Before we get started, tell me if you got this problem. You’ve got a great product but you’re not getting people to even try it, let alone buy it. Well, the problem is probably that you’ve got too much text on your site. But check out what these startups have done. Here at SnapEngage they’ve got a video explaining their product right under the free trial button. Here is SendGrid, right next to the get started button is a video explaining the product video. Much more than text, it helps people understand what you’ve created and convinces them to try it and buy it.
The company I recommend that you turn to for this, it’s Revolution Productions. Same company that did both start ups in many other videos, Revolution Productions. And when you go to their site, Revolution-Productions.com, and contact them. I want you to talk to directly to the founder, Anish Patel. Tell them I sent you, they’ll take care of you and make sure you have a good video that convinces people to try your product.
Next sponsor is Grasshopper.com. I want you to think of them as like adding super powers to your phone. Want extensions, you can add it. Want a phone number that catches you anywhere you are, you’ve got it. Want to take your voicemail messages maybe and convert them into text, you’ve got it. Anything that can be done with a phone, pretty much anything. I can’t imagine what you can’t do. Grasshopper.com will do it in a very user friendly environment so you can keep adding features and adjusting them yourself. Grasshopper.com.
Finally Scott Edward Walker is the lawyer that I have been recommending long before he even paid me for his sponsorship. I don’t even know, Scotty, why you even both paying me, I’ve been telling people for years to try you, but you do. So I’ll tell my audience right now, if you need a lawyer, if you’re an entrepreneur, especially if you’re a test startup entrepreneur, go to the lawyer that I recommend. As you can see on this website, Jason Calacanis, Neil Patel and many other entrepreneurs recommend, Scott Edward Walker of Walker Corporate Law.
Alright, I’ve talked too fast and for too long, let’s get right into the program.
Andrew: Hi everyone, I’m Andrew Warner, I’m the founder of Mixergy.com, home of the ambitious upstart, the website where entrepreneur can come to tell you the stories of how their built their businesses.
How does an entrepreneur, when half of America’s doctors with a mobile app. Joining me today is Jeff Tangney. He co-founded Epocrates, maker of smart phone apps that let doctors look up information on drug dosing, interaction and insurance coverage, all while talking to patients. After exiting that company, Jeff went onto launch Doximity and iPhone app and web service, which helps physicians communicate with each other and look up patient related information. Jeff, welcome thanks for doing the interview.
Jeff: Thanks for having me, Andrew.
Andrew: You’ve left the business and it was doing how much in revenue?
Jeff: I was doing about 100 million in revenue, about 20 million in EBITDA when I left about 18 months ago.
Andrew: OK. So that was 2009 and you launched the business, I guess 10 years before, roughly, 1998, right?
Jeff: That’s right, yeah. No, it was me and actually two of my roommate friends who were physicians. We were at Stanford Business School and the truth is we had actually accepted jobs in the more traditional sector but decided to go the entrepreneurial path. We’ve never looked back, it’s been a terrific journey.
Andrew: Do you have an example of how someone like me might come into contact with Epocrates?
Jeff: Sure. As you’ve already mentioned, we have about a half of the countries physicians are using Epocrates. I’ll tell you how Steve Jobs come in contact with it. He was visiting his physician, we were one of the three companies on state with Steve Jobs when he launched the Apple App store, which now seems like eons ago, which was really just a few years.
His physician was looking up the different drugs he was taking and whether or not they interact with each other.
You think about it, there are thousands of different drugs, they all have different combinations of interactions. You really need a computer to calculate this. So we saw back in 1998 with that early Palm Pilot was the opportunity to do that quickly in front of the patient to make sure that polypharmacy as they call it. You know the people taking more than one medication doesn’t cause problems.
I’ll tell you, at the time the Institute of Medicine, this is back in ’98 announced that the 8th leading cause of deaths in the United States, the 8th leading cause of death was drug interactions. We felt really proud that we were coming up with something that helped doctors just make faster, better decisions.
Andrew: And how about an example for the current company Doximity?
Jeff: Sure. At Doximity, we’re about connecting doctors together. We’re at Facebook or LinkedIn, if you will, but it’s just for doctors. It has that HIPA security. It’s a law that requires that everything is encrypted, doctor to doctor. So, if I go in and see my primary care physician and I need a hand specialist, they could quickly look up their orthopedic specialist friend, who his colleagues are and more quickly refer me to the right specialist. The average primary care physician in the U.S. deals with 270 different specialists in an average year. If you think about it, that’s a lot of people to keep track of.
It’s really sad. You hear all these stories of‚Ķ patient will go and have an operation done. Something bad will happen, and the only way the primary care physician finds out about it is through the family. What we really want is to make it easy for doctors to send a quick text message, chat about a patient, because today they have to do it over FAX. They’re not allowed to send emails to each other. It’s not secure. So, we’re providing that secure channel.
Andrew: You must be so proud, by the way. I want to go back and find out how you launched the business. But, as I’m hearing your story and reading about it in preparation for this interview, I just kept thinking that you must be so proud. It’s great to build on iPhone app that’s a game that does really well and people enjoy. It gives them a little bit of happiness in their lives. But you’re actually helping doctors save lives, helping doctors make life easier for their patients. You tell me, how does that feel?
Jeff: It’s terrific. It’s wonderful. We did a study with Harvard Medical School showing we helped avoid over 2 million adverse drug events, which is basically sick people, per year. One of things that’s great about working in health care is that it’s something that’s so fundamentally broken right now in the U.S., that I think you really get the benefit of doing well and doing good. Right?
Andrew: Mm-hmm.
Jeff: That helped us retain and attract a certain type of employee and contributor. We were about 350 people when I left, that really are very mission drive. We had, every Friday, an email that we’d send around. We’d call it our ‘Friday Fuzzies’, or warm and fuzzy. It would be an email from a doctor saying, ‘I saved a life this week, because I could look up what that pill was in the patient’s pocket from taking a picture of it. And know that this person was an epileptic and that was the problem.’ So, it really was very, very gratifying, and still is.
Andrew: I often highlight numbers in my introductions, and we talked about how you did $20 million EBITDA before you left the business. But, wow, to just hear those kind of stories has got to feel so powerful and so moving for your team.
All right. Let’s go back to 1998, when you launched the business. What was the original idea that made you say, I’ve got to launch a business here?
Jeff: I’ll tell you, we had several original ideas. We were excited about Palm Pilots. We were excited about mobile computing. I had a Palm Pilot. I had developed a little on the Palm Pilot. We actually tried doing an application that you could use at baseball games to order food and look up batting stats. But, we naturally gravitated back to healthcare, because a couple of our other founders were doctors, and I had worked in the industry as well. It’s because it’s an industry that’s really, so much of it is information. Doctors are making decisions based on information, and so much of that information is on paper, or it’s lost, or it’s over in some file somewhere else. So, just trying to bring all that together was really our mission and goal.
Andrew: The original mission was to bring together information that would otherwise be locked, essentially, in the books that were on the doctor’s bookcases and in the libraries. You wanted to make it accessible and put it right in the palm of their hands.
Now, I understand that idea as a concept. It makes a lot a sense. But, what about the revenue, back before the app store, back before they were advertising on mobile devices or even, really, wireless available everywhere? Where did you think the revenue was going to come from?
Jeff: The honest is answer is we didn’t know. We had a bunch of ideas and slides, and bunch that failed, frankly. We spent a lot of flying around the country, a lot of time living in the tube going back and forth to various companies, insurance companies, pharmacy benefit managers, pharma companies, medical device companies.
Andrew: This is before you even launched, you had these kinds of conversations?
Jeff: Oh yeah.
Andrew: What were the conversations about? What were you trying to find out or accomplish with them?
Jeff: Fundamentally, we wanted to find a way to make it make it free or very cheap to the physician, right. And so what it really comes down to then is different types of advertising. Now in the end we never did anything that I’d actually call, or what most folks would recognize as straight advertising. We would ask the doctor four survey questions on their Palm Pilot, they would get $25 to answer them but it was just people on Wall Street asking what they thought of this new drug from ABC Pharma, right. That’s about a $30 million a year business for [??] right now. So that’s a win-win, I mean the doctor makes money, the researcher gets good answers.
Doctors make a lot of decisions, their very busy, they control millions of dollars or spend per month, right. And we found in the end, lots of players, insurance companies, they wanted doctors to know what drugs were covered under their plan, and which ones weren’t, right. And to be able to tell the patient, oh, I can give you this drug but it’s going to cost you $50 a month in co-pay. And by switching that patient to a cheaper drug, everyone saved money, right.
Andrew: I see, but that wasn’t even in the original idea, that wasn’t in the first launch that was something that occurred to you as you were talking to actually users. In the conversations you had before the launched, I’m curious about what you learned that you didn’t know, and how that helped shape the product before you launched it?
Jeff: Well we learned a lot, you know we originally began trying to do a full electronic medical record on the Palm Pilot and we learned that that really just wasn’t feasible, it still isn’t really isn’t that feasible to have all that information quickly available enough on that mobile device.
Andrew: Why not, that does make sense, especially back then to say to doctors, you will know every single thing about your patient, it will be on your Palm Pilot, you won’t have to go looking for documents from other doctors or even go though those files of yours with the bad hand writing on them. Why didn’t that make sense?
Jeff: Well, at the time, and keep on mind, this was 1998. Palm Pilots were syncing at cradles to your pc, there was no wireless access, there was no Wi-fi, so really just the access to the data wasn’t there. You really had to have something that really lived more like that mini textbook on the Palm Pilot. Today with iPads, over 30% of U.S. doctors have iPads. With Doximity we’re very excited, the new company, that you really can have access to all of that. There’s still some coverage issues but it’s come a long ways. Getting back to your question, as we grouped around to try to find the right market fit, in the end we found some folks I’d worked with previously at Pfizer, who were willing to take a risk on us, as individuals, before we had any venture capital, to say, let’s try this out, we’ll do 500 doctors, we’ll give them a free Palm Pilot with some of your software and see what they think of it. And they would pay us two or three hundred thousand dollars for that.
Andrew: This is Pfizer paying you to distribute both the hardware and the software, and with that money, that’s what you went and created the software with?
Jeff: Correct.
Andrew: So your first investors essentially were Pfizer, a company you were selling to?
Jeff: Yes.
Andrew: With that deal in hand, did they give you the money, or did they say first produce then we’ll give you the money to make it work.
Jeff: They gave us half, right. And that was enough to get going, to pay our airfare back out there again. It’s with that in hand that we went out and raised 5 million in our series A and really built out the idea.
Andrew: Oh, I see, so you didn’t build with that, you were just able to take that deal to investors and say look, this is obviously something that our customers, our potential customers a Pfizer want, we’re going to be able to build this out if you fund us?
Jeff: Correct.
Andrew: And we’ll get other customers, I see. So, you got the funding, you got the first client with Pfizer, you have to build a product. How long did it take you to build the first version?
Jeff: It took us about six months, we took our team out to meet the folks at Pfizer, and we introduced our lead developer, this guy named Ben Strong, and we said, you know, in the intro he was in the top 10% of computer science majors at Stanford. The part we forgot to mention wasn’t yet a Junior.
Andrew: He was still there.
Jeff: We really had a team of undergrads that we knew from school and in about six months time, mainly over the course of a summer working on it, pulled together our first product. We, actually almost as a lark, put it up on the website for free, as well. If anyone wanted to go test it out, and buy their own Palm Pilot, they could, but it completely surprised us, shocked us. Within a year, it was a hit. We had close to 80,000 doctors who had gone and bought their own Palm Pilot, just to use our software.
Andrew: Wow!
Jeff: And so then the whole business model changed, and it was, well, you know, who needs Pfizer? Right? We’ve got the internet. We can get out of the hardware piece of the business and focus on the software. Which is what we did.
Andrew: The first version of the software, you just made it into, essentially, an e-book reader, right?
Jeff: Yes. We did a drug reference. That was the primary thing. It was pulling in from a bunch of sources- we did have to compile our own content for it- and that was the first version. It didn’t update. That was it. Shortly after the first version, we put in the updating, so as new drugs would get added, they’d automatically get added. And then one of the key things was a drug interaction checker, and we heard this lot from our doctors. That, ‘hey, it’s great that I can look up that Prozac is 10 milligrams, BID, but this patient is also taking Aspirin- do these two things interact with each other?’ And so, there’s no book that could do this. Right? We could just let you put in up to 20 drugs, hit a button, and it would tell you all the potential interactions.
Andrew: I see.
Jeff: And that’s what I think really vaulted us to that next level, which got us to 150,000 doctors in a couple years.
Andrew: How did the first doctors find out about you? It’s great that you exist and that you’re even useful for them, but how do they know you exist and get to decide for themselves whether you’re useful or not?
Jeff: Yeah. It’s kind of- I remember speaking at conferences back in ’99-2000, back when we called it ‘viral marketing’, right? Today it would be called ‘social media’ or something better, but it really was just doctors telling doctors. There are only about 500-, 600,000 doctors in the U.S. Most of them have been to one of the same hundred schools, or a thousand residency programs. They get a lot of things sold to them, but they’re pretty tightly networked. So, forwarding an email, or just telling someone else in the hospital. I’ll tell you, for us, the younger doctors turned out to be the real Johnny Appleseeds for us. They would get trained, they would go out, and go out into their private practice, and they would show-up the older doctors. They would find the answers faster, and that would lead to questions of ‘what is that thing?’ And suddenly, we were selling a lot of Palm Pilots for Palm. 80% of our users, when we hit 200,000 doctors, told us that they had purchased the Palm Pilot just to use Epocrates.
Andrew: Oh wow.
Jeff: And they would just keep it in their lab coat pocket. It would be there. One of them called it his ‘peripheral brain’. That whole library of knowledge he had in his pocket.
Andrew: So, we don’t think of the world back then as having app stores, but there were app stores back then. I forget the names of them, but there were a handful of them, and I remember, I think, seeing you guys almost always featured in them.
Jeff: Yeah.
Andrew: Is that because you were buying ads to get featured?
Jeff: No. I’ll tell you, at the time there was Fandango, and Ad It, and a few of them.
Andrew: There it is! Right!
Jeff: But they were always a very small part of our volume. There really just wasn’t much of an app marketplace. We were getting doctors to come to our website, because another doctor had mentioned it to them, right? They would say, ‘oh, it’s like Hippocrates, I get it’, and then they would come and register, and then they would download from our site directly. The app store has really leveled the playing field there, and it’s made it great for‚Ķbecause we had to build client software for the PC, to be able to install it. We had to-
Andrew: Really?
Jeff: -have the whole, you know, we had to build the whole infrastructure. The subscription payments, the credit cards, all of that, that now, Apple and Android just give you for very little.
Andrew: You said subscription payments. Is that where the first revenue came?
Jeff: After the Pfizer deal, yes.
Andrew: OK.
Jeff: We had a hit product. It was a free drug reference and then we started adding on things to it. An infectious disease reference, and a laboratory reference on lab results, and we charged anywhere from $100 to $200 a year for that.
Andrew: OK.
Jeff: So we were also a very early freemium model which is good.
Andrew: So how did the product evolve beyond what you’ve told us about so far? You’ve said at first it was essentially an e-book reader, then it allowed doctors to see how medics interacted with other medicine and then you said that you also added a premium model to it, what was the next step in the evolution of the product?
Jeff: Well, really just going specialty-by-specialty and building out that full, integrated, peripheral brain. We began as drugs, and then became drugs and tests – lab tests, then became drugs, diseases and tests. Then we went from just being Palm only, to being on the Web, and on the Blackberry, and now on the iPhone, and adding in full images, so that was within the core references.
Then we added the ability to do continuing medical education, so more interactive. I could earn a half-hour of credit; doctors need to do about 40 hours of credit a year to remain certified. So, I can earn my credit right there on the iPhone answering a few questions. I could do surveys on the iPhone. I could order new drug samples. I could keep a phone list of industry experts to call.
Andrew: So, how did you know what to build out? How did you figure out what products, what features needed to be added and what you needed to wait on or not do it at all?
Jeff: The core of it was customer research.
Andrew: What kind of customer research did you do back then?
Jeff: We did surveys, certainly with our doctors, we had a whole $30 million business just doing surveys on behalf –
Andrew: …right on the device?
Jeff: Yeah, right on the device with Wall Street, so we would use our own service to do that. We’d do focus groups and also we have, and still have 12 physicians inside the company, who would be actively engaged and say, ‘You know, I was out practicing, seeing a patient yesterday,’ we would ask everyone, who is a doctor at the company, about one or two days a month they would still go see patients so, keep it real, and they come back and they [??] say, ‘You know what would be really nice if I could look up what the co-pay would be for that drug,’ and that would be another idea that we would bring in.
Andrew: Where did the idea for the surveys come from?
Jeff: It came to us. We were known as having a lot of doctors who used our service, and there were market research firms who just couldn’t get doctors on the phone anymore, right, so they came to us and they said, ‘You know, it would be nice if with some of these simple surveys, we could just do this,’ and sure enough we put together a business on it. Ultimately Goldman Sachs ended up investing because they wanted their Wall Street analysts to be able to use this. That was a business that, I guess we knocked on some doors, but when you start looking at things that we went out and got versus things that came to us, that one came to us.
Andrew: I’ve got an article here from the New York Times. I think it’s from 2001, where a vice-president of Eli Lilly said, ‘Doctors are not going to pay a lot of money for technology.’ Were you finding that too that at the time, even that the premium model or the freemium model wasn’t working because doctors just weren’t willing to put up the money?
Jeff: We never had high expectation for the freemium model. It does $17 million a year right now which is pretty good.
Andrew: $17 million out of roughly $100 million in revenue?
Jeff: Yes, yes.
Andrew: OK.
Jeff: So, I would say it’s done well relative to our expectations, but here’s the thing, doctors they make so many important decisions for peoples lives and financially frankly, and they make millions of dollars of decisions a month if you look at what they do. They’re, you know, 18% of the GDP of the country is healthcare and doctors make 80% of those financial decisions. So, there are lots of folks, from insurance companies, to the government, to pharma companies who really see a lot of value in creating that tool to make it easier for you to sign up that patient for an indigent program, or a diabetes monitoring service.
Andrew: To help, they make a lot of money and have a vested interest in influencing the people who are influencing so much of GDP.
Jeff: Exactly.
Andrew: I see. So, they’re willing to spend money, why not look for ways to earn money from them instead of from the doctors.
Jeff: Right.
Andrew: I see.
Jeff: And the joke with doctors always is, let’s face it doctors are poor until their early to mid-30’s right? I mean as residents, in their mid-20’s, they’re not making enough to barely even live, much less pay back they’re $300,000 in med school debt. So they’re definitely the guys who — I can say this because many of my best friends are physicians — were first in line for the free cookies at the conference. We never expected them to be paying a lot out-of-pocket. $17 million a year was probably better than we expected.
Andrew: You were growing during the dotcom bubble explosion, during that “cold winter” where there wasn’t any money, where a lot of companies were going out of business, where everyone was doubting the future of technology. What was it like for you at the time, as a business?
Jeff: When we did get funded it was the height of the bubble, and we joked, Richard and I, that we wouldn’t be able to raise money again without that type of environment, as two unproven entrepreneurs out asking for $5 million in venture capital.
From 2000 to 2008 we had to get profitable, it wasn’t a choice, and we did. We got profitable in four years after our first initial funding. I think we actually benefited from that discipline, and that “nuclear winter” of venture capital.
Andrew: How? Do you have an example of what you guys did differently and better because you were in such a tough financial environment?
Jeff: Sure. Well, we laid off about 30 people. We had a couple of business lines that just weren’t doing that well. We were selling hardware, which wasn’t a great business. We were trying to do electronic prescribing, which just wasn’t easy enough for the doctors to do. So we jettisoned those businesses faster than we might have otherwise.
It was good learning for us as entrepreneurs. For me as CMO of a company to really learn from that experience that you have to make the tough call. It’s never easy at the time, laying off good people isn’t easy. But I will say, those people, typically within six months, ended up in a position that was better for them. It certainly was better for the company not to continue to pursue poor business lines.
Andrew: You focused on what? When it was time to really say, ‘We need to get good at something and earn money from something,’ what was that one focus that you wanted to spend most of your time on?
Jeff: There were two areas. The subscriptions that we sold to our doctors, they were actually quite profitable and it was one of those pure Internet businesses. Every day we made $80,000 off our web store, and we didn’t do much, so that was the main one.
The other one was working insurance companies and pharmaceutical companies around helping manage this [TD] drug [spend] helping the doctor know that a patient would be able to get Drug A for $5 a month or Drug B for $50 a month.
Andrew: Where’s the revenue from that coming from?
Jeff: Well, from two different sources. From the pharma company, the one that wants you to shift to the cheaper alternative, their alternative, and also from the insurance companies who want to have that savings as well.
Andrew: So the insurance companies were paying and the pharmaceutical companies were paying to switch you over? But the pharmaceutical companies, of course, if you’re looking at one medication, they might advertise for their medication as a cheaper option.
Jeff: There were lots of internal debates at the time. It was a time when we really established our internal rules and ethics around what we would and would not do with advertising within the products. In short, there’s nothing within the drug reference or disease reference that is sponsored at all. We would not do sponsorships there.
But we do have these separate alerts that people receive that are sponsored. So it was drawing the line. New England Journal [of Medicine], they make most of their money from ads, and they’ve had to draw the line. Are there ads within articles? No. Are there ads every other page? Yes. On the Internet, we defined our rules there.
Andrew: Was there a period there when you wanted to leave? When you said, ‘Hey, this is just not going to work out.’
Jeff: Sure.
Andrew: When?
Jeff: Typical vesting for a founder of a venture-backed company is four years, and they extended mine a little, so it was five years. I had been there five years, and I had vested most of the stock that I was going to vest, and it was a natural point to just say, should I be going and starting something new or not?’ Really, what I got sold on was the career growth that comes from running and growing this enterprise. I learned a lot over that decade, and even the last year or two of that, as we filed to go public, and we did our initial road show, and seeing how investors react to it. I learned a lot about the full cycle of starting, building, and selling to the public markets, the company. But, I’ll tell you, I thought about going and starting something new. My goal always was to become virtually unemployable. I think it’s almost the goal of every entrepreneur.
Andrew: What do you mean by that? What does that mean for you?
Jeff: There’s this guy, Herb Grousbeck, who teaches at Stanford Business School. He’s one of the founders of TCI Cablevision. He’s a very successful entrepreneur. And, he said, ‘It used to be that the biggest risk of being an entrepreneur would be that you’d lose your house, that you would not be able to support your family, that you’d run up your credit cards. You’d be financially bankrupt and no one would hire you.’ And he said, ‘Actually, that’s not the case anymore. Now you find other people who are willing to take the financial risk. Even if you fail, you’re actually more employable.’
There are companies out there who want to hire ex-entrepreneurs, because they appreciate the scars, the learning. But he said, ‘The goal of an entrepreneur is to become virtually unemployable.’ In that, you get so excited about that process of building something from scratch, the journey of creating new things that delight customers, that you just don’t want to do anything else. The thought of working for that 2,000 person company just becomes unattractive enough that you can’t be employed by them.
Andrew: Do you have an example of a time when you felt like you really were doing that? Because a lot of entrepreneurship is also dealing with frustrations of employees who are unhappy, of picking where people sit, or having them complain to you because they’re sitting in the wrong place. And you think, this is just so small. I came into this to create something wonderful. Do you have an example of a time when you did get to create that wonderful thing?
Jeff: I have lots. Let me give two quick ones. We launched this new CME product, that allowed people to earn continuing medical education, so get class credits on their iPhone. And, we did a contest with the doctors, take a photo or where you’re earning credits. So, they would take photos of themselves on a horse. Or, we had lots of guys overseas, military doctors, standing on a tank earning CME credit. As part of this, we did a trip out to D.C.. We got to meet the President’s personal physician, who told that he had had to do a secret trip to the Middle East, and he had forgotten to bring along his iPhone. Or, actually, at the time it was a Blackberry. And, he basically needed to have it Fedexed to him right away, not because of the email or other things. He had other things for that. But, he couldn’t live without Epocrates. He couldn’t adequately treat the President of the United States without having this tool. So, that was a great moment.
Certainly, doing that first filing of the S-1, where you’ve now written this 100 page document describing this company you’ve built. It’s got the banker’s names on it, and pulling that all together. That was a real proud moment for us, where we thought, ‘Wow. We built this company of lasting value that lives on long beyond us.’
Andrew: You left the company just before it went public, right?
Jeff: Yeah.
Andrew: You left in ’09, and you guys went public in 2010. How did that feel to be out of the business when it finally crossed that threshold?
Jeff: Actually, it was fine. I was still there at the employee party, clinking glasses with others. And, I’m very proud of the team we built there and how well they’re doing. Frankly, I had been there 10 years, and it was time to go do something new. I’d had the chance to go out and start something new with the same venture capitalists we had at Hypocrites. I say it’s like mountain climbing. Climbing the mountain is this exhilarating, tiring experience that you love to do. But it’s so tiring while you’re doing it, you think it’s not the reward, that the reward is getting to the top. But the truth is, once you get to the top, you look around for a few minutes. You’re a little bored, and then you’ve got to walk back down, and that’s the least fun part.
I encourage entrepreneurs to focus on the journey, enjoy the journey because that really is the fun part. Making money at the end let me tell you, there are more people than I know of, who, you know, have made tens and millions of dollars and been less happy than when they were out there trying to…
Andrew: Really?
Jeff: Yeah, oh yeah. You know…
Andrew: Why, why are they unhappy at that point?
Jeff: Well, I can speak from personal experience here. You know, the influx of new wealth in the tens of millions changes your life dynamic a lot. Certainly there are people, you know, calling you and bothering you about things that, you know, you may not want to deal with. Also there is that issue of, you know, why do I have to get up in the morning and go do something that I don’t like anymore, right? So you stop doing that and then you realize that now I am bored, right?
Andrew: What is it that you stop doing?
Jeff: You stop working for a pay check and you start working for the love, right? And if you are in a job or you are just working for the pay check, and now you have all this money, you are less happy than ever, because why am I going into this job, you know, that I don’t like, alright? If you don’t have a job you love, well, then you just stop working, but then you are bored, and you know, I joke with my wife, but you know, me hanging round the house drumming my figures on the desk was not going to be a recipe for marital happiness, for us.
Andrew: How much time did you take off?
Jeff: I took about two months, we went, traveled…
Andrew: That was it? You launched, you left 2009 and you launched Doximity, 2011, middle of the year…
Jeff: Yeah.
Andrew: … but it was only two months of not working, the rest was you coming right back and thinking what the next project was going to be?
Jeff: Yeah, so I took a job. That’s what they call as entrepreneur residence, at our VBC, gave me a desk and an assistant and a platform really, it was great to look at, you know, a dozen different things to do next. And I will tell you, my own happiness quotient went right up that day I started coming back to that desk, and thinking about what to do next. You know, I think, you know, you are an entrepreneur, it is in our fiber to go out and build things. If we are not building things, I am not certain we are that happy, right? And I think a lot of first time entrepreneurs they get trapped into thinking, ‘Oh, I will be happy once I get to that point where I can, you know, exit’, right? Or I will be happy once I am able to buy that big house, you know, up in the hills. And you know, really the big house in the hills, there are a lot of headaches with that house, I can tell you, I am building it. It is not really as much fun as building a new company where you have customers and appreciation and people who are excited about what you can do for them next.
Andrew: So towards the end, you weren’t fantasizing about sitting in your backyard and reading all day, or going cycling or traveling for years, or doing anything other than launching a new business? Your fantasy seemed to be towards the end of just launching a new business and creating a new product.
Jeff: It was, I mean, Andrew, I know you took a year or so off. That’s what most venture capitalists say, ‘you should take a year off’. A year is enough time to clear your head and you know, it gets a little boring near the end of it, but it’s the right amount of time to just get out and explore, right? And I would have taken a year. Actually I think a year would have been better than two months, but I just felt like, the market that Doximity is in, this, a sort of LinkedIn for doctors, it wasn’t going to wait for me. There were a lot of folks who were circling on it and I was passionate enough about that opportunity that I felt like we needed to move a little sooner. And I will tell you, you know, the two months of traveling, that was about enough for me at my stage … again, I might be a little more [??] but I am happiest when I am working on that piece of the product, when I am talking to a customer, when I am meeting with an investor…
Andrew: Why didn’t [sounds like] you think about this business, about Doximity, differently than you thought about [??] in the early days? How was the planning different? How was the thought of where it was going to go different?
Jeff: Main difference is the percentage of my time allocated toward fund raising went from 80% to 5%, because I already knew a lot of right people to talk to and I could get the meetings, right? That I think is one of the biggest advantages of a serial entrepreneur is the access to investors and capital, and also the running room to leash, having had a successful company, being able to do that. Also, it helps with recruiting and everything else. More of my time was spent on customers and products, right out of the gate, than we ever did at Epocrates.
Andrew: What kind of conversations were you having with potential customers before you launched?
Jeff: We had an alpha version of the product out, we had several hundred physicians who were using it in the area. I find meeting live with people is the best way still, to get feedback and so, I had a series of coffee lunches, afternoon coffee dinner kind of days, where in return for a little bit of free food, I would get a good half hour, 45 minutes of good feedback, from a doctor, what they would like out of it. We also did some surveys, we tested the website and the product; A/B testing in a lot of places.
Andrew: Do you have any questions you would advise us to ask potential customers when we are having the kind of conversations that you are having?
Jeff: I would say, talk about the pain.
Andrew: The pain.
Jeff: The pain. You want to solve a customer pain. There are a lot of products out there today, that are technologies looking for a solution. It is because the technology exists that I am putting it out there. But really, if you just ask a customer what is the most annoying thing they have had to deal with this week, as a starter question, half the time you may not be interested in the area because it may not be in your market space, but half the time you might be surprised what it teaches you about what you are putting together.
Andrew: What is the most difficult thing you have had to deal with this week?
Jeff: Exactly. So, Doximity, we are at 5% of the U.S. physicians now, in under a year, and I think it is because we have hit on one of those pain points for doctors, which is the hideous logistics of getting information about a patient; having to call outside my office, having to fax. If you get people to share their pain, that is a sign that you really are getting to a point of sincerity in the discussion.
Andrew: I read that at Epocrates, one of the things you did to get physicians to notice the product, you sent over a thousand physicians to go out and give presentations at local events. Here, it seems like Doximity is just naturally viral. If I’m using it to look up who I should refer my patients to… actually, can you explain it because I’m just a little tongue tied here, in trying to explain something that’s so obvious. So, talk about the natural virility and how did you build it in.
Jeff: I’ll tell you, 10 years ago, virility meant sending around a Power Point to 1000 different doctors, who would then go and give talks at their local hospital, medical meeting or clinic, and that was our most successful program, by far. I realize now, the reason why doctors did that is because, if I’m the local guy who does knee surgeries, I want to go out and talk at the hospital, just to get my name out there as the guy who does knee surgery.
Andrew: Oh, I see. So, you didn’t even have to pay them, they were going out to talk about this new product that other physicians would benefit from, and by the way, people would ask who they were and what they were doing? OK. I see.
Jeff: Exactly. And talking about the Palm Pilot or the Blackberry was enough to fill the seats and that is how it would work. But, you are right, the virility of Doximity is built into the product. Our average new physician invites 25 colleagues to join the service and that is their own referral network.
Andrew: And they do that so that they can find their contact’s contacts.
Jeff: Yes.
Andrew: That’s [??]
Jeff: The other thing that they do is share, what they call their backline, or their private line. The simple analogy is that you would become friends with someone on Facebook so that you can see their photos, right? You become colleagues with another doctor on Doximity so you can get their cell phone. Because they don’t put that up on a website, they don’t want patients to get access to it, they don’t even want your nurse to get access to it. They want and only do that with their true colleagues.
Andrew: I see.
Jeff: And over 1/3 of our users actually do share their cell phone, or a lot of offices have a separate phone line, they call it their ‘backline’, which is for physicians only, so they’ll share that, just making it easier to get a hold of. It’s a big time saver.
Andrew: Final question, I know you advise startups right now, as an experienced entrepreneur, what is the one thing that you try to drive into their heads? What is the one piece of advice that you would pass on to the entrepreneurs that you advise?
Jeff: Particularly for the ones who are raising money, it is easy to come up with a list of eight things you need to do, and it is hard to just say, ‘I’m going to do number one well, I’m going to forget about number two and number three, I’m just going to do number one well, and then I’m going to do number two.’ One of the biggest reasons I think that companies do unravel, or do not get to those milestone points, is because they have too many different initiatives, and that is why
I think it was good that Epocrates actually had to survive the nuclear window of funding in 2002-2006, because it did force us to focus. If we had not done that, I know we would not have been profitable in four years, but I am not certain we would have even been successful. Because you end up diluting the one or two things you really do well. So focus.
Andrew: That is great advice. I really appreciate you doing this interview. It is an honor to meet you, and thanks for sharing your story with us.
Jeff: [??]
Andrew: Thank you all for watching.
