Can Blockchain Save ‘Made in the USA’? – OZY

As COVID-19 ravaged New York last spring, Krissy Mashinsky wanted to do her part to reinvigorate the economy by producing a casual clothing collection locally. But after finding a lack of local manufacturers, at a time when international supply chains were gasping, she started to think bigger.

The result is a partnership between the former top Urban Outfitters executive and her tech entrepreneur husband, Alex: usastrong.io, a digital marketplace for American-made goods verified by blockchain. Their audacious aim is to take on behemoths like Amazon, eBay and Etsy, where foreign goods sit alongside made-in-America merchandise, to ignite a spark for sustainable domestic manufacturers.

Historically, with the possible exception of cars, Americans have approached made-in-America shopping with a large degree of ennui. Same goes for buying with the environment in mind. But that is changing. Working at Urban Outfitters for 17 years, Krissy had a window into the popular fashion brand’s target demographic. “Now it matters,” Krissy says. “Gen Z and millennials want to know how it was made.”

The Mashinskys believe the sustainability boom, plus stories of “local heroes” like manufacturers, main-street retailers and home-based businesses, will help drive usastrong.

Since the pandemic hit, consumers have started to show a greater preference for shopping closer to home, according to Accenture. Every week Krissy hosts a “Friday Local” livestream selling show featuring businesses on the usastrong platform, including the company’s own usastrong casual wear. Usastrong takes 5-6 percent of sales from brands, a cut similar to Etsy and below Amazon, which averages 13 percent.

The platform’s product list is eclectic, from clothing to honey. Next, the Mashinskys are eyeing wine.

Twenty businesses across 17 states are currently on board, and the Mashinskys are hearing from more every day. The plan is to add 12,000 businesses by the end of 2021. “It has to be organic,” says Alex, CEO of the cryptocurrency company Celsius Network. “We can’t grow it too fast. This is not a race.”

The blockchain piece is critical. Made in America is like the Wild West. Anyone can slap a “Made in the USA” label on a ceramic mug, a fleece hoodie or a fragrant candle. Abetting this confusion is that various components of a product could be from different countries. A shirt might have its buttons made in China, fabric sourced from Italy, pockets made in Turkey and sleeves manufactured in Tanzania, with the whole garment put together in the U.S. Is that made in America?

Usastrong created a process to aid verification. Sellers provide proof that they are local. Brands are encouraged to have a personified owner — no hiding behind corporate veils where ownership can be obscured. Goods must have a limited number of components in order to be better tracked by the blockchain, the verifiable digital ledger underlying cryptocurrencies.

In addition to FaceTiming owners and verifying addresses, usastrong has established ambassadors in each state who visit business sites to verify they are local. The system requires cooperation from participants. Usastrong will, by definition, attract manufacturers and other sellers who value the made-in-America certification. Alex Mashinksy says it will soon license its blockchain technology to other businesses.

The platform’s product list is eclectic, from clothing to honey. Next, the Mashinskys are eyeing wine. “Part of why Amazon bought Whole Foods was for the liquor licenses,” Krissy says. “It’s the next area of disruption.”

Not everyone is excited about local and sustainable. The great green movement of the aughts didn’t have a huge impact because retailers pretty much ignored sustainability and supply chain issues, says Gary Wassner, CEO of the fashion financing company Hilldun. “I don’t think it’s a selling point yet,” Wassner says. “Consumers are ruled by their pocketbook. And right now, we’re focused on other things.” But Wassner did acknowledge that sustainability will be “the norm” for emerging brands.

MaryAnn Wheaton, a former fashion executive who was Krissy Mashinsky’s boss, says for usastrong to work, “They’re really going to have to build a brand around it. Because you still have the girls who look at a handbag and you say: ‘It’s $3,000! And it’s made in China.’ And they say: ‘But don’t ya just love it?’”

There’s another risk in the partnership itself. Discussions about EBITDA are known murderers of pillow talk.

But after years of successfully nurturing a large blended family — Krissy and Alex have six kids between them, aged 5 to 21 — Krissy, 50, and Alex, 55, decided that maybe they can blend their formidable business experience.

“In 20 minutes, we came up with the idea,” says Alex as they sit side by side on a Zoom call. Square-shouldered and square jawed, he wears a casual black T-shirt that says “Unbank Yourself.” Her polished blond hair falls carefully over her creamy, high-neck, Victorian-style blouse with a black pussy bow.

Alex is accustomed to moving through uncertainty, as a serial entrepreneur and having emigrated as a child from his birthplace, Ukraine, to Israel, where he attended the University of Tel Aviv, arriving in the United States at age 22. Among the companies he founded was an early ride-share business resembling Uber, called GroundLink.

Krissy was raised in Connecticut and New York, where she attended the Fashion Institute of Technology and Vassar College. She’s spent her professional life in the corporate world. When she left last year, she was president of URBN Wholesale, comprising Urban Outfitters, Anthropologie and Free People.

Krissy’s drive was evident early on, according to MaryAnn Wheaton who was Krissy’s boss when Wheaton was managing agent for the U.S. businesses of French fashion designer Christian Lacroix. “She was aggressive, she wasn’t cozying up to my assistant,” says Wheaton. “She wasn’t afraid. She didn’t care if people didn’t like her. She was going to get the job done.”

Krissy, Wheaton recalls, had a razor-sharp focus. “There was no running to the Chanel sale at Bergdorf at lunchtime, like the other girls. And she had a high energy level that was contagious. I became dependent on her. … If Krissy saw a hole, she was coming through it.”

And in the startup game, that’s what you need.