Welcome to the NanoAP podcast. I'm your host, Will Churnland, and I'm excited to have you join me on this journey through the world of nanoap companies. For the past decade, I've talked to thousands of business owners across various industries. It's been an enlightening experience revealing the vast tapestries of entrepreneurship and innovation that thrives beneath the surface of mainstream media coverage. Each week I will interview different leaders of Nanoap publicly traded companies to learn about their history, what they do now, and their future. As a reminder, none of this information is financial advice, and it is all for entertainment purposes only. Let's start this week's episode. Hi everyone, and in this week's episode, I have Sam Rubin, the CEO of Light Path, stock ticker LPT. Light Path is a fully integrated manufacturer and supplier of visible and infrared optical components and subsystems. Thanks for coming on the podcast, Sam.
Absolutely. Thanks for having me, Will.
So, I'd like to start with all guests. Tell me just a little bit about your life before your LinkedIn starts. It looks like you went to college for mechanical engineering in Israel, but please tell me just kind of what got you on the engineering path, a little bit about your life growing up and kind of what got you on the path you are on today.
Yeah, absolutely. It's funny you should mention it. It's like, you know, if something isn't on LinkedIn these days, it doesn't exist, right? That's sort of the assumption there. Yes, I've actually, you know, as you can see on my LinkedIn, I spent my whole career really in optics, but the way I got at it is very interesting because it's actually, I almost like to say, it's in my DNA inherited. My dad worked at Laser Industries, which was the first company to ever make a medical laser. And so I remember growing up as a child hearing from him about all these wonderful things that they do. And I'm a techie, I probably knew by the age of five that I'm going to be an engineer. And so growing up, hearing about all this amazing technology of optics and lasers and what it can do and how the first lasers are shipping, can be used in an operating room, almost left me no choice but to really point my life in the direction of going into optics. And so by the time I went into university to start my undergrad, I already had a few years of sort of optics under my belt just from, you know, the symbiosis of being near my dad and hearing everything he talks about and his work. And at some point he started his own business, and like many other small businesses, at first was working from home. So I literally had an optics company in the room next door to me. So it really pointed my life in that direction, which I'm very, very happy about because what ended up being is I was so immersed in this life that halfway through my undergraduate in electronic engineering, I already was publishing papers and started academic research and started a PhD when I was already in my third year of my undergrad.
And so from there it was a very easy path into starting my own startup which, you know, we're talking about late 90s in Israel. In Israel in the late 90s, starting a startup was like a national sport. All you needed to do is have an idea related to optical communication and you could get funding pretty much. And that was the case. And so on my fourth year of my undergrad when I was already deep into the PhD, my advisor and I started a startup company called Exite, which was commercializing fast switching optical lasers. So lasers that could change their wavelength really quickly. And the idea was back in the '90s everyone felt that, you know, the networks will not be able to handle the amount of data that is needed. Optical switching is the key for the future. Voltages based on silicon are just going to not handle the load. So you have to do switching in the optical level. You know, going very technical. It actually happened but it happened 20 years later. So what we were working on 20 years ago is happening now pretty much. And so that startup, you know, changed direction like many startups do. Ended up actually still selling it off to a telecom company. So was able to do a bit of money and then moved to the US and did my MBA and from there already LinkedIn started. So probably, you know, you can track the rest of my life just by looking at the profile.
No, I love the idea that you're the kid that all the people who are just graduating with their undergrads complain about where they go, 'This is an entry-level job. How can they require six years of experience?' But you already had that six years of experience coming out of the undergrad and then moving from that to the often theme in technology of your idea wasn't wrong, just the timing was wrong. Is that pretty much?
Yeah. I mean, it's great. You know, it's funny, I get notifications about papers that I published if they get referenced and suddenly some paper from 24 years ago is getting referenced a lot now and it's really because that's a point where I realized that, you know, what we were working on back then is now being commercialized but it's just satisfying to see it happen. There's a great coffee table book of companies that failed in the late 90s, early 2000s during the dot-com bubble and every single one of them is some sort of unicorn today where it's food delivery, on-demand cabs called through the internet and all these things where everyone was right but they were all wrong at the same time.
Yeah, absolutely. Well, you know, you can probably spend a whole podcast just talking about Apple making a living from taking old ideas and reviving them and exactly, you know, getting the credit for it. But yeah, and so, okay, so that the idea of you coming up with Xite makes sense where it's in your blood, photons and different types of lenses and such. But then I'm scrolling through and then you started working with like a branding agency. How did you make that switch?
Yeah. So, you know, I went to business school at NYU Stern, which is everyone that goes there goes either into investment banking or consulting. And so, I came from technology manufacturing, you know, but there's something about the environment around you. I don't want to call it peer pressure, but when you go to school with, you know, 250 others that are all talking about investment banking and consulting and all the people that come to interview people, you know, no one comes to business school to Stern to interview someone that can be a CEO of an optics company. So, you know, the interviews are all and the opportunities for internships and everything all around consulting and banking. Banking for me was out of the question. I'm just not that type of guy. Consulting was something I felt like I wanted to try, but marketing specifically is something I always felt like, you know, is really the essence of everything we do. I mean, when you talk about starting a startup, you know, putting the technical idea aside and all of that, half of what you're doing is marketing. You're out in front of venture capitals, you're out in front of investors, you're trying to raise money. That's marketing all day long. And so, I took an opportunity of going to work with a brand consulting company, which was incredible to be honest. I learned some incredible things there. And you know I also learned that it's really not for me. I also, you know, sometimes that's also important. I had to explore that, check that box, see, okay, you know, I tried to go the mainstream, that's not me. I really need to go back into the manufacturing world, the technology world. I need to make product, not just powerpoints.
But there was something I did learn very interesting in that company. And Eric, the founder and owner of the company, is a brilliant branding person who wrote some of the best books out there on it. But I learned from him something very interesting and that is the perception part. So we worked with a company with O'Neill that is a surfing company and you know when you work with O'Neill you see they have a very strong brand perception of hardcore surfers. In fact when we went to visit their headquarters every day at noon everyone drops everything and goes out surfing. That's how hardcore they are. But at the end of the day, most of their revenue comes from school bags, t-shirts, sunglasses, sandals, everything else. You know, that's where the real money comes from. But everyone that buys that buys that because, you know, of that sort of secondary effect of feeling like a professional surfer. So, you know, sure, you can go out to the store and you can buy a dozen t-shirts from other companies that might have a surfing board printed on them or something like that or a wave for thing. But the feeling you get wearing a t-shirt that is O'Neill, which is definitely considered the most hardcore, you know, professional surfer, you get a secondary effect there, right? And learning that and understanding how much the perception is really the key to it was a key because that goes into many other things that you do every day in marketing.
No, I can imagine that just rippling through from people who want to wear the sneakers the pros wear in basketball to even something like a luxury item like an iPhone where I have the same iPhone that Jay-Z and other billionaires have. We're all pros. We're all the same kind of thing. You can kind of... Yeah. Halo effect.
Yeah. I had a boss that used to call it's a Corvette in the corner. You go into a showroom and there's a Corvette in the corner. You're not going to buy the Corvette. You're going to buy the, you know, mid-level car that you wanted and so on. But just having the presence of Corvette and knowing that it's made in the same plant and it's the same company, gives you feelings that you're getting a bit more than just buying a mid-level car. And so that Corvette in the corner thing, which I learned from, you know, the founder of Ford Labs, Alex Cable, is a really powerful expression.
100%. No, I 100% agree with you. And it also reminds me of the idea of like first time founders are worried more about the product and then the second time founders are thinking more about the distribution at the beginning. You kind of got to touch on both.
I heard that expression not long ago and I started using it a lot because I found often times with engineers you have to stop them. It's like you don't have to keep adding features. You don't have to have the best product. You know, save something for Gen 2, Gen 3, Gen 4. Apple does that incredibly, right? By the time they release a new iPhone, they already have in the labs the next two generations that they're working on that have already new features. They're not holding back that iPhone and waiting to add that in. On the contrary, they want to already know that that one is going to be obsolete soon because they want you to already upgrade to the next version after that. So that's definitely a difference between first generation founders that think that it's all about the features and second generations that understand that you just need to get out there start getting the revenue and then yeah keep adding features definitely you want to keep the differentiators there.
So let's fast forward about 15 years from there. Yeah. All right. You're working at Thor Labs for a while as a leading designer and manufacturer of kind of photonic equipment. Then you go from there to the job as CEO of Light Path literally as the pandemic starts. Tell me about just kind of were you interviewing through January and February and you're kind of hearing about COVID but not worrying too much about it and kind of explain that like that six week span of your life to me.
Oh my god. You know, the funniest thing is while I was interviewing for Light Path, my wife, we were living in the US in Virginia, my wife went to Thailand for a week to visit a girlfriend of hers. And on the way back, she's saying to me, 'Maybe I'll wear a mask. I keep hearing these rumors about this funny virus or something coming out of China, and just in case, I'll wear a mask.' And she tells me, 'I flew all the way back from Thailand to the US. I was the only person on the flight wearing a mask. I felt so weird.' And you know, three weeks later, a mask become like a mandatory fashionable item, right? So yeah, definitely I interviewed while that was starting to unfold. Of course, we all thought that has nothing to do with us, right? We all remember Mike Pence standing out there saying, you know, oh, we contained COVID in the US. We had one plane come in with thing and it's under control and that's it, right? And I felt that it's under control. I signed my contract. I announced I'm starting. We were living in Virginia. The company is headquartered in Florida.
My plan was to stay in Virginia until the end of the school year and then move the family, you know, fly back and forth all the time. I flew down here, you know, on a Monday, spend five days here, four days here, said to everyone on the Friday, 'Okay, I'm leaving back to Virginia for the weekend. I'll see you on Monday.' and then I couldn't see them for another four months. So my work as a CEO included four days on site meeting like 10 people out of 350 and then four months we're meeting no one in person and then after that even when I could come down to Florida because we just moved in the middle of COVID I couldn't visit my factory in Latvia for two years and my factory in China for another year and so it was quite hell of an introduction you know but apparently you can achieve quite a bit without physically going there.
So that's what I was going to ask real quick is that were there certain redundancies and different things that you got to build out since you had all these constraints in the beginning that now are kind of paying dividends because you go well now I don't have to go to Latvia every month because I figured it out kind of thing.
Yeah. So one thing we made sure very early on is because we were worried like everyone of shutdowns or facility shutdowns and so we developed a redundancy to make sure there isn't any process that is not done in at least two facilities. So we don't depend on one facility for one process only. The only exception is there's one process done only in Orlando but there also competitors we can use for that process. So if needed we have some external backup for that but that definitely worked out well even though we never had to go through a shutdown in the formal way of an infection and all of that we did have periods where for example in Latvia 60% of the factory was out in isolation or exposed right and so on and we had a period even in China where you know people had to sleep in the factory because they were locked down for two weeks. But it did work out well. It helped also now with geopolitics and us deemphasizing our China operation. When I came on board, the company was very focused on manufacturing in China. That is something that I was changing from day one. Even before the pandemic sort of hit in our face, it was already sort of the writing on the walls that we can't just depend on China on everything. And so we've been deemphasizing the China operation really. Everything we do in China, have been doing in China, we can do elsewhere. And having another low-cost manufacturing center in Latvia really helps a lot because the cost of labor in Latvia is not that much higher than China necessarily. And so we're able to transition some operations and some activities over there pretty well.
So I touched on it a little bit, but I would love for you just to give a proper introduction to Light Path and what you all do before I start getting into some kind of deeper questions about Light Path.
Yeah. So, if you would ask me, four years ago, LightPath was an optical component company making lenses and it had some very unique technologies for making lenses, precision molding like injection molding of plastic, some diamond turning and so on. But when I came on board four years ago, it was obvious that that is being commoditized and that remaining as a component company in optical components is going to be just a race to the bottom. And so we worked very hard on our strategy and identified that our unique capabilities that allowed us for years to differentiate ourselves on the component level can also be leveraged to make much more than components. And so we've been transitioning into a system company.
We started by making assemblies and saying, 'Okay, instead of buying a few individual components and assembling, let us design the assembly for you and we'll put it together.' Think of a camera lens. You buy a, you know, back when we had an SLR camera and you would buy a lens to fit on your Nikon camera, you know, we would make that lens assembly. So that was the first step. That's already 20% of the business and so on. The next step after that through acquisitions and through more of an investment in R&D was to go and make the camera itself. And now we've been transitioning into a camera solution provider. And so you can look at it in terms of what are we selling. Four years ago we were selling glass. We were selling lenses that would cost maybe $2 a lens or maybe $50 a lens, maybe $100 for a really high-end lens. We went into making assemblies. The assemblies would sell anywhere from $100 to say $800.
Now, we're making cameras that sell anywhere from $1,000 to $30,000. So, we've been climbing up the food chain by really leveraging the unique technologies that we have on the materials, on the glass, on the lenses, on optical design, and adding more unique capabilities for acquisitions. We acquired a year ago Visimid, which brought in some video analytics capabilities and video engine capabilities. That allowed us actually this week to announce a really cool new product that integrates AI into the camera video pipeline on the camera level. You can now deploy AI. So you don't need to even have a separate computer. You don't need to worry about, you know, okay, which GPU do I choose? What computer do I get? Raspberry Pi do I get a high-end computer where thing you can if you have a module that's already trained and ready you can just download it directly into the camera and seamlessly it will be already in the video pipeline. So it's differentiators like that that allow us to go from the $20 lens to the $10,000 camera.
