The Exchanges

Q All right, so tell me about the decision to, to create a surgical mask company. How did, how did that idea, I mean, did that come purely from the pandemic?

A Yeah, a hundred percent. I, you know, I was just looking around, uh, At all these articles and all these, uh, people saying we can't get masks, and I was like, this is a really stupid problem for America to have. I grew up with my dad was actually in manufacturing. He was a, uh, a plant manager, and, uh, I would hear him talk about how things are being outsourced and how, like, this could be eventually really bad for the country because if we don't maintain the skill set here, what happens to us? And I think I just had that in the back of my head. You know what really Kind of set me off was, um, an, an investor from my group of, of investors kind of sat around this email and said, we're going to raise, uh, three hundred and fifty million dollars to buy masks, um, and import them into the United States because we can't get masks here. And I was like, that's really a dumb solution. I was like, I was like, I did the math and I was like, I'm pretty sure for like five million dollars, you could make the capability of making that many masks. And, uh, Some, that's actually what put me over the edge, and I ended up pulling the trigger.

AI assessment note: “Yeah, a hundred percent. I, you know, I was just looking around”

Q All right. You get the machinery from China. Cause presumably there was, there was off the shelf, right? This off the shelf production line that you could get shipped to you. But where did you set it up?

A So I, you know, I had a, Pretty decent size, like, eighty-person startup in, uh, Austin, and so, uh, we had, before the pandemic, and actually, funny enough, I, I had just decided to shut down our office right before the pandemic started, but I had good relationships with real estate brokers, and I said, hey, I'm looking for, like, a thousand square foot to set this thing up, and, I mean, I didn't really know a lot about manufacturing and how much warehouse space I need, but what ended up happening, we, to be honest, I, I think, like, you I think like the companies that are successful, they end up doing a lot of things right accidentally. Like there's a lot of luck. Yeah. And one of the super lucky things that we did was we stumbled on this facility that was 15,000 square foot. Uh, half of it was warehouse, half of it was lab space. They were making, uh, weapon sites in there before, and the company went out of business. Um, and it was just sitting there for like two years unused, and they just had a lease, someone that was going to take the lease, and then it fell through because of the pandemic. And so we went to the, the owners of the property and we were like, look, we can't afford the, whatever they wanted, you know, 25,000 a month for this beautiful, pristine manufacturing space. I was like, but we're going to make masks. We're going to save lives. Can we do, can we do a …

AI assessment note: “we stumbled on this facility that was 15,000 square foot.”

Q weeks. All right, so the machine arrives, and you've got the space for it, and I mean, I'm assuming maybe you're a little handy, maybe you could use a wrench and a screwdriver and maybe get some power tools, but how do you build it? Who did you get to help you? Did you get a bunch of people from your other business, your other company that you had started?

A So I, I had reached out to a couple of folks in the area, some people who were, um, had worked at, uh, a automation line, uh, I think it was a former Toyota production line here in, uh, just outside of Boston. And, uh, that plant had shut down. And so they were looking for work. And again, this is the beginning of the pandemic, like no one's working. Right. And so I got some really, really smart guys who knew automation and, uh, they were able to help me hook it up, but it was funny because The machine was, was so temperamental, and they are used to, like, manufacturing. These guys are used to, like, making something that you plan and plan and plan, and then after a year, you have this thing up and running, and I was like, guys, like, I, I just spent, like, a lot of, there's a lot of money for me. I just spent a lot of money. We need this thing to be making masks now, and they're like, Well, this takes some time. And so I was there in that mask lab, that first mask lab for. 18 hours a day. I kid you not, uh, just had a kid. So my, my wife was a trooper on that decision and we were just figuring it out. You know, it's like, no one is an expert really in sonic welding, which is the kind of thing that melts the plastic together in the United States. And so I had to learn it. I was like reading manuals and documents to figure out like what frequency I should be tuning this thing to…

AI assessment note: “I had reached out to a couple of folks in the area... former Toyota production line”

Q How did you finance this whole operation? I mean, you had to buy this equipment. You had to, and I don't think you were independently wealthy, right? You were just, I mean, I know you raised some money from family and friends, but presumably you needed a couple million bucks.

A Yeah, actually we, so I raised just a couple 100,000 dollars from, from friends and family. That was enough to get the, the first machine in. And I think when we said, when we were showing that we're making these masks, um, is when like, and then I went to the investors and I was like, look, we were trying to make masks. We're trying to bring mask manufacturing back to the United States. And I think a lot of the folks, it was, it was like an altruistic thing. You know, it's like local angels in Austin and San Francisco. That I had known before, and they were like, yeah. And so we raised, I actually raised three million dollars in a weekend. I did the worst PowerPoint presentation of my life. I recorded a voiceover, seven minutes long. I sent it to all these people, and, uh, yeah, we closed about three million dollars based on that.

AI assessment note: “I raised just a couple 100,000 dollars... I actually raised three million dollars in a weekend.”

Q and companies that did spirits were transitioning to make hand sanitizer, and everybody's kind of focused on, on, on sanitizers, and cleaners, and bleaches, so, so we were all caught up in this, understandably, um, we all wanted to do something, and, and so for you, it was, well, let me see if I can figure out how to make masks here, was, that, that was basically what you asked?

A Yeah, I mean, I think I've just become more of like a, I really became focused on like the, the core financials, like do the unit economics make sense? And so what are masks being sold out before the pandemic and, and how are they being made? And I found that mostly masks were being made manually one at a time by hand at the time. And so I said, okay, if we, if we inject some like modern manufacturing here and we put this to work, we add some robotics, we remove like the 10 or 12 people that touch a mask to actually make it. Can I make that work here? Like, can I sell it for the price that was being sold before the pandemic? And if I do those things and I have some, some other things like we were actually vertically integrated. So we make some of the fabric ourselves, which shaves off some of the cost. And I was like, man, I could really compete with, uh, with the Chinese model and I could sell to, you know, to hospitals, I could sell to governments. And previously I'd been selling to newspapers. I was like, what could possibly be harder than selling Software to newspapers. Like, surely I can sell to governments and, and hospitals.

AI assessment note: “I really became focused on like the, the core financials, like do the unit economics make sense?”

Q are higher. Your profit margins are lower. Um, at the same time, politicians of all stripes say Buy American. Make stuff in America. We need to return manufacturing to America. But the incentives are there for businesses and corporations to manufacture overseas because it increases their, their profits. So when you hear politicians say, hey, buy American. Let's make stuff in America. Let's do it. What's your response to that?

A I mean, it's just easier said than done. And like, you know, to be honest, I did not realize how far the United States was behind. I was kind of shielded from it, to be honest, because we, you know, we're so great at things like Hollywood and we're so great at, uh, you know, marketing in the United States, but we don't realize that just about everything is made overseas now. I mean, everything. So like, I'll give you an example. We had, we had a single sensor That, that cost about a dollar overseas. That sensor took out my entire line. I couldn't, I was done. I was, I could not make any masks. And I called our, our manufacturing partner and, and, uh, actually the manufacturer, the chip in, in Taiwan. And I was like, look, we need this thing super fast. I was like, I want you, I'm buying five of them and put them on five different carriers. See who can get it to me the fastest because we were down and I was talking to them and they were like, that's crazy that this sensor has you down because there's a And there's five different companies that make this sensor. Um, and you could get it 24 hours a day. They have that infrastructure in place in, in places like China and Taiwan that we just don't have here anymore. And so it is so hard for us to be actually successful because we do not have the infrastructure to actually make stuff anymore.

AI assessment note: “I mean, it's just easier said than done.”