How Doximity parlayed its popularity with doctors into a blockbuster IPO

Doximity exploded onto the public markets last month with an IPO that saw share values of the physician social networking startup double in 24 hours.

The company raised $500 million — and the eyebrows of many industry observers — with its stock market debut, its first public fundraise since 2014. More than 10,000 physicians participated in the IPO, making them the biggest collective Doximity shareholder, according to Nate Gross, the company’s co-founder and chief strategy officer.

One secret to the company’s success going from startup to stock market darling: It frequently pulls ideas from physician users and the members of its scientific advisory board, who regularly participate in company brainstorming sessions and events, Gross told STAT. That’s how Doximity came up with the plan to create the telehealth platform Dialer, which launched in 2020.

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“We joke that the best ideas come on the second day after the second glass of wine, because it takes time to get a group to the level of candor where the best ideas are freely flowing,” Gross said.

STAT spoke with Gross, who is also a co-founder of the digital health venture firm Rock Health, about what Doximity has been up to since 2014, whether the newly-passed federal information blocking rule could impact its business, and how having a broad investor base might be beneficial for health tech companies. This interview has been edited and condensed for length and clarity.

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What prompted you to go public? What have you been up to since 2014?

The timing was right. The entire health care industry has shifted to digital in recent years. We felt our model was working, proven, and would drive growth. It was the time to scale.

Since 2014, we’ve been focusing on the productivity needs of clinicians. Our members can access digital faxing and telehealth, and they have the ability to make referrals and stay up-to-date on the latest medical research in our news feed, our app’s starting point. Since the last funding round, we’ve been investing in each of those segments and working with our physician members to fine tune them to what matters to them.

When you deliver real value to doctors you can run your business responsibly. Taking the time with investors who are patient and will think alongside you about things like fit and membership satisfaction before growth, that’s really important. So in 2014, we had business models that were working well enough where we didn’t have to raise until the IPO.

Your investors aren’t the typical names I’m used to seeing these days in digital health. None of them is explicitly focused on digital health or health care. Is there something about these non-niche backers that you think may have helped or harmed you?

We raised our Series A from Interwest, which has a long history of supporting digital health innovation, and from Emergence Capital Partners. Emergence has backed companies like Salesforce and Zoom, and while those aren’t classic health care companies, there’s a lot we can learn from them. They’re on top of the trends with regard to cloud storage and subscription models, and they have an investment thesis around the deskless workforce: They spend a lot of time thinking about how they can help entrepreneurs who are deskless do well. That works in parallel with our mission, which is to help doctors be more successful with their patients.

Emergence and other investors also helped us take the time to optimize so we could grow organically, virally, without having to spend to acquire. Our advertising spend last year was $2.6 million. That patience is something really special if you want to grow a company with the strongest network effect and the most user trust and alignment.

How has your vision of what Doximity could be changed from 2011, when you launched, to today?

What hasn’t changed is our mission to help doctors be more productive so they can provide better patient care. Our mantra is physicians first — we develop technology that works for doctors and not the other way around.

Now with the interest in our telehealth platform, we’re thinking about how to improve on that experience. A lot of what physicians do during telehealth is educate. We have a vision to expand those capabilities. We recently announced partnership with UpToDate, the online clinical reference, so that doctors can make sure they have access to the latest materials during each visit. And we’ve been building out what we call “wall charts,” which lets doctors pull up a picture of, for example, an anatomical beating heart, so they can show the patient their coronary arteries and make that experience interactive.

Where do you get your ideas for new products?

A lot of them come from our physicians. We spend a lot of time talking to them and during what we call capstone events, or our medical advisory boards, we take a number of ideas over the past year and whittle them down into what we think will make the biggest impact in their day-to-day practice. At end of the event, physicians present to us. We use that as our product roadmap and our compass.

Our telehealth product idea came from a member of our medical advisory board. It was a cardiologist from Northern Florida who had to make a lot of patient calls, and physicians were increasingly concerned about their patients’ ability to call back, whatever hour it might be. That idea eventually became the foundation for our telehealth suite.

In the documents you filed to go public, you estimated Doximity’s total addressable market (TAM) to be $18.5 billion. That’s orders of magnitude smaller than other health tech companies, including Hims & Hers, One Medical, Oscar, and Talkspace. Did you underestimate yourself?

Telehealth is a rapidly changing industry, and there are a lot of different views on how big it will be. We’re extremely bullish on it. We focus on the software component. There are a lot of folks out there trying to be the Amazon of health care — including Amazon itself. Our approach is more like Shopify, where we help existing practices and doctors digitize. We’re not a practice of Doximity-employed doctors out there trying to compete with primary care clinics. We’re helping our members and partners digitize their practices to make them as seamless as possible.

How big of a component of your business does your telehealth offering represent compared with your social networking services?

Our telehealth suite is one of several popular features on the network, but our news feed is far more popular. As far as the business, [telehealth] represents a low single digit percentage of our revenue. It’s still very new, however. We’ve only been working on the enterprise version of it for the past year, and we’ve seen rapid adoption. We have annual subscription agreements with over 150 hospitals just for telehealth.

One of Doximity’s unique offerings involves helping doctors refer patients to other doctors. With the introduction of the information blocking rule, which will likely make this referral process easier, are you worried about new competitors or other potential impacts?

Preventing information blocking has been at the heart and soul of Doximity’s existence for years. The rule has been a long time coming, but there’s still a long way to go. I think there are multiple paths to improvement here. Doctors want information to be able to be exchanged, and we help them do that today with near ubiquity.

What do you think matters the most to the clinicians who use your platform?

In our telehealth product, one popular feature is being able to add an interpreter. That can matter a lot if, say, I have a patient from Ethiopia who speaks Amharic where, to make sure they receive the same quality of care as someone who speaks English, you need that functionality.

And for many people, our telehealth tool might be their first telehealth experience, since many practitioners are older and might be less familiar with this. We want a tech revolution where nobody’s left behind and everyone can participate, so we allow for things like backwards compatibility between voice and video, and from analog phone calls to digital calls. For example, a physician can call their patient and have their hospital phone number appear on the patient’s caller ID, so they’re more likely to answer, and they can call back at any time of day. In a tap doctors can also upgrade calls to video, the same way you and I might do using FaceTime video.

And importantly that’s without making the patient install that software or go through an extra login portal. That helps ensure care can be delivered regardless of a patient’s geography, demographics, etc. and lets clinicians focus on what matters, which is giving the best possible care in every interaction.

Source: STAT