My superiors were insistent that DiscoCare place a large initial
stocking order and targeted $1 million. While this seems like a large
amount, the personal injury model had enormous potential and large
stocking orders for new distributors was the normal course of busi-
ness at ArthroCare. DiscoCare did not even want to be a stocking dis-
tributor. So the parties were pretty far apart at the beginning of nego-
tiations. We knew, however, that we held the upper hand in that they
would do anything to demonstrate that they could successfully imple-
ment this business model in other markets. So we offered them an
exclusive distributorship in the 3 most promising states in exchange
for the $1 million stocking order. They finally agreed, but it took
almost to the very end of the quarter for them to incorporate
DiscoCare and sign the purchase order.
It's important to note that nobody bothered to determine
DiscoCare's ability to pay for this product. It was simply presumed
that they would do so based on the success of Palm Beach Lakes
Surgery Center and the large market opportunity. In addition, no one
asked me to vet the legality of the model DiscoCare would be imple-
menting as ArthroCare's exclusive distributor in those states.
Even though I had misgivings about getting involved with PI, I was
excited about the potential of the opportunity. If DiscoCare could suc-
cessfully implement this model in several other markets, the spine
business could easily become a $100-million business. In addition, we'd
be providing pain relief to patients who wouldn't otherwise get it and
introducing our Coblation technology to surgeons who wouldn't typi-
cally adopt this type of technology. However, it didn't take long to learn
that implementing the model was much harder and would take much
longer than anticipated.
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