Scales Of Success Podcast

#18 - Running a $100MM Company Won’t Make You Successful (But Being Ousted From It Might) with Ted Eveleth

• Marcus Arredondo

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What would you do if you were pushed out of the company you built? In today’s episode, host Marcus Arredondo welcomes Ted Eveleth, a serial entrepreneur who has raised millions, faced gut-wrenching setbacks, and still chooses to build. He shares the raw reality of getting ousted from his startup, the risks of raising money from friends and family, and why rejection is part of the game. Now, as CEO of AvantGuard, he’s leading a breakthrough in antimicrobial technology that could change medicine as we know it. If you’ve ever wondered what keeps an entrepreneur coming back despite failure, this is an episode you don’t want to miss.

Ted Eveleth is an experienced entrepreneur who has been CEO, COO, CFO, and Chairman in companies covering various technologies, including medical devices, life science molecular tools, waste heat to energy conversion, new materials, and MEMS devices. Ted received a three-year BA in Economics Phi Beta Kappa from Union College and an MBA from the Johnson School at Cornell University.

Connect with Ted Eveleth:
Website: https://www.avantguardinc.com/
Instagram: https://www.instagram.com/avantguardinc/
LinkedIn: https://www.linkedin.com/company/avantguard-inc/ 

Episode highlights:
(2:05) Losing his CEO role & lessons learned
(7:20) Why entrepreneurs keep coming back
(9:18) The pain of investor behavior, rejection, and fundraising strategies
(13:19) AvantGuard’s origins and revolutionary antimicrobial technology
(19:30) How COVID shaped the company’s growth
(22:04) The value of grant funding Vs. Investor capital
(26:50) Leveraging non-dilutive funding and technology
(29:01) Intellectual property and the importance of patents
(31:25) The science behind long-lasting antiseptics
(41:41) Strategic partnerships & market positioning
(43:10) Lessons learned from waste-to-energy and past ventures
(46:14) How to push forward when everything seems to fail
(48:05) Outro

Connect with Marcus


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Note: The transcript was generated by AI and may contain errors.

Ted Eveleth: 0:00

Realistically, the value of avant-garde is our patents. Sure, it doesn't matter. All the technology, all the great things that we can do, if we can't stop somebody else from just doing it themselves, there's no value, commercial value to the company.

Marcus Arredondo: 0:19

Today's guest is Ted Eveleth, a lifelong entrepreneur, who shares his journey from raising nearly $65 million in grant and venture capital to getting ousted from his own company. We discuss navigating rejection, the risks of friend and family money, and why he continues choosing the road less traveled. Now, as CEO of AvantGuard, his team has unearthed a $30 billion opportunity with groundbreaking antimicrobial technology by creating topical treatments that outperform antibiotics without resistance. We discuss his candid take on failure. What keeps him coming back and why he believes that if you're not pushing the limits, you're just taking up space. Let's start the show.

Marcus Arredondo: 0:55

Ted, I'm so excited to have you. Thank you for being on. Skills to Success. All right, thank you, marcus. So I want to talk about. You are a serial entrepreneur, a lifetime entrepreneur. You've been heads of multiple startups, which I find most fascinating, because I think there's a skill set that's associated with startups that's dissimilar to coming on as a well-established CEO company, a CEO of a well-established company, and I want to pick on a few things, but since this podcast is really about the development of resilience and what can perpetuate success, I wanted to just jump right in into something that I find super juicy, which is you being removed as a CEO of your first large startup and I hope we can launch off there, and then we can talk about a number of other companies, from plastics to MEMs, waste to energy conversion, AvantGuard, which I want to spend some time on and full disclosure I'm an investor of. But I want to start off in a low and I want to hear how you bought out and what your steps were to overcome it All right.

Ted Eveleth: 1:57

Well, there's still PTSD involved in that experience, that experience. But so I had. I had started a company with a friend of mine who came to me one day and said hey, general Electric wants to sell 59, 49 patents to a unique type of plastic and I want to start a company. Do you want to join? And I said no, no, not really I'm. You know, I'm in DC, I just met a girl. This is great. Then a year later he came and said hey, I'm definitely starting that company now. Do you want to join? I said, okay, I was unhappy with my job, I was about to get married.

Ted Eveleth: 2:35

So I got married and I moved from Washington DC to upstate New York and I started a company in pretty much the same month. Those are three life-changing events that you should definitely keep on separate calendar year. And so we did crazy things with that, mostly because we didn't know any better. And when you don't know what the bounds are, you find what they are by doing. And we raised almost a hundred million dollars in that company between a project management to build a plant and the investment to take it forward, and we got to the point where we were moving on to commercialization and for a variety of reasons, I lost the confidence of the board. Now the friends and family round. The actual founding money came from my mother, who loaned me $50,000 to buy the patents, and I had two other uncles and my father who were investors, and now I was no longer part of the company, and so it makes family reunions a little dicey and you feel bad.

Ted Eveleth: 3:47

And you also start to wonder what did I do, what's going on and what do I want to do now? Maybe I should just go get a job, because this life is crazy.

Ted Eveleth: 3:56

You've been there for seven years and every year there was an event that made me think the company's going to fail. One of them was, you know, my birthday. My son had been born the week before. My second son was a week old and the bank financing that was supposed to come through for our plant in Germany, for which we'd already spent a million and a half, fell through. So I flew to Germany and missed my other son's second birthday party in order to find a new bank to fund it, and I stayed in Germany until we did Just what you do, Yep.

Ted Eveleth: 4:36

So a lot of you know your company has become like your children. Sure, you become very attached to them. You will do anything for them. I don't know that that's always healthy. But once it's over, you're thinking why did I put myself through that? Can I get a normal job? And you have to really figure out who you are, what you want, and I think after some reflection, it was pretty obvious to me that this is the lifestyle I like. There's a certain amount of brain damage that goes into it that those of us who are involved sort of share. I always feel closer to other CEOs that started their company. There's just something about it that makes you part of the club, but it takes a special type of person and it takes a special kind of relationship with those around you who are willing to tolerate that. So my wife knew from the beginning and she was okay with that, and she was very clear it didn't matter what happened that we would be together and she followed through.

Marcus Arredondo: 5:39

So well, having a partner like that, I think, is a pretty critical part to being able to move forward. Well, having a partner like that, I think, is a pretty critical part to being able to move forward. But something I want to touch on though I've had this and I can relate a lot to the raising of capital and the debt side as well, and I think there's a misconception about that being set in stone and once it's been inked, it's going to come through, and I've been at the altar and been left high and dry and had to scramble to identify solutions in very short time periods, yeah, and you scrape through whatever you can. But you also mentioned the raising of friends and family right, and I've gone through that as well, where you know, I think part of being an entrepreneur is risking your own personal capital, sure, but it's your social capital as well. And to your point about family reunions being a little odd at Thanksgiving, I can relate to that as well.

Marcus Arredondo: 6:39

The state of affairs where I was just buried, I was getting two hours of sleep trying to beg, borrow and steal to make something work, which it did. At the time. They asked why do you put yourself through this? And my answer was that it's not about avoiding this because, to your point, from my perspective, this is the juice right, this is what gives you. From my perspective, this is the juice right, this is what gives you, this is what allows what's inside of you to come out, because what that's never going to come out unless you're pushed to that end. But I'd like to find a way to mitigate the way it influences me. You know, maybe I don't get as stressed, maybe I don't get as many grays, but I'm curious to you what kept you coming back? Because how many years ago was that?

Ted Eveleth: 7:25

Oh, my goodness, that was 2006.

Marcus Arredondo: 7:27

So you know, you're coming up on 20 years of coming back to the well, what keeps you coming back? Because I like it? What specifically?

Ted Eveleth: 7:36

All of it. Yeah, it is living on the edge and it's almost boring. We, you know, for AvantGuard we were wildly successful and for the previous two years two years ago I raised $2.4 million and I had $2 million in the bank for like a year and a half. It was kind of weird. There just wasn't the excitement. The excitement If you're not living on the edge, you're taking up too much space. If you're not pushing, you're not moving forward. And I hate it. Every day I hate it and occasionally my stomach hurts from that tension and the cramps.

Ted Eveleth: 8:14

But I like it, and so it's trying to find that balance of you know getting through your day and relating to everybody else, knowing that any day now you need to tell 12 people that they're out of a job, right, and if you don't put in that extra hour, that could be the difference. Make it through right.

Marcus Arredondo: 8:38

So you're wearing a ton of hats as a startup CEO, right, You're having to raise capital. You're having to build out the team. You're going to have to build out systems of that team. You're managing the team. You're having to manage revenue. You're having to grow. You're having to provide investor updates. You're having to go to alternate rounds of raising. And I want to talk a little bit about AvantGuard a little bit later. But what AvantGuard was at its onset has been evolved into something different. So what number of those hats do you find most challenging? What do you think pushes the boundary of what you're made out of?

Ted Eveleth: 9:16

most. The hardest thing I have to do is essentially when you're supposed to do the investor funnel. So you start with 100 people, narrow it down, keep tying the people. It's that first, 100 to 20.

Ted Eveleth: 9:35

It's really hard to get the rejections or the people that don't respond when you thought they were going to be great. And it's really hard not to take it personally when an investor says you're not a match and it can be obvious we only do medical devices and you're a drug. Yeah, I take that personally still. But the hardest thing is for me to just send out an email to somebody, knowing that I may never hear from them and I'm supposed to put in the time to customize it perfectly and put in all this effort and then nothing comes of it. Yeah, so that's the daily rejection is a little much. Once you're in the game, once you're talking to people, it's fun. You try to convince somebody to do something that they were on the bubble on Sure. That's challenging and fun. It's the test of my skill Finding the you know-leaf clover in a yard full of clover.

Marcus Arredondo: 10:29

That's luck, it's interesting no-transcript, I guess what can you speak to? Dealing with investors at the onset and then through the management of the operation? Because I'm sure that you've got some that are terrific that say they're going to come in with a hundred grand and they come in with 200 grand, but I think those are probably far fewer than those who come saying that they'll come in for 500 grand and they spit out 50 and then they demand updates on an unreasonable timeline or are unhappy about the revenue generated. Any takeaways for somebody who's starting this process as a young person coming out of an MBA, for example, like you were what feedback would you give them as they start to go down that process? You, what feedback would you give them as they start to go down that process?

Ted Eveleth: 11:24

Wow, it takes a while to learn the lingo because the no's come in various forms. Nobody wants to disappoint you. It's upsetting, for them to tell you no. So they'd rather ghost you or they'd rather give you a different excuse. But as a person who's perpetually hopeful, you think, oh, I can overcome that, when that's not really what they were saying with their side Right.

Ted Eveleth: 11:50

Never going to happen. So you got to just be respectful and listen, really listen, and if you can ask questions to clarify things and I'm open with people now, I mean, when my emails go out, look, if we're not a match, just let me know.

Marcus Arredondo: 12:07

The kindest thing an investor can do is to say no clearly.

Ted Eveleth: 12:10

Well, to be definitive in one way or another, because they all have an incentive not to piss you off, because maybe a year from now they are interested because something happened, so they don't want to say no now. They don't want to say no now. They don't really. You know, it's one of those. They're struggling with that as well, and so you just have to, you have to learn the tells yeah, but that takes a while.

Marcus Arredondo: 12:34

Well, and I can relate to it, testing your resolve, because there is some sense of I believe in this so wholeheartedly. Why can't you come to this same conclusion?

Ted Eveleth: 12:42

Everybody should want to invest in me. It doesn't matter what they're actually supposed to be investing in. They should clearly see this is such a fabulous thing that they should just give me their money if they have it sitting around. Yeah, and that just isn't how it works. But that's the emotion of you know, if you don't believe that you shouldn't get in this business. But you got to temper that too.

Marcus Arredondo: 13:04

Sure, Well, let me ask you so what, what? I want to jump into. Avant-garde now, and before I ask the first question, can you just give a short synopsis of what AvantGuard was and has become?

Ted Eveleth: 13:18

So Avant-Garde started off as a antimicrobial surface treatment, so it was a spray on antimicrobial surface treatment, so it was a spray on antimicrobial surface coating, and so that's what we started with. Coming out of Cornell University it was not that interesting because it's an insurance business. Your value is avoiding infection. People would rather have positive value, where they get something out of something, not the avoidance of damage, it's the presence of something positive. But I was told that we could also use the technology for urinary catheters, and my mother was suffering from chronic urinary catheter associated urinary tract infection, and so it seemed like an interesting place to go, because it's only going to get worse as bacteria develop drug resistance. So it's not like an industry that's going to get put out of business, it's going to grow more important. Now turns out surface modifications is interesting, but not really a big economic driver. And we said can we take that chemistry off the surface and do something with it? And we did, and now it's turned into something that's incredibly fantastic, which would be so essentially, you can take that same chemistry and put it into a solution. You can turn the solution into a hydrogel and the combination of those two things, the material that we developed in general people think of.

Ted Eveleth: 14:47

There's disinfectants that are really toxic and you use it on your surfaces and there are antiseptics that are safe to put on your skin to kill things, and the two chemistries are different. Well, the antiseptics are usually weaker too, so they don't kill as much. The antiseptics are usually weaker too, so they don't kill as much. But if you had something that had the killing power of disinfectant and the safety to put on your skin of an antiseptic, you would have the best of both worlds. You would have a material that you could kill pathogens on your skin and on surfaces. And that's what we have. Something that is different in the safety efficacy trade-offs. You can use a higher concentration on your skin and it's still safe, so you can perform better than the best antiseptics.

Marcus Arredondo: 15:34

So this would be taking the power of a Clorox bleach and applying it to something that would be as safe as putting on your face.

Ted Eveleth: 15:42

So for the non-scientist folk, think of it this way when you say something like bleach or you say chlorine, people think, oh my goodness, it kills, it's corrosive. So think of chlorine as like a knife. You don't want to hold the knife. It'll cut anything that it gets close to. So you got to be really careful, and so what we do actually is we make a compound like it's sheath, so you cover the knife, you can grab it from both sides, it's safe. And so we put a sheath over the chlorine and the sheath only comes off in the presence of a negatively charged cell wall. Pathogens have negatively charged cell walls. Humans have positively charged cell membranes, cell walls. Humans have positively charged cell membranes. So we are chlorine, but we are only chlorine. That's going to be effective against pathogens and not going to damage you.

Marcus Arredondo: 16:31

So I find this technology fascinating, and so the number of ways it can be used. Obviously I'm interested in it myself. But before we start to jump into that, I want to hear about how you found this opportunity and what the decision-making lattice was for you to take this on, to actually come on board and lead it.

Ted Eveleth: 16:53

So I went back to so as a serial entrepreneur. I was at one company we talked to. I left and I decided you know what? The way to accomplish this is never to put all your eggs in one basket. So rather than become CEO of one company, I essentially was COO or CEO of four, and so any one of those four was going well at any given time and any one of those four was going poorly at any given time. But since I was involved in a mix of them, I had some emotional stability, which was great for a while. All four of them seemed to wind up at the same time, so two of them got sold, One of them we closed down, and so I went looking for some new opportunities. I went back to Cornell University.

Ted Eveleth: 17:40

So back in after 2006, I ended up at Cornell University and, with a friend of mine, we licensed some technology and tried to start a company. That one didn't make it very far, but I thought I'll go back and see what's going on at Cornell and there's two incubators going there. I talked to the people running the incubators and one of them said I have somebody that needs your help, and that's how I ended up meeting the original founder of AvantGuard. Back when we called it Halamine and started working with him. Did you have a chemistry?

Marcus Arredondo: 18:12

background before that.

Ted Eveleth: 18:14

No, but some of the basis of the technology is polymeric, and so the first company that I started was a polymer company Plastics. So I had some plastics background. I had been involved in a thermodynamic heat engine and a medical device to cure presbyopia and intraocular lens, mrna regulatory mechanism for cell line selection for biopharmaceutical production, selling the internet, access to the Amish. I was involved in a lot of different things. There was a MEMS-based microelectrical mechanical systems-based security protocol, which is what we'd originally licensed from Cornell, so I picked things up.

Marcus Arredondo: 18:56

Well, I actually want to talk a little bit about those too at some point. But when you took this project on well, at least when it came sort of into my radar it was either right at or immediately preceding COVID. Yes, which sort of made it a unique opportunity from my perspective? When did you come on board related to that, and how did COVID influence your capital raising the build out of the team? I'm really fascinated because I don't know any of the background.

Ted Eveleth: 19:29

So I started in the summer of 2019. And so the founder was a gentleman who was Chinese and in January he sent me a picture of the exit off the highway to his hometown and they had brought a backhoe in and dug a trench so that you couldn't take the exit, couldn't get into their town in January of 2020. And he said this is coming. They said I believe you, wow. And so it was pretty obvious in January of 2020 that it was going to make a difference. Now we were doing okay.

Ted Eveleth: 20:09

The founder had got a USDA phase one grant. I had applied for an NSF grant, which we ended up getting, and by the time we got to March, april, the NSF was going to fund the grant. And then they said do you want another one? I said, yeah, I'll take another phase one grant to go specifically after the virus rather than all the other stuff that you were going to fund us for. So it was a fabulous marketing event. The transmission turned out to be pretty much through the air, so surfaces weren't as important as people originally thought.

Marcus Arredondo: 20:48

You mean we didn't have to clean all of our fruit and vegetables before we put them in the refrigerator?

Ted Eveleth: 20:54

That you do, but probably not as much as we did. But we didn't know. Right Part of it is we only know what we can test and it's really hard to test for viruses in the air. So we found them on the surfaces, so that's where they must be. But we eventually figured that out. Now it's still the heightened awareness and the interest in protecting ourselves from virus, bacteria and fungi is still critical, and so we've done pretty well since then. But that helped an enormous amount, having awareness heightened just around the need. And the New York state came out with a New York state and Empire State Development started a biodefense fund where they funded novel things that could help us prevent the next pandemic and other things, and we had a $2 million grant from that. That would not have happened if it hadn't been for the COVID-19. So it was the best marketing event ever and I promised people that I didn't start it, but I would have if I could have, just to really push it over the top.

Marcus Arredondo: 21:54

So what's your experience in the fundraising within the grant world and how does that compare to retail investors or private equity?

Ted Eveleth: 22:04

So Avancard has raised about $9 million in grant funding and $4 million in equity. Yeah, 4 million of dilutive capital and 9 million of non-dilutive capital. That's not a bad mix from my perspective, because every time I raise investor money we have to give something up. The grant money has strings, it takes longer, there's reporting, there's some other things you need to do, but you know I will have by April 5th I will have five $2 million grants in and any of them that get funded are non-dilutive. Going to move the ball forward.

Ted Eveleth: 22:43

I'm a big believer in grant funding, but I totally understand why investors a lot of investors give it zero benefit. You have to go through the grant writing process. You have to organize your thoughts, which is really the most important thing. You also have to have a peer-reviewed group. Take a look at it, think that you guys know what you're doing, which is beneficial, and so I'm a big believer in it as a backup plan, and there was no way that we could have done what we've done without some grant funding. There just isn't enough capital going around for you to make any mistakes at all. You have to know what you're going to do and execute perfectly on exactly what you thought you were going to do Otherwise. You need more money.

Marcus Arredondo: 23:30

You say there isn't as much capital going around. Are you suggesting this period in 2024, 25?

Ted Eveleth: 23:40

is just different from. I mean, this seems like an obvious statement, but from 2020 and 2021? So there's an enormous amount of capital going into artificial intelligence. Right, if you're not in artificial intelligence, the capital seems to be being withheld in life sciences to some extent. The IPO market isn't that good. There are a lot of areas where, to a certain extent, there are a lot of areas where there isn't a good chance for a good return anymore, and so it's always changing what areas are hot and which areas can actually give the investors a return, given the type of businesses that they want to fund. It is a complex problem, but in the last two years, around the last year, year and a half, particularly in life sciences, it's been very, very bearish. Hard to raise money. Well, with respect to the grants.

Marcus Arredondo: 24:33

What obligations do you have to those grants? What comes with that?

Ted Eveleth: 24:40

So to a certain extent you just need to tell them what you did with the money and do something reasonable with it. Now I think as long as you have a good kind of communication and relationship with your program manager, you can do anything. The investors generally don't expect you to do exactly what you told them three years ago. Right, there's just no way. So they're buying in on a plan and then they're buying in that you can adjust as needed to get there. Sometimes you adjust too much and they wonder did you know what you're talking about back when?

Ted Eveleth: 25:13

we started, but program managers are the same, and so I haven't had any trouble going back and saying hey look, I told you this is what we're going to do and we can do that if you want, but that's not going to help us get to a commercial product. It's going to be what we said we would do. And they'll say no, go, do what you think you need to. And so there's more flexibility in there than I think people think, because, again, the MSF is very clear about it they're investors and it's non-dilutive funding, but they're investing in your company and they want you to succeed. And I'm sure they've got I haven't seen lately, but they have lots of stories of, yeah, we funded these guys to do this and then they solve that problem, so they're very happy.

Marcus Arredondo: 26:03

Well, that's sort of where I'm going with this. Where do you? The NSF is an investor, so they are seeking some form of non-capital return, right, I guess? Is it societal, however you might define it? But I would suggest it would seem to me that it would be so much more beneficial to have non-dilutive capital that can pour fuel on the fire of this research, peer reviews, to add more credibility for an organization like yours, where you're going to have to go through a bunch of regulatory hoops in order for this to get administered, accepted, processed into the public. Those steps seem like worthwhile endeavors to support that ultimate commercialization.

Ted Eveleth: 26:49

The concern that investors always have is that you turn into a good at getting grants company and that you never go commercial. So there are some organizations that do. They just rack up the grants, that's their business, and you shouldn't invest in those Because you're not going to get an economic return on your investment. But I don't see any other way an economic return on your investment, but I don't see any other way. Generally, I consider, until you have a phase two, you're not really investable as a company because you haven't taken enough risk out of the technology, and so that's. You know generally how I think about things, and so that's what you need to survive, to get to the point that you can then raise money Because you're going to need non-grant money to commercialize, right and so.

Ted Eveleth: 27:41

But there seems to be a stigma. There are too many people that all they ever do is get grants and some people got burned and then they're like if you keep talking about grants, I think you're never going to commercialize Right. No, I want to commercialize. I just the most capital efficient way to commercialize is to get the government to pay for my research. Sure, if they're willing to. So we should do that. But you know we have those conversations and I have people on my board that are both pro and anti grants, so you know we get both sides.

Marcus Arredondo: 28:15

Well in terms of timing. So I know that in your history you've used patent protection consistently, you know throughout. So I guess I have sort of two questions. One is have you found benefits? For example, I've spoken to some IP attorneys and some groups with respect to IP that have suggested once you have a certain number of patents you can actually leverage against them materially through borrowing capital. I don't know if you've ever experienced that, but I was curious if that's a component of what you've experienced. I haven't. The second question is balancing it with timing, because that patent process seems like a challenge. So I just dumped a couple of things on you, but I wanted to see what your take was.

Ted Eveleth: 29:00

So I haven't monetized or made liquid my investment in patents before, so that's new to me. You can file for too many patents. I have built too big a patent portfolio, but you can also not get enough patents. And realistically, the value of avant-garde is our patent. Sure, if we can't stop somebody else from just doing it themselves, there's no value commercial value to the company. So that is the company. And there's another guy that I have a small stake in his company and I impressed that upon him. I said, look, you're getting the wrong claim. You need to get a broader claim so that you can. That you can, because this is it you're. The value of your company is this patent. And so it takes a little while to realize that you think, oh no, no, no, we've developed all this technology and all this other stuff, but none of that really matters when billionaire company x decides this is interesting. Finally, what you want is them to buy you and not for them to replace you.

Marcus Arredondo: 30:18

Well, on that note. So one of the things that I two things I remember in the research for this company was one I was blown away that and I might be mincing words, so please correct me if I'm wrong, but the number one cause of death within the military was infection. And two was that the antiseptics or Clorox-related ingredients that you'd use in hospitals are only effective for 15 minutes, and I caught a glimpse of a video that you had where you had said look, if I were to offer deodorant or sunscreen that lasts for 15 minutes, is that something that you would be attracted to? And yet that has been the status quo since we had some form of antiseptic. Talk to me about how this technology works to create a much longer lifespan, for the qualities of that. What's the best word to use to describe it?

Ted Eveleth: 31:24

So a lot of chemicals, when they're in the bottle, are stable, and when you pour them out they will react with air or other materials or what have you, and when they dry out they will convert into something else, generally salts, so bleach, you know. You pour the bleach on a surface, let it dry, bleach is gone. Hydrogen peroxide, parasitic acid you know, I could go through the whole list. Pretty much all of them disappear immediately. Povidone, iodine, similar or same, you know. So what we have is, as I said, we stabilize chlorine, we put it in a little, we sort of encapsulate it in a little container and hold on to it, and so if it transitions from a liquid to solid or back to a liquid, it doesn't matter. So it doesn't release into liquid, it stays fixed with our material until a negative charge shows up. And so what we can do is we can actually make a product.

Ted Eveleth: 32:31

There is chlorine in your deodorant. I think it's aluminum chloride and that's what kills the bugs that make the smell, and so it's long lasting, and so we could be a deodorant that will last longer. If the deodorant only lasts five minutes or it decomposes, it's not going to give you 24-hour protection. You can do some things like slow release and microencapsulation and some other things. But if you really want something, it'll stick around, and so that's what our basic chemistry did was stabilize chlorine.

Ted Eveleth: 33:09

You put our chemistry on the surface and when you used bleach on it, it would hold the chlorine there for days, weeks, stably, until a pathogen comes along. Well, now we take that chemistry off the surface and we have a liquid and you bring it into your bathroom. You spray it, because people use chlorine a lot to clean their bathrooms, because it's effective when other things aren't. But you're on ceramic, so you're not going to corrode it and we won't corrode ceramic. But we also won't bleach your clothes. You probably don't even need to put a glove on when you spread our material around, but when we dry we'll just sit there.

Ted Eveleth: 33:50

So if you want your bathroom not to smell, you would put our material down, let it dry and we will continue to kill the odor-causing bacteria, and so it's different. It's a different perspective and I always struggled with. Look, you mow your yard right. Every couple weeks you go out and you chop it down. Back to the same thing. Well, what if you had something that could, very quickly, every day, just go chop it?

Ted Eveleth: 34:21

You know that would be better than to wait around and once in a while you know it's like your haircut. What if your hair just stayed the same length? Wouldn't that be great? So that's kind of what we do or can do is. And you know, for one product they said you can put it on your skin, you can put on your surfaces. It's residual, which means it sticks around. It's just the craziest compound ever. There's just so many things that we can do with it. It's just mind-boggling and I can't tell people because it freaks them out. I I end up leaving people speechless. They're like all right, right, I'm overwhelmed.

Marcus Arredondo: 34:55

It is an overwhelming concept.

Ted Eveleth: 34:57

Yes.

Marcus Arredondo: 35:02

Well, on that overwhelm, I am curious from a business perspective. So I appreciate that context because I think I want the audience to understand sort of the dynamics at play with what you guys are working on. You clearly had some idea of the potency and application in 2019 when you saw this opportunity take shape. The applications have informed how you approach different markets, what potential partners you started to identify, how you sourced that partnership, Because I think for an outsider, they might think this is a startup. You guys are coming up with a solution. You're then building out a lab to build this out and you're going to manufacture it and then you're going to ship it everywhere and that's not really how these this is not how this works. So I'm wondering if you can give some insight into what your thought processes were along the line at those critical junctures and what were most important in making the decisions to pivot and partner.

Ted Eveleth: 36:11

So the best companies are formed when somebody that understands an industry sees a problem and fixes it. Some of the worst startups are somebody in the lab invented a cool, nifty thing and now you're looking for an application for it. Now the founder knew the problem. It was the Food Safety Modernization Act required. You Act required food processing plants to test on a regular basis, and he developed a solution for it that we thought we could make more general. So we got to the pandemic and the thing that changed our perspective was when Microband 24 did the commercial at the Super Bowl for a residual disinfectant. So we were an antimicrobial surface coating. They were a residual disinfectant and their sales went from zero to 200 million.

Ted Eveleth: 37:07

Okay, what people want is a residual disinfectant. Is a residual disinfectant? So residual disinfectant? If you look at the chemistry, it's a small molecule held in place by a water-soluble polymer. We have a monomer, they have a water-soluble polymer. Let's put our monomer in their water-soluble polymer and we'll have a residual disinfectant. Initially our technology guys said that'll never work and eventually we followed the market and said we'll give it a try. And we did and it worked great. At that point, okay, we can make a residual disinfectant, isn't that nice turns out.

Ted Eveleth: 37:50

Doesn't corrode surfaces, doesn't stain your Huh, maybe a stain remover like hydrogen peroxide is a stain remover. Chlorine is a stain remover. Be a clothes brightener? Okay, that's interesting too. What else is chlorine used for? That's when I sat down and said, okay, what are all the different forms of chlorine and what are they all used for? Well, we could do swimming pools, we could do. You know, there's an enormous amount of wood pulp. There's enormous. You know, look at all the uses for chlorine. And then you look at okay, so chlorine is also used in solution as a wound wash. Okay, it's been used since World War I.

Ted Eveleth: 38:34

You start to look into things. Okay, where isn't chlorine being used because of the lack of the properties that we now bring to it? It's too corrosive, or it damages your skin, or it's not resilient in the presence of organic material. There's lots of different things. And you say, okay, well, what could it compete against? And we spent a long time. Thank goodness we had ESD's money. Thank goodness we had all the funding.

Ted Eveleth: 39:03

We had to do a serious look at okay, this is the world, and then add in all of the competing materials and figure out where it all fits and what we can or can't do, and almost all of it is an efficacy safety trade-off, and safety includes both for your skin and for surfaces, and when you go through all that, you then pick out the things that are the most critical factors that you need to go after at the moment, and the one thing that we ended up with at the moment is candida oris decolonization, and so I don't know that I mentioned candida oris yet, but it's a fungi that can infect your skin. You get a systemic infection. You have a 40% chance of dying in 30 days. This is a bad acting fungi. It goes after immunocompromised people, so healthy people are fine, but once it gets onto your skin, there's no current method to get it off and you are highly contagious. Every surface around you, anybody in the same room, can get infected in as little as four hours. No way to get off your skin, highly contagious, long lasting like eight months. So imagine if you had COVID and then you were contagious for eight months. That's a disaster, and cases increased from 2022 to 2023 by 70% to reach a total of 14,000.

Ted Eveleth: 40:37

We are on the cusp of having a Candida auris pandemic For immunocompromised people. You have HIV if you have cancer or if you have an organ transplant. Those are the three main categories. So Candida auris is coming for those people because their immune system is compromised. The defenses we have against fungi are our immune system and our body temperature. Candida auris can grow at higher than our body temperatures. It's one of the rare fungi that can do it. That is the worst case pathogen that we're facing at the moment that we can treat topically, and so that's what we're now focused on. It took a year and a half to figure out in a conversation with the CDC. Figure out that's what we should go after, but we investigated a lot of different markets. It took a long time, but we investigated a lot of different markets Took a long time.

Marcus Arredondo: 41:35

Well, and how have you identified the partnerships with other manufacturers and distributors?

Ted Eveleth: 41:41

So you know, mostly it was. We looked at high-level disinfection, which is endoscopes and other things that need to be cleaned but can't be sterilized. We look at disinfection. There's some people we've talked to in that space. We look at wound care. Wound care is an unusual space.

Ted Eveleth: 41:58

Mostly it's just going out to these trade shows, hearing what people have to say, trying to understand what the needs are and what the reality is. It's really hard to figure out what's really going on and when people say some things like this is a really critical thing, is it really Would you just like to talk about it? Is anybody doing anything about it, or is it just you know? Has it been the critical thing for the past 30 years? In which case, not that big a deal. So trying to figure out the secrets of every of all the different marketplaces for a while but that's you know did a lot of that, did a lot of research. Mostly it's just talking to people and developing relationships, and now we've got a couple of strategic partners that we're in conversation with that we're sort of going together through the evaluation, but we're focused on coming out with a treatment for candidatores colonization At least that's what I tell investors.

Marcus Arredondo: 42:55

Well, I want to pivot from avant-garde because I would be remiss if I didn't bring up a couple of parts I identified in our research that I found interesting and I would like to know a little bit more about. First, is your waste-to-energy conversion company.

Ted Eveleth: 43:11

So it was waste-energy, so it was waste-he heat to electricity. Okay, so we had a thermodynamic heat engine. That was different than a turbine because it could go at slower speeds, which the faster speeds of a turbine require auxiliary materials, so it was the cheapest way to take low temperature heat and convert it to electricity. Back when green was the new thing to invest in, that seemed like a good place to go.

Ted Eveleth: 43:39

So there's a lot to the investment community, and one of the things that they look for the easiest things for venture capital fund is any business that has a 70% or higher margin. Capital goods will always be a problem unless you can fund the capital part of the goods in a different way, through debt, and so it turns out to be a little more challenging than you think. I don't, you know. You look at the fusion guys and think, okay, they need to build bigger and bigger plants every time to prove that it'll work. That's a big investment challenge, and so some businesses work and some don't. But it was pretty interesting one because we could make them small too.

Marcus Arredondo: 44:20

What was your takeaway from that experience?

Ted Eveleth: 44:22

One of the things that we did. We had a founder who had some who never ran across a conspiracy theory he didn't like, and one of the big lessons I take from that is if your scientist is susceptible to conspiracy theories, you have a problem because you really need to be incredibly dispassionate. And we talk about. Terry Pratchett talked about first sight and second thoughts, right? So first sight means you see what's in front of you. You actually see clearly what people are telling you and what is in front of you not what you want to see, not what you believe you should see, but what's actually there.

Ted Eveleth: 45:07

Really hard to be an entrepreneur and do that because you have to believe so well. And second thoughts means you always have in the back of your head maybe I'm wrong, and if I'm wrong, why am I wrong? Or I believe this, should I believe this? So you're always checking yourself. For everything that you fervently believe, you have to leave space for the opposite. For everything that you fervently believe, you have to leave space for the opposite. It's like holding a paradox in your head and it's hard and it hurts, but those two things are critically important.

Marcus Arredondo: 45:43

So something that you had mentioned and we'll start to bring this home for a landing here. But you had mentioned there's a point every year in each of your startups where you wake up thinking this startup's going to fail, and I just want to give you an opportunity to expand on that, because I find I can relate to that in a number of ways, but most specifically in your response. I would be most interested in what gets you out of bed when that is still facing you.

Ted Eveleth: 46:14

So when I started this, we had you know, failure is not an option, was the catchphrase At this point. Failure is the expected outcome. Pretty much most everything new is going to fail. There are a couple of things that are going to go spectacularly well, but most things will fail. A couple things that are going to go spectacularly well, but most things will fail. So I've gotten better at forecasting what I think is going to happen. I've also gotten better, when I'm worried about something, that I don't just worry about it. I think, okay, I'm worried about this, what can I do to back up my chances to if that happens? Assume that happens. What am I doing now? And I try to go do it. So I've got backup plans, I'm trying to raise money and if that doesn't work, I got grants. If I don't have grants, I have strategic partners. If I don't have that, I have this. This is the plan.

Ted Eveleth: 47:08

I have plan B for plan A. I have a C, d and E plan. I never expect anything to happen and so I'm prepared when whatever happens happens. And so a lot of that is you get out of bed because you don't have a choice, you just there's something driving you. And if there's something driving you, I think some people put on this world to enjoy it and some people put on this world to make it change, and that's just me. I can't stop myself, so I just get out of bed and go push forward, because that's what I like doing.

Marcus Arredondo: 47:51

I can't think of a better way to wrap this conversation up. Thank you so much for being on any any closing thoughts I hope I didn't say anything.

Ted Eveleth: 48:00

I'll regret I you get, you get talking too much and then you're like, okay, it's been great, it's been great.

Marcus Arredondo: 48:06

Well, we I appreciate you coming on and, um, I wish you luck and I'm on guard and we'll be sure to um share the news as it develops. But, um, thank you again. All right, thank you, mark.