Special Kruze COVID-19 Good News Episode: Jeff Lee on Origin's pivot into 3D Manufacturing to help fight Covid

Jeff Lee of Origin - Podcast Transcript

Scott:	Hey, it’s Scott Orn at Kruze Consulting, and before we get to a really great podcast with Jeff Lee at Origin… It’s a really exciting story. It’s a COVID Good News, part of that series. I think you’ll really love it. Quick shout out to Rippling. Rippling does amazing payroll, fantastic benefits, and exceptional IT infrastructure provisioning. They help you take care of all the day-to-day with your payroll, week-to-week. They make sure your company gets benefits. They make sure you get the best benefits. They also let you work with independent brokers, which is really nice. And then their IT provisioning stuff is really cool. It allows you to spin up a new employee really fast, plugs into all their web services automatically. It takes us like … We’ve just switched, but it used to take us three hours to do this for every person, so Rippling saves you a ton of time. It’s an awesome service. Check out Rippling. Also shout out to the Kruze Financial Modeling Team. They are kicking butt. COVID stuff has had a lot of our companies coming back and doing bunch of actuals and revised financial models, so the Kruze Financial Modeling Team is kicking butt. Great job, folks. And now on to Jeff Lee at Origin. Thanks.
Singer:	(singing) it’s Kruze Consulting, Founders and Friends with your host Scotty Orn.
Scott:	Welcome to Founders and Friends Podcast. This is Scott Orn, and we have a really awesome guest, Jeff Lee from Origin. Welcome, Jeff.
Jeff:	Thank you. Thanks for having me.
Scott:	Maybe you start off by just telling the story of Origin through your eyes, because you’ve been involved at different points in different ways.
Jeff:	Yeah, I mean, just my background, I’m sort of sort of half operator, half investor. So, half my career sort of been an engineer, Stanford trained. But then the other half of my career has also been on the investing side, so for four years I was at a firm called Mission Ventures where I opened their LA offices. And then before joining Origin, I was a partner over at DCM Ventures. [inaudible] a about four, four and a half billion-dollar firm, Sandhill, Beijing, Shanghai, and Tokyo. So, I looked at a bunch of emerging tech, so frontier tech, as some people like to say. Looked at a lot of 3D printing, so back in the day looked at Carbon and Formlabs and all those guys. And then I actually got connected to Origin, and what got me really excited about them was, they are actually doing things differently in a way that really, in my view, allowed them to go after this mass manufacturing opportunity that everyone has been talking about, but frankly no one’s actually changed anything outside of just raising a bunch of money. And the whole thesis behind Origin, which I really love, is that the fundamental problem with 3D printing, or the 3D printing and mass manufacturing, is that generally the materials suck, as in they’re not good enough. They don’t survive hot enough temperatures. They’re not flexible enough. Blah, blah, blah. And they cost too much. And for what a lot of the 3D printing industry is, that’s okay, because a lot of it’s prototyping. Again, it just needs to look good, and no one cares how much it costs, because there’s only a single unit or a couple that you’re producing. But when you’re trying to make millions of something, first of all obviously it needs to work, and then secondarily it needs to be really cheap. And so what Origin’s done is, which I love, is instead of trying to vertically integrate and use this kind of razor-razorblade model, where I force you to buy my materials and I try to be a material company, Origin’s strategy basically is, let’s be a platform, right? In the classic sort of Silicon Valley way. Let’s be the PC, where all the applications or software sort of works on our PC, or [crosstalk] modern form like your iPhone or your Android device, right? We want to be that platform and then have all these quotes, “apps”, which are materials that work on our platform. And so, Origin partners with the largest material companies on the planet, which frankly were not involved in three D printing, but it’s now a major initiative for them, like BASF, DSM, Henkel, and a number of others. And we leveraged their massive ability to develop cutting-edge materials. They’ve got giant libraries of intellectual property, so we can leverage stuff they’ve done for automotive or furniture or other areas to get really cheap chemistries or high-performance chemistries. And then they also just have massive billion-dollar factories, which is what you need to drive prices down to materials, so-
Scott:	Yep. That’s amazing.
Jeff:	Yeah. So, we get all the benefits of the classic hardware and software innovation of being a platform. We can be very capital-efficient because of that. And then we let the big chemical companies do what they’ve done for 150 years, which is figure out how to make cutting-edge chemicals that are really cheap.
Scott:	And you work at Origin, but you also… You wrote the first check the Origin, right?
Jeff:	Yeah. So, the story is, while I was looking at all of these companies in the 3D printing space, I was like, “This makes no sense. They’re not doing anything different, but it’s hot.” Because at that point MakerBot had been bought for like 500 million [crosstalk 00:05:13].
Scott:	I remember that. Yeah, yeah.
Jeff:	And then I got connected to Origin and I was like, “Oh, this is really interesting.” So, I sourced the deal at Origin at DCM, basically led the deal at Origin with my partner Jason. And my partner Jason [inaudible] the board, and I worked with the company for about 12 months. And for those that have experience on the investment side, it’s very rare when you have a thesis for a company and you invest. Usually your first board meeting is your oh crap board [inaudible] meeting, where you’re like, what I thought was [crosstalk]
Scott:	I use that all the time, just so you know. I tell people that all the time, yeah.
Jeff:	Yeah, exactly. But that didn’t happen. [crosstalk]
Scott:	All the stuff that you didn’t know in due diligence, basically, they tell you the truth.
Jeff:	You got it. So, it’s rare when it actually goes the way you think or even better. And so that’s what happened. It was no surprises at the first board meeting, and the risk that we articulated, which was really, can this platform be replaced? The short answer of it is not really, and it’s just gotten more and more strong, that the platform defensibility of what we’re doing really is hard to copy both from a business reason, because in the end of the day these companies commit to partners, and it doesn’t make sense for them to work with like 50 million 3D printing companies because you’re [inaudible] You want to focus on the ones that work. And then also it’s the tools and the platform that we’ve built. The integration between chemistry and platform have just gotten stronger, because again, back to the thesis that you need cutting-edge materials and really low prices, it means you’re pushing the boundaries of materials, which ultimately, you’re actually pushing the boundary of the materials with the printer together to print consistently. And so, because it becomes harder on both sides, they become increasingly integrated, which fundamentally means that it’s harder to just have… Like we’re not playing with commodity materials. I mean, many things just only print on our platform.
Scott:	That’s, that’s really interesting. And so, it’s, it’s a symbiotic relationship between you and the chemical companies, because they’re getting locked in with you, and you’re getting locked in with them, and you guys become long-term partners basically. Yeah, that makes sense.
Jeff:	Yeah, exactly. You got it.
Scott:	And so, after you led the investment, you just couldn’t resist and you joined the company, and now you’re working there for… What, a year? Or how long you been there?
Jeff:	Yeah, I’ve been there either a year or right around it. I’ve just been working with these guys, and there’s, I guess, an operational itch in me, which [inaudible] ready to be scratched, and one thing led to another, and then I became COO, and I’m still here, so-
Scott:	That’s awesome I have a lot of respect. I think this is the way to live life, so, you know. But everyone’s different. Some people are deal people. Some people like to build stuff, so-
Jeff:	Yeah, [crosstalk 00:08:09].
Scott:	But the main reason I wanted to have you on was, you guys are doing some amazing stuff with kind of helping the world, the COVID world, right?
Jeff:	Absolutely.
Scott:	And helping us overcome COVID.
Jeff:	Yeah.
Scott:	And so, you started telling me before we turned the mics on, but maybe explain how you’ve attacked the problems that the healthcare industry is facing during COVID.
Jeff:	Honestly, it’s pretty crazy. I do want to highlight one thing before I get into the story, which is… So, we’ve raised $15 million, and the folks that are sort of in this sort of universe of 3D printing companies that I’ll talk about, I mean, they’re like Carbon that’s raised $700 million and is a unicorn. Formlabs has raised hundreds of millions, also a unicorn. HP is a giant, public company. EnvisionTEC literally invented the technology and the space. But it’s because of this strategy that we have around working with world-class material partners and the quality of the people in the team that we’ve been able to basically play with giants.
Scott:	I do know how that industry raises tons of capital, and even MakerBot raised a lot of money before it sold for $500 million, so yeah, you’re totally right. It’s a super capital-intensive industry, so your guys’ approach is like asset-light [crosstalk]
Jeff:	It is fundamentally asset-light. Yeah. So, the story is this. So probably… I don’t know if it was a month ago or so, but when COVID hit and we basically were sheltered in place and we couldn’t go into the office, for about a week we were like, “Oh crap, what do we do?” And then we were like, “Well, there’s a bunch of folks trying to print things like PPE, personal protective equipment, respirators, face shields, [crosstalk] whatever.” And we’re like, “Okay, well let’s do that. At least we can get a couple people in the office, obviously trying to do it in a very safe fashion. And if nothing else, then we can do what we can to try to help this pandemic.” A number of those projects we’ve actually set aside, or frankly given away. So, the face shields, one of the big 3D printing companies I think we’re going to partner with and basically just give them the design, and they’re going to use that for the industry. The respirator thing, I think we put it open source on GitHub, so folks can go and do that if they want. But the swabs thing is really interesting, both because of the fit for what we’re doing as well as sort of the need for this whole pandemic. So, the story basically goes like this, right? So generally speaking, when you have a pandemic… And again, mind you, I’m not a health scientist or whatever, but-
Scott:	You play one on TV.
Jeff:	I can prognosticate, because I used to be a VC, and that’s what [crosstalk] But anyway, if you read generally the news, there’s really two ways of dealing with a massive pandemic. Either you massively vaccinate people and basically protect everyone so eventually the virus dies out, or you massively test and isolate the people that are sick, which is somewhat similar. You basically find the critical ones that are ill and you make sure they don’t infect other people. The vaccine, if we have one, is probably at the very, very earliest nine months out, probably more like a year, year and a half, and then they have to scale production, so God knows how long that really is out. And then the concept of massively testing actually… It actually hasn’t happened, and the reason it hasn’t happened is because of limitations in the ability to massively test, mainly due to a lack of supply of swabs.
Scott:	Which blew my mind. I’ve been reading about that. Because you of them as like an innocuous little thing that is everywhere, right? I actually did my MBA internship with Becton Dickinson, so I’m used to a lot of that medical equipment [inaudible] There was a huge factory in Nebraska that made all the needles, but like… So, you wouldn’t think the swabs would be hard to get, but it turns out they are.
Jeff:	You’re got it. So actually, it’s interesting. There’s a great NBC Bay Area kind of like two-minute clip that they featured Origin on last night, so that might be a good [crosstalk 00:12:21].
Scott:	Check it out.
Jeff:	For folks to kind of understand that story also in more depth. But the short thing is, this particular virus… This is, again, back to my whole VC break it all down thing, right? So what are your alternatives if you’re going to a test, right? There’re two sets of tests that are really popular. There’s either kind of a swab test plus PCR, which is kind of the gold standard, and then there’s an antibody test, which is basically draw blood and see the antibody, right? Problem with the antibody test is that it only tells you if you’ve been sick or if you’re mostly over being sick. It doesn’t really catch you in the beginning when you haven’t generated the antibodies and you’re actually highly infectious. [crosstalk]
Scott:	Yeah, because your body generates the antibodies to fight the virus. That’s the whole point.
Jeff:	Correct.
Scott:	And PCR is like looking at like kind of [crosstalk 00:13:13].
Jeff:	[crosstalk] technology, right? So basically-
Scott:	Yes, yes, yes.
Jeff:	Yeah. So, what you do when you swab is you basically try to get some of the viral material, and the PCR is a fancy name for a device that amplifies that virus so that you can see enough of it to determine if you actually have that disease. And then the gold standard for doing this PCR test is what they call a nasopharyngeal swab. It’s kind of crazy. Basically, it’s a swab that goes into your nose all the way to your back of your throat. And my sister actually did this like a few days ago, because she’s been sick for a few weeks, and they like twirl around 10 times in the back of your throat, like almost down your esophagus kind of thing, because that’s basically where most of the viral load is. Then they pull it out and they break it off and they either send it to a lab or they have a desktop tester or something like that. So, it’s a very specialized swab. It needs to be flexible enough to go into your nose, and not so brittle that it breaks off in your nose, et cetera, et cetera. So, there’s only, as to my understanding, two companies in the world that make this swab. It’s a company called COPAN out of Italy, which is probably the largest producer, and then like a 500-person company out of Maine called Puritan Medical Products or something like that. Their production is probably in the low millions, is my guess [crosstalk 00:14:40]. And so, if you think about the amount of testing they have to do, it’s probably in the hundreds of millions if not billions worldwide.
Scott:	Ideally, we’d get tested every couple day, right? Kind of thing. So, 300 million in the United States-
Jeff:	Absolutely. So, we were actually talking to a corporate customer potentially, and they’re a business that has a lot of labor where they contact a lot of things. They’re talking about testing twice per week, right? Think about the population of the United States twice per week. That’s like 600 million a week. And mind you, maybe some people don’t get tested or whatever, but you’re talking tens of millions, hundreds of millions a week just for the US, and so it’s a massive demand. So, the punchline is, in about 10 days Origin learned about this need, developed a product to FDA specifications, and got it to the point that we got clinical validation from Harvard BIDMC, that’s Beth Israel Deaconess Medical Center, [crosstalk] Harvard’s medical center that was running a clinical trial and validated that our solution worked. And frankly, we had much less time to do this than anybody else, and we passed the very first pass.
Scott:	Wow. Incredible.
Jeff:	And that put us through the. Basically, that was phase one and phase two, and then we went… We were one of only three solutions, I think, that were selected, or maybe it’s four, for their phase three, which was a full-blown clinical trial, which we completed in a week. And then we passed the clinical trial. We actually are the best performing of all the solutions of the clinical trial, which was done by Harvard, which is one of the top clinical institutes in the country. And we are now scaling up production of a FDA class one exempt nasopharyng… 3D printed, which has never existed to date, 3D printed swab for the detection, mass testing of COVID19.
Scott:	Incredible. And that was like what, 10 days to product and into Harvard? And then you guys within two weeks, three weeks-
Jeff:	One week for clinical trial, and then basically we’ve been scaling up manufacturing, and we’re getting… I think we’re probably at probably like a quarter million pieces per week run rate and scaling. [crosstalk]
Scott:	That’s incredible. How fast do you think you can get it to like-
Jeff:	A million plus?
Scott:	20 million or whatever? Like what we need.
Jeff:	Yes. Well honestly that’s the problem, because I don’t think the 3D printing… At least the way it is today, the 3D printing community isn’t big enough to produce enough swabs for to test the whole market. In fact, I think we’re still probably 10X below what the real market wants, even if we ramp up altogether, so-
Scott:	You would help the corporate corporations that want to get people back to work and things like that, like selectively go after them kind of thing?
Jeff:	You know, we want to help people in the end of the day, and we want to save lives, and so a lot of our sort of initial focus has been hospitals, so the places, the first responders where you’re really getting a lot of the pain. The corporate thing is just… I think it’s a second part of that ecosystem which is important also, but I sort of mentioned that because it’s just… You’re thinking about one company potentially consuming like a million, million and a half swabs a week in production, and that’s just one company. [crosstalk]
Scott:	Yeah. It is important. People focus on the healthcare professionals, rightly so, but there’s a lot of people who are out of work right now. The unemployment’s like 25 million people in United States. So, enabling some of this stuff to let people just get back to earning a living and getting the economy moving again really is super important too.
Jeff:	Yeah, absolutely. I mean, there’s many facets to this issue. And I’m not going to necessarily try to prognosticate on prioritization, but obviously the people in the hospital that are either sick or dying or somewhere in between or might be sick, and then there’s the economic hit to the environment, which is, okay, there’s people that aren’t going to work, and then they’re not making money and they can’t afford their mortgage or they can’t put food on the table, so making sure that they’re safe so they can go back to work and get back to their lives, that’s also really important. That’s just the best way too, because there’s people dying all around the world too, right? I mean, yes, we’re an American company and obviously we want to support America, but we’re also part of the same planet, so it’s not like this virus was just contained to one country, so-
Scott:	For sure. My best friend or my roommate in college works for the CDC, and he’s in Africa right now helping… They’re understaffed by definition, so-
Jeff:	Yeah, Africa [crosstalk 00:19:56].
Scott:	That’s incredible, what you guys have done. How do we follow along with this? How do we help you? How do we promote it? What should people who are listening to the podcast do to help?
Jeff:	Yeah, well, I mean, one thing we’re trying to do is just putting these out there. We’re selling these things. We’re hoping to work down the cost curve so that we can have better flexibility with pricing and stuff like that. So, if there are folks that… Hospitals or other peoples who are on the front line that have a shortage, or it might even be… We’re in conversations with the federal government and other things. But if there are folks that have a need and we can be helpful, we would love to talk to those folks and see if we can be helpful. That’s probably the most obvious one, so yeah.
Scott:	What you guys are doing is really amazing, and kudos to you for taking the leap a year ago, and-
Jeff:	[inaudible]
Scott:	And life has a strange way of working out. It’s pretty cool.
Jeff:	It’s funny. When I got into this in the first place, you’re sort of like, “Okay it’s a series A company. There’s still going to be bumps and going in new directions,” but never in my right mind did I ever imagine that we were going to in 10 days shift from a 3D printing company to a medical device supplier and directly attack, selfishly, I think what is probably one of the most critical parts of this entire pandemic, which is, how do we test and make sure people don’t get everyone else sick?
Scott:	Yeah, I know. That’s so important. An I’m an asthma person, so I’m-
Jeff:	Me too.
Scott:	-incredibly grateful to you, because I’m a super at-risk person, so-
Jeff:	Same here.
Scott:	So, thank you. [inaudible] how to find Origin? we’re on the web, and we’ll send some good vibes to you, and hopefully someone who’s listening to this can help out.
Jeff:	Yeah, absolutely. Origin.io is our website. My email is jeff@origin.io. So, folks can either reach out through the website or can ping me directly, and hopefully I can help direct folks. And we’re really focused right now on scaling production. We think we can get to at least a million units a week with potentially other intervention. That’s kind of based on the existing systems that we have and we have line of sight to. The federal government is doing a number of crazy things with like the Defense Production Act and a bunch of other things that if they massively shape the supply chain, we’re only really limited by the number of printers that we have, and so if we can get the ability to produce more really, really fast, and if this continues for a while, then we can just continue to scale this thing, so-
Scott:	That’s great. Well, thank you on behalf of the Kruze Consulting community and just asthmatics and other people like me and others throughout the world. It’s really incredible what you guys are doing.
Jeff:	Thank you. Well, it’s a pleasure to at least share the story, and hopefully we can do our part in reducing this pandemic as much as we can.
Scott:	Awesome. Thanks, Jeff.
Jeff:	Thank you.
Singer:	(singing) It’s Kruze Consulting, Founders and Friends, with your host Scotty Orn.

Special Kruze COVID-19 Good News Episode: Jeff Lee on Origin's pivot into 3D Manufacturing to help fight Covid

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