The brilliant son of immigrants discovers a way of identifying and counting bacteria that could upend the world of diagnostics. Listen to this engrossing interview with professor and founder Ed Goluch of QSM Diagnostics.
Highlights include:
QSM Diagnostics Is What Jeff Behrens Calls a “Scrappy Biotech”
QSM’s Mission: Identify & Quantify Bacteria Present in a Sample in Minutes
“No one wants to be the five or ten percent that's misdiagnosed, and so our technology really gets them closer to being perfect and these critical first few minutes and getting it right the first time”.
The Founding Story of QSM
Cool Example of Bacteria Interacting with Squid
Bacteria Communicate to a Startling Degree
Quorum-Sensing Molecules Allow Fine-Grained Detection Down to the Level of the Species of Bacteria
“Trying to get a faculty job is actually a lot like starting a startup. You have your idea and you go around pitching to schools”.
Boston as a Life Science Hub: “This was one of the great parts of being in Boston. I got 20 amazing candidates in less than a week”.
Why QSM Wants to Get to Human Patients Via the Veterinary Market
QSM’s Big Pivot: From Addressing Urinary Tract Infections that Require Six Sensors to Ear Infections that Require Just One
How an Investor Can Make Money Investing in a Scrappy Biotech Like QSM, Hint: Capital Efficiency
“…we don't want to overlook how large dog ear infections are as a problem… You're looking at 9 million dog infections per year”.
Getting a Product to Patients with Just $1 Million in Capital Raised Is Very Efficient for a Life Science Business
Sal Daher Talks About Another Option for Funding: Revenue-Based Financing
How Ed Goluch Found His Calling: From Being Born to Immigrants in the South Side of Chicago to Getting a PhD
“…just growing up seeing the hardships of having very little money, parents that are struggling… triggered me to say early on, "I want to get out of this...”
" My parents said, "This is perfect, you'll have a job, you'll be comfortable." But for me, I was like, "I want to do more."
Edgar Goluch’s Parting Thoughts
“Looking back, I think we should have done even more research on…Who’s going to be the user.”
Accelerators Ed Goluch Attended: Did Not Have to Give Up Any Equity
Transcript of “Diagnosis in Minutes”
Guest: Scholar and founder, Ed Goluch
SAL DAHER: Welcome to Angel Invest Boston. I am your host, Sal Daher, an angel investor who delights in the fascinating tech companies being built in Boston's singular startup ecosystem. Because of the unique concentration of great universities here, Boston is a massive exporter of great startup ideas and a huge importer of capital. This idea-rich and capital-poor environment gives me the opportunity to invest early in the companies that will be changing our world. Companies such as Akili Interactive. I'll tell you a bit more about Akili later on.
Now, I'd like to introduce my exciting guest today, Edgar Goluch, academic and founder of QSM Diagnostics. Ed, welcome to our studios.
EDGAR GOLUCH: Thanks so much for inviting me here today.
QSM Diagnostics Is What Jeff Behrens Calls a “Scrappy Biotech”
SAL DAHER: Ed, I think QSM, this is what Jeff Behrens in a recent podcast called the scrappy biotech startup in a lot of really impressive ideas bubbling up all around Boston. After you get your initial validation with grants and so forth, there's a big gap until you get to the point where a strategic will take can interest in you and so forth.
EDGAR GOLUCH: That's right.
Ed Goluch Bio
SAL DAHER: QSM scrappy biotech. Anyway, let's talk a little bit about your biography. Professor Ed Goluch got his PhD from the University of Illinois at Urbana Champagne. He spent nearly three years in a postdoc in the Netherlands. Ed joined the Faculty of the Chemical Engineering Department at Northeastern University, one of the great universities here in Boston. In 2014, he founded QSM Diagnostics to bring to market technology he and his group at Northeastern had developed that promises almost instantaneous detection of certain types of infection in patient samples. Ed, please tell us what QSM Diagnostics does and why it's important.
QSM’s Mission: Identify & Quantify Bacteria Present in a Sample in Minutes
EDGAR GOLUCH: Sure. QSM Diagnostics identifies and quantifies the amounts of specific bacteria present in a biological sample in just a few minutes. And so, this is really critical information for doctors, to be able to confirm their diagnosis and begin targeted therapy within minutes. Right now, doctors rely on their personal experiences and practice to make this initial diagnosis, and they have a few tools that can help them suggest that they are on the right track, the confirmation takes several hours or days.
SAL DAHER: Right, like a culture or something like that.
EDGAR GOLUCH: Exactly.
SAL DAHER: It can take a day for a culture to come back.
“No one wants to be the five or ten percent that's misdiagnosed, and so our technology really gets them closer to being perfect and these critical first few minutes and getting it right the first time”.
EDGAR GOLUCH: Yeah. Now, there's genetic methods, but they still take an hour. They're done at a centralized facility. It involves some prep work and specialized technicians. Definitely in hospitals that's available, but in an outpatient clinic where you don't have a lab, you're really relying on what the doctor, what their personal experiences have been. Usually, they don't even send out for the test because, it's pointless three days down the road, so they're pretty good at making these guesses. They have a lifetime of experience, but in medicine it's really important to be perfect. No one wants to be the five or ten percent that's misdiagnosed, and so our technology really gets them closer to being perfect and these critical first few minutes and getting it right the first time.
SAL DAHER: Yeah. So it's perfect and fast.
EDGAR GOLUCH: Exactly.
SAL DAHER: Yeah. Which is a really quick diagnosis of the specific bacteria that's affecting, because we have such a huge problem with drug-resistant bacteria, you want to hit it with exactly the right bacteria [anti-biotic] that is known to be effective in that case.
EDGAR GOLUCH: Exactly.
SAL DAHER: There's an unbelievable amount of money being poured into treating these drug-resistant bacteria.
EDGAR GOLUCH: It's interesting. I was just reading on LinkedIn, on a medium, Isaac Stoner just posted this story on his company, Octagon Therapeutics. How they're pivoting away from antibiotics to an auto-immune marker. I think part of our reasoning is, we'll get into it is, how are we going to stay on this track of focusing on antibiotics and stewardship and avoiding the emergence of resistance? It's actually a really complicated problem in medicine right now.
SAL DAHER: It's what we got for now.
EDGAR GOLUCH: Yeah.
SAL DAHER: I'm an investor in Vedanta Biosciences and they are creating a treatment for C. difficile, based on the microbiome, sort of an engineered biome, changing the biome to make it less hospitable to C. difficile. But those things are, it's a beginning, it's infancy, and we have a huge stack of antibiotics that if we can protect that and use it really effectively, it would really make an enormous difference. Tell me the founding story of QSM. How did QSM Diagnostics come about?
The Founding Story of QSM
EDGAR GOLUCH: It's actually really interesting. The origin story starts when I was still in the Netherlands. While I was out there, I started doing electric-chemical sensor.
SAL DAHER: In Delft?
EDGAR GOLUCH: In Delft, in the nano bioscience group. I was working with Sege Lemay, amazing researcher. He's moved now to the University of Twente as a group leader. But we were actually really pushing the frontiers of what you can do with electric chemistry. We were doing single molecule detection using something that's as simple as a glucose meter, by just the microfabrication and the nanotechnology that's there. And I saw the potential of it. At the time, I was working on these instruments, but I was also applying for faculty jobs.
And one of the big things is, well, what are you going to do differently? How are you going to show that you're original and your research's separate from what you've been doing in the past? I managed to stumble on this one paper out of a group out of the UK, that talked about this molecule pyocyanin produced by pseudomonas and how it's electroactive. That sparked this idea. Pyocyanin is a quorum-sensing molecule or QSM. That's what eventually became the name of our company, QSM Diagnostics. Yeah.
SAL DAHER: Right. Explain the mechanism, quorum sensing, for those who are not-
EDGAR GOLUCH: Sure. Yeah. Quorum-sensing molecules, quorum, just like the name suggests in Congress, you're taking a roll call.
SAL DAHER: So there are enough of them?
EDGAR GOLUCH: Yes.
SAL DAHER: It triggers.
EDGAR GOLUCH: It triggers a series of events. Bacteria are constantly communicating with these chemicals. They're secreting them out into their local environment, and then they also have receptors on their surfaces. So when they notice the concentration of these QSMs is increasing, that's how they know that their friends are around. It's the same concept that you see in pheromones and birds and bees. They use this to communicate, "Hey, there's food around, there's enemies around."
There's a whole suite of these quorum-sensing molecules that they rely on to survive and thrive in their natural environments. And so, our piece was that, we started measuring these molecules. There hadn't been a lot of analytical thought and research being put into place for these. They had been discovered, I want to say, in the mid-70s, actually looking at bacteria in the stomachs of squid. There was this cool symbiotic-
SAL DAHER: How exotic.
Cool Example of Bacteria Interacting with Squid
EDGAR GOLUCH: Yeah. A cool symbiotic relationship that they noticed that the stomachs of the squid would glow, and it's because of green fluorescent protein that gets produced by the bacteria. But when the cells aren't in their stomach, if they're just floating around in the ocean, they don't make the protein. What turns out is that the squid that have the GFP expression by the bacteria, are better at hunting and surviving. They're better at catching prey. So the bacteria had evolved to make this, because they're in a high concentration in the stomach where there's a source of food for them.
SAL DAHER: Wow. That is so cool.
Bacteria Communicate to a Startling Degree
EDGAR GOLUCH: A really cool concept, and that's the first-time people really realized that bacteria aren't just these single cells swimming around, they actually know how to coordinate their activities with their friends. It goes even beyond the species. There's higher levels of quorum-sensing molecules between, say, cousins and second cousins, all the way up through gram negatives and gram positives. They've developed a very complicated language of, who are our friends who can make molecules that help us, who are going to be our enemies, and how do we balance all of this out?
SAL DAHER: Frame this, cousin's, you're talking about actual relatives or are you talking about-
EDGAR GOLUCH: In terms of evolutionaries. For example, you have staph aureus. That's the species, but all of staphylococcus are related.
SAL DAHER: So, you're talking about bacterial families?
EDGAR GOLUCH: Yeah. Families, genus, all the way up.
SAL DAHER: Okay.
EDGAR GOLUCH: If you're a taxonomy buff or taxology, it's one of those two.
SAL DAHER: Yes.
EDGAR GOLUCH: You'll learn about it. Actually, biologists have now identified new species based on how quorum-sensing molecules have evolved. One of the interesting stories coming from staph aureus, staph aureus is commensal on human skin, but animals have actually developed-
SAL DAHER: Commensal?
EDGAR GOLUCH: Oh, commensal being, normally found. Part of your natural microbiome. They don't do anything when you're healthy, but always normally found on your skin. Animals have the same thing. They have lots of different bacteria on their skin. You don't want to think about it too much.
SAL DAHER: Yeah.
Quorum-Sensing Molecules Allow Fine-Grained Detection Down to the Level of the Species of Bacteria
EDGAR GOLUCH: But they actually have the bacteria mutated to survive better on cats and dogs. One of the ways they've mutated is to make their own quorum-sensing molecules. Now there's a species called staph pseudo intermedius that the cats and dogs have that's uniquely distinguishable from staff aureus found in humans. That's the level of resolution we can have by detecting quorum-sensing molecules. We can get at the species level.
SAL DAHER: So, it was really precise so you can target really …. Anyway, so let's get back to you in Delft looking for a faculty job. You found a paper with this really exciting result.
“Trying to get a faculty job is actually a lot like starting a startup. You have your idea and you go around pitching to schools”.
EDGAR GOLUCH: Yeah. Trying to get a faculty job is actually a lot like starting a startup. You have your idea and you go around pitching to schools. You submit first an application, you write up what you plan on doing if you've got the faculty job. The top few get invited for in-person interviews. You're presenting to the faculty. Then they decide, is it a good fit for their department, and did they like the ideas that you've come up with? So this was one of the ideas I pitched. I saw that I have a great sensor that could detect this particular molecule. I was hoping that there would be other similar molecules in this class that we could develop, but nobody had measured. That was the concept, let's build our devices and study these QSMs that get produced by bacteria.
SAL DAHER: You call it single molecule in the sense that you're capable of detecting a single-molecule?
EDGAR GOLUCH: It's possible, and we have the electronics at the university to do that-
SAL DAHER: But it's not necessary?
EDGAR GOLUCH: ...but it turns out that the bacteria produce huge quantities of these molecules. So we actually can use very low cost electronics and sensors to do this. But one of the interesting things that we found out, so this was a really interesting concept, it actually got funded right away by The National Science Foundation. One of our goals was to, let's look at other common pathogens and see how their quorum-sensing molecules behave naturally. Where are they produced? Are they electrochemically active? And so, we went down this path and for better or worse what we discovered was that this pyocyanin molecule from the pseudomonas aeruginosa is the only common pathogen that makes something electroactive.
That was the first light bulb that said, "This could be a really great sensor, very unique." We tune how our electronics work to measure that one molecule. There's no interference from anything else and in high quantities. It's like this is a perfect biomarker for telling you when pseudomonas is present in a sample. What we found was that, looking at dozens of other pathogens, they all make their own QSMs in high quantities. They aren't electroactive, so we had to work on some more of the engineering. How do we tune our electrochemical sensors to then detect all of these other QSMs?
SAL DAHER: So now it's electrochemical, that are just electroactive. Okay.
EDGAR GOLUCH: Yeah. Well, so I use those terms interchangeably. An electroactive molecule is capable of donating and accepting electrons, and it's an interesting field. It's really at the interface of electrical engineering and chemistry, because you're measuring currents when you're applying potentials and different electric fields to actually measure chemicals. Knowing both sides of those has been actually one of the unique aspects and what makes QSM Diagnostics in a unique position, because we're really focused on the platform.
SAL DAHER: But I'm still, I'm hanging on the edge of my seat.
EDGAR GOLUCH: Sure.
SAL DAHER: I want to know the story that took you from Delft to founding the company. Okay.
EDGAR GOLUCH: Yes. When we were at Northeastern, so I got the job, we got this grant funded at Northeastern and the first paper we published on measuring these QSMs to get created by pseudomonas, Northeastern's media, their press, did a little release on the paper and we actually got contacted by a healthcare consulting group out of New Jersey. Part of the interview there that they asked us for the press releases, "Where do you think this technology might go? What's the application for it?" Northeastern being one of the great universities looking at use-inspired research. So we're always thinking-
SAL DAHER: A very practical-minded university.
EDGAR GOLUCH: Exactly. What are we going to do with this? Our idea at that point, the light bulb had gone off, is, well this could be a biosensor for detecting when pseudomonas is present, telling you what's causing the infection. That's what-
SAL DAHER: Pseudomonas cause ...
EDGAR GOLUCH: It's involved in quite a few different types of infections. So we have to get into medicine a little bit here. There are a lot of misconceptions. If you have an infection in the blood, that's sepsis, but that's really an end-stage of something that started days, weeks beforehand at a localized position. So if you have a urinary tract infection, the bacteria are in your ureter or in your bladder, and that's where the infection is started. So we want to detect, for example, urinary tract infections. We would test a urine that would have those bacteria. Another common example is an open wound. The bacteria, and pseudomonas would be one of them, would be present in that wound, so then you're checking the wound exudate for the presence of this bacteria. And so, pseudomonas is very-
SAL DAHER: Like pus? Using pus from …
EDGAR GOLUCH: Yeah, pus from the wound, sputum, so what you're coughing up from your lungs, if you have pink eyes, so the tears from your eye.
SAL DAHER: Yes.
EDGAR GOLUCH: Those are the places where you would see these infections. Obviously, now we're getting into ears, so the ear wax literally from dogs and babies in the future. Swab that and see if the is present.
SAL DAHER: Oh wow. Imagine that, ear infections are such a hassle for parents.
EDGAR GOLUCH: Exactly.
SAL DAHER: Anyways, so this consultant contacts you, this thing could be a way to detect pseudomonas-
EDGAR GOLUCH: Yeah, all sorts of infections. They ask us, "Is there a product?" I said, "No, there's not." They said, "Well, maybe you should think about starting a company and making this. There's a real need for this sort of technology." And so, that's what sparked our idea. Luckily, I'd been very exposed to entrepreneurship as a PhD student. My PhD advisor, pretty much all of our collaborators, had startup companies. And so, they knew that we should be filing the IP along the way, protecting our information. And so, before we published the paper, we had already started filing a lot of patent applications around this.
SAL DAHER: Outstanding, yeah.
EDGAR GOLUCH: The tech transfer office then saw that there's a potential with this, they would bring in companies that would talk to me about the idea. And the question always came back, "Well, who's going to turn this into an actual product? This is a great concept. You have some nice IP, but it's not a product yet." That was always the hold up, "Who's going to come in and do this? Just licensing that patent isn't sufficient." After hearing this story multiple times, at one point I just said, "I guess I'm going to have to do this with my students." The timing worked out, my first PhD student, who did the bulk of this research, was getting ready to graduate and he didn't have a job lined up. And he said, "Well, let's dive into this, try this out." We started by utilizing the entrepreneurship universe that's been created at Northeastern.
They have all sorts of groups and organizations that help, students primarily, but also alumni and faculty, figure out how to become entrepreneurs, start up a business and go through all this. So we started IDEAS, their accelerator program, teaches you how to create a five-minute pitch. What do investors look for? I was sitting there with a room full of undergrads in the evening learning about these things with my PhD student, Thad Webster. So we did that. We learned a bit about it. We did some other programs, health science entrepreneurs since that's one run out of the Bouvier School of Health Sciences. We're a healthcare product. They provided us with some experienced mentors. The next step, since we were NSF-funded for this idea, was to do an I-Corps program. And so, this is a great-
SAL DAHER: What's an I-Corps?
EDGAR GOLUCH: It's this amazing bootcamp. It started out at The National Science Foundation. Other federal agencies now do it. There's even private ones that you can take. It's a bootcamp for academics that are interested in commercializing a technology. They teach you all about the lean business startups, so Steve Blank's program, how do you interview customers, how do you find a product/market fit? And you have to interview 100 customers in six weeks. And so, you have the academic PI [Primary Investigator, ie the head of the lab], which I was, we had our PhD students and we had to get a industry mentor. One of our mentors was Craig Sockol from HSC. He was willing to put in the six-week bootcamp with us.
SAL DAHER: HSC is?
EDGAR GOLUCH: Health Science Entrepreneurs, a program at Northeastern.
SAL DAHER: Okay.
EDGAR GOLUCH: So, he signed up. He's like, "Okay, I'll help volunteer my time to go through this with you." Interesting twist, right around that time, Thad managed to get a nice job, in pharma, paying a lot of money.
SAL DAHER: That's the biggest competitor-
EDGAR GOLUCH: Exactly
SAL DAHER: ... to the startups. It is a perpetual question for me how someone as capable as you or Thad, how they make that choice between this easy life of earning very nicely, having a very organized, quiet life, working for these really well-run large companies or going off, wrestling alligators in the swamp, which is what starting a company is.
EDGAR GOLUCH: Yeah.
SAL DAHER: Struggling for funding, struggling to get resources to hire people, because it's so hard. People want to work in the large companies and they get paid really well, and yet, the startups is where all the ideas come from.
EDGAR GOLUCH: Right.
SAL DAHER: Perpetual wonder to me, and I consider founders really extremely heroic. So that's sort of the founding story of QSM?
EDGAR GOLUCH: Yeah, where we really took off from. Thad left, I had my next PhD student came in, next guy up, went through the I-Corps program with me. Hunter Sismaet. It was interesting. It kind of got thrown onto him. He was a little reluctant, but in the end he loved it, because, it's an opportunity that most PhD students don't have, to see the relevance and how the technology actually plays a part in becoming a product. But then, we had the same thing again. He graduated, got a good job. He actually got a job at Intel. He was from the West coast. He got a chance to move back. So really the next point there was, I had gotten tenure and I was up for a sabbatical.
So, I actually was able to take a year off and just focus full-time on the startup, and I wrote an SBIR grant. That got funded, so we had a phase one SPIR grant, and that's really when the company started. I like to think of the starting date as summer of 2017, that's when we found out that we got the grant funded. The funding started in January of 2018, we now had the funds to set up a laboratory outside of the university. I had enough money to pay someone to become a full-time employee. This is actually a funny story to most people, it seems really straight forward to me. I put out an ad on Indeed. I'm like, "I'm looking for a PhD, recent graduate, that knows surface chemistry, electrochemistry."
Boston as a Life Science Hub: “This was one of the great parts of being in Boston. I got 20 amazing candidates in less than a week”.
This was one of the great parts of being in Boston. I got 20 amazing candidates in less than a week. One of the people I interviewed and ended up hiring was Nicholas Cadirov, and he's been my co-founder with me for the last two years, randomly applied online. He had finished his PhD at UC, Santa Barbara in chemical engineering. Perfect skillset, happened to move back to Boston. He was originally from Massachusetts, and his girlfriend, and now fiancé, had been finishing her PhD at Harvard and just worked out beautifully for us. Then we were able to really go from there, make advances on our technology, get additional funding, and move forward.
SAL DAHER: That's exciting. It's exciting. Now, your ultimate goal is for diagnostics for people.
EDGAR GOLUCH: Yes.
Why QSM Wants to Get to Human Patients Via the Veterinary Market
SAL DAHER: But you're going the route of starting with the veterinary market.
EDGAR GOLUCH: Correct.
SAL DAHER: Please explain why that is. Some people say, "Oh, the vet market, you're going to get lost in that. You don't make any money," blah, blah, blah, "It's a waste of time. You need to go and raise money and get you FDA approval. Rip the Band-Aid right away and get your FDA approval and go for it." How do you counter that argument?
EDGAR GOLUCH: Oh, multiple ways. It took us several years before we really finally decided we're going to be a veterinary company with ambitions down the road. One of the big things, so I mentioned Isaac Stoner's article is, how many successful diagnostic companies for antibiotics and infectious diseases have come out in the last few years? Not very many, and the ones that are in the pipeline are now on series C, series D. Tens of millions of dollars have gone into development to get relatively simple products onto the market. We were facing the same uphill climb, but behind a few other companies that are already way ahead of us in this rather crowded market, because there's definitely a need for it. So that was one of the questions is, do we keep fighting up this steep hill towards this? The investors are telling us the same thing. That it's so difficult to get a diagnostic to market.
You need to find a partnership with one of the big, there's only two or three companies in the world that are really in diagnostics, and if you're not part of that, it's incredibly difficult. Going back to our I-Corps, one of the things that we had stumbled on, one of our mentors had mentioned, "Oh, have you ever talked to veterinarians about this technology?" From day one, the first veterinarian we talked to, they were so excited about this. They said, "Yeah, no one's developing things for the veterinary market. We have the same problems that the human market does. All sorts of bacteria we need to diagnose. There's a resistance growing there as well. We would love your product." Then, looking at all the other barriers that go away, we don't need to get FDA clearance. There's no FDA approval for a diagnostic in the U.S. for companion animals. Different for livestock, but for companion animals, the American Veterinary Medicine Association, the guidances that if you can show and convince a veterinarian that it's equivalent and safe for existing products, you can sell it.
QSM’s Big Pivot: From Addressing Urinary Tract Infections that Require Six Sensors to Ear Infections that Require Just One
Far less bureaucracy involved. We don't have to worry about insurance reimbursements and getting codes. It's a payer's market, so the barrier just to getting to a successful company lowered very substantially. Then the next key point, that we only hit on a few months ago, we had initially been looking at urinary tract infections for cats and dogs. There, you want to have a panel of sensors, look for about six or seven different bacteria so that you really know you're catching anything that's possible or probable in causing a UTI in a cat or dog. There's definitely a substantial interest, but there's also a lot of R&D for us to do, so we need to develop seven different sensors to put onto that disposable. We had heard about dog ear infections as being a problem, but we were reluctant because, the sample processing was going to be more challenging. Urine, you just put a drop of urine down, you're done. Dog ears, you're getting this goopy earwax pus out. I mean, how much are we going to need the process that?
SAL DAHER: And the dog is squirming.
EDGAR GOLUCH: Dog's squirming.
SAL DAHER: Yeah.
EDGAR GOLUCH: We came to a head basically saying, "Well, do we focus our R&D on getting this full panel of sensors finished," and we're making progress, but it's expensive, "or do we look a little bit more at, how do we handle dog ear swabs?" It turns out it was very simple. The other thing was that, that first pseudomonas sensor I talked about, is the only one we need.
SAL DAHER: Oh, so it's low hanging fruit?
EDGAR GOLUCH: A low hanging fruit. It's fine.
SAL DAHER: It's six different bacteria. You're looking for one.
EDGAR GOLUCH: Yeah, and it's the one that we have nine years’ worth of data for. That we've tested on hundreds of human samples already, we know it's going to work.
SAL DAHER: But, what else could it be? An ear infection could be many other things, but the-
EDGAR GOLUCH: It could be many other things-
SAL DAHER: But the really big thing they're looking for is pseudomonas?
EDGAR GOLUCH: That's the big differentiator where pseudomonas shouldn't never be present in a dog's ear. It's not commensal, if it's there in large quantities, that's a serious infection. Pseudomonas is also one of the pathogens that people are very worried about for developing resistance quickly.
SAL DAHER: Okay.
EDGAR GOLUCH: So, if you spot it, you need to treat this correctly, very fast.
SAL DAHER: As soon as possible, very fast.
EDGAR GOLUCH: You don't want to prescribe an antibiotic that kills off everything else and makes the pseudomonas infection even worse.
SAL DAHER: Yeah.
EDGAR GOLUCH: So this is the big determining factor, decision point, that veterinarians faces. Is there pseudomonas there? We need to take extra care, teach the pet owner how to clean the dog's ears every few days, really apply the antibiotics correctly, follow up, make sure this is being treated correctly. Whereas the other things, like if it's staph or a yeast, the antimicrobials that are present are actually covered pretty well with the normal topicals. The other interesting part to this is that, pseudomonas is actually quite common in these dog ear infections. Now, the exact number isn't known, and the study that we're starting next week actually is going to get to a lot of this, but as soon as we talk to people about dog ear infections, said, "Hey, we could do the pseudomonas test," their eyes light up.
We've been able to talk to the world's experts on dog ear infections, and there are world's experts on dog ear infections. There's a specialty called veterinary dermatology that handles these, because, usually, the infection's very similar to humans. It's caused by underlying inflammation. The dog develops an allergy and it's an allergic reaction in their ears due to food or something else in their environment. They get the inflammation and then the bacteria come in and set up shop and cause the infection. These dermatologists are the specialists to see, they treat the infection, and then they treat the underlying allergy that's causing the problems.
SAL DAHER: Yeah. Allergy or, sometimes, a viral infection can also create an environment where the bacteria-
EDGAR GOLUCH: It's possible, but that's actually very rare in this case.
SAL DAHER: Oh okay.
EDGAR GOLUCH: It's usually bacteria, yeast or mites, are the three categories. Mites are easy. You can see them with your orthoscopy. Yeast are much larger, or it's one of two bacterial species and pseudomonas is the big one.
SAL DAHER: Okay. Coming up next I will ask Ed Goluch, academic and founder, the question that is always in the mind of angels. What would be the exit for an investor of such a venture? I'm not going to ask that question yet, however, before we do that, I'd like to tell you a bit about an interesting company in which I am an early investor. I don't know, Ed, have you heard about Akili Interactive? You've run across them?
EDGAR GOLUCH: No, I haven't seen them.
SAL DAHER: Yeah, They are the forefront of the field of digital therapeutics. It's expected that they'll receive FDA approval for the first video game to treat ADHD in adolescents pretty soon. There was recently a result from one of their studies that they hit the primary-
EDGAR GOLUCH: …indication?
SAL DAHER: ... target for improving cognitive function in people with major depressive disorder.
EDGAR GOLUCH: That's really amazing.
SAL DAHER: Yeah, not treating the depression, but treating the cognitive impairment that comes with the depression. It also seems to interact well with pharmacological treatments for depression. It's interesting that in the case of dealing with ADHD, what it's doing, they believe, is that it is actually treating the underlying problem. It's sort of helping the brain reprogram itself to focus on the things that need to be focused on. Because attention is a funny thing. It's about calming the distractions and then focusing the attention, the two mechanisms at play. They do this with the video game that they have. It's basically somebody is driving and then there's interference, there's all this kind of stuff. It's been shown clinically and they compare it with a video game that's not designed to do that. It's just a regular video game that has a placebo effect or has a certain therapeutic effect actually, but theirs is much stronger. And no drugs, it's really an amazing thing.
EDGAR GOLUCH: Wow. I guess that's a great sign, because I know a lot of companies that are getting into interface computer gaming programs for healthcare applications, and even large companies are getting into it as well.
SAL DAHER: Yeah. Actually, the first digital therapy company that had FDA approval is Pear Therapeutics, for-
EDGAR GOLUCH: Yeah. I know those guys.
SAL DAHER: You know them?
EDGAR GOLUCH: Yeah.
SAL DAHER: For treating addiction. These guys will be addressing the ADHD space and also the major depressive disorder space and so forth. But the reason I mentioned this is that, I'm looking forward to having the co-founder and CEO of Akili, Eddie Martucci, on this podcast as soon as things kind of gel with the direction that Akili's going. That would be a really exciting conversation, but the point here is to tell people who are accredited investors out there in making the point once again that I invested really early in this company. When I invested, these guys were out in the wilderness looking for money, going the angel round. Now they've raised tens of millions, like $70 million, from various sources and perhaps even more than that, because they've done really well. This is the kind of opportunity that I see here in Boston, like everywhere. I just wish that I had more money to throw at it because, there's so many of these promising ideas and Akili is one that's coming to fruition. It's been some time since I invested, but-
EDGAR GOLUCH: Yeah, I was going to ask. It probably took several years to get to this stage.
SAL DAHER: I think I wrote the first check in 2014 when I invested in them, maybe 2015. It's been at least five years.
EDGAR GOLUCH: Yeah.
SAL DAHER: But there's another company I like, Gelesis, that I invested 10 years ago. They did get FDA approval in April of 2019. They're launching their treatment in 2020, in January, and I'm hoping to get their pills, PLENITY, for weight loss. It's effective and very safe. But anyway, getting back to the big question for investors in a company like QSM Diagnostics is, how am I going to make tons of money from writing a check to Ed Goluch?
How an Investor Can Make Money Investing in a Scrappy Biotech Like QSM, Hint: Capital Efficiency
EDGAR GOLUCH: Right. This is also part of our veterinary strategy. So you mentioned, five, 10 years, tens of millions of dollars. Without the FDA clearance requirements and for the product that we have, our requirements are going to be much, much lower in terms of investment. So we're still working on our seed round, but we've made amazing progress. We're ready to go into manufacturing this year.
SAL DAHER: Oh wow.
EDGAR GOLUCH: I'm actually talking with partnering companies in the animal health space, which are also incredibly excited about this, to have someone developing technology specifically for them to actually launch a product into veterinarians' hands in 2020. So we're looking at about $1,000,000 to get our product up to manufacturing, doing that first run, but the study for doing a few hundred dogs is less than $100,000.
SAL DAHER: Yes, yes. A few hundred people. It's a multi, multimillion dollar study.
EDGAR GOLUCH: Exactly, and you don't have to worry about HIPAA compliance. You still have oversight. The pet owner has to sign off informed consent, but you can get the medical records sent over, no-
SAL DAHER: But it's not like you're injecting something, the dog is just taking a sample.
EDGAR GOLUCH: That's true.
SAL DAHER: Yeah.
EDGAR GOLUCH: That for us specifically is an even lower bar, so we get [inaudible 00:33:01] exemption, where we're just swabbing the dogs ear. All the dog's going to squirm. So there is a little bit of worry. You need to get three or four swabs to run all the different confirmatory tests that we're going to do. But that whole things, our first study with 100 dogs, we're planning will cost us $50,000
SAL DAHER: Presumably, you're going to have the pseudomonas tests and then you're probably going to have a few others because, if you get that going, you've got revenue, then you have time to build your library of these tests. Then, when you do go to human trials, you're going to be doing much in a more robust, I mean, you can exactly trials with, at the same time you're testing-
EDGAR GOLUCH: Exactly. R&D will be finished. We'll have things lined up. We'll have actually all of our animal studies done [crosstalk 00:33:43] already to move that conversation forward.
SAL DAHER: Presuming commonality between humans and companion animals.
“…we don't want to overlook how large dog ear infections are as a problem… You're looking at 9 million dog infections per year”.
EDGAR GOLUCH: There's a lot of commonality. The same bacteria appear almost every time. The sensors we're developing, the sample processing and even on human drug therapeutics. You start on animals, you start on mice, rats, dogs. Definitely, for these types of samples, there's not a lot of differences. The one thing I do want to mention though is, we don't want to overlook how large dog ear infections are as a problem. It's the number one cause of taking a dog to the veterinarian. There's 90 million dogs in the U.S., 67% of us households have pets at this point. For dog ear infections, it's a 10% prevalence. You're looking at 9 million dog infections per year.
SAL DAHER: Wow.
EDGAR GOLUCH: Veterinarian's that we've talked to, we've talked about 70 or 80 veterinarians at this point. Some of them see, half of their patients are dog ear infections.
SAL DAHER: Wow.
EDGAR GOLUCH: So, you're looking at upwards, because you'll have the initial diagnosis, the first visit, follow-up visits, recurrence is almost 50% on these. So you're looking at 10 million-plus tests a year in the U.S. alone for dog ear infections. An average veterinarian visit for a dog ear infection is $300, so this is a $3 billion market opportunity that we're addressing with a very low cost product. What we're trying to show with our study is that every single dog should get this as soon as they walk in through the door.
SAL DAHER: Wow.
EDGAR GOLUCH: Because, that is really how you drive antibiotic stewardship and making sure that you don't get this recurrence, that you get the right drug on the first try. To address the other part of your question, how do we see as an exit is, this product alone can get us to hundreds of millions within a few years. We're planning to only raise an A-round next year of about two to 3 million, and there's no more investor dilution after that. We have a product, we are going to sign a partnership with one of these large animal companies that does the distribution to the 50,000 veterinarians, and then we're off to the races and we're generating revenue and making boatloads of cash. At that point, the goal is to spin off the animal healthcare company. Maybe we get acquired by one of these larger companies, or we start paying a dividend on our stocks, because it's going to be a very cash-rich.
SAL DAHER: Don't give any angel investors heart attacks. A dividend check. What is this?
EDGAR GOLUCH: Dividend checks.
SAL DAHER: How do I deal with this? I've got the few, yeah.
EDGAR GOLUCH: Yeah. Then, we'll actually be, I'd say further ahead than the human diagnostic companies, we won't be out there trying to raise more money. We'll have the funds, we'll have de-risked the technology, we'll have a product that can then move into the human side, which is our ultimate goal.
SAL DAHER: So the really crucial thing, you're hoping to have a product into the market in 2020?
EDGAR GOLUCH: Yeah.
Getting a Product to Patients with Just $1 Million in Capital Raised Is Very Efficient for a Life Science Business
SAL DAHER: And you will have raised by that point no more than a million to get this product to market, which sounds pretty capital-efficient.
EDGAR GOLUCH: Exactly.
SAL DAHER: To actually get paying customers in the life sciences is pretty efficient.
EDGAR GOLUCH: Yeah.
SAL DAHER: Yeah. Recently, I had a conversation on a podcast with Jeff Behrens, which I think is extremely, extremely important. The podcast is called “The Gap in Biotech Funding’. Jeff is a founder, he's a former CEO, he's worked in large pharma and startups. He was CEO of a cancer therapeutics firm. He's now on the board of Savran, which is a single-cell separation company, that catches one single cell. He says that there's this whole trend towards large VCs in the biotech space who've had quite a bit of success to start creating their own companies, which they fund from the very start. And they are making these really big moonshots. There are very ambitious projects, and he calls them the $50 million babies because, they start out with $50 million in funding from their backing VC and those VCs will back nobody else.
They will back those companies that they started in their stable. So there are a lot of other promising ideas that might not be as much of a moonshot as what the VCs are backing. Because the VCs, they look at the portfolio and they say, "Oh. Yeah. Look, if I invest in these things and I get a five X exit, and so it's not going to change a bunch of ... because I have a huge pile of money to invest. I need to do something where I put money in, I put in $100 million and this gets me $10 billion in an exit. That's going to move the needle for my limited partners." That's the kind of stuff they're looking for. They're not looking for, "Oh yeah, I put in $1 million and I got $10 million back," and so forth. This is a rounding error for the portfolios.
And so, they've gone in this direction. As an investor, I think it leaves a lot of opportunities on the table for people who can find projects that are capital-efficient, that can get to a strategic player with sufficient angel funding without having to go and do a mega, mega VC raise from these guys that are just increasingly involved in their own projects. The jury's still out, and it's going to be out for a long time on whether their approach works. To me, I like a little bit of crowdsourcing, of kind of having lots of bets because, you never know, the surprises are usually for the downside. But sometimes there're upside surprises in this, investing in startups. I like the idea of taking these bets. Basically, it says, "Well, yeah." They get grants, like NIH grants or whatever.
They get some initial sense that the technology works and they get a little bit of angel money. It looks like it's working, but then to get to the point where they can prove to a strategic player, a large pharmaceutical company, a large biotech company, that their technology works, that there is real demand for it and so forth, that could take tens of millions of dollars in most of these projects. And so, have to be very discerning about what projects you're funding to see if that project can get to revenue that will attract ... I mean, there're two ways, one of the things is actually have revenue, which is what you're looking for. The other way is to have something that will make existing revenue in a large company just explode. Go really, really high because, if they have a product line, if you plug into that product line, some new technology is just gonna make a huge difference to them. So in that case, they'll pay attention.
EDGAR GOLUCH: The other side of this, it's not good for health care, because now the companies are only betting on things that are going to be worth hundreds of millions and billions of dollars and there's low hanging fruit like antibiotic resistance and developing new antibiotics that aren't economically viable. And so, companies getting into that space, there's a lot of incentives now from the government to get there, but there are several companies that have gotten good Phase 2, Phase 3 results in new drugs and their stock's dropping. Because, they can't charge very much for these drugs, but they're critical. Same thing, I think, in diagnostics and other medical devices is, there could be real upside and benefits for healthcare, but they're not 10 billion, a $100 billion markets. We've talked to a number of investors that a billion isn't large enough anymore. There needs to be other ways to address this or figuring out how to back scrappy startups and getting those products out there.
Sal Daher Talks About Another Option for Funding: Revenue-Based Financing
SAL DAHER: Another thought that occurs here is that, once you have an install base of veterinarians paying you for your diagnostic and you have a production set up and so forth, you might be able to get what's called revenue-based financing, RBF. I know people who really like it. I'm skeptical, because I like the moonshots. I like the huge possibility of 100X, 400X, and those are precluded in the revenue-based financing. But in that case, if you get revenue rolling, you just say to somebody, "Okay, advance $1 million and, as the revenue rolls in, I'm going to pay you off two times, three times what you financed.
In the meantime, you've had that capital to work with and to, basically, for working capital financing, in something where you're already established, you just have to grow this thing. I have an example of a company that I'm invested in. Then all of a sudden they have an order from 1,500 McDonald's to install their software, and they're like scrambling for capital. They need the money for that. That is an opportunity for revenue-based financing, which could be attractive to investors, because they get their money back right away. It could be attractive for you, because it's non-dilutive, if you're in there for the long haul and you're hoping to really build a lot of value in the company and to retain some of that value yourself.
EDGAR GOLUCH: Yeah. No, I hope we get to that situation, but at the same time ,we'll see what it looks like when we are there. Because, now, we won't be first-time founders starting out. We'll have a track record that we're capable of launching successful products. We're hoping that, when we get to that stage to get back to the human market, maybe investors will be ready to line up and bet on us.
SAL DAHER: Well, yeah. I mean, you're going to have this whole stable of diagnostics.
EDGAR GOLUCH: Yeah.
How Ed Goluch Found His Calling: From Being Born to Immigrants in the South Side of Chicago to Getting a PhD
SAL DAHER: Ed, I want to step back a little bit and talk a little bit more about how you got to where you are. One of the things we like to ask people is to tell us about the background they're from. How they cottoned onto wanting to do what they do. How did you decide that you're going to be a scientist? What did your family do? I mean, was your dad a scientist, your mom a scientist?
EDGAR GOLUCH: No. This is a story I love talking about, because I think it'll help inspire a lot of other people. I've been scrappy from the start. My parents are immigrants from Poland. My mom went to vocational school, my dad came here when he was 16 and was left by his parents here when he was 18 with his older brother when he was 21. He actually dropped out of high school and went to work, blue collar job, because he had to survive. He ended up getting his GED eventually and taking college classes to be able to maintain his job. He was a union worker on an assembly line.
“…just growing up seeing the hardships of having very little money, parents that are struggling… triggered me to say early on, "I want to get out of this...”
And so, their aspirations for me were to finish high school and maybe go to college, because now I'm doing better than they are. But I grew up on the South Side of Chicago, like many immigrant families from Poland did after World War II and under Communism. So they had families there. It was an interesting experience growing up there. My dad was laid off in the '80s when there was the big recession. Growing up in that environment, I don't really have something to point to as an exact moment, but I think just growing up seeing the hardships of having very little money, parents that are struggling, something really triggered me to say early on, "I want to get out of this. I want to move on and really see what's capable."
SAL DAHER: And you saw an education as, you're getting excited, as a way out-
EDGAR GOLUCH: Yeah. I'd always done really well in school. I'm not exactly super athletic.
SAL DAHER: The baseball contract was not in play.
EDGAR GOLUCH: Yeah. No. And my parents being immigrants, they weren't exactly sports fanatics either. I had definitely friends that were on the little league baseball teams and I wasn't part of that. I would play with them on the side. But academics, I saw was my way forward. I don't know if you or any of the listeners listen to, or see the show on Showtime, Shameless. It's based on the South, well, the original was out of the UK, but the famous one on Showtime is based on the South Side of Chicago. I actually grew up only about a mile or two from there. It was a blue collar neighborhood, fairly poor and it was struggling. And so, a lot of the schools there, so I went to Catholic school, my parents wanted to really provide that religious education, not as much.
They didn't really look at it as being a better education, but offer the religious background. But a lot of the Catholic schools there get closed down, so my friends from where they shoot that TV show, a lot of them went to school with me at one time. And it's a scrappy bunch of people, seeing that, figure out ways to hustle, but for a lot of them finishing school and being able to get some job was as far as they want to go. For me, it always has been, "Let's see how much I can accomplish." And so, managed to get into high school, scored well, and then went to University of Illinois for chemical engineering. I met my wife there, when I was a sophomore. We met at the Student Union at the bowling alley. We were both trying out for the bowling team.
We ended up being in a club league for years, got married right after undergrad. But then, she really kept encouraging me to not just try to get a comfortable life, but to follow my ambitions. I had no idea what a university professor was, growing up, or what a PhD looked like. My goal in high school was, "I'm going to be a chemical engineer, because that's the highest-paying undergrad degree." That was my motivation. I didn't meet and start talking to PhDs until I was an undergrad, and they told me about all the other options. I did a number of internships, every summer I was working in factories and saw what bachelor's level chemical engineers do, and said, "This is going to get boring. You can make money, and it's a stable job."
SAL DAHER: Sure.
" My parents said, "This is perfect, you'll have a job, you'll be comfortable." But for me, I was like, "I want to do more."
EDGAR GOLUCH: In the Midwest, they all go into food industry. Everyone's buying Kraft Mac & Cheese. That's not going away. I did an internship at Diageo Beverages, makes alcohols. In good times and bad, people are drinking, either celebrating or getting away from troubles. Then like, "Okay, stable job." My parents said, "This is perfect, you'll have a job, you'll be comfortable." But for me, I was like, "I want to do more." I started doing research as an undergrad and that's where it really sparked me. It's like, "I like working on new ideas and cutting-edge things," so I decided to do a PhD and just kept rolling from there.
It was interesting. I think one of the things I talked with my dad about a few years back, he used to always tell me all these stories about advice he would get from teachers or friends about opportunities, and he never acted on them. Because, he was always the safe bet. He's like, "I have a job. I'm happy with this." For me, that turned into inspiration. I'm like, that inspired me. When I got advice from people that I trusted and I thought had good ideas, I'm going to jump on these things. That never occurred to him. It wasn't his intention for me to do that.
SAL DAHER: My mom used to say, when you've had so much privation and you get to a place where life's pretty good, my mom used to compare it to, you bought this car and it was so cheap that when you get into first [gear] and it goes, you don't want to get into the second [gear]. If it's going on a first gear, good enough for me. My mom was also very ambitious and so forth, but she had this explanation, because she saw a lot of people sort of saying, "When you come from a place like Brazil," Poland, "your life is so difficult, so many problems. When you get to a place like America, most people, particularly the first generation are sort of like, 'Yes, we got it here. Let's just get something really safe. Let's not do ...'"
Like the joke about the mother of Indian guys or women who all want them to be doctors. And they go off and become founders, "Oh, don't take risks." It's the same thing, but the generation that grows up here still isn't the contact with the privation. And they understand the need to be scrappy and to scramble, at the same time, they aspire more. They can say, "Wow, no. Hey, pops, I can really hit the ball out of the ballpark. I can be president." Quote unquote, I can be the head of a big corporation and so on. It's a great thing to see. It's very inspiring. Does your wife work?
EDGAR GOLUCH: Yeah. She finished at Illinois with a cell molecular biology degree. She was working, she was the breadwinner while I was doing my PhD. Well, I kept taking these risks. I lost my parents at some point, I told them I have an opportunity to do a postdoc in the Netherlands, and they're like, "Why would you ever move to Europe? You have all these degrees, here in the U.S., you can get an amazing job." At that point, I realized that I want to be a professor. I saw how my PhD went and my PhD advisor was very successful. Saw that, it was like, "That's the ultimate in job stability.
Forget chemical engineering, tenured professor. Now, you're really set for life. If you can get to that stage, and you have to do a postdoc for that." As I mentioned, we were at Illinois, I did my PhD at Illinois there as well. I actually switched into bioengineering, so my PhD is in bioengineering. To become faculty, you need to do at least one postdoc. My wife said, "If we're going to be poor and you're going to be a postdoc, let's at least go someplace interesting, so we get out of the corn fields." And this opportunity to do a postdoc in Delft, in The Netherlands came up, and she was like, "We got to do this."
SAL DAHER: Doesn't get more interesting than that.
EDGAR GOLUCH: Yeah. So we got a chance to live there, experience life there. She was doing research when she got there. She got to work on some amazing stem cell research that isn't even allowed in the U.S., then when I got a faculty position, that was definitely something we considered. I applied all over the world, but we had to go someplace where she could get a job as well, and being in biotech, ending up in Boston, you can't do it better than that.
SAL DAHER: Boston is like the Mecca.
EDGAR GOLUCH: So when we first moved here, she worked at Beth Israel in a PhD program as a technician. Got to work on some really amazing science, but the pay for a technician on NIH funding does not get you very far. She did that for a few years and then got a job at Biogen, doubled her pay off the bat. Loved it, did a few years there, started her MBA. One of the nice perks of faculty at Northeastern is discounted tuition for spouses and dependents.
SAL DAHER: Oh wow. Yeah.
EDGAR GOLUCH: So she did a part-time MBA program at Northeastern for far less than what an MBA would cost. But there were several years of nights and weekends where we were both on campus working. Then she moved to Novartis and she's been in a Novartis in Central Square for the last few years. Finished her MBA and now is looking at moving up in the world, getting project management and business experience.
SAL DAHER: She's gone a safe track and you've gone the daring track.
EDGAR GOLUCH: Yeah. Definitely now. Being tenured professor, I was the safe option and she was the big money maker.
SAL DAHER: On tenured professorship, look up the thoughts of Howard Stevenson on what he called “The Velvet-Lined Rut’ of the tenured professorship at Harvard Business School. He passed up a professorship to go off and found companies and, eventually, he ended up being involved with Baupost, which is one of the most successful hedge funds ever.
EDGAR GOLUCH: I'm seeing this as a very rapidly growing trend. Academia is going to have an issue in the next decade or two because, they're becoming less and less competitive, and society's changing. People want to pursue their dreams and take risks and a tenured professorship, this is why I'm walking away, is that I have an opportunity to really do something amazing and grow something of my own that isn't really available. And my wife's been so supportive of this.
EDGAR GOLUCH: She's like, "Come to the dark side."
SAL DAHER: No, no. This is really important.
EDGAR GOLUCH: Yeah.
SAL DAHER: The support, to be able to read your family into the risks and have them agree to take the risks and understand that there are going to be difficult times.
EDGAR GOLUCH: Yeah. We've played it conservatively, so she has her job’s in a good position right now. We're built up a little nest egg and we can, slowly making my way out onto that ledge and taking that jump, but still not risking everything the way some people do. But that's how I was brought up. I would have never done this at 20 as an undergrad. That would have been way too risky.
SAL DAHER: Interesting!
EDGAR GOLUCH: But now it's like, I think I'm in a position where I can do this and do this well and take that risk and still be okay.
SAL DAHER: Do you have kids now?
EDGAR GOLUCH: We don't have kids. We're part of this demographic of pet owners. We have four cats, and we've spent thousands of dollars on their healthcare.
SAL DAHER: Oh my gosh.
EDGAR GOLUCH: So, I'm definitely the target demographic for our product.
SAL DAHER: Great. Ed, as we wrap up this interview, feel free to address any topic that's important to you that you want to communicate to our audience of founders, angels, people who work at startups, people who are thinking about founding a startup. What would you say to them?
Edgar Goluch’s Parting Thoughts
EDGAR GOLUCH: Oh, so much advice. I still have my teaching hat on, I'd love to share my advice. I'm happy to talk with people about ideas that they have or things that they want to explore at every stage. I'd say, early on, try to validate things. Looking back, I think we should have done even more research on what that products can be. Who's going to be the user? You can never do too much of that.
“Looking back, I think we should have done even more research on…Who’s going to be the user.”
SAL DAHER: Okay.
EDGAR GOLUCH: We could have saved ourselves a few years of heartache and difficulties running around.
SAL DAHER: Even more attention to the customer, to the use-
EDGAR GOLUCH: Yeah. Even more of how that's going to fit in exactly. Then from there, I think once you have that, and depending on the products. If it's going to be technical, you need to know inside and out your field. If it's consumer-based, you need to understand the consumer and how that world runs. But I think, build a good team trust people. That's definitely one of the things, I'm never afraid to talk about our technology. We do something that's really difficult. Nobody is going to drop $50 million and try to catch up on what we're doing. So here's what we've learned along the way, don't fall in the same pitfalls. Find your way. We can help and you can help us, hopefully, in the future.
Accelerators Ed Goluch Attended: Did Not Have to Give Up Any Equity
SAL DAHER: Have you guys looked at accelerators?
EDGAR GOLUCH: Yeah, we've done several over the years. We did Mass Challenge in 2016. We were a silver-award winner. Right now, we're part of actually three different ones, MassMEDIC here in Boston. I'm part of the Ignite program, which, is for first-time CEOs and medical devices. But we're also part of creative destruction labs out of the Rotman School of Management at the University of Toronto, and the Endless Frontier program, which is out of the Stern Business School at NYU. These are really fun programs. They're competitive. They let in about 50 companies a year, and they've run them survivor style. There's a group of mentors that you meet with. We just finished our second meeting. The first meeting you get the 50 companies in, you meet with five or six mentors, they then have 10 or 15 minutes to discuss in the room amongst all of them. Then, someone on the mentor side needs to raise their hand and say, "We're willing to keep working with this company."
If you get at least one hand, you get to come back in eight weeks, report on all of your objectives. They set milestones of what you accomplish, see how well you did and see if you can keep making progress, and see if you keep getting your hands raised. Less than half of the companies are going to graduate from the program. But in previous years, something like 80% of the companies have successfully raised before the end of the program. We just got invited back for session three at EFL in New York in February. We just got back from Toronto actually last night from session two, so we're here in the next few days if we move on to session three, but these are amazing mentors. Most of them are VCs, angel investors, people that are entrepreneurs, and we get a lot of interest. They've been amazingly helpful because, anyone that does raise their hand has to give you at least four hours of their time over those next eight weeks to work with you on achieving these goals.
So fingers crossed that we keep moving in CDL and EFL over the next few months and you get paired up actually with MBAs. Another thing then is, we get a lot of business experience this way. We have some amazing MBA students from both programs that are helping us refine our business plans and do a lot of information as well as the business school faculty work with us as well. So this has been really fun and I encourage people to apply to these programs. CDL is franchising, so they're now at like seven or eight different schools. EFL spun out from CDL. They were part of the CDL program a few years ago and this year they're running their own version, because they have a slightly different academic year. But CDL is in Toronto. They have one in the UK, in Oxford, I believe. Next year, they're opening one up in Atlanta. I think it's with Georgia Tech. And so, all of these business schools are running these programs for startups.
SAL DAHER: Did you give up any equity for those?
EDGAR GOLUCH: No.
SAL DAHER: Okay.
EDGAR GOLUCH: Zero equity, you just have to figure out how to get there. You go for one or two days every other month for eight months.
SAL DAHER: Excellent. Excellent. Very good. Ed Goluch, scholar and founder, thanks a lot for making time for this really engaging interview.
EDGAR GOLUCH: Great. Thanks for having me.
SAL DAHER: I'd like to invite our listeners who enjoyed this podcast to review it on iTunes. Ed, if you haven't reviewed us on iTunes, do so, please.
EDGAR GOLUCH: Definitely.
SAL DAHER: This is Angel Invest Boston, conversations with Boston's most interesting angels and founders. I'm Sal Daher.
I'm glad you were able to join us. Our engineer is Raul Rosa. Our theme was composed by John McKusick. Our graphic design is by Katharine Woodman-Maynard. Our host is coached by Grace Daher.