Warren Falk

This page is here to serve as an update to friends and family who are interested in my current situation regarding my endeavor into the medical software business world, and the ensuing disaster.

In early 2004, I was approached by Scott, a friend of mine, about contracting to develop some software in the medical field. I got a quick synopsis from a partner of his on what the software was to do and then quoted a price to them. The two of them were two of five owners of a company called MediGeeks. After quoting a price, I went to meet the other partners and heard the spiel on what they were trying to do. The basic concept was that there was a huge demand for this piece of software because the only other piece out there that did the same thing, cost a lot of money and didn’t work right. They sold me on the merits of the software, and after I had done some work on it, I offered to take membership in the company instead of the payment we’d already agreed on, and that’s how it all began.

The original product was called MediSwap and was a simple application designed to swap data between two existing systems. It was almost complete when we realized that alone it would likely not be profitable as it relied on two very unreliable systems making the support of it a daunting headache. The decision was made to move onto phase two of a three phase plan to take over doctor’s offices nationwide.

Phase 2 was to develop software to completely replace one of the systems we were linking with Phase 1’s product. Several months into that endeavor we reached a similar conclusion as the first phase, that replacing only one system only mitigated some of the daunting headache of support, but that it was still not going to be profitable to continue with a half-baked system. So the decision was made a final time to skip completion of a phase, and we were on to the third and final phase.

The third and final phase was to replace both systems and take over automation in every doctor’s office. Shortly after this switch, two of the members left (Scott and his business partner) leaving four remaining members including myself.

Originally the third phase was to create and package the software, but that plan changed in early 2005 to creating a website and providing a service. I suggested the name “MediFusion” which became “MedicFusion” and this became the new name.

I’ve been working on a website framework for years now. I had, by that time, named the system “Core Framework,” though it wasn’t complete, many of the concepts had become quite evolved already. When the idea to change focus was mentioned, I said “I’ve got just the thing for that.” And the decision was made. Development on that began in January 2005.

At this point, all the work I was doing was being done part-time as I was able, since I was employed full-time already. The other members had discussed with me the cost necessary to support me if I left my full-time job. I gave them the bare minimum amount and they started looking for investors.

Unfortunately, they looked for investors in the wrong places, and the only potential investors they could turn up were only interested in investing once the project is complete. I was not part of the investor-finding initiative, so I can’t be sure if they couldn’t find the right investors because they misrepresented our progress, or if they misrepresented our progress because investors were otherwise uninterested. In either case, there was a lot of pressure on my to make progress to secure an investor. Ironically, we were trying to secure the investor because it was difficult to make progress without capital.

At one point, it was suggested that I quit my job and start working full-time on the project using my own savings, and that when an investor was found, I would be paid then. This way I would be able to make enough progress to get the investor, then get the investor and be able to replenish my dwindled savings. And if an investor wasn’t found within two months that the other members (two doctor’s and a doctor’s wife) would chip in to help me along. The exact words of the doctor’s wife were, “We would not expect you to go longer than two months.” So the plan was set in motion and my last day at the full-time job was April 15th, 2005. Full-time work on the medical website began

Unfortunately, it became quite clear within a few months that “sufficient progress” on the website meant it would have to be completely operational before any investor was going to be interested. It also became clear that my savings were not going to last long enough to allow me to complete it. After giving them warning about my financial situation, the very next week they demanded that I put all the source code on a CD and hand it over to them, citing the possibility that I perish unexpectedly.

Also at this time they had decided to put money into hiring a second developer, whom they would actually pay. They did this to “speed development” despite my argument that it would have the opposite effect in the short term. At this point, when three things became simultaneously evident, 1) there would be no money for me until project completion, 2) there was a second developer already on the payroll, and 3) they wanted the code from me at all costs; I told them, I planned to play it on the safe side and deliver demonstrations of the application’s progress, only (all they needed), and not the code itself until the savings which were depleted during its development were replenished.

The hesitation to hand over the code visibly and immediately infuriated them, particularly the doctor and his wife. Despite the fact I’d never received a penny, and that, monetarily speaking, they had invested no more than about $4,000 a piece at this point (in logos and such) and that I’d already spent over 900 hours developing this software, they were quite certain they had full claim to it. I disputed this and declined to turn it over, at which point, both the doctor and his wife immediately said they would call their lawyers (which itself is not exactly a threat) but in the same breath the doctor said “I’ll take you down, brother” and the wife said “We’ll subpoena your computers, do you want to be without your computers?” This all happened in one meeting. The meeting lasted less than an hour, I believe. I left immediately after the threats started, I walked out of the meeting. This was Wednesday, July 27th, 2005.

The other doctor, who for most of the meeting just sat still with his jaw clenched, called my cellphone after I was about one minute down the road. He was trying to smooth things over and he and I agreed that on the following Monday I would give him a demonstration of my progress. By Monday, I had decided that I would be forced to leave the company and retaining ownership of my code. Because of this, a progress demonstration would not be necessary. I communicated that if a legal battle was imminent that I was ready. Between Wednesday and Monday I had done much research on copyright laws and had determined that they had no legal chance of winning. However, I was fully aware, that legal merit, or lack of it, was not going to stop them from litigating me unto bankruptcy if they could. It was, in fact, confirmed to me by one of the doctors that this was the plan.

We finally reached an agreement on the matter which was printed up and signed by all parties. The basic points of the agreement were that I leave the company, retain copyright, license the code to them, and they abstain from suing me. This was acceptable to me, and to them despite the fact that they were warned that without my involvement, the code was going to almost certainly be useless to them.

So I forewent several thousand dollars of payment on software I developed, then developed a lot more software, then developed even more, and now I have no money. But I do have a lot of lessons learned, and some of the software, which is worth something to me. And I expect to be able to use it in the future. The underlying website framework I was developing is not at all geared specifically toward the medical profession, and on the contrary is quite useful for any website. The other members have the code and their ideas, the latter of which they think is worth a lot more than it really is.

In the end, their less than genuine promises were enough to get me to take the dive of leaving my full-time job and to work towards completion of something that’s been a dream of mine for years. I’ve had the means, but never the courage to do it. The safety net, even though it was an illusion, was enough for me to make the jump. So it wasn’t a total loss.

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