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COVID-19 has really defined my year and my company’s year

April 8, 2020

COVID-19 has really defined my year and my company’s year

by Joseph Heller, CEO

More information about our masks can be found at thestudio.com/sos

Our View On Wearing Masks

The/Studio believes that every US citizen should be wearing masks. Not masks that you make yourself, or masks that were made by a fashion brand out of cloth. But real masks that are lab tested to prevent particles the size of a virus from reaching your mouth and nose. Previously, many government agencies in the US and Europe said that the average person does not need to wear masks — but it wasn’t because they were ineffective at protection. Instead, the fear was that existing stockpiles would be depleted by public usage and panic — much like toilet paper. Now that supply has been secured for essential services, the federal government has changed its course, with President Trump and the Center for Disease Control (CDC) recommending everyday usage of face masks.

Basic logic of course dictates that masks can protect people from contracting COVID, and should be worn by everyone. If we know that COVID is contracted person to person through air particles and can be contracted through even casual interaction with others, and we know that medical staff use face masks as a key part of COVID prevention, then why shouldn’t you protect yourself with face masks?

While our team was on vacation for Chinese New Year, they quickly became accustomed to wearing masks on their own volition. It became a government-mandate that our team and factory partners workers had to wear masks in order to return back to to work.

It wasn’t just us. According to the Economist even gig workers in China are being required to wear masks and take extreme precautions to protect themselves:

“Zhang Shuai, a 24-year-old from the central city of Zhengzhou who delivers for Meituan in Shanghai, has to wear a mask while working.The firm takes his temperature twice a day, notes it on a card pinned to his jacket and uploads it to the app for users to see. He undergoes many more checks when he picks up orders and carries them into residential compounds, most of which are now open again to outsiders.”

The/Studio’s take on this is that government agencies in Europe and the US were horrifically unprepared for COVID19, and did not create a supply chain that was even capable of protecting medical staff. As a result of their inability to have the proper medical supplies for even essential staff, they fabricated a convenient story that not everyone needed to wear masks. In other words, they admitted that masks reduce the possibility of contracting COVID-19, but that because of their incompetence, you should not protect yourself. The time to discuss this shortfalling is later.

The real question is no longer if you should wear masks, but how you can acquire enough for yourself, your family and your team. As you read above, we’ve worried about this weeks before the federal government.

Our view is that everyone from medical professionals to first responders, people that work with the public professionally to everyday citizens, should have access to good quality lab tested masks for personal protection. The good news? There are enough masks in the world. The bad news? The supply chain needs to do a drastically better job of weeding out the frauds and getting masks to where they are needed more efficiently.

Governments seem to be recognizing this reality. A few days before the federal government reversed its position on mask wearing, the state of California also released guidance that everyone should wear masks. On April 5th the Pentagon came out requiring that all soldiers wear face masks during all routine procedures.

The good news? There are enough masks in the world. The bad news? The supply chain needs to do a drastically better job of weeding out the frauds and getting masks to where they are needed more efficiently.

Our Introduction To COVID and Masks — and Why Us?

What makes The/Studio an authority here as opposed to other providers? For one, COVID-19 has really defined our company’s year.

Let me start at the beginning, though. I previously lived in China for 10 years, where I started a traditional trading company, and eventually developed a hybrid software and trading company whose goal was to digitize the supply chain. Many of my original employees are still with me today — cumulatively, it’s almost a century of supply chain experience packed into a versatile, young company. That company — The/Studio — ended up raising an $11Mn series A in Silicon Valley with a prestigious venture firm, Ignition Partners. During a time when Silicon Valley focused mostly on “sexy” robotic startups and apps, we caught their attention with the vast potential of the supply chain.

Our company still has deep roots in Southern China as we continue to unravel the mysteries of how the world makes things — a full-fledged team of 40 great people. I was there as recently as early January. Shortly after I returned, we’ve been navigating first trying to understand COVID-19, keeping our team safe and then figuring out how to get our supply chain back online. We even had to ship masks to our staff and factories so that their workers could be protected and get back to work.

Throughout this entire experience, we knew that this was going to have a devastating impact on global supply chains, but we never anticipated that it’d get so “real” for our offices outside of China — that our teams would be working from home in San Francisco, Romania and the Philippines in government-mandated quarantine. As soon as we got our supply chain back to 100% health in China, we were slammed with the demand side of our business being eviscerated.

The Start Of Our Masks Sourcing Journey

I’m known in my network as being an expert in China manufacturing and sourcing, and in the past 10 days I started to receive inquiries from friends and acquaintances, asking if I could help them source masks in China. Generally people aren’t that interested in sourcing and manufacturing — now all of a sudden doctors, lawyers, VCs were all interested in how to work with China.

After receiving a few phone calls from friends about the desperate need for medical workers to get masks and other medical equipment, we decided that we would start looking earnestly into this and see if we could help out. We sent some emails to our customers asking what sort of PPE products they were interested in, and the demand was overwhelming.

We were inundated with requests. Everything from a COVID testing facility that did not have enough protective gear for their team, to a man with severe immunodeficiency disorder that was scared that his caretakers would infect him and cause his death.

Our team sprung into action working around the clock to try and source factories to fulfill the demand. Let me preface what I’m about to say with this: there are many things that I admire about Chinese entrepreneurs. They are incredibly hard working, they are bold, humble, inquisitive, creative and extremely innovative. However, even Chinese will tell you that the most disturbing thing about Chinese capitalism is that far too many entrepreneurs are willing to harm society for their own financial gain (I’d like to caveat that with my belief that the Chinese government and legitimate Chinese corporations don’t like this either, because it ruins their reputation and it floods the market with inferior products at a cheaper price). During the recent COVID-19 crisis in China there were rampant reports of Chinese entrepreneurs finding discarded surgical masks, and reselling them. We went into this mission eyes wide open knowing that the frauds and scammers would be out in force.

Once I had masks on my mind, I started to realize that so many of my factory connections in China on LinkedIn and WeChat were all of a sudden selling masks. One guy pinged me on WeChat and said “Hi Joseph. Do you remember me? My factory makes jewelry in Zhejiang. Do you need masks”

Another message from a salesman that manufactures clothing wrote “I heard your country has a serious problem with the virus now. I can sell you masks in bulk.”

As our team started to source factories, it became more apparent that we were entering the wild west of manufacturing. A factory that manufacturers custom lanyards for us told us that he recently invested in a mask factory! When we asked him if we could visit the factory, he became irate and said that they are too busy to see us and that we should just take their word for it — that we were lucky they were willing to even give us capacity and if we weren’t grateful, then that was our problem.

We found another factory in our network that told us that we couldn’t see their factory until we paid a down payment of $100,000 towards a minimum order of $200,000.

This was just the beginning.

Getting Deeper In The Mask Supply Chain

After dealing with this for 48 hours, we had had enough. We didn’t want any part of this brewing circus. Then we looked at our emails again, and continued to see the emails pouring in with desperate calls for people to get masks.

We felt an obligation to continue what we started. Myself and a core team spent the entire weekend trying to figure out the supply chain for sourcing masks and trying to understand the complicated nuances of the differences between N95 masks, KN95, surgical masks, medical masks, non-medical masks. It felt like medical education in 48 hours (please note, we are not doctors).

But we continued to realize that with every factory we were talking to, nothing was quite adding up. We weren’t sure exactly what the scheme was, but we knew things were off. Every company that we contacted had FDA registered documents, so on the surface it seemed like things were OK. But we noticed that all of them were literally registered in the past few weeks! Furthermore, from the factories’ correspondence, it just didn’t add up that these small little factories were sophisticated enough to make masks that could potentially save people’s lives, especially when their speciality was something else entirely like lanyards.

Our fear — grounded in real experience in the past — was that we would transfer the money to them and they would run away. In fact, we were starting to hear stories that this is what was happening. The entire weekend I was gritting my teeth and cursing the fact that I ever decided to get involved with this. I was sure that we were either not going to find a factory that we could trust or that we would pull the trigger on a factory that would run away with our money and our customers’ hopes.

We started to run across the obvious fraud which was easy to spot. Factories were providing FDA numbers that we’d seen from other factories — and when you checked the numbers against the FDA database, it said the company didn’t exist!

It wasn’t this easy for everyone. Some of the factories’ numbers did show up in the FDA database, and they knew it, proudly presenting us with their FDA registration as if it was all we needed. These started streaming in through slack from my team and also from my WeChat where I was communicating with factories directly. I found it odd that all of these factories were registered with the FDA. It shouldn’t have been that easy — and again, many of these were very small and unsophisticated factories specializing in something else entirely. And even these “valid” ones were almost all recently registered with the FDA almost always in March, and most within the last 15 days.

Another thing that we learned was that all of the masks available were actually not N95, but “KN95.” Any of the factories that said they had the highly-demanded “N95” available were easy to spot as totally fraudulent and either not real or not being able to truly produce N95. Why? We later found out that only three manufacturers in China control almost all of the N95 masks manufacturing, and most of the N95 masks supply available in China and even globally are fraudulent, unless they come from very specific channels.

What was the difference, anyway?

N95 is the FDA approved standard for masks that are tested to block out 95% of particles over .3 microns. KN95 does the exact same thing but is the Chinese standard. As we dug into this further, we realized that there is simply not enough global capacity in the world for N95s based on the current requirement. According to US Secretary of Health and Human Services, Alex Azar, the US only has about 1% of the 3.5 billion masks it needs to combat a serious outbreak. And if the US relies on US-manufactured masks only, then the shortage would be even more severe than it already is — and significantly more of our healthcare and first responder heroes will fall victim to COVID-19 because of the shortfall.

The FDA has generally been extremely specific that only N95s should be used by healthcare workers in the US. The problem is that there is a lot more KN95 production capacity than there is N95 production capacity. The FDA has played a bit of politics, in our opinion, by not officially accepting the KN95 standard when the mask does the exact same thing as the N95. Both the CDC and 3M (the largest manufacturer of N95 masks in the US) have explicitly stated that they are fundamentally the same.

In fact, some hospitals in the US will not buy KN95 because they are not officially sanctioned by the FDA, and are therefore afraid of lawsuits. We know firsthand that some hospitals would prefer that their staff not have any masks, rather than give their staff KN95, because they are not officially sanctioned by the FDA. It’s also possible that hospitals and the FDA are afraid of fake KN95 getting into the supply chain — but the risks of fake N95 and KN95 are equal. If a company can vet the sources of KN95 masks, then the risk is mitigated.

Like most things in the world right now, the situation is extremely fluid and now even the CDC seems to be backing off their guidance that KN95’s can’t be a safe replacement for N95. It’s high time they do so.

The Epiphany

Then, at 4AM on Monday after another sleepless night working with my team in China, I finally realized what the fraud was. We’d worried that it’d be that the factories would run away with the money. But I realized that it was the factories showing us their FDA registration. That FDA registration was meaningless. Why would a factory that is selling KN95 show us an FDA registration, when the FDA does not recognize KN95s?

Through a bit of digging, I found out that any company can become FDA registered. It’s the same thing as patent pending. It just means that they registered with an agent, but it did not confirm that the FDA had any oversight on their product. In fact, it’s mentioned on the FDA website!

All of these factories knew that the world was in desperate need of masks and that they could create an illusion of legitimacy for themselves by sending a document that said “FDA registered” — and that they would gain even more credibility if you could check the FDA’s website and see their company was registered on the site. There were even two cases where in initial conversations with the factory we could not find their company registered with the FDA, and then all of a sudden it would magically appear! We realized it’s because they had literally just applied within the last 72 hours.

I reasoned that if the factory was a legitimate company and was selling legitimate KN95, then they should have test reports that validate that their product conforms to the Chinese standards for the KN95, with the most important test being that the product blocks out 95% of airborne particles. In essence, our realization was that the FDA was not the right agency to ask. We needed in-country certification for the KN95 mask specifically.

I had my team double back and talk to every factory that we thought potentially could be legitimate and asked them to show us their documentation that proved they were compliant with Chinese standards for the KN95. This is when the factories’ stories all started to fall apart. None of them — except for one — could produce the proper documents.

We had found our litmus test.

Some factories either didn’t produce documents or they produced fraudulent documents such as the one below. In this case the factory didn’t even properly photoshop their fake documents correctly, with the photoshopped stamp being placed below the actual printed text!

Additionally, in China, you have to register as a specific type of factory to legally produce that product. So I also had our team do a background check on some of these factories. Most of them were registered as toy factories, or printing factories, and weren’t even registered as masks factories or factories that would reasonably understand how to manufacture this type of product.

All this was a swamp of fraud that would be difficult to navigate if you didn’t have the experience our team had. The FDA registration, for instance, was an easy way to fool unsuspecting customers into complacency. Furthermore, if you haven’t sourced masks before you wouldn’t even know the right certificates and tests to ask for.

It finally dawned on me that probably hundreds of millions of masks were going to hit the US and European markets with literally no tests being done. It was a nightmare scenario. I told everyone I knew about this and some people acted responsibly and either decided not to pursue masks or decided to take a step back to do more intense due diligence.

However, I was disappointed to see that many people basically ignored what I said, and continued to try to import these masks. It’s not just Chinese businessmen that were being greedy — the whole world was being greedy, including US-based importers. I suspect people are going to die because they are walking around with false confidence that their masks will protect them, when in reality they won’t.

A New Partnership & Supply Chain

There are many amazing factories in China. The problem is that it’s oftentimes hard to validate which ones are amazing — just like anywhere else in the world.

We did end up finding one factory that checked out. They have all of the documentation that proves that their product was tested to comply with Chinese KN95 standards and that it blocks out 95% of particles. Functionally, it’s the same thing as the American FDA N95. Furthermore, they have all of the documentation that proves that they are certified by the Chinese government to legally make medical (to be clear our KN95 masks are not medical grade masks, because although they block out 95% of particles over .3 microns, they do not have waterproof capabilities, which are necessary to be considered a medical masks. However, even doctors have confirmed with us, this is not necessary unless a patient is actually being operated on) equipment, and have had it before the current crisis.

We redacted the name of our supplier below to maintain the confidentiality of our supply chain, but here is a brief overview of how we validated the integrity of this supplier. Our view is that most masks being sent to the US and Europe are not going through this thorough but necessary due diligence.

This is the business license of the factory group that we chose to work with.

Through the Chinese government’s website, we were able to validate everything from whether the company had a strong credit score to the amount of registered capital they had — and that they were registered to manufacture medical grade equipment and products.

This is one of the many lab reports submitted to us. This particular lab report confirms that this factory’s masks can protect the wearer from 95% or more of particles under .3 microns. In fact, this masks could protect the wearer from over 99% of particles.

We also validated that the lab that did the test was a nationally accredited lab in China — see above.

We also sent an email to the lab and confirmed that the lab had records of performing the test and that the document sent by the factory was legitimate.

This wasn’t the end of our due diligence. Having worked in manufacturing for years, we know all of the tricks. One trick for factories is to make a perfect sample at first and then mass produce a lower quality product. This is one of the big problems, especially with anything related to health — so we have dedicated quality control staff randomly pulling masks off the production line and sending them to our testing partners to confirm that the product actually continues to be mass produced in compliance with KN95 standards.

Working with The/Studio means certification and ongoing trust.

Everyone thinks they know how to source and import from China, but there are thousands of opportunists that have absolutely no idea what they are doing, or worse don’t care if they are harming people. What you need, especially during these times, is dedicated, knowledgeable and ethical teams literally on the ground. That’s us.

Our manager at the factory doing due diligence and also donning our new masks!

Our position is that the FDA and US government are being far too rigid given the desperate need for masks. The reality is that there are simply not enough masks in the world to meet demand, especially N95s.

This is especially the case when both the White House and the CDC are advising all Americans to wear masks. And it’s been proven that everyone wearing masks does actually reduce the spread of viruses.

The reality before The/Studio stepped in was that large government organizations, massive hospitals and giant corporations are going to be the ones prioritized to buy N95s, leaving millions out in the open without protection. There is so much more KN95 capacity in the world, but because of politics, these masks won’t get to medical staff, first responders, and even gig workers that have to work with the public.

Nobody is safely providing masks to the ambulance company in Delaware, or the battered women’s shelter in North Carolina, or the assisted living homes across America that have all reached out to us.

Everyone will have to go through informal channels to get KN95 or fake N95s and these products are not being properly tested.

That’s not the reality our company wanted. We’re changing it because we can and we feel we owe it to our friends, families and fellow citizens.

Our company hopes to offer a third alternative to scarce N95s and uncertifiable KN95s: real KN95s, properly tested and certified by staff we’ve known and trusted for years.

The good news is that there are a lot of companies that are acting incredibly responsibly. Globalization is an easy and understandable target in today’s political environment, even before all this. However, the reality is that Chinese entrepreneurs are the best-situated entrepreneurs in the world to make masks now. We’d be foolish not to find the best, the most honest, and work with them.

The factory that we are working with now? They’re increasing their capacity from 500,000 to 1,000,000 masks per day, and they are doing it ethically with the proper testing standards because we can guarantee them the proper channels. This pairs wonderfully with the amount of American business people that are rising to the occasion and making sure their staff are protected by buying masks at their own expense.

You can buy these masks at our site to protect your team or donate to a local hospital or charity by going to our site thestudio.com/sos. If you’ve read thus far, you’ll realize that as a company we’re selling these at as close-to-cost as possible while offering speedy air shipping and the above-mentioned quality testing. No one else is doing that.

I want this to be a message of hope — so I want to leave you with some of our customers’ own words for how they’re using us:

“We have 4500 semi truck drivers delivering supplies across the country – we intend to distribute these as quickly as possible to them.”

“We need a quote on 2500 KN95 masks for our security guards.”

“I run a small ambulance service in Vermont, and we are very grateful that you and your team have taken this on and are prioritizing healthcare and first responders.”

“KN95 masks and hand sanitizer. We are Citrus growers and we are desperately seeking these materials.”

“I am interested in masks. I am working with a crisis shelter downtown Victoria to provide meals to the homeless during this time.”

“I am a nearly 20 year ventilator dependent, bedridden and confined to my home patient with duchenne muscular dystrophy and contracting covid19 is a death sentence. I want to purchase k95 facemasks for my healthcare workers and first responders on the alger county ambulance when I need them.”

This is a lifechanging crisis. So much damage has been done. But I’m hoping it can do at least one good thing — make us forget “Chinese” or “American,” “English” or “Italian” and other country labels, just once. I’ve seen it with my own eyes in the lifesaving equipment that our communities need today being made in China, consolidated in our office and shipped out to American communities via a supply chain my team put together in literally ten days.

Together, I know we can beat this.

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