Your doc has that mixed up. There are actually 3 stages to the sex differentiation of puppies (and yes, this applies to most all mammals too -- including humans). First, from the moment of conception, the actual genetic sex is determined -- they are either XX -- female, or XY -- male. So, they are not all females to start with and not all males -- they are actually male and female depending on the presence of the Y chromosome.

The next step for the little embryo would be to develop either testes or ovaries -- these are internal initially and they may all look the same in outward appearance -- still there are little XX developing ovaries and little XY’s developing testes -- definitely male and female.

Finally, and this is where the “they all start out as females” line of thought comes from, the XY’s start to make both internal and external male “parts.” This is actually caused by both the mother’s hormones and the embryos production of hormones. If all goes right, the XY will now have the outward sex organs that readily identify him as a male.

So, no all puppies do not start out as male -- if the vet meant “appearance-wise” only, then it would be more correct to say they all start out appearing female. But in reality the XX and XY difference has been cast at conception.

In people, slow swimming sperm ((that usually lives longer))
will result in a male.
Faster swimming sperm ((but quicker to die)) will result in a
female.
I hear it is the same way for all mammals. That is how they are
now doing gender selection. The sperm for the female are also
somewhat lighter in weight. Timing proves to be everything.
I don't know who would want the job. But I learned this at
a fertility clinic.

Kasey