From DailyRounds to Marrow: How an academic network of doctors, snubbed by pharma companies, found its dose of profit

L to R: Priyaank Choubey, Deepu Sebin and Nimmi Cherian, Cofounders, DailyRounds Image: Arunchandra Bose for Forbes India
 
Mumbai, 2016. At times, Mumbai can be overwhelming. Deepu Sebin, who travelled close to two hours and covered 981 km from Bengaluru, was excited about his business meeting with top officials of one of the big pharma companies in Mumbai. The doctor-turned-entrepreneur from Kerala had strong reasons to feel special, and a bit entitled. Co-founded by Sebin, Nimmi Cherian and Priyaank Choubey in December 2014, DailyRounds started as an academic network for doctors who would get clinical cases, quizzes, news and medical content. The idea was to build a thriving community of doctors so that they could learn, discuss and share the knowledge and cases with their peers. “It all started as a passion project,” recalls Sebin. “I expected only a few downloads.”
 

The founder was wrong with his diagnosis. By March 2015, DailyRounds had thousands of downloads, there were around 45,000 doctors using the platform, and DailyRounds raised a seed round of $500,000 from Kae Capital, Teruhide Sato and GSF. Over the next few months, there was no let-up in the intensity. By September 2016, DailyRounds had some 2.5 lakh users, graduated from GSF India and Microsoft Ventures accelerator programmes, and raised an undisclosed funding by Accel and a bunch of other investors such as Beenos, Powerhouse Ventures and Aksua Holdings in September. The doctor—Sebin completed his post grad in internal medicine from Stanley Medical College in Chennai in October 2012, and co-founded a startup in online healthcare delivery for over two-and-a-half years—was elated with the progress. Nearly 30 percent of doctors read the notification on the app inside an hour. The response, indeed, was overwhelming.
 
Back in Mumbai, the entrepreneur again got his diagnosis wrong. Sebin was confident that he had figured out a business model, built a product which could be monetised, and was about to pitch to the big pharma company. The founder started his pitch with a series of fancy slides. “These were the same slides which were lapped up and loved by the VCs,” he recalls. In Mumbai, though, Sebin forgot that he was not pitching to VCs. The slides didn’t make any sense. “What do I get out of this,” came the first abrupt question from the top pharma honcho. “Why are you showing us all these,” another one chipped in. “What are you selling,” a confused pharma executive asked.


 
The doctor was jolted. A volley of piercing questions came hard at Sebin, and the entrepreneur didn’t have an answer. Over the next few months, he had to deal with a battery of rejections. Nobody understood the model. Nobody bought the product. And there were no takers. A devastated doctor went back to the operation table, and checked his diagnosis. “We were wrong,” he says. “The fault didn’t lie with the pharma companies,” he reckons, adding that cracks started becoming visible in his pharma model.  

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Sebin explains what went wrong. The business model of DailyRounds, he underlines, revolved around a structure where pharma companies would be the buyers. Sebin had built a digital version of pharma detailing, which was supposed to be a much superior rendition of what medical representatives used to do. The idea was to connect doctors and pharma companies in a much efficient and qualitatively better fashion. There was one small glitch, though. Indian pharma operates in a different manner. “They want in-person visits of medical reps to the doctors,” he says. What made things worse for Sebin was that he didn’t have any method to track the ROI (return on investment). “There were a lot of gaps. It was not a pharma problem. It was mostly our problem,” he confesses.


 
Over two years into the venture, Sebin was yet to figure out a monetisation strategy. Though there were small pharma contracts that kept the venture going, DailyRounds still missed a sustainable business engine. This time, the doctor decided to go to the root of the problem: He didn’t have the right product. As an entrepreneur, he explains, a founder sells his vision to a VC or an employee. “But you have to sell a product to the buyer. And the buyer must feel a need to buy it,” he says. Sebin and his team started to figure out the magic pill. “What can we offer where people would be happy to pay,” was the question, and a puzzle.
 
The answer, interestingly, lied in a quiz. DailyRounds had a feature on multiple choice questions. “We noticed young doctors would use it actively,” he recalls. “And they wanted more of it.” There was a demand, Sebin had means to take care of supply, and there was money to be made. The doctor decided to build a separate app on gamified case learning and medical test preparation. “That’s how Marrow started,” he says.


 
The gambit worked. By March 2019, DailyRounds apps had been downloaded over 5 lakh times, and Marrow was used by more than 3 lakh test takers. The numbers translated into heady revenue from 2020 onwards. From Rs 173 crore in operating revenue in FY20, the numbers jumped to Rs 331 crore in FY21 and Rs 402 crore in FY22. The profit, during the same period, stood at Rs 80.7 crore, Rs 178 crore, and Rs 198 crore, respectively. In terms of users, the numbers jumped to around 6 lakh, which includes more than 2.5 lakh paid users. “We grew during the pandemic and after it as well. The company is still profitable,” says Sebin, who exited from the company in March this year, four years after DailyRounds was acquired by Japanese company M3 in 2019.
 
Vineet Bagri, chief executive officer of DailyRounds and Marrow, reckons the transition from a founder-led model has been seamless. “It was less a departure and more a continuation of the legacy Dr Deepu had built,” says Bagri, who worked with Sebin for three years and was promoted from business head to CEO in March this year. Bagri explains what has helped the company, which has been profitable since 2018, grow at an aggressive and sustainable pace over the last few years: “We had a solid foundation set by the founder, and the model placed immense value on customer satisfaction and operational efficiency.” Having a focus, he lets on, the basics, and three Cs of profitability—customer, content, and culture—helped.


 
Marrow, interestingly, didn’t mimic other edtech players. “If you happen to be only a test prep, then you're basically rearranging the rank list,” says Sebin. “There is no disruption,” he says, adding that Marrow took a differentiated approach and went beyond just helping students clear the exams. “We wanted to make them better clinicians.”

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Bagri tells us how Marrow managed to get deeply involved with the medical students. “We engaged with them as early as second and third years,” he says. The idea was to make Marrow a companion throughout the medical college journey. This result was an increase in retention rates and extended user lifetime value. A special focus was placed on churning out content. A team of over 100 doctors focussed on creating high quality content. A lean team ensured to keep expenses in check, a strong word of mouth brought down the CAC (customer acquisition cost).
 
Being frugal in raising capital also came handy. In little over nine years, DailyRounds raised just $1.8 million. In fact, the last funding round was in 2016. “If I continuously need external funding to run the show, then I might as well shut it down,” says Sebin, who once declined a funding offer. It was a tough thing to refuse as there was an ‘insane’ amount of money on the table. But there was a flip side as well. Accepting the funding would have meant an aggressive expansion into multiple sectors, and competing with the likes of Unacademy and others. So far, Sebin had not burnt cash in marketing, acquired users, spent heavily in advertising, and scripted growth at all costs. With this offer, he would have to undo whatever he had done in his entrepreneurial journey. “We realised that it’s not a fight we need to fight,” he says. Reason: There was immediate win for sure, but a certain death in the long run. “You can bleed to become big, but you will die if you keep bleeding,” he says.
 
Right diagnosis, and a perfect prescription by the doctor. For the edtech biggies, who are bleeding heavily and counting on their runway, Sebin’s story has the right medicine. But are there takers?