Democratizing Access to Hospital-Grade Disinfection with Eli Harris, President and Co-Founder of R-Zero: Audio automatically transcribed by Sonix
Democratizing Access to Hospital-Grade Disinfection with Eli Harris, President and Co-Founder of R-Zero: this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.
Saul Marquez:
Hey everybody! Saul Marquez here with the Outcomes Rocket, and I’m super excited to tell you about today’s guest. His name is Eli Harris. He may be young, but don’t underestimate him. He’s driven by an unwavering work ethic and a desire to change the world for the better. He’s worked for leading high-tech companies around the world and launched two successful startups all before his 30th birthday. Now, as president and co-founder of R-Zero, he’s taken on his most ambitious challenge yet tackling the transmission of pathogens in the COVID-19 era and beyond. He truly is revolutionizing the 20 billion-plus infection prevention industry, and we’re going to hone in on that today. And so, Eli, tell us a little bit about yourself here. Maybe something that I left out of your intro and welcome.
Eli Harris:
Thank you for having me. I appreciate it. Your show is very impressive. And I’ll take any opportunity I can to tell the story. And I’m grateful to be here. And thanks to all those who are listening. My name is Eli Harris. I’m from California. I actually spent my last eight years in mainland China. It started out on the Foreign Service track. I did a couple of Fulbrights in Beijing. Then I went down south to try the drone company and then five years ago spun out and started my first business. I’m manufacturing large lithium-ion battery packs for energy storage, uninterrupted power supplies. I was fortunate in the skill that business raised several rounds of capital. We had a lot of ups and downs. In the end, I had a small exit. I was bought out of that venture after four and a half years running that as CEO. I did exit a bit early. Since that exit, that company is now valued at over a billion dollars. Unfortunately, I didn’t get to share in that financial material success. But I take pride in that journey as a first-time entrepreneur, going through those motions through an exit. 15 months ago got launched in R-Zero. And that is where my heart and head are now. And I think what’s most relevant to you guys and I would love to tell you a lot about how that journey came together and what we’re doing now.
Saul Marquez:
Yeah, man. Now, I appreciate it and certainly looking forward to learning more. So, Eli, fantastic work and all the stuff before your 30th birthday, which is amazing, right? I mean, it’s just so cool to hear the stuff that you’ve done. Talk to us a little bit about R-Zero. What is it that you guys are doing? How are you adding value to the health care ecosystem?
Eli Harris:
Yeah, so it was almost 16 months ago now with the pandemic first started taking hold. I got in touch with the two mentors of mine, both entrepreneurs who I’ve known for about a decade. And the three of us were talking about how there are certain events throughout history that just create everlasting societal and infrastructural changes. And in a dark way, we kind of liken what was happening with the pandemic to 9/11, how after 9/11, we have the Department of Homeland Security, you have TSA with fourteen thousand agents. You still can’t take a water bottle or wear shoes to the airport. You go to a bowl game, you walk through a metal detector. These are all new standards that were created and adopted post 9/11. And I think some of these psychological scar tissue after that event accelerated the creation of the adoption of the standards. But we never addressed it. Fundamentally the world took on a new posture around security and shared spaces. Our thesis here was that this event of the pandemic was going to broaden that word security to biosecurity, to biosafety, and in the standards that all organizations are going to uphold as they regard human health and the safety of their staff, the patrons of their communities at large. So what we did is we sort of kind of unpacking the disinfection industry. And we learned quickly that this is a massive industry, hundreds of billions of dollars of market cap governed by these Goliath players, Ecolab, Clorox, SC Johnson, Diversey, all of these companies are extremely old, some over one hundred years old. And more or less, they’re all pushing commodity chemicals. And our response to the pandemic was to go around and hose buildings down with chemicals. And that’s what we did. And this industry has not evolved with the technology that has become commonplace in almost every other industry. It’s extremely antiquated in what we’re doing with chemicals. I mean, there’s a lot of limitations there. One is they’re not always that effective. There’s a lot of human error in how they’re applied. There’s a massive labor cost, a massive op-ex, and chemical cost, and it’s horrible for the environment. So we got in touch with Dr. Richard Wade and Dr. Wade actually Cal OSHA for 15 years. He taught at Harvard, Oxford, UC Irvine. We’d like to call him the Michael Jordan of disinfection. He’s gotten more about this industry than most of us will ever learn. And he’s quite special. But he led us on a study to really understand what are the best tools exist in infection prevention today and why have we not democratized access to those tools, so we started looking at hospitals thinking that ever since their advent, hospitals are a place where you actually encourage the sick to gather and you have to learn to control the spread of disease. And in a hospital, the highest risk environment is the surgical environment. You have open exposed bodies and oftentimes you’re dealing with many pathogens. So, Dr. Wade, let us on a study to really understand what happens in the surgical theater, in operating rooms right now that is the gold standard for infection prevention.
Eli Harris:
We learn that hospitals do three things pretty darn well. They practice good hand hygiene. You see doctors scrub in scrub out. Second is the use of chemical wipes on high-touch, high-risk surfaces. When used appropriately, chemicals are effective. And then third, which is the gold standard in all operating rooms today, is the use of these large UVC light towers. And what’s really interesting is UVC is extremely old technology. In 1903 the Nobel Prize for Medicine was awarded for the discovery of the germicidal properties of UV. In 1910 we started using it in wastewater treatment, the 1920s in HVAC, the 1040s we actually started using UVC towers in hospitals. But what’s really fascinating is that the market did not take off until 2010 and it’s a five billion dollar market today, selling UVC light towers only into operating rooms.
Saul Marquez:
Five billion dollars a year?
Eli Harris:
Five billion dollars a year.
Saul Marquez:
Crazy.
Eli Harris:
But what’s crazy is that the reason the market took off was Obamacare’s Affordable Care Act. So prior to the Affordable Care Act, Medicare and Medicaid were reimbursing hospitals for hospital-acquired infections. So if you went to a hospital for a small surgery and you left with staph or something else, that was a forty thousand dollar financial liability for the hospital but it was reimbursed. And when we passed the Affordable Care Act, we, one, raise taxes, and two, spend down on health care. And Medicare and Medicaid said you know what hospital this happened on your watch. We’re not going to cover it anymore. So for the first time ever in 2010, hospitals finally became financially liable for the incidences of hospital-acquired infections. So because we using these systems in hospitals in the forties at that time, we had almost 70 years of data that showed that hospitals that used UVC towers had ninety-three percent fewer infections than hospitals that didn’t. And that data was overwhelming. And with that data point, the market skyrocketed. But what’s really unfortunate is selling it to health care is difficult. There are only a few manufacturers that build these products and they practice what’s called value extraction. So they go into the hospital and say, hey, it doesn’t matter what it costs us to build this thing. These infections cost you forty thousand dollars each. And there’s an overwhelming body of evidence now, 80 years of data that shows that a hospital of your size with X number of ORs and Y number procedures per year, this system will prevent Z number of infections. So even at one hundred thousand dollars, it pays for itself. And it’s a very logical purchase for the hospital. It makes sense and it’s a massive market. But because of that price point, because the data doesn’t exist elsewhere in that lack of awareness, we’ve never taken this technology outside of the OR. It’s been limited to the operating room because that’s the only place for that value extraction argument that has been very sound and clear. So we looked at this, and my background in battery manufacturing and hardware manufacturing. And my partner comes from Abbott, the medical device manufacturing company. And we said fundamentally, this is a light on wheels with a timer. This is not rocket science. There’s no secret sauce, no IP, the ability for UVC light to kill anything, any micro-organism, virus, bacteria, mold, fungi. It’s purely a function of the amount of light that you emit and how long you run it for. And there’s one manufacturer that makes 80 percent of the bolts.
Saul Marquez:
I love it.
Eli Harris:
So we point out in the past 15 months, we’ve actually raised more than 60 million dollars. We’re backed from the same fund is a Tesla and SpaceX. And in five months, we re-engineered the product and we brought a piece of hardware to market that unequivocally, fundamentally outputs more light than any product being sold in the world today. And we’re pricing it based on the building materials, not extracting value from the health care system. So we’re democratizing access to this technology that’s been used for 80 years but has been pigeonholed into the OR. And now we’re selling it into hospitals at large, health care, more largely urgent care centers, dentists.
Saul Marquez:
What’s the average price difference? I have to ask.
Eli Harris:
Yeah, so we have two models. The systems in the hospitals today range usually about one hundred and twenty-five thousand. We’re selling our outright for around twenty-five thousand, so quite literally, 20 percent of the cost. We’ve also built a leased model where we’re leasing it for 17 dollars a day.
Saul Marquez:
Holy smokes. That’s game-changing.
Eli Harris:
So from a hardware perspective, I mean, from a price-performance point of view, we built something that is better than anything in the world. And we did that with third-party lab tests like up the Wall Street like crazy. So there is no question about the efficacy and performance of this device. But the truth is, I mean, we built a better mousetrap. There is no rocket science. There is no special IP. We built a darn good product. But the hardware is hardware. It’s mostly off the shelf. And we all compete with everyone but where we actually are starting to build our IP. And what the future of our company is, is we’re the first company to embed an LTE chip in the device. So it’s actually an IoT device. And what that means is you can actually in real-time, we can transmit data and you can see who ran it, what room, what time. So for the first time ever, we’re actually building an audit trail around disinfection.
Saul Marquez:
Fantastic.
Eli Harris:
Right now, you send crews in to wipe, to spray, to do whatever they sign their initials on a log, or if you’re really fancy, maybe they scan a QR code, but there’s no way of knowing what was actually done. With our system, we can generate real-time reports that can be filtered by the operator, by room, by building, by week, by month by day. You can cut that data in any way you like. You can use it for execution compliance. So, you know, your staff is doing a good job. You can also use it for marketing. You could show your customers, your community what you did.
Saul Marquez:
Yeah, yeah. That’s great. I’m thinking of these cruise lines, too. At this price, they could buy a bunch of these, man. Maybe I would take a cruise.
Eli Harris:
Right now, folks are worried about COVID, but what we’re doing to prevent COVID is effective against any pathogen. For cruises, it’s norovirus, For schools, it is the common cold, seasonal flu. For sports teams staph infections. And these are very costly. I mean, schools are funded based on daily attendance. So if we can roll in solutions that actually prevent the spread of the common cold seasonal flu, that’s going to result in increased attendance, which means more funding for the school. And by the way, attendance is directly correlated to performance. So making safer spaces could fundamentally change the education of American youth. So it’s pretty darn cool the impact we can actually have, a biosafety disinfection company could actually change the education system.
Eli Harris:
Man Hey, Eli, this is fantastic, man. And as we look at ways to decrease cost, unnecessary cost, certainly these types of ideas are fantastic, being able to turn the stones and find these opportunities is difficult. You guys found a really good one where you’re able to build a better product, charge twenty percent. So if you’re a hospital leader, if you’re a corporate leader looking to keep your people safe, and you don’t know about our zero, there’s an opportunity here. So that’s number one. And number two, having the clinical validation that this thing does what it does, what it’s supposed to do is fantastic. So, I mean, the outcomes improvement, everything is clear. The difference is clear. You’ve done a really great job of kind of walking us through the value prop, talk to us about setbacks. We learn a lot about setbacks, probably better than actual successes. Tell us about one of those with R-Zero and key learning that’s made you guys even better.
Eli Harris:
I don’t know if I answer your question directly, but I’m just going to talk to you about what’s on my mind right now in this inflection point I feel like we’re at now. So we launched our flagship product, the R-Zero, and that’s the floor-standing UVC device. And when we first launched this company, we were selling it in the pandemic. We were selling a single product in a pandemic. And the buying patterns were reactive, they were emotional. It was short sales cycles. It was high-velocity small deals. We sold into fourteen different industries. And now we’re moving into a world that’s I mean, Delta Lambda variants aside. Let’s put that at bay for a second. I mean, we’re selling largely in a post-pandemic world. And our roadmap, the direction we’re going is installed assets. We’re looking at sensors, fixtures, products that are installed into the built environment. So we’re at a huge pivot point in our company where the world dynamics around this pandemic and issue are evolving. The types of products we’re selling are evolving. It’s a very, very different business. And we’re now we’re learning to unpack how to thrive, how to be successful in this new environment. And this onus has been on us to prove that this is not just a moment in time, flash in the pan pandemic response. We’re now trying to build out the thesis that this was not about COVID, this is not COVID response. There is an opportunity to actually change the disinfection biosafety industry and that there is value in doing that beyond the pandemic. So that is the journey we’re on now. And the truth is, I mean, the science is clear, the math is clear, the models are clear. We have an opportunity to statistically lower the risk in any given space. And what that should mean is that should translate lower risk of infection transmission. Should translate to fewer sick days and fewer sick days mean different things for different industries. For schools, it’s increased attendance and better performance. For the corporate world, it’s which is all I mean, all large companies are self-insured. That’s actually lower healthcare-related expenses. For hospitals, that’s fewer HAIs. We have modeling that is so clear and rock-solid that we can in fact reduce risk in these spaces but we’ve never translated that into the real world and been able to measure that.
Eli Harris:
So the next year we’re really focused on building clinical studies and actually outfitting schools, outfitting hospitals, outfitting senior care homes, outfitting large corporate environments, and actually measuring. Do we have an impact on sick days and how does that translate in value to the business? So our thesis is very clear. Our hypothesis is very clear. And the math makes sense on paper. But now we need to see does this translates into the real world? At the end of the day, people aren’t going to buy and make decisions because it’s the right thing to do. And I wish they would. I wish that people would say, you know what? We want safer people, healthier people. I’m going to write this check. We need to prove that this solution fundamentally results in value creation. That is the crossroads right now. And we’re pretty darn excited about it. But a lot is riding on the clinical studies of our next year.
Saul Marquez:
Well said. Well said, Eli. And, you know, the question that crossed my mind is around this shift to care in the home. You know, there’s a huge shift in hospital in the home. Do you guys or do you have a vision around being able to close a gap there with the clinicians coming into people’s homes? There’s also a concern, is there going to be smaller ones of these that people could put on the side of their bed, et cetera?
Eli Harris:
Yeah, so again, and probably get a part of the answer to your question.
Saul Marquez:
I mean, we’re having a discussion as I hear your thoughts.
Eli Harris:
Yeah. So, I mean, really, if you think about where risk is in the world, we’ve proven that it’s not really in outdoor environments, in an office space, it’s not actually at your cubicle. It’s not actually at your home where people are getting sick. Our indoor environments are confined, smaller high throughput spaces in those places like bathrooms, places people eat, meeting rooms, break rooms, that’s where the highest risk is in society. It’s not actually at your cubicle. It’s not actually in your home. It’s in those shared spaces that are high traffic, high throughput. So that’s what we’re focused on. Could we build solutions for the home, for cars? Yes. And maybe someday we will. But if we’re trying to address the most serious problems first, it’s actually in shared public corporate spaces. And what we’re doing is if you think about infection prevention today and cleaning the spectrum today, it’s all done based on time, which honestly can be very, very arbitrary. It’s not done based on risk. So the future where we’re actually going is we’re outfitting buildings with sensors that could do two things. One actually looks at the utilization of spaces. Where did people go throughout the day? What is the density of people in a room? And then secondly, since you can actually measure things, what’s in the air, what particulate matter is there? How much CO2 is there, what VOCs are in the air? So with that sensor data in real-time, we can actually automate janitorial workflows. So if nobody uses that conference room, then don’t send your crew there tonight. That bathroom, it doesn’t matter if it’s been two hours or two days, send somebody in there. So we have this opportunity right now to actually get smarter about when and where we clean it. It shouldn’t be time-based. It should be based on risk and utilization. So that is the future is these installed sensors that can automate activity based on risk, not time.
Saul Marquez:
Well said. Well said. Appreciate that. And yeah, I get it’s the high throughput, high-risk areas that you’re most concerned with and that’s where. You’re going to be tackling the issues. What are you most excited about today?
Eli Harris:
We are now building our body of evidence to prove that this works. So last week, we actually signed our largest deal in company history. It’s with one of the top five largest school districts in the country. It’s Clark County in Las Vegas, Nevada. So they have three hundred and seventy-five schools. They work with almost four hundred thousand students. That’s bigger than most cities. And we’re actually outfitting an experiment group of schools against a control group of schools where they’re using chemicals. And this is our first opportunity in Dr. Feigal being from the Harvard School of Public Health. He’s actually administering the study. So we’re providing the product. Clark County is providing the schools. And we’re actually going to do a year-long study where we look at do these solutions actually result in increased attendance and better student performance on standardized tests? So this is our first true test of what science says and does this translate? In the opportunity to do one of the top five school districts in the country protecting four hundred thousand students and working with the Harvard School of Public Health? This study could fundamentally change the responsibility of all facilities managers for every educational institution in the country. So this is pretty darn exciting. It is undoubtedly the most exciting project that we’re doing in my short professional life.
Saul Marquez:
Yeah, that’s awesome. It definitely is exciting. Thank you for sharing that huge opportunity, number one, for the business to have won this deal. But secondly, the ripple effect of what this could mean for public health as far as we know it. Awesome, Eli! Thank you. This has been a fantastic opportunity to get to know you, to get to know R-Zero. Folks, it’s our rzero.com. So make sure you check them out over there. Give us one closing thought here. And then besides the website, where could the folks reach out to you if they want to learn more?
Eli Harris:
You can connect with me directly on Linkedin, Eli Harris or RZero. I think it should be pretty easy to find me, but I just want to thank you guys for listening. I mean, we’re working so hard and we’re really trying to do good. We’re a double bottom line company. The first bottom line is we have to be profitable enough to survive, the second bottom line, we signed a pledge for social impact. And what that means is we actually manufacture here in the US all of our services, US-based, all of our offices are in low-income zones. We try to hire very diversely. Our whole mission is to democratize access to the technologies that have been limited to a certain subset of the population. So we really are trying to do good and we’re working really hard and would be thrilled. If you have any ideas, feel free to reach out. And thank you for the support, even just listening to the story.
Saul Marquez:
Eli, I thank you. Really appreciate what you guys are up to. Everybody, take them up on it. You’re going to save a ton of money, first of all, but more importantly, making the type of impact that will make a difference for all of our health and safety. Eli, I appreciate you jumping on man.
Eli Harris:
Thank you. Thanks for having me. I’m sure we’ll speak soon.
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