and health plans.
It seemed a questionable premise, especially in 1997. At the time, consumers were still leery of entering their credit card numbers online, let alone sensitive medical information, and Hackett was gambling that the Koop name would overcome such resistance. There were plenty of other hurdles. To succeed, the company had to persuade consumers to track down their health records from their physicians and enter the information into an online database. Doctors also had to cooperate. The medical-software industry had spent decades unsuccessfully trying to create an electronic medical record for physicians, and whether doctors would now accept the legitimacy of medical records created by patients was anyone's guess.
The company's plan to make money was hazy at best. The 1997 business plan discussed how the health care industry would use the company's software, but Personal Medical Records had no product to offer at the time. All company executives had was the Koop "brand" and an almost mystical belief in the power of a brand to overcome all obstacles.
Hackett moved the company out of his home and eventually into modest offices with used desks and chairs that, as one former staffer recalled, "made your butt hurt at the end of the day." Hackett sat in a cubicle like everyone else and installed a Web camera so colleagues could check on his whereabouts.
The surroundings were modest, but not the executive perks. The company paid chairman Koop $8,333 a month as a consulting fee - that would rise to $12,500 a month in 1999 - and awarded him an initial 11 percent ownership stake in the startup. His duties, as outlined in his contract, were few, though. He was charged with helping to organize a medical advisory board and, at his discretion, speaking with clients and at conferences on the company's behalf.
Zaccaro, who was vice chairman and a board member, originally received a 7 percent stake in the company. He signed a three-year consulting contract that also paid him $8,333 a month, topping out at $12,500 a month in 1999. Drkoop also paid for Zaccaro's office near his home in the upscale Los Angeles suburb of Rancho Palos Verdes. The contract called on him to serve as a strategic adviser to the company and to act as the "primary liaison" with Koop and fellow board member Nancy Snyderman, the television doctor and medical correspondent at ABC (dossier).
Celebrity-wrangler was Zaccaro's most visible role to some employees, who saw him squire Koop around company headquarters on the chairman's rare visits to Austin. "He was like the protective right arm of Dr. Koop. If he didn't want someone to talk to Koop, he would step in between them," says one former staffer. Zaccaro calls that characterization untrue.
Hackett also signed lucrative, three-year compensation agreements with the founding executives in August 1997. The salaries were more appropriate for a well-funded company with revenues than a development-stage venture with few assets other than a licensing agreement with its well-known chairman. In a move that would cause a rift in the company, Hackett installed his brother, Robert, a pharmaceutical industry veteran, as an executive vice president. Robert Hackett received a 5 percent ownership stake in the company, a salary of $165,000, guaranteed annual raises of 20 percent and a $600 monthly car allowance. The company's chief technologist received a similar package.
Hackett started off with a $195,000 salary, 20 percent annual raises and a $700 monthly car allowance. (When he loaned the company $216,043, he received 1.8 million shares of stock to cancel the debt. The shares were worth $30 million the day Drkoop went public. Even at Drkoop's depressed stock price, they're worth more than $2 million.)
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Correction: In a previous version of this story, the related articles box mistakenly identified Adventist Health Systems as Adventist Health. The two companies are unrelated. |
