HIBT Lab! Armbrust American: Lloyd Armbrust

Hello and welcome to how I built this lab. I'm Guy Raz. This is the place where we break format and experiment with ideas and stories that you might not hear on our Monday episode. So remember the early days of the pandemic when we were all freaking out when you would literally see someone walking towards you on the sidewalk and you'd cross the street because you thought you'd get COVID just by passing them. The days when we were disinfecting packages and mail and even vegetables from the grocery store.

Okay, maybe that was just me, but it was a scary time and Even scarier was the shortage of things like hand sanitizer and Lysol, and most importantly, surgical masks and N95 respirators. And the reason for the shortage was because most of these products are made overseas, particularly in China. And the demand for personal protective gear skyrocketed so high.

That Chinese manufacturers, at least at first. Couldn't keep up. So Lloyd Armbrest, an entrepreneur who ran a company that sold ad sales software to newspapers, decided to make a pivot and try to tackle the problem. And within a few short weeks.

He literally set up a manufacturing business making surgical masks in the US. He named it Armbrust American, and by the summer of 2020, Lloyd's company was making a million masks a day. So how did he do it? Well, he's here to tell us. Lloyd Armbrust, welcome to the show. It's great to be here.

Alright, so let's first talk before we talk about uh masks and and what you're doing now. I want to talk about your your background, your career. Because you came from this is not the first company you you founded. You actually started in in the newspaper business and in I think in the ad Sales part of it, right? Yeah, that's correct. It was uh It's more of a software company, really. It was a I mean, we were a Silicon Valley backed startup.

Um we raise about ten million dollars. And uh it just was one of those startups you don't hear about because we we didn't we didn't have like some crazy exit. Uh we didn't IPO. We just it was called own own local, right? That's right. And actually the company still exists today. And what what did the company do? Uh so what we do is we automate the building and buying of advertising for about three thousand newspapers. All right, so Tell me about

the decision to To create a a surgical mask. Company. How did how did that I mean did that come. Purely from the pandemic?

Yeah, a hundred percent. I uh you know, I was just looking around At all these articles and all these uh people saying we can't get masks. And I was like, this is a really stupid problem for America to have. I grew up with my dad was actually in manufacturing. He was a uh a plant manager, and uh I would hear him talk about how things are being outsourced and how like This could be

eventually really bad for the country because if we don't maintain the skill set here what happens to us. And I think I just had that in the back of my head. You know what really kind of set me off was Um an investor from

my group of of investors kind of sit around this email and said, We're gonna raise Uh Three hundred and fifty million dollars to buy masks. Um and import them into the United States because we can't get masks here. And I was like, that's really a dumb solution. Like I was like, I did the math and I was like, I'm pretty sure for like five million dollars, you could make the capability of making that many masks.

And uh Some that that's actually what put me over the edge and I ended up pulling the trigger. Yeah, I mean let let's sort of go back to that moment in in sort of February, March really March of twenty

twenty I think of March eleventh is the date because that was the date the NBA Shut down the season. I think that was a wake up call for so many people. That was a date. And um First of all we didn't know uh to use masks, we were told not to use them'cause nurses and doctors needed them. Um and then when it came time for you know, when the C D C was like, Yeah, actually everyone should wear a mask it was really hard to get them. We always rem we're all remember that, you know, trying to scramble to get masks. But most of that

outsourced a long time ago. Like most hospitals had been buying their their personal protective gear. from Chinese companies for for a while to'cause it was cheaper, right? It was it's so much cheaper. I mean they sell it for less than the cost of actually making the mask at this point.

Yeah. At uh I remember on that time like s distilleries and companies that did spirits were transitioning to make hand sanitizer and everybody's kind of focused on on on sanitizers and cleaners and bleaches. So so we were all caught up in this, understandably. Um we all wanted to do something. And and so for you it was, well Let me see if I can figure out how to m how to make masks here. Was that that was basically what you asked.

Yeah, I mean I think I've just become more of like a I really became focused on like the the core financials, like do the unit economics make sense? And so what are masks being sold at before the pandemic? And And how are they being made? And I found that mostly masks were being made manually, one at a time, by hand, at the time. Wow. And so I said

Okay. If we If we inject some like modern manufacturing here and we put this to work, we add some robotics, we remove like the 10 or twelve people that touch a mask to actually make it. Can I make that work here? Like can I sell it for the price that was being sold before the pandemic? And if I do those things and

I have some some other things like we were actually vertically integrated, so we make some of the fabric ourselves, which shaves off some of the cost. And I was like, man, I could really compete with uh with the Chinese model. And I could sell to you know I could sell to governments. And previously I'd been selling to newspapers. I was like, what could possibly be harder than selling software to newspapers? Like surely I can sell to governments and And hospitals.

So you were you're based in Austin, Texas. You have this idea. But then what? Like what do you I I wouldn't even know where to begin. You gotta f where where's the factory? Where's the money to make it? Where's the m where's the equipment? I mean, w how did where did you even Start. Um I did a lot of uh research in terms of reaching out to current mask manufacturers and and not just um not just China, but in you know, Taiwan.

uh in India. and uh got relationships with folks on WhatsApp. And then I started looking into the actual machines themselves and then I found a factory that was just starting to do a fully automated line. And so I got all the documentation. I put it together. Uh actually work I found a robotics guy'cause I I don't have a any experience in robotics. Well, I do now. Yeah. Found a robotics guy in Flugerville, Texas. And uh

We got together, we looked over the plans, we said, Hey, I think this works. And we actually We actually ended up flying this thing. Flying this like production line that's like a or this machine. Our first production line. Yeah. We we had it produced. And by the way, it was like I wanna say the the base cost of the machine was$140,000. And so I remember when I was like You know, I went to uh friends and family and I was like, All right, here's my idea.

You know. Maybe I lose all of our money. Maybe I get it back. Everyone was like, Okay, let's do this. So I wired the hundred and forty thousand dollars, really hoping that that money wouldn't go to Nothing. No, maybe this is a total scam, you know what I mean?

And uh yeah, I mean I was on you know, while they were producing the machine, we were doing Face time. Uh with the manufacturer. Uh every night, you know, seeing their progress. Seeing it run all together. And then we got it packed up and sent here. And I think it was

April. I think it was the first week of April. that we got the that the machine landed in the United States. Wow. So for the time that you I'm assuming you came to this decision to start a a mask manufacturing business

In March of twenty twenty? Yeah, I was thinking I think I actually tweeted in like February, like beginning of February, I said, I think thinking about spending a hundred and forty thousand dollars on a on a mask machine, m bad idea or terrible idea. And everyone was like, This is a horrible idea. But I uh you know, over the course of the next fifteen, twenty days, I eventually convinced myself and I think we actually did send the money in I think it was the f first week of March. So so if I if you came to me at that time and said, Hey, I'm gonna do this, I would say, Okay

Oh well it'll be up and running in a year. From the time you thought of this idea until the time you actually got Delivery. of a manufacturing. line until the time it arrived, until the time you were making actually was making masks was like six weeks.

Yeah, in fact it might Son was born. um two days before the machine uh produced the first couple of masks off the line, then which was uh in early May. Uh so yeah we we did get it up in in six weeks. Um and then the we had the governor's office, uh his his uh response team for COVID came through probably a week after we launched

And they were like, This is great, do more of this. Like, we'll give you a big order. Well, you get the machinery. from China, because presumably there was there was off the shelf Right, this off the shelf production line that you could get shipped to you. But where did you set it up? So I you know I had a

Pretty decent size like eighty person startup and Uh Austin and so uh we had before the pandemic and actually funny enough I I had just decided to shut down our office right before the pandemic started. But I had good relationships with real estate brokers and I said, Hey, I'm looking for like a thousand square foot. to set this thing up. And I mean I didn't really know a lot about manufacturing and how much warehouse space I need. Yeah. But what ended up happening, we to be honest,

I I think like I think like the companies that are successful, they end up doing a lot of things right accidentally. Like there's a lot of luck. Yeah. And one of the super lucky things that we did was we stumbled on this facility that was 15,000 square foot. uh half of it was warehouse, half of it was lab space. They were making uh weapon sites in there before and the company went out of business. Um and it was just sitting there for like two years unused.

And they just had a lease someone that was gonna take the lease and then it fell through because of the pandemic. And so we went to the the owners of the property and we were like look We can't afford the whatever they wanted, you know, twenty five thousand a month for this beautiful, pristine manufacturing space. I was like, but We're gonna make masks, we're gonna save lives.

Can we do can we do a deal here? And so they they gave it to me for five thousand dollars a month. Wow. Which was incredible. And that gave us this amazing space that we could uh we actually eventually were able to produce a million masks a day in that facility. It's uh unbelievable. All right, um Lloyd, hang on for one sec, we're gonna take a quick break. We'll be back with Lloyd Armbrust and uh

But Arm Bost American in just a moment. Stay with us, you're listening to how I built this lab. Hey, welcome back to How I Built This Lab. I'm Guy Raz, and I'm here with Lloyd Armbrust of Armbrust American, hearing the incredible story of How he built a manufacturing business in just six weeks. So so the the machine arrives.

And you've got the space for it. And I mean, I I'm I'm assuming maybe you're a little handy, maybe you could use wrench and a screwdriver and maybe get some power tools, but how do you build it? Who did you get to help you? Did you get a bunch of people from your other business, your other company that you had started? So I l I had reached out to a couple of folks in the area, some people who were Um had worked at uh

A automation line of I think it was a a former Toyota Production line. here in t and uh just outside of Boston. And uh that plant had shut down and so they were looking for work. And again, this is the beginning of the pandemic, like no one's working, right? And so I got some really, really smart guys who knew automation. And uh they were able to help me hook it up. But it was funny because

The machine was was so temperamental, and they are used to like manufacturing. These guys are used to like making something that You plan and plan and plan and then after a year you have this thing up and running. And I was like, guys, like I I just spent like a lot of this is a lot of money for me. I just spent a lot of money. We need this thing to be making masks now. And they're like

Well, this takes some time. And so I was there in that mask lab, that first mask lab for Eighte hours a day. I kid you not. Uh just had uh a kid, so my My wife was a trooper on that.

Decision. And we were just figuring it out, you know, it's like no one is an expert really in sonic welding, which is the kind of the thing that melts the plastic together in the United States. And so I had to learn it. I was like reading manuals and documents to figure out like what frequency I should be tuning this thing to. The logistics of this are mind boggling, right? Like to t that you did this so quickly, but I guess the urgency of the situation just kind of You didn't have time to like Think about this, you just have to get it done. Oh, yeah. Because we didn't have to just make masks.

We had to get it to make masks so that we could submit it to the FDA so that we could actually sell these as surgical masks. Because it's a regulated thing, right? And so I had to get them made and then shipped right away to a lab and then get them tested. And one of these tests guy takes like twelve weeks to do. Yeah. Yeah. It's like they put they put it on rabbits and make sure there's not a reaction. Like I'm not I'm not even kidding. Right.

So so what happened? How did you how did you get it? Approved quickly. We uh so we the the FDA actually did this thing called the emergency use authorization for right. Four masks and they let us in that right away. And then we actually, like I said, we did a lot of things and we got lucky.

And the batch of masks that we had created lined up and we were able to get our five ten K very, very quickly from the FDA. I think they were which I I look, I think the government at the time was was really trying to make things happen and they were pushing things forward. Yeah. Um where do by the way, where did you get the material to make the surgical masks? Oh that's that that is another story. I mean we actually make the material now. Um uh and but the re the journey to making the material was trying to find it. Uh the uh the mask has five pieces, but the most important piece is the melt loan layer, which is the filter layer. And you wanna have a really, really great quality filter layer'cause that's the whole reason people are wearing that mask. Yeah. And at the time

Before the pandemic You would pay probably about I would say ten thousand dollars a ton. In China. for that Melbourne layer.

You would pay about seventeen thousand dollars in the United States for that Melpoin layer. So that kind of gives you the idea. It was selling. for a hundred and twenty thousand dollars a ton in China. Wow. And and it was going up every day. And I I couldn't get it.

And so I told my my COO, I said, look, you need to find this. I I don't care how you do it. This is your only job. Figure it out. And he contacted Anybody had anything to do with masks on LinkedIn. It was like 300 people. And I kid you not, I'm not making this up. The last person he gets a hold of. The guy's like, Well actually

I do have some Melplan. But Uh, we were thinking about making some masks with it. And we were like, look. We will pay.

Double whatever you paid for it. And so we paid a hundred thousand dollars for this actually made in America a melt bloom. How did you finance this whole operation? I mean you had to buy this equipment. You had to and I don't think you were independently wealthy, right? You were just I mean you I know you raised some money from family and friends, but Presumably needed A couple million bucks.

Yeah, actually we so I raised just uh a couple hundred thousand dollars from from friends and family. That was enough to get the the first machine in. And I think when we said when we were showing that we're making these masks. Um is when Like I then I went to the investors and I was like look we we're trying to make masks

Trying to bring mask manufacturing back to the United States. And I think a lot of the folks, it was it was like an altruistic thing. You know, it's like local angels in Austin and and San Francisco that I had known before. And they were like, Yeah, and so we raised I actually raised Three million dollars. In a weekend, I did a the worst PowerPoint presentation of my life. I recorded a voiceover seven minutes long. I sent it to all these people and uh yeah, we closed about three million dollars based on that. Wow.

And and perspective when you raise the money Are you do you are you feeling under pressure to To to to give your investors a return?

So we actually structured the deal as as a loan. For that reason. I uh I I I I named the company Armbrust really after my dad. My my dad passed about five years ago. And he was really the inspiration, to be honest. for for all of this. And I named it

arm rust because I didn't want it. That was the other thing too. Like startups, the thing they don't really tell you is when you raise V C. It's like you have to sell it. So you're building this thing, you put your blood, sweat, and tears into it. And and your job is to if you're successful is you sell it. I mean, it's like, you know, raising a kid and then being like, all right, uh It's somebody else's kid now. I mean it's insane. I mean just emotionally wrecking. And I've seen so many other

you know, founders that I know personally just go through this depressing thing. And so I I purposely named it Armbrust because I did not want to sell it. I did not want to have that exit. Wow. It's incredible. All right, so you are now

You go from being a guy who's doing ad sales and trying sell software to newspapers to being a mask manufacturer in like six weeks. You I mean complete pivot of career. And you're doing something that people really need. Um At that point, you know, April, May, June. of twenty twenty. Was it was it just easy to kind of sell them because governments wanted them, hospitals wanted them, or did you

Did you have to do any marketing? Did you have to go on Amazon? Or was it just like people had heard about you and the demand was so intense that it was just like they were flying off o out the door? Yeah, I think the Wall Street Journal quoted us in saying like it's you were selling masks in a pandemic, it's not that hard. Yeah. Something like that.

That was a in a four hour conversation, he pulled that one out. But no, I mean I mean to be honest, like we I I call us the the accidental consumer brand because we really tried to get traction with hospitals and governments, but those existing supply chains. Like they already exist. The relationships are with three M or or with overseas providers. That's that's kind of it's very entrenched. It was we we still haven't broken into it, to be honest. Yeah. But But the consumers what I love about the consumer mentality is that if you can

Give them this story. And you could say, like, look, like we're providing jobs, we're giving living wages, we're giving health care. And and all of this stuff is made in the United States. It's supply chain proof. What happened before can't happen with this in place. You're not just a customer, you're an investor in the future of this American manufacturing. Like people just love I mean, they bought into that. And guy like I s I opened up. our sales because the the day we had a like a a newspaper a local newspaper story. And Um I was like, you know, wouldn't it be funny?

Yeah. I just started a store and people could buy because you couldn't get masks, as you were saying, from anywhere. Yeah. And I was like, wouldn't it be funny if like people who read the story can just buy our masks? Like that would be that would be funny. I'm gonna go ahead and do that. And we did I think I wanna say in the first week we did like a million dollars in sales. Wait, you just had like you had like an e commerce site? You just put you put on a website. This is not an advertisement, but I swear I I signed up for Shopify at seven AM and we did three hundred and twenty thousand dollars in sales that day. Wow. And this is in your website's Armbrust USA and you just put on'cause you can shop to the website and that was it. That was your store. That was the store. Yeah. Alright.

It's uh it's amazing. I wanna take another quick break, uh we'll be right back and hear the rest of the story of how you how you stood up. a a multi million dollar company in a matter of six weeks stay with us. You're listening to how I built this lab. Hey, welcome back to How I Built This Lab. Guy Raz with Lloyd.

Arm breast of arm breast American. Talking about the amazing story of how he built a mask manufacturing company in like six weeks. During the pandemic, Lloyd Once you uh were m manufacturing masks and the demand, you know, went through the roof and people were ordering from the website, how did you find the the human personnel. People were scared. They didn't want to w work indoors. How did you

find all the people to make the masks and to package them and to send them out. Again, this is one of those things that was just, I think, super lucky. Like we we happen to hire somebody and um it I think it was a referral. Uh from somebody who I think worked at a nail salon. And all the nail salons were closed in Texas at the time. And they were like, Well, hey, I I know these other people, they all work at the nail salon, they're really hard workers and actually

Working in a nail salon, you have this like technical thing where you're trying to, you know paint something that's very precise and the customer will get mad at you if it's not correct. And it's the same thing with masks, because it is, it is actually more of an art than a science, to be honest, like putting this mask together. That's something that was the hardest to learn was how do we get the fold right in the machine? How do you adjust the static electricity, like how do you get the weld points right? And And these folks are really, really adept to it. And so our entire staff uh was almost wholly coming from this uh the the local mail salon industry. Wow.

Yeah. All right, so you are full steam ahead and you've got This crazy demand and of course the summer of twenty twenty Everybody's wearing masks. I mean the demand must have been

Crazy. Your basic argument was Look, these are made in the US. And it means that the supply chain can never be disrupted because we're here in the US. Everything is domestically produced. And by the way, Um

These are really well made masks, we're not cutting corners. But um presumably they were more expensive than imports from From Asia. Well, not at the time. I mean at the time you couldn't really get them for any price. That's right. And in and in fact, uh we I purposely price them uh

at a price that was lower than what was being sold at the time. And all of those customers that came in, I limited it to one person. uh per order because I wanted to get it out there to as many people as possible. For me it was like I just want people to be protected. I don't want somebody who is flipping masks on eBay or Amazon. to take advantage of this situation. Yeah and we haven't changed our price since. In fact during uh Delta and Omicron

Uh, Amazon went really high on their prices, people were complaining, but we we have stayed exactly the same. But it is expensive because it costs more money. To make it here. Yeah. Um Alright, so this is kind of an obvious question, but you know, you have

You're creating a product that is in h in demand and there were several waves of of the coronavirus that presumably created even more demand. But we are once again at in a moment where mask mandates have lifted. uh pretty much everywhere in the United States. fewer people are wearing them.

And I have to assume that that has a huge impact on your business. Yeah, the boom and bust cycle of the mask business is not something that Uh I would recommend to anybody. Um Yeah. We we had to lay off. I mean the last before the last Delta Wave, we had to lay off like seventy people. That's heartbreaking to do.

You know. Um but it's like I was making masks and filling up our Warehouse. And it's like, well I can't keep doing this. It doesn't make sense, right? Um So that is the one thing that

You know, w I think when we can connect with a consumer base with this story over something that they want and need, it makes sense. But the moment that they don't need it anymore, to your point. Like the that connection is broken. And so that's one of the reasons why we we're we're taking our actual same technology and we're we're launching an air filter business. Like a for home H H VAC unit because that's something that everybody needs. And that's where the conversation's going. Like, you know You need a something in your home that actually can filter the air for you at at a quality level.

And and I have to assume that that m most of that industry is also uh sourced from overseas manufacturers. I know 3M does filters for air conditioning systems, but is it's the same thing? Yeah, it's the same thing. I a lot of filters are actually surprising, uh they're formed here in the United States, but the fabric is made overseas. Yeah. Um you know.

I I I wonder about and in in the past I've we've had from time to time manufacturers who are committed to making things in the US. uh because for a variety of reasons. You know, there it provides jobs and and and decent wages. But enormous trade offs when you make something in the US, right? I mean the the the costs are higher, your m profit margins are lower. Um at the same time politicians of all stripes say buy America and make stuff in America. We need to return manufacturing to America. But the incentives are there.

for businesses and corporations to manufacture overseas because it increases their Their profits. So When you hear politicians say, Hey, buy American, let's make stuff in America, let's do it what what what's your Response to that. I know I mean it's just easier said than done. And like I you know, to be honest, I did not realize how far the United States was behind.

I I was I was kinda shielded from it, to be honest. Because we you know, we're we're so great at things like Hollywood and we're so great at uh, you know marketing in the United States, but we don't realize that Just about everything is made overseas now. I mean Everything. So like I'll give you an example. We had we had a single sensor. That that cost about a dollar overseas. That sensor took out my entire line. I couldn't I was done. I was I could not make any masks. And I called our our manufacturing partner actually the manufacturer of the chip in in Taiwan and I was like, look, we need this thing super fast. I was like, I want you I'm buying

Five of them and put them on five different carriers. Because we were down. And I was talking to to them and they were like that's crazy that this censor has you down because there's a twenty four hour market here and you could go

And there's five different companies that make this sensor. Um and you could get it twenty four hours a day. They have that infrastructure in place. in in places like China and Taiwan that we just don't have here anymore. And so it is so hard for us to be actually successful because we do not have the infrastructure to actually make stuff anymore.

Yeah, I mean. He here's here's the thing that I find interesting when people talk about Chinese manufacturing will say, Oh well, of course, you know, you can't compete'cause it's cheaper and But but the reality is that's that That never made sense to me because

Germany and Japan are manufacturing powerhouses and they pay Uh hi. high wages and have very strict standards environmental standards and They are

They produce a lot of stuff. And export a lot of stuff. It's infrastructure guy. We just do not have the infrastructure to do it here. It's like e even though we are sort of like supply chain proof and that's something we talk about a lot.

We're not really because of some of our parts, like our our robotics, like our pneumatics are all Japanese. So what happens if we can't get our Japanese parts? Like they don't make them in the United States. They just don't. Yeah. There are all these things that make it really impossible for the United States. To be successful because we just do not have

The parts for the parts. You know, and we don't have the the knowledge base. We don't have like I was saying earlier, it's like I had to become an expert in sonic welding because they're Just aren't any experts in sonic welding where you could go in China or you could go in Taiwan and like there would be just like there's

people that, you know, are experts in plumbing. They're experts in sonic welding. Like you could call them into your factory and they'd be like, Oh yeah, here's the problem. It just doesn't exist here. Well.

Lloyd, given the fact that the you know the the m the mask business is a boom and bust business Um, in order for your business Chip. to sustain itself and to thrive and and and to succeed. Yeah, in the long term.

Um beyond the air filters. Do you will you have to Diversify further, will you have to create other products? Yeah, I think so. I think it's like when you build some pieces of your your own infrastructure.

It just makes sense to add on. Like if I have you know, we do our own Shipping, right? We do our own packing. We do we have our own warehouse. It's really not trivial, but it's it's a lot easier for me to add on product lines to that. Um than it is to start from scratch.

And so I think you have to do that and you have to diversify in order to Yeah. Yeah, survive. It's amazing. An amazing story about how you built an entire business. in six weeks a manufacturing business in the United States

It's it's it's like a blueprint for how to do it. And um And you did it, um, despite the difficulties. I appreciate that. I I think that like when I look back on it and and hearing you say that, honestly, the thing that hits me is like yeah I was like not thinking through it. I think that like Many successful entrepreneurs just

Don't Think how hard it's gonna be. And you just jump in. And then you're there and you figure it out. And I think that's that's the hallmark of entrepreneurship. Lloyd Armbrust, founder of Armbrust American.

Mask manufacturers are now. Air filter manufacturers. Lloyd, thanks. Thanks so much, guy. Hey, thanks so much for listening to How I Built This Lab.

You can follow I Built This on Apple Podcasts, Amazon Music, or wherever you're listening right now. If you want to follow us on socials, we're at How I Built This on Twitter and Instagram, and I'm at Guy Roz on Twitter and at guy.Roz on Instagram. If you want to contact the team, our email address is hibt at id.wondery.com. This episode was produced by Chris Massini with editing by John Isabella. Our audio engineer was Maggie Luthar. Our music was composed by Ramteen Arablui.

Our production team at How I Built This includes Alex Chung, Carla Esteves, Casey Herman, JC Howard, Liz Metzger, Sam Paulson, and Carrie Thompson. Our intern is Margaret Sarino. Neva Grant is our supervising editor, Beth Donovan is our executive producer. I'm Guy Raz, and you've been listening. How I built this.

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