Dot Com Week – The Paul Allen Effect effect on post surgical recovery
There is, or was, a thing called the “Paul Allen Effect”. Paul Allen is the co-founder of Microsoft and was usually cited as the third or fourth richest man in the world. Allen is barely heard of outside of the Pacific Northwest but in Seattle and Portland he was on par with Rameses II. The guy built great monuments: stadiums, museums, office complexes. Allen, as some might know, got cancer in the early days of Microsoft. He left to fight his cancer. After remission, he never really went back. He was probably only a millionaire a hundred times over back then but even back then he figured he had enough money to last a lifetime, and understood that lifetime could be foreshortened, so why punch a clock? A fan of Jimi Hendrix, he learned to play guitar. He opened a museum in Seattle devoted to rock ‘n’ roll (originally it was supposed to be a museum devoted to Hendrix but there was a falling out early on between Allen and the Hendrix family). He built a football stadium in downtown Seattle, despite a city plebiscite rejecting it!
Allen and his holding company Vulcan Ventures (sometimes called Vulture Ventures for its habit of buying control of companies when their stock crashes) invested a lot of money in all kinds of crazy things, from dot.com start ups to pay per view TV. If word leaked out Allen might invest in a company, the stock price tended to shoot up considerably. That was The Paul Allen Effect. My company Infospace was once subject to The Paul Allen effect in the Seattle medical community. I didn’t discover this until I was actually a patient in a Seattle area hospital.
A number or years ago I had a lung lump turn up on a chest xray. This required a CT-guided biopsy. You have to spend a day in hospital. The procedure takes 30 minutes but they need to hold you for the rest of the day to make sure your lung doesn’t collapse. I never really put Infospace’s health plan to the test until then. Turned out we had a solid gold health plan. I had a private room. The whole procedure cost about $20,000. In the states you actually get a copy of the bill they send to your insurance company. That’s pretty cool. Despite a 20K bill, my out of pocket expense was $5. That’s what I had to pay for a day of parking in the hospital’s parking garage.
Now I guess on your medical chart they put who you work for because every time a nurse or doctor or candy striper looked at my chart the person would say “Oh, you work for Infospace. I bought some shares in that company. How is it doing?”
How it was doing was this: about 8 months previous to my hospital stay a share was selling for $200. I seem to recall we had a market cap bigger than Amazon.com. When I was admitted to the hospital the share price was $15.
I repeated to everyone what I was always told at the company staff meetings. “Well, the share price is down but the company’s fundamentals are solid. We have no long term debt and we have $250 million in cash in the bank. Our cash burn rate is $10 million a year. We can burn cash at this rate for 25 years and still be in business. We’re not teetering on bankruptcy.”
We were in a very curious position, one a handful of dot.coms actually found themselves in shortly after the crash. Our market cap (ie our company’s worth based on our stock price) was LOWER than our actual assets (90% being a huge wad of cash in the bank). That meant, conceivably, you could buy the whole company for $200 million (as in buy every single outstanding share). You could then close down the company and put $250 million cash in your pocket.
I’m given to understand Infospace, maybe seeing they’d never be a major player again, divested itself of a lot of that bothersome cash in the form of a couple large dividend payments.
Anyway, after about the third time I was asked by a medical professional (my attending nurse) to give my prognosis on the health of Infospace, I asked “errr, how come everyone who reads my chart keeps asking me that?”
The nurse responded “Oh, a few months ago there was a doctor on staff who told everyone he heard Paul Allen was going to invest a lot of money in Infospace. So we all bought stock. Ha ha.”
I sensed this doctor was no longer on staff. I also sensed a small conflict of interest and I decided to use it to my advantage. I quipped (read LIED) to the nurse “Oh! Well, let everyone know that I’m critical to the well being of Infospace. If something happens to me here in the hospital, Infospace is doomed.”
I’m not sure if my claim had any effect on the quality of my care but all I know is after the biopsy the nurse brought me a second serving of hospital food. Of course it could have been the sheer novelty of having a patient request a second helping after gobbling up a whole tray of hospital food without struggle or complaint.
– Karl Mamer
(The lump turned out to be a benign mass called “hamartoma” and I never again got to enjoy another day of lying around in bed and having a nurse feed me to my heart’s content.)
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