Most U.S. businesses are reeling from the current economic dysfunction unleashed by the coronavirus. But a few—think companies like video-conferencing services, or streaming entertainment providers—are seeing an uptick in usage as most Americans stay at home.
Another company in this position is Xenex*, of San Antonio, which manufactures robots that use pulsed xenon ultraviolet light to quickly disinfect indoor spaces like hospital rooms. Powered by Battery spoke with Xenex CEO Morris Miller on March 13 about how his business is being affected by the coronavirus pandemic. Miller was previously the Co-CEO, managing director and co-chairman of Internet hosting company Rackspace. This interview has been edited for space and clarity.
When did you first hear about the new coronavirus epidemic?
From one of my advisory board members. I have an official board of directors, but I also have an advisory board made up of some of the smartest people that I know. I have them all participate in [my] board meetings. I want as much input as I can get from as many people as I can.
So, one of these advisory board members runs a very large, healthcare-investing hedge fund. In early January, he emailed our founder and chief scientific officer and said, I’m hearing murmurings of what’s going on in China [with a new disease]. It hasn’t really spread, but are you paying attention to this, and does it worry you? From his news sources, he thought there were a lot more cases in China than the government was reporting. And the virus was more virulent than they were letting on.
It was that call that really got it on the radar for us. I think more broadly, it speaks to the importance for all CEOs and leaders of assembling a good team of advisory board members in the first place.
Once you got that intelligence, were you thinking, we’ve seen this movie before?
We saw this movie during the Ebola crisis. I remember saying to our PR person, based on what I just read, there is going to be some interest [in our company] from the media. Just be aware we may be getting some inquiries.
It sounds like you wanted to use PR to raise visibility for the company, as a way to step in and help.
About three weeks ago I was on a CNBC morning show. That kind of got the company name out there. From that, there were three or four more inquiries. As cases started developing in China, I said, look, we’re the leader in this space . . . let’s take 20 robots and let’s set them aside and offer them to the Chinese government. Maybe this is a circumstance where the Chinese equivalent of the FDA would say, we really want them to go to this person, or that person.
Then I started reaching out through my network to ask, who knows people in China. Getting robots to China, however, has taken far longer than we anticipated. That was around the time when the Lackland [Air Force base, in San Antonio] quarantine was set up. People off the Diamond Princess [cruise ship] came here. I offered to send five [robots] across town to the base.
But even though the CDC kept saying, you can use the robots, the DOD [Department of Defense] said, unless we are ordered to use robots, we won’t. It was like this morass. I’d talk to a general and say, you have these [robots] in 55 VA hospitals . . . why would you not use something that’s proven to be effective?
Then once the infection started spreading around the world, we had partnerships already set up in Japan and Italy [that facilitated new sales]. We’re in about 15 countries. The calls started coming in and literally overnight our business is up 400%, compared to before the virus.
So, to date, all your customers and partners have been hospitals, correct?
Traditionally it’s been almost all healthcare facilities, yes. Though last week there was an announcement that a Houston hotel has bought our solution. That went out, and overnight, actually before lunchtime, someone was here from out of town who owns 70 hotels who was interested in our product. The LAPD is also using a robot to disinfect one of its stations – they were concerned about the officers contracting sicknesses and taking it home to their families.
So that’s the first hotel you’ve ever sold to?
Officially. It’s the first one ever announced. Hotels have never really understood why they need to do it. Now it’s abundantly clear that room disinfection is important.
Maybe now is a good time for you to explain exactly how your germ-zapping robot actually works and kills viruses and bacteria.
UV has been used for disinfection for a really long time. For the past 100 years, people around the world have used mercury light bulbs to create ultraviolet light. Mercury light bulbs are not intense – think low lumens; they only broadcast at a single spectrum, and wind up running hot for a long time and destroy plastics and other things that are exposed to the light. Everyone has seen yellowed plastic [from this reaction]. The founders of Xenex realized that they could use a xenon lamp–a 12-inch, U-shaped Xenon lamp–to put out high- intensity, broad-spectrum UV light covering the entire germicidal spectrum. It turns out that high-intensity, broad-spectrum UV light does more damage to pathogens, prevents their replication, and prevents them from exercising their photo-repair abilities – versus the older mercury UV solutions. And pulsed xenon UV doesn’t cause damage to hospital surfaces or equipment, which is important.
Why is room disinfection important? Aren’t the hospital rooms clean?
Studies show that less than half the surfaces in a hospital room (think bedrails, tray tables, nurse call buttons, IV poles) are disinfected when the room is being cleaned and prepared for the next patient. Some of the really bad superbugs – like C.diff – can live on surfaces for up to five months. That contamination poses a risk to the next patient or healthcare worker in that room. A study performed at MD Anderson demonstrated that our pulsed xenon UV light disinfection is 22 times more effective than traditional hospital cleaning techniques. Hospital rooms may look clean and smell clean, but unless they’ve been disinfected by one of our LightStrike robots, there’s a significant chance that the room still contains contagious pathogens.
How many machines has Xenex deployed?
Our robots have been deployed in 500-plus hospitals. And we have thousands of robots out there.
How does the reaction to the coronavirus pandemic, in terms of what you’ve seen so far, compare to past global disease outbreaks, like avian flu, swine flu and Ebola?
Ebola was also very big. We were also asked to help solve the swine flu problem. We know that we can kill it. But at that time, we didn’t step in, because human lives weren’t being affected. I wasn’t willing to send robots to China. They don’t respect intellectual property. But now, under the current circumstances, these are people’s mothers, fathers, sisters, brothers, and children at risk. I will allow somebody to potentially steal my IP to save lives.
Which countries have you shipped robots to recently?
We have shipped to Italy, Japan, South Korea, Singapore. Also Thailand and South Africa.
I know you’re not a doctor, but how serious do you think this will get?
It’s obviously growing in the U.S. I think the numbers that I see from the sources that I trust show there might be as many as 4.8 million infections in the U.S. And remember we’re not as tightly controlled a society compared to China—that freedom allows for the wider spread of disease.
With the Spanish flu [of 1918], the incidence of infection dropped precipitously in the summer, then increased again in the fall. I think you’re going to see something very similar here. My daughter goes to college in Boston, and she called me in tears recently because her college was closing for the semester. She was upset about that. She’s a junior. She said, at least we’ll get to go back in the fall for my senior year. I’m not so sure. That’s why I’m working with government officials who say we’ve got a time period of four to five months [to curb the pandemic]. Maybe we could get 20,000 or 50,000 robots produced and get them out in the key places where we need them. The founder of our company, he has a PhD in epidemiology from Johns Hopkins. I’m saying, we need you to put on your PhD hat and figure out, what is the exact right way to deploy this technology. He’s working on that, in real time.
You’ve had direct conversations with the federal government?
Where are your robots made? If they’re made in China, I’d imagine you’d be having supply-chain problems right now.
Our robots are made here in San Antonio, Texas.
I’m currently accelerating a years’ worth of sales into a quarter. Right now, I need help. When I was running Rackspace, we scaled that company to a half a million servers, but we did that over a 10-year period.
We’re a lean manufacturer. From an assembly standpoint, we can get it done.
I’m sure you’re happy that your company is seeing increased sales. But is this a bit of a double-edged sword, in that even though you’re helping to save lives, you’re also benefitting financially from the pandemic? That must be difficult.
I was editing this (email) before we talked. It’s based on a note I recently got from my head of sales, whose name is Irene. When we sent the robots to Italy recently, she wrote a note to both the company and to the buyers in Italy. This is what it said.
“At any other time, we celebrate these wins; however, in light of what is happening in Italy, this one is different. Italy has confirmed 10,149 cases with 631 deaths. This equates to over six percent of those with COVID-19 passing away.
Today, we are sending robots to Italy where they are urgently needed. Tomorrow, we will send more. They are expecting to purchase more units in the next week. Let’s think about our partner as they engage within the health community in Italy to play an important role in the country’s response to this crisis.
Today, the World Health Organization (WHO) announced COVID-19 is now considered a pandemic. We are absolutely humbled to be in a position to help in the United States and across the globe.”
The views expressed here are the author’s own and not those of Battery Ventures or of any person or organization affiliated or doing business with Battery Ventures. Further, the information herein is not intended for use by any current or potential investor in any investment fund affiliated with Battery Ventures.
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*Denotes a past or present Battery portfolio company. For a full list of all Battery investments, please click here. Investments identified above are for illustrative purposes only. No assumptions should be made that any investments identified above were or will be profitable. It should not be assumed that recommendations in the future will be profitable or equal the performance of the companies identified above.