Blockchain in Apparel with Janett Liriano, CEO of LOOMIA

Hey, and welcome to another episode of Fashion Made. Today I'm sitting and speaking with Janet Leriano. Janet is the CEO of Lumiere Technologies and is gonna really be schooling me on how blockchain is used in the fashion apparel industry. Janet, As I explained to you, I really have no idea about blockchain and I'm really hopeful that some of the listeners here are in the same boat as me. So really simply, could we just start with what is blockchain?

Sure. Blockchain is a really big catch-all term for a few different things. So I'll kind of go into them and thanks for having me on. There's the blockchain core technology, there's cryptocurrencies, things like Bitcoin and Ether for Ethereum, and I'll talk about how cryptocurrencies interact with blockchains. And then within that, there's a lot of different asset classes of tokenizing real-world assets that, that can use the blockchain. So I said a few different things there, but what is blockchain? Blockchain is a technology that allows two parties to execute a transaction without any trust. So that sounds like a very abstract concept, but to put it simply, let's pretend you have a book you'd like to sell me and I have money I say I'm going to give you. In the real world, we both are exposed to a really interesting amount of risk right before the transaction happens. If I give you the money first, in theory, you could run away with the book. And if you give me the book first, in theory, I could run away with the money. So when we think about institutions like banking, or if we think about apparel, supply chain even, when do we execute our part of the transaction and how do we know that we're going to get the other side? Invoicing, billing, you know, there's— that's accounts receivable, accounts payable, even international transfers. This trust issue is a really huge antiquated problem. So what blockchain as a technology does, it creates a system in which every participant is verifying all transactions on the blockchain. And separate from that, there's a very interesting type of escrow that happens in blockchain where, okay, since it's completely transparent and decentralized, I can see, even if I don't know who it is on the other side selling me a book, that this person does have the funds to— or does have the book. They do have the proper custody of the item they say they're going to sell me because I can see the history of the acquisition of this good. And you can see that I do have the funds and that those are legitimate because you can see all the transactions that have led up to this point before we transact. So before that transaction is executed and automated, we both contribute to a separate pool. You contribute a little more than the value of the book, and I contribute double, double of what I'm supposed to pay you. And when the transaction is executed, we both get our funds back. So that's a very long and kind of abstract way of explaining a few different things. But what blockchain is trying to do is a couple of things: identity and, you know, verifying, you know, the legitimacy of accounts, chain of custody, and ownership, and make transactions a lot more secure and really take out the middleman from a lot of these different things. So that's blockchain as a Well, it's one of the things that blockchains can do, but that's the most interesting part, I think, right now for most businesses.

Yeah. I mean, it's amazing how long I've heard that term for and how no one's actually been able to explain to me in such quite simple terms. So thank you for that.

Oh, well, that's good. That means I'm doing a good— then I know what I'm talking about, maybe.

Yeah, exactly. I think you're in the right business.

Oh, well, that's good. That's good. I try to know a little bit about the space I'm trying to work in, but— and there was a few other things that I'd like to touch on. A bit quickly. So to maintain this big decentralized transparent system, you need participants. So how do you incentivize people to verify these transactions? That's where you get currencies like Bitcoin and Ethereum that basically reward people for computational power to maintain the network. So, you know, we're avoiding all of the information being within two distinct parties. The entire network needs to be maintained. So how do you incentivize people to maintain this transparent network? Well, every time they confirm or execute a block, they receive this currency. So that is the fuel that allows these networks to run. I think there's a lot of interest in cryptocurrency and blockchain now because of the financial success that many have had, but there's a fundamental misunderstanding of what the principles of this technology is and how useful it really is for businesses like Apparel that really struggle with a lot of the problems blockchain is trying to solve.

So hundreds and hundreds of pain points that it sounds like blockchain will be able to solve. What are the most exciting points for you in this industry?

Yeah, I think on the supply chain side, there's some really obvious ones around supply chain management, vendor management, and automating payments. So if there's a way for all of my suppliers to notify me leveraging blockchain technologies that this many products are shipping and are ready to ship, and I can verify that they actually were produced because they're sending data to the blockchain with sensors in the items, for example, then I can remit payment to them in the same in a safe and trustless way. There's obviously some interesting things there. But what I find really compelling around blockchain technologies, and this is something that Lumia is working on, not to shamelessly plug.

No, I mean, plug away.

You know, really, actually, before I talk about Lumia, let's talk about IBM and Maersk. They just announced this really interesting partnership around shipping and really having the data around these shipping containers. So they've got these sensors. Maersk does a fair amount of shipping around the world. They're a gigantic organization. And they're using the blockchain to track and verify where goods are, ensuring like proper authority, like chain of custody, all of that. They're leveraging the blockchain to verify all those transactions in real time. And there's a fair amount of work that they're doing with sensors that can speak to blockchain as well, to Hyperledger, because they're using Hyperledger. So that's one example. How can I use the data that is flowing in this industry, but it's kind of stuck in Excel sheets. And how do we make that dynamic data that can give people information so that I know, okay, this is— this has been verified, it's done, it's coming from England, it's going to be here in 6 days. And I know that, you know, it went through the proper— the proper steps and I don't have to wait for a big report to confirm that. So a lot of what blockchain is trying to do as it relates to Parallels is reduce the complexity of supply chain management, reduce The concern around— and also authenticity. Is this really the cotton that I paid for? Did it come from the supplier that I think I got it from? How do I verify that the person that is selling me this, or the group that is selling me this, is really the group that should be? And so on.

This is really interesting, because how does blockchain actually help you verify where the cotton came from?

So you see, this is a question. Right now, there really is no meaningful way to do that. But that's something that technology, using the blockchain at scale, but that's something that technology could be used for. So there's some issues around scalability of the core tech. Like, a fully public blockchain is likely not going to be useful to do that. You probably want a permissioned blockchain. So what does that mean? All of your vendors agree to participate in the system. You know, there's going to need to be a fair amount of training and on-ramping so that they can use the platform.

People are going to have to be trained to—

yeah, there would need to be. This is where the challenge of real-world adoption of blockchain in this space is tricky because you basically need to get every one of your suppliers to join, right? To be a user on this network. And now that they're a user on this network and it's trusted and you know them, they have to be pushing the information that you need with some regularity so that you can do what you need to do. But to talk about the use case you just mentioned, how do we verify that the cotton is really the cotton that we thought we bought? This is where things like RFID or tagging, like tagging materials at the source of make, that can then be scanned, and then that scan is transferred to this ledger, and then the buyer can see those transactions on that ledger. It's a synthesis of things. We need the software, but we also need the textile innovation and the hardware to support that. So if the apparel industry wants to optimize, there does need to be investment on both ends of that conversation. You need to on-ramp your suppliers. You need to be willing to make that infrastructure update, and that's gonna take time. It's not gonna happen overnight. And then there's some real things in the material world that we need to do as well. How do we tag our goods so that we know that this marker is ours and that is the cotton that we bought? There's— it's a, it's a thorny issue.

Yeah, well, it sounds like a flawed solution, RFID, for tagging cotton. I mean, do you know what I mean? Yeah, I might be able to trick that system.

Oh, I agree. Oh, I agree.

I think that's maybe some of the interesting things that if blockchain is implemented correctly— I mean, you talk about trustlessness, you know, but it seems like you trust the technology to provide you the right information. Is there a way of cheating blockchain?

In general, unless the incentive structure, to be honest, is in place, yeah, you can cheat most things. There's a lot of market manipulation that happens in that space that I think goes without saying. But beyond the currency side of it, this is where I really think and where blockchain technologies that want to serve supply chains are kind of missing the mark. You need hardware solutions that are working with it. So you need embedded sensors. My company, Loomia, we create textile circuits so we can mark items at the fiber level. This is this. And when you scan it, it's a unique mark to that good. So that's something that we're spending a lot of time on because we know for these technologies to really be useful, they need a reliable way to get that input from the good, not from a person saying it's the good. So for it to be really fully trustless, all of our items need to be smart. So what we do, just briefly for the listeners there, Loomia is what we go by. Full name, Loomia Technologies Inc. We create a textile that can be patterned like a circuit. So it's a fabric that behaves like nylon ripstop. It's washable, dryable over 50 times. We can pattern heating, lighting, sensing. We print LEDs directly to the textile. But for blockchain, for example, we've created a small quarter-sized tag that has the ability to dynamically collect data from the good. So it knows how often it's been moving, if it's been washed, and it has an ID. So the tag itself has an ID. So there's only one for that good. And that's what we're producing and that's in production now. And we're doing a few pilots in the upcoming year. So we're focused on the hardware side of the equation, which is why I think I was invited to speak with you on blockchain because there's a lot of foundational software and just program updating that needs to happen. There's a lot of education that needs to happen as well. Is your supplier in Vietnam gonna understand blockchain? Are they going to remember, you know, a 13-word password, you know, private key. There's so many implementation challenges that I think the industry as a whole could get behind to solve, but there needs to be, there needs to be that commitment and investment for it to be useful. I do think that.

Well, yeah, and I think it's really great that you're coming and talking about it, this event with me today, because like we've seen with all the other technologies, and we've been running these events for a while talking about emerging and disruptive technologies within fashion apparel and footwear sectors. Until people get together, talk about it, collaborate company from company, nothing really can get done. Because emerging technologies, as one of our favorite speakers who always comes and speaks for Pyropower, Craig Crawford, says, you know, you have to play with it first as you don't know where it's going to go. And that's kind of the fun part. And so I think it's really good for people to come together, talk about it first, and then suddenly somebody is going to start actually implementing it. And then see really where it goes from there.

I really agree. And there are some brands that have made some moves largely around the supply chain side, working with semi-permissioned, which are like not public blockchains. IBM is doing a lot, and we're good pals with the guys over there, trying to service enterprise on the blockchain side. But the other thing is there, and I say this as a startup, but there needs to be a willingness to allocate budget capital and ability to choose for innovation teams to really play with this stuff. What we tend to find is there's a lot of excitement around new technologies, but unless you're going to empower your team to take risk, which sometimes means no return, that needs to be— that's a huge culture shift for apparel in general. You think about technology companies like Google or Apple, they just set money on fire when they're trying new things, which is obviously stress-inducing probably for the CFO, but as a result of that, trust In trying, they make some pretty amazing innovations. And I think that's where the apparel industry has a lot to learn from tech companies. You know, the willingness to set money on fire, as it were, to make something really interesting.

There's so much technology that can be used. And you know that companies now start saying sort of, "We're not a taxi company, we're a technology company. We're not a hotel company, we're a technology company." Do you think that there are fashion brands that are going to start coming up and saying that we don't make clothes, we make technology and that the clothes just come from that?

I think, truly, I really hope that doesn't happen. And that's kind of funny because we're a textile company that takes a position that we're a technology company. Arguably, we can defend it. We make circuits on fabric. But I think the issue with apparel, and not to be dumping on the industry I work in, is that they forgot they were the original technology. Like, apparel and textiles is easily some of the first technology humans ever made. It's very complicated. It's highly technical. There's a ton of engineering that goes into making a fabric. People have no idea. The average layman, as you say, has no idea. And if we think about what clothes do, they protect you, you know, they signal, they communicate. It was some of the first signaling and communication that we ever invented before phones and before computers. So apparel unfortunately has ceded its real value. I feel like there needs to be a reaffirmation that We're the ultimate utility. We're the only thing that's indispensable and that you take with you everywhere you go. You can leave your phone, you can leave your computer, but you're not going to walk outside naked. Most likely it's not feasible. And in a world that's changing, you know, environmentally and otherwise, these items become more and more important. And I think apparel of all the industries has the strongest position to say, like, there are very few things that are more technical than apparel. And that's the truth. So I just think they forgot and have made themselves a commodity, and we don't need to be like that because everybody wears clothes. It's one of the few things that's ubiquitous.

It's incredible actually how the clothes are made. That contradiction between how fashion and apparel is seen by most people, because it's made its own bed in that way a little bit, you know, it's self-inflicted, that sort of image of fashion and apparel, because all of the runways and, you know, that kind of thing. But actually, as you say, the engineering to create a garment and the whole process, especially now with 3D technology as well. So you're going from 2D to 3D, trying to analyze drape and all of this other stuff that's going on. Incredibly technical, you know.

It's so technical.

You should take a break and go and design a car and do something easy.

Exactly. But, but that's actually the funny thing. People don't realize how complicated it is. And that's not to be speaking to people's marketing teams, but you're missing a golden opportunity to tell a really interesting story. Like, there's nothing more custom than apparel. There just isn't. Your iPhone Okay, doesn't really care about you, but your clothes do. They have to by virtue of being on your body. I mean, I'm not gonna knock on Apple, don't come for me, but the point is, you know, this is an industry that, you know, has to think in so many different planes to make you look your best or keep you warm or keep you dry or whatever it is. And we need to start taking credit for that innovation and on the other side demanding margin for that innovation, really value pricing. That is, you know, probably an unpopular opinion, but if you're motivated to drive your cost down, down, down, you're training your customer to not value what you're selling. It's just basic, you know, logic. If you're competing on, I'm selling you a $5 shirt and there's a $7.50, you know, well now you're, you know, that's the expectation you've trained these, these users, users to think. And I think that's where technology can really help the industry remember its value, but it shouldn't see it— it shouldn't see sensors and light-up jackets as their saving grace because you're already pretty cool. You just need to re-educate the base user about that.

Yeah, absolutely.

That's my thought there.

I mean, it can't really get much cheaper, can it? No, it's so cheap now.

It's also not sustainable. I think the big issue on like on all sides, financially it's irresponsible. There can only be one cheapest. Newsflash to the listeners, there's only one company that will win the game of I'm the cheapest. But in order for that to be the case, you basically have to gut a lot of existing— like, I mean, when you think in nature there, and I often bring this up in conversations that I have with people in the space, we have to stop thinking about hierarchies and like, you know, constantly growing. The only things that perpetually grow are black holes, cancers, and tumors. So if you're motivated by perpetual growth, you have to understand that's at the destruction of other things. So what you want to be doing is constantly Producing, right? You want to be able to produce, so you need to take in and you need to put out. And people have to understand where they are in that value chain. Like, we talk about supply chain, but what we really need to talk about is value chain. Where is the value? Where, where do I get value from my suppliers, and how do I protect their value so I can pass it on to my users? And how do they protect my value? So there really needs to be a philosophical shift, I think. And I think, to bring it back to the topic I was invited to speak on, blockchain technologies can certainly contribute to that. But it'll only be useful if there's a mental shift about how the industry plays in the space. You cannot be motivated by, "Let's source cheaper. Let's source cheaper." That's not the problem you need to solve. How can we be perceived for the value that we actually offer and how do we change that narrative and also protect our supply chains as well? Because that's important.

Yeah, absolutely.

And unfortunately, those incentives aren't aligned. And I'm not even deep in the supply chain space, you know, I'm making textile circuits. But as an outsider, kind of, that's where I really hope that tech can shift that perspective. People understand that there's more symbiotic relationships that need to happen.

Do you think there's anything blockchain can do, whether in fashion or not in fashion, but to change people's philosophies?

I think— I love that question. I think blockchain's in a very interesting time, like the base principles of it It's a massive difference, right? It's a huge philosophical shift where we're decentralizing access, we're decentralizing control, we're really making honesty an obligation. There's, there's so many philosophical challenges that a blockchain-based system or society would need to confront, which I think is amazing. My big concern is that because there's so much money to be made in confusing new spaces, we're going to run into a lot of the same corruption that you see in the industries they say they're railing against. So there needs to be, again, a confrontation of the human. It's like, well, we say we want to save the world with these technologies, but are we, you know, are we investing in, in universal IDs so that if I move from Syria, my doctor's license and all of that is verifiable in an immutable chain and my identity is secured? And then when I move elsewhere, I'm not running into these issues. Like, are we actually investing and critical problems to, to make, to make the world better.

Yeah, yeah. I mean, are you willing to sacrifice your freedom to achieve the sort of sustainable goals that we all know we have to change? But that you're willing to make certain sacrifices to do that? Because it can be something as small as throwing garbage away and something as big as having universal ID for everyone on the planet and everything in between.

Exactly, that's exactly it. It's like, are we willing to be uncomfortable? And really, ultimately, and this applies to your power as well, are the decision makers? Because I, I don't know if I mentioned this to you, but in Bitcoin I think there's like 30 individuals that could completely swing the market if they all invested, or if they all behave the same way, would completely manipulate the market. But that's not just in Bitcoin, that's in politics, that's in business. Are the 30 people in the room willing to be uncomfortable? Are they willing to make less money? Are they willing to take a hit? To propel the group forward. That's a larger, and I think it's a timely topic. We're seeing that in politics, we're seeing that all over. Are we willing to be uncomfortable? Because we've been very comfortable in a system that is just fundamentally not sustainable. And I think that's where we're seeing the death of so many legacy brands, so many businesses. A lot of what we've built strength is to, like, it's not a space in which everyone can thrive. And if you look at nature, and I always bring that up, like oak trees are not fighting pine trees. Pine trees are doing their thing and oak trees are doing their thing and the forest isn't like, "There can only be one tree!" And there's so much life there. So oftentimes we get into our little factories and we forget that we're in that same system and our businesses need to, I think hopefully, look to nature and understand how many things can exist at once and they can all be productive and they can all derive value back to. So, but that's a very different philosophy on business in general. And I'm hoping people start to realize that.

But yeah, if a company was to employ blockchain, fashion apparel company was to use blockchain, could they collaborate with another company using blockchain and make it all, make their systems work better?

That's how, that's like the, the right question. There would actually need to be like a, in a lot of ways there's this concept in blockchain called consensus where to make any like big system improvements or changes to the code, to the base code, there needs to be consensus. People— the vast majority of the holders need to agree. So in order for any blockchain solution to really be the greatest, there would need to be consensus, or at the very least, majority, uh, collaboration across brands. Brands would need to say, we're all going to benefit from the supply chain clarity, and we all need to invest in ramping up our suppliers in in training our workforces, in partnering with whoever, like we all need to agree so that we're streamlining the process. There would need to be a view that your competitor is actually your collaborator because you have the same problems. That's 100%. I think in order for blockchain technologies to be really interesting and useful in the space, there is definitely going to need to be a similar consensus. If we think about something like the internet, there's a bunch of stuff built on top of it, but we all use the same internet. We just do. So blockchain is another layer. It's another type of infrastructure that requires the same consensus in order for all of us to do our business better. No one's arguing. Verizon isn't mad at AT&T that they're on the same internet. So that's how we have to see base technologies. But unfortunately, I think because blockchain is so complicated to initially understand, that's not how people are viewing it. So. But yeah, they would need to agree.

It doesn't help that it feels like it's been corrupted at the early stage. Like it's almost born corrupted.

That's a really good point. The cool thing about it though is that a lot of this code is open source, so anybody could say, you know what, I'm going to make a better whatever and try to do it. And there's plenty of companies, you know, I won't use the cursed words, but I will, ICO. There's plenty of companies that are doing all sorts of interesting things. But at the same time, corruption is an interesting thing because Corruption can be corrupted if the incentives are different, right? So you can corrupt the corruption if, let's say, we're going to make an apparel panel that's of all the major Fortune 500 apparel brands, and they're all going to say, we're going to invest in blockchain, but it needs to do this, this, this, this, this. These are the things we need. Trust me, like, there will be, there will be adjustments. It's just basic economics where there's demand, someone's going to fill the supply. So while yes, it's It is unfortunate. I think what people do need to understand, we live in a digital age where it's so much easier to find things out. There was probably the same amount of nonsense when the internet was really making its appearance in the early '90s at the consumer level. I'm sure the level of shenanigans was just as high. There just wasn't Twitter where it was easy to see it. So, you know, take heart. We've always been crazy as a people and it can be fixed.

Yeah, absolutely. You just need enough momentum and enough people to jump on board. And have that same mindset.

Well, that's the interesting thing about a place like PI Apparel. We have so many decision makers in one room and there's so many core technologies, but, you know, it's this uneasy— there's a slight uneasy awareness of like, you know, we're all here looking to innovate, and you know, you kind of like, hello competitor brand here looking to innovate. But it doesn't need to be like that, actually. There's space for us to innovate together.

Well, I always say I've always been amazed at how willing people are to collaborate with one another when, you know, we can have— I won't name them— let's say the 3 biggest sportswear brands under one roof all having a chat together. And it's really nice to see that can actually happen.

Yeah, it's great.

And these kind of events are really great, and I hope we can get blockchain on the program more and more because more people are going to bring this into fashion apparel. And I know it's not the only thing that Lumia do, and not the only thing you're involved with. So I highly recommend people go out there, check out what Lumia is doing. It's Lumia Technologies. And I think we're going to have to have you back on, Janet, because I also wanted to talk to you about how you got onto this. I know you're a master electrician and all of this other kind of stuff, so I'm really looking forward to hopefully having part 2 of this conversation.

Oh, I'm always happy to chat. You can have me back whenever.

Yeah, absolutely. Let's get deep into the Forest philosophy as well.

Yeah, let's— the Forest philosophy of business, guys. I'm starting a school. Yes. Well, it was wonderful to talk about blockchain and the state of affairs. And yeah, you're right, I love Pi Apparel. It's my second year here and always so many interesting ideas that are flowing around and a genuine desire to make interesting, meaningful products. And I think that's how we have to see the space. How can we be meaningful? And, you know, innovation is a good way to do that. Everybody get up!