At a time when companies struggled to locate masks and other PPE at affordable prices in a highly stressed supply chain, CU alumnus Russ Decker (CompSci’18) and co-founder Jake Deichmann decided to use their technology skills to help.
The two used blockchain — a list of data records organized into blocks that are chained together in chronological order — to empower purchasers and manufacturers to check one another’s financial stability, interact securely and transfer large payments.
Since they founded PPE Exchange in June 2020, their system has helped companies secure roughly 36 million units of PPE and transfer $48 million in payments.
“In the future, having a good process in place will allow us to avoid scams like those we saw happening early in the pandemic,” said Deichmann, referring to cases such as an attempt to defraud a federal government agency out of $750 million in nonexistent PPE orders.
Friends since high school, Decker and Deichmann both have backgrounds in technology development. A 2018 graduate with a Bachelor of Arts in computer science, Decker has developed systems for healthcare companies, including the Mayo Clinic and a large consulting company’s pharmaceutical work. He quickly realized blockchain technology could help companies verify PPE suppliers and manage large financial transactions.
Decker had been interested in such technology since his time at CU Boulder, when he did a class project on big data that analyzed blockchain and cryptocurrencies.
He noticed medical records are segregated and historically difficult to link up.
“That’s when I got super-interested in blockchain and how it can join records,” he said.
Starting the Company
In spring 2020, Decker heard from a doctor friend that companies were struggling to buy PPE at affordable prices. After conducting market research, he called Deichmann. They concluded their skills could help the market.
Soon afterward, they began talking with a subsidiary of the North Carolina Healthcare Association that needed masks and supplies for small medical facilities.
“They were having problems finding a source for around $4,000-$5,000 worth of PPE,” Deichmann said. “Manufacturers quoted them 3-4 times the market price.”
The two friends had a manufacturer contact who could handle the order, and they agreed to set up a software system to handle it. Still employed full time at other jobs, they worked nights building software to collect payments, shipping addresses and other information from 35 North Carolina facilities. Very busy by June 2020, they left their jobs and began full-time work at PPE Exchange. They had partnered with 16 state hospital associations and 41 smaller medical associations by March 2021. The team has hired nine employees, including Senior Engineer Alex Urbanski (CompSci’19), the company’s first hire.
“What particularly impresses me about PPE Exchange is their combination of providing a much needed service — PPE during a pandemic — and the way they have used blockchain technology to build a trusted system,” said Bobby Schnabel, external chair of the Department of Computer Science. “And they’ve accomplished something that can be so difficult for technology startups: reaching a profitable state in a short time.”
How the System Works
The company uses blockchain to track supplier credentials: references, financial scores and any other information that can be used to flesh out a manufacturer’s identity. The system also uses systems that prevent payment until buyers receive and review their merchandise.
“In short, blockchain helps us build trust in our marketplace. When the supply chain is strained, like for PPE supplies during a pandemic, that trust is very important,” Deichmann said.
How It Helps Others
PPE Exchange allows small, regional care providers — local dentist offices, long-term care facilities and others — to group together and create a large purchase order.
“It’s given these smaller providers access to PPE, at the same prices a massive hospital would get,” said Decker.
The company also allows flexibility. Unlike many group purchase order (GPO) agreements in healthcare, buyers don’t have to sign a long-term agreement with PPE Exchange.
“Like Uber and others, we’re more of a dynamic, self-serve marketplace,” said Decker.
While working with thousands of manufacturers and buyers over the last year, Decker and his business partner realized they have plans for the post-COVID-19 supply chain.
“I think COVID showed that in terms of supply chains, if one supplier goes down, it all falls. We want to build a marketplace where you can source the same material from multiple suppliers without worrying you’ll get a fraudulent product,” said Deichmann.
They plan to continue to diversify the supply chain, suggesting that their buyers spend 5-10% of orders with U.S. suppliers to keep domestic industry in action.
“So when this does happen again — and hopefully it won’t — we’ll have the infrastructure to be ready,” said Deichmann.
With blockchain supporting their system, the two think their business will continue to expand. They’ve already hired their first employee, another CU Engineering graduate.
“The average Amazon customer spends around $600 a year. Our average customer order is for much more than that,” said Decker. “That’s because we’re able to build that trust, and we want to bring that service to more customers.”
Decker has become truly passionate about his work.
“I really believe in the ability of two parties to transact on the Internet without having met or a 10-year business relationship. In this industry, that’s what you need to transact. We’re excited to make an impact, creating a trustworthy system for customers to interact and getting PPE to everyone.”