Do not cheap out on people, especially the ones who bring in the business. If you pay fairly and competitively, you will retain happy employees and build a successful company.
The COVID19 pandemic has disrupted all of our lives. But sometimes disruptions can be times of opportunity. Many people’s livelihoods have been hurt by the pandemic. But some saw this as an opportune time to take their lives in a new direction.
As a part of this series called “How I Was Able To Pivot To A New Exciting Opportunity Because Of The Pandemic”, I had the pleasure of interviewing Ted Karkus.
Ted Karkus is the CEO of ProPhase Labs, Inc. As CEO, he directly manages and oversees corporate strategy, product development, sales and marketing, and R&D. Ted has long focused his career on investing, management consulting and managing emerging growth companies. He started his career on Wall Street working for a variety of investment banks. Ted financed and advised ID Biomedical, a biotech/vaccine company, when it was valued at approximately 25 million dollars and near bankruptcy. He successfully persuaded the board of directors into making difficult but necessary changes to management, including the replacement of the CEO, and helped to redirect their strategic focus. Seven years later, the company was sold to GlaxoSmithKline for more than 1.4 billion dollars. While advising ID Biomedical, he began a similar decade-long engagement with ProPhase Labs. After years of declining revenues, increasing losses and questionable management activities, the Company’s direction was in dire need of change — and the shareholders’ interests in need of protection. Ted initiated a highly risky but successful proxy contest in 2009 that led to his position as CEO. After inheriting a severely declining brand portfolio, he restructured the go to market strategy for the flagship Cold-EEZE brand and grew revenues significantly. The net result: in 2017, ProPhase Labs sold the Cold-EEZE brand for 50 million dollars to Mylan, a multibillion-dollar pharmaceutical company. Ted graduated Tufts University with a BS in Psychology and Magna Cum Laude Honors in 1981 and Columbia University School of Business with an MBA in Finance and Beta Gamma Sigma Honors in 1984.
Thank you so much for doing this with us! Before we start, our readers would love to “get to know you” a bit better. Can you tell us a bit about your childhood backstory?
My father was a psychiatrist who ran a Methadone clinic for heroin addicts. Looking back, I realize he was an entrepreneur. It was his own business, and he helped people for a living. My mother was a learning specialist who had her own business, helping kids with learning disabilities. My mother was also an entrepreneur that had her own business. She liked helping people. I have been subconsciously wired my entire life to be an entrepreneur that helps people.
I went to Tufts University and Columbia Business School where I got an MBA, and I graduated at the top of my class from both schools. While at Columbia, I was very interested in the stock market. I remember charting stocks on graph paper. There was no internet back then. I would invest in companies and would tell my friends what I was investing in and they would invest alongside me. As we got older and became more successful, our collective investments became larger. I also started to get very involved with the management of the companies that I was investing in and that’s how I learned about running and managing companies and all that it takes for small cap development stage companies to be successful.
Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?
One of my favorite life lesson quotes comes from the movie, Field of Dreams featuring Kevin Costner. The quote and the theme that surrounds the movie is “If you build it, they will come.” When I started the process of building my CLIA laboratory business, I wanted to build a lab that had tremendous capacity for COVID testing, keeping in mind that this would attract large customers to do business with us.
Is there a particular book, podcast, or film that made a significant impact on you? Can you share a story or explain why it resonated with you so much?
Early on in my investing career, I read a book called Technical Analysis of Stock Trends by Robert D. Edwards and John McGee. The book was written in the 1940’s and remarkably, 80 years later, it is still relevant. It taught me that when investing in the stock market, psychology plays a significant role and therefore paying attention to how a stock trades is critically important when it comes to finding entry points and exit points in my investment positions.
Let’s now shift to the main part of our discussion. Can you tell our readers about your career experience before the Pandemic began?
The last 40 years, I have been investing in small cap companies. Each of these companies had an exciting product or service and story but shortly after becoming a large investor, I would find out about the major problems in the company. I would spend a lot of time figuring out the source of the problem and coming up with solutions on how to move forward successfully. I have a long history of financing, consulting and turning around small cap companies.
What did you do to pivot as a result of the Pandemic?
Last year when the pandemic hit, I realized that COVID testing was going to be critical to containing the virus. This sparked the idea to start a lab specifically for this type of testing. Once someone tests positive for COVID it is important that they quarantine to keep them away from others, and so this obviously meant that COVID testing would play a huge role in slowing the transmission of this disease. In my opinion, there are two keys to COVID testing, the first is the reliability of the test, and the second is to turnaround the test with fast results. I designed a CLIA lab with the highest quality PCR testing, which gives the most reliable results (as close to 100% as you can get) and also provides those results within 24 hours.
Can you tell us about the specific “Aha moment” that gave you the idea to start this new path?
I met with Spectrum Solutions, a company that has what I believe the best saliva collection device for COVID testing. They received the first FDA EUA in April 2020. I immediately saw tremendous potential for this device, as I felt that people that needed to be tested regularly for COVID would prefer to spit in a tube rather than have a swab stuck uncomfortably way up their nose! I believed that the demand over time for COVID testing would continue to grow. I also felt that the demand for the saliva test would also grow, and so I decided to marry the two and go into the laboratory testing world, validated for both swabs and saliva.
How are things going with this new initiative?
Incredibly well! Prior to the pandemic, our core businesses were manufacturing lozenges and marketing and developing dietary supplements. Those businesses combined generated about 15 million in revenue last year, which was up approximately 40% from the year before. Our new CLIA lab processing business is already running at a run rate that is multiples of that. Our lab provides results within 24-hours and also has enormous capacity to handle large new accounts. This is generating incredible activity and interest.
Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story about that?
When I was 30 years old, I started seeing a therapist several times a week. That experience changed my life; it taught me the importance of thinking for myself and thinking clearly. It is critically important in business that you are a good thinker and that you have confidence in your thoughts. I find that most people in business do not think clearly, which can be a hindrance to successful business transactions. Therapy can do amazing things and for those who have not had that experience, I highly recommend it!
Can you share the most interesting story that happened to you since you started in this new direction?
There was an underprivileged kid that I coached in basketball and stayed in touch with over the years. He now plays college basketball and his team just recently had a conference playoff game in Madison Square Garden. Only friends and family were allowed in and my family and I were invited. However, we needed to get COVID tested immediately, within 24 hours because the game was the next day. I told him that I ran a COVID testing lab, and I was able to get my family tested and about eight of his friends. His friends came over to my lab that night with my family. We were tested, everyone had their results the next day, and we all got to watch our friend that I mentored play. None of us would have been able to attend the game if it was not for the fact that I coincidentally ran a lab for COVID testing.
What are your “5 things I wish someone told me before I started leading my organization” and why. Please share a story or example for each.
- The right management consultants are worth their weight in gold. They taught me the best hiring techniques to manage and collaborate.
- When it comes to marketing, the message is everything. If the message isn’t effective, it won’t generate sales. Once you have that clarity, you need to efficiently purchase media. For our Cold-EEZE brand, this principle led us to purchase remnant TV ads at a deep discount, which fueled the brand’s tremendous success. It ultimately contributed to selling Cold-EEZE for 50 Million dollars.
- Do not cheap out on people, especially the ones who bring in the business. If you pay fairly and competitively, you will retain happy employees and build a successful company.
- The first step in the hiring process is to give candidates an online assessment that provides you with their strengths and weaknesses. It is important that you hire people with strengths that fit the responsibility of the position. Otherwise, employees tend to be mismatched for the position that you hired them for and they do not work out long term. Never make the mistake of hiring someone just because you like him or her.
- Relationships matter. Take investment banking, for example. Our relationship with two high caliber investment banks: Think Equity and Dawson James, which started many months before we ever considered raising capital, made it possible to raise 37.5 million dollars over a long weekend. This accelerated our business growth and took our company to the next level.
So many of us have become anxious from the dramatic jolts of the news cycle. Can you share the strategies that you have used to optimize your mental wellness during this stressful period?
The way that I have managed it quite honestly is to not watch or listen to the news. I also found that working out and getting out of the house everyday helps to clear my mind. I will often conduct many of my business calls while I am at the gym. While I have a home office, I found that my mental health was significantly better just by being in a different space.
You are a person of great influence. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be?
Given my background and the way that I am wired, I am huge believer in helping others. I would start a movement where people can learn to get along and have compassion for others, because the truth of the matter is that we all need each other. Everyone is born with a good heart, but everyone has a different upbringing and different experiences, and so it is critically important to not judge others when you have not lived in their shoes.
Is there a person in the world whom you would love to have lunch with, and why?
George Foreman. He’s not only one of the best boxers of all-time, he’s also a heavyweight consumer products entrepreneur. He epitomizes an entrepreneur that doesn’t give up and has pivoted each time to greater success.