Business Breakdowns
· Matt Reustle, Jim Jones
[00:00:00] S0: Makes sense. When you know where the fish are, you can fish in that pond. You mentioned when they launched it was a social network, primarily the LinkedIn for the medical professional. When was that, and what was the storyline for evolving over the years? How much history is there in this business? [00:00:00] S1: The current CEO, Jeff, he's had a previous business, Hippocrates, and Hippocrates helped doctors make decisions about prescriptions and patient safety while on the go, so it was kind of a digital drug reference guide that was founded in the late 1990s as mobile phones were becoming a thing. Eventually went public and then ultimately sold to Athenahealth. He started Doximity in 2010 with a guy named Nate Gross and a woman named Shari Buck, really focused on the intersection of technology and healthcare, and then they went public in 2021. [00:00:00] S0: There's a definite history just in terms of the founder being around this space and probably understanding the pain points. Still somewhat of a youthful business in terms of being founded within the past 15 years and a shorter public lifespan than that. In terms of competition in this space, what exists? Forget about LinkedIn. That's gonna be a different bucket and way more generalist. Do they have other competitors in the medical professional network space?
· Matt Reustle, Jim Jones
[00:00:00] S0: There's a definite history just in terms of the founder being around this space and probably understanding the pain points. Still somewhat of a youthful business in terms of being founded within the past 15 years and a shorter public lifespan than that. In terms of competition in this space, what exists? Forget about LinkedIn. That's gonna be a different bucket and way more generalist. Do they have other competitors in the medical professional network space? [00:00:00] S1: There are competitors. So when you think about how pharma companies are trying to reach doctors, historically it's been banner ads trying to chase doctors as consumers, trying to find them on golf.com or other places. Pharma reps can be viewed as competitors, so pharma reps going into the hospitals and trying to educate the doctors on recent studies or drugs that are coming out. There's a bunch of point solutions. There's telehealth providers and there's newsfeed providers. What Doximity is, is really taking a lot of those point solutions and putting them on a platform so that the hospital or the doctors have one platform and have all the services available to them.
· Jim Jones, Matt Reustle
[00:00:00] S1: There are competitors. So when you think about how pharma companies are trying to reach doctors, historically it's been banner ads trying to chase doctors as consumers, trying to find them on golf.com or other places. Pharma reps can be viewed as competitors, so pharma reps going into the hospitals and trying to educate the doctors on recent studies or drugs that are coming out. There's a bunch of point solutions. There's telehealth providers and there's newsfeed providers. What Doximity is, is really taking a lot of those point solutions and putting them on a platform so that the hospital or the doctors have one platform and have all the services available to them. [00:00:00] S0: When I think about the doctors interacting with who is advertising towards them, but also trying to take in information from the network itself, what does that look like? If I'm a doctor, can I do independent research in terms of new medicine that's out there? Is that something that's offered, and how does that interact with the advertising? Because obviously you always have this balance of the information and what's being fed to you, sponsored content, educational content, all of that. I'd just be curious to hear how they've approached that and found that effective balance.
· Jim Jones
[00:00:00] S1: Right now they show one ad in every 11 news items. The business started as this social networking, LinkedIn-like, and then over time they added a newsfeed, so there's thousands of new pieces of information that come out broadly across the healthcare space. Doximity will basically use machine learning to help filter out the news that's relevant to you. You're not sifting through thousands and thousands of articles that may or may not be relevant to your specific practice. They call it "cutting the scut," which just sort of enables doctors to get through that stuff quickly. The business evolved even further: "Okay, now we have all these eyeballs reading their daily news." You get the CME credits by reading these documents in order to maintain your licenses. That was the first step into the "workflow," and then they started adding workflow tools that help the productivity of the doctors: digital signing, HIPAA-compliant documents that can be signed and digitally faxed, secured messaging. Doctors can't just message other doctors using traditional text message, so they implemented that. The telehealth business: they are lowering the technology bar for the patient, making it very easy for the doctor to call the patient. To call that patient, you can select, "Hey, I want the caller ID to say this is the hospital calling," so that the patient doesn't necessarily have your cell phone and can call you at all hours of the day, but at the same time, the patient knows that it's the hospital calling and they're dramatically more likely to pick up the phone. They're very doctor-specific, unapologetically very focused on the doctor first, maintaining their time and respecting their time. These products that they come out with are very targeted at increasing doctor productivity.
· Matt Reustle, Jim Jones
[00:00:00] S0: Seems very logical to me that the doctor would be the highest-value target of an advertiser as well, so just keeping that customer happy and satisfied is particularly important from that side of the business perspective. Do they monetize any of those add-on solutions as they're rolling them out? Because it does feel like the DocuSign-esque, the HIPAA compliance, all of those productivity tools can make a material difference. They're gonna increase the stickiness of you using the platform, which is a net benefit to the advertising business, but I'm just curious if they've explored monetizing any of those add-on tools. [00:00:00] S1: They'll sell enterprise agreements to hospital systems to get all the doctors on the Dialer Pro, but doctors can use all the tools for free. If your system doesn't necessarily have an enterprise agreement, then doctors can use the tools for free, but most of the revenue comes from pharma advertising to the doctors as opposed to the hospital systems. [00:00:00] S0: What has the trend line looked like for that in terms of advertising spend coming from pharma? I know it's just always high, but I'm sure there's some cyclicality to it. Are there any secular trends in that ad bucket that are worth noting? Because it feels like the most obvious KPI here.
· Matt Reustle, Jim Jones
[00:00:00] S0: What has the trend line looked like for that in terms of advertising spend coming from pharma? I know it's just always high, but I'm sure there's some cyclicality to it. Are there any secular trends in that ad bucket that are worth noting? Because it feels like the most obvious KPI here. [00:00:00] S1: The market grows about 5% to 7% per year. That's because there's a secular shift to digital from traditional sources of advertising. The healthcare industry is pretty far behind the rest of the economy in terms of how far we've gone digital, and it makes some sense. The healthcare industry, specifically pharma, has an army of salespeople that are going into hospitals that a lot of industries just don't have that. The latest numbers I saw are that digital advertising is 75% penetrated in most parts of the economy, and we're about half that in healthcare. There's a long runway of shift that needs to happen. It helps that you can identify the ROI. When you put a TV commercial on, you have no idea if that consumer saw the ad and then fulfilled a script or not, but it's very clear: we target a group of doctors and then we buy third-party data to see who's getting the prescriptions. Being able to see the ROI is driving that shift to digital. The rate at which pharma will move over is the governing factor there.