Maybe you didn’t notice it last week, what with the Mideast conflagration and the Wall Street crash (not to mention the Mets and Yankees), but some big news happened on our beat, too.
WebMD threw in the towel.
Oh, the company still exists. But the WebMD of Jim Clark that was going to take over the world, the WebMD of young Internet entrepreneur Jeff Arnold, quietly disappeared last week. It slunk out of Atlanta with its stock price between its legs and went quietly into Marty Wygod’s pocket.
I first came across Wygod in the late 1970s when I was at the Houston Business Journal. He was building an outfit that would become Medco Cost Containment. Medco looked like a mail-order pharmacy, but its game was really to do something folks today figure neither Gore nor Bush can do – squeeze drug companies for lower prices. Wygod eventually sold Medco to one of those drug companies, Merck, for $6.6 billion in 1993.
Wygod could have retired right then, but he didn’t. Instead, he left Merck for a small online medical outfit called Synetic. He merged Synetic with a medical software company and renamed it Medical Management, so it now has links with 185,000 doctors. Then he took 69 percent of CareInsite, a web site for doctors and patients, and took that public. Finally, in February of this year, he merged the whole thing with Clark and Arnold’s WebMD nominally for $5 billion in stock.
This last deal shocked people. Wygod had essentially built the same business as WebMD but under the radar and profitably. Why sell out? Now we know the answer. If Arnold’s plans had worked out, he’d have had another fortune. If they didn’t, he would have had most of his competition in his pocket. And this is what happened.
That’s where it stands today. All that big talk about Clark or young Arnold taking over the medical industry was just that. Quietly, old Marty was simply executing, building a larger version of his old Medco Containment operation, but one that could do more than process drug orders. He executed by working within the system, helping outfits like Blue Cross Blue Shield of New Jersey save money and working separately with doctors and hospitals, under various company names, toward the same goal.
There’s a lesson here. Business isn’t about headlines, hype, or revolution. It’s about delivering what you promise to customers and evolving that into your fortune.
I mentioned that in Wygod’s spare time, he’s a horseman. He lives north of San Diego but keeps a farm in Buellton, northwest of Santa Barbara. He runs many of his horses at Del Mar Thoroughbred Club, about seven miles from his home. One of those horses is a two-year-old filly named Tranquility Lake. Wygod recently advised trainers who might be thinking of running against her not to do it.
The same advice holds, from me, for any executive thinking of running against Marty Wygod.