Investing in Regenerative Agriculture and Food
Investing in Regenerative Agriculture and Food
332 Aaron Huang - How ranching (and eating) of millions of zombie sea urchins could restore the massive kelp forests of the U.S. Pacific West Coast
A conversation with Aaron Huang, founder of OoNee Sustainable Sea Urchin Ranch, to dive into the world of sea urchin ranching and its connections to high-end fish restaurants, many of which fly their sea urchins in from Japan. Over the past decade, a warm water blob off the U.S. West Coast has caused sea urchins to overgraze the kelp forests, leading to a massive population boom of urchins, the collapse of kelp ecosystems, and the rise of countless “zombie” sea urchins—urchins that prevent the kelp from regrowing without dying themselves.
Why should we care? Because this phenomenon is happening everywhere—whether it’s invasive species or extreme weather events, ecosystems are collapsing, and without smart intervention, they won’t recover. In this case, the solution is to harvest the sea urchins threatening the remaining kelp, fatten them up, and sell them to the growing market for high-end seafood. What can we learn from this approach and apply to other ecosystems that are out of balance?
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A fascinating and unexpected deep dive yes, pun intended into the world of sea urchin ranching. Yes, those spiky things you see sometimes when you're diving or snorkeling High-end fish restaurants which have their sea urchins flown in from Japan. And a warm water blob that caused the sea urchins to overgraze the kelp forest in the last 10 to 15 years on the West Coast in the US, leading to an explosion of sea urchins and an implosion of the kelp forest and many, many hundreds of millions of zombie sea urchins that are preventing the kelp forest to regrow, but without dying themselves. But why should we care? Because this is happening everywhere. An invasive species or extreme weather event triggers an ecosystem collapse and without smart intervention it won't recover. What is a smart intervention in this case? Harvest the sea urchins that are threatening the surviving kelp forest, fatten the urchins and sell them into the growing market of higher-end seafood. What can we learn from here and apply in other ecosystems out of balance, which are pretty much any ecosystem? Take a deep breath and another one. Every second breath we take comes from the oceans, and over half of the fish we eat is farmed. That's why we dedicate a series to explore the potential of regeneration. Underwater Oceans and other water bodies cover most of our planet and have stored most of the excess heat so far and, at the same time, have some of the best opportunities to produce healthy food, mostly protein, store carbon, create materials, fuel, bio stimulants and much, much more. Plus, create a lot of jobs in coastal communities.
Speaker 1:We have largely ignored the water-based farming aquaculture industry in this podcast until now. In these conversations we explore why aquaculture is so important for the future of our planet. If we get this wrong, we have a serious problem. What are the risks and challenges with feed, the reliance on soy pests yes, there are pests, underwater antibiotics, microplastics, etc. What does it mean when you apply regenerative principles to aquaculture? What can soil-based agriculture learn from aquaculture and vice versa? And what should investors really know about water-based farming and what the potential is of regenerative aquaculture? A series of interviews with the people putting money to work, entrepreneurs and investors in this crucial and often overlooked sector.
Speaker 1:We're grateful for the support of the Nest family office in order to make this series. The Nest is a family office dedicated to building a more resilient food system through supporting natural solutions and innovative technologies that change the way we produce food. You can find out more on TheNestFOcom or in the links below. Welcome to another episode Today with the founder of Ooni sustainable sea urchin ranching, regenerating Oregon's kelp forest. That's not a sentence. I thought I would ever say sea urchins and ranching in the same sentence. We're going to unpack a lot of that, but welcome. Welcome, aaron, to the show.
Speaker 2:Thank you very much. Good to be here.
Speaker 1:And to start with a personal question, we always love to ask at the beginning, obviously, instead of like oh, introduce yourself, but more, how did it happen that you spent most of your awake hours thinking about sea urchins and, yes, those are the spiky things you find in some places where you go diving or snorkeling and, more specifically, about the zombie version of them? They are alive, but not really and they're not really dead, and they're actually quite a threat to kelp forests. So what happened that led you down this career path that I can't imagine. There are many people thinking about sea urchins all the time.
Speaker 2:I mean, why wouldn't you want to think about it? They're so cool.
Speaker 1:I mean, of course, but for those three or four people that are not listening and thinking. Of course, I don't think every second about that. What happened?
Speaker 2:Yeah, for those people that are not obsessed over sea urchins on a daily basis, there's not always a confluence of interesting aspects here. I mean, I've been studying kelp regeneration and kelp forests for 10 years already, and this really kind of came about because I was actually interested in sort of the principles of permaculture applied to the ocean when I was living in California. These zombie urchin issue has actually been percolating on the west coast and across the pacific and actually atlantic for for a number of years, actually over a decade now, and I'd always been thinking in the back of my mind you know, what can we actually do about this? There are definitely a lot of kelp hatcheries getting started, there's kelp farming, there's kelp restoration. When I stumbled upon an urchin diver in Oregon a little over a year and a half ago, a gentleman by the name of Brad Bailey, we actually started talking more about urchin ranching as a way to restore kelp forests.
Speaker 2:And my obsession with sea urchins is not just the fact that I think it's a species that I think is commercially harvestable, but it happens to be one of my favorite foods. I've grown up with eating a lot of umami-flavored things, sea urchin if no one's ever tasted it before, especially purple sea urchin. I would urge everyone to go out and actually try it. Or especially purple sea urchin. I would urge everyone to go out and actually try it. Once you fall in love with something, you tend to have a very visceral response and emotional connection with it.
Speaker 1:So what does this taste like? Because I actually haven't tasted one, or I don't remember.
Speaker 2:I need to send you a sample and I would say this if you've had it at a sushi restaurant, you may get a similar as close of a possible taste to pulling it out of the reef and cracking it open, but when you first taste it it is a combination of the sweetness of the kelp the wild kelp it's been feeding on the saltiness of the ocean. This brininess that sort of balances out the sweetness and the saltiness of the ocean. This brininess that sort of balances out the sweetness and the saltiness, and it has a consistency people say of of custard, but when you really sort of put it on top of just seaweed and rice, it's probably the best thing, personally, that I've ever tasted in my life.
Speaker 1:So okay, so this is a good primer into uh, into this one. Okay, so, if you happen to go to a restaurant tonight, or if you're a good seafood restaurant, uh, go go. And you have never tried it? Definitely, um, try it and let us know. Um, yeah, but what's the issue? I mean, you mentioned they. They're feeding on the kelp forest, and what's the issue with uh, with sea urchins, and why? Why are you focusing not only, let's say, your restaurant time on it and your cooking time on it, but also your working time?
Speaker 2:Yeah, I mean, this is really no fault of the sea urchin. I mean most animals and plants in the world. They really sort of go about their own programming. They really sort of go about their own programming when you look at sort of how the species interact in the ecosystem. When the ecosystem itself becomes out of balance, things become out of balance.
Speaker 2:And what happened over 10 years ago was there's this blob of warm water in the Pacific. It's called the warm blob for obvious reasons. They thought it would basically persist for a few months, persisted for over a year. In that time, those sea urchins predators, which were the sunflower sea stars that existed by the billions along the west coast of the US, they basically melted away. And so when you have a sort of a keystone predator that's gone, the sea urchins keep doing what they're doing and they basically went about and started eating more and more of the kelp forest without any predators to keep them in check.
Speaker 2:Fast forward 10, 15 years. There have been some nascent efforts to send divers out with hammers to crush them. But, as you and I were talking about Cohen, when you have a hammer you can only crush maybe 100 or so each time. You're literally looking now at an ecosystem that spans hectares and hectares of hundreds of millions of sea urchins basically sitting in a destroyed, decimated kelp forest and they're basically starved out. That along the west coast of the us, that exists along the coast of australia, it exists along the coast of japan, it exists all over the world, south africa, and essentially these urchins, having been survivors in the past millennia, have found ways to survive without it actually eating. They simply turn themselves off for a few years and when the kelp regrows and they smell it, they'll basically reanimate themselves and they'll go back and they'll eat that little budding piece of kelp. So, without removing the urchins from the kelp forests or the urchin barrens, the kelp does not have a likelihood and a high probability of growing back, because there are just too many urchins out there right now.
Speaker 1:So what has happened basically was this weird climate event that will happen more often is of warmer water for a long period of time. Their natural predator, the sea stars, were boiled, and the sea urchins are natural survivors. They didn't, and they just started eating and eating and eating until they consumed basically their whole kelp forest. But instead of dying out and we've maybe seen that in other ecosystems, like land systems, where you see, I don't know, tree stumps being eaten by deers, et cetera At some point the deer dies if there's no tree stumps or there's nothing left to eat.
Speaker 1:Sea urchins have something special in the sense they can survive in an off mode for years. Slowly, the kelp forest starts regrowing or replanted or somehow starts to reflourish and before it even can start to get to a healthy balance, it of course gets eaten immediately again by in this case I think I read somewhere 300 million sea urchins. So there's zombies there basically waiting for a little piece of kelp, which of course gets eaten in a second, and so we have to remove them. How do you go about? Like what? Even if you start reading this report, you start seeing this you think of, I don't know, you start dreaming of a zombie army of 300 million sea urchins, how do you even start thinking about removing them? I understand people are doing the kelp side of things, but of course that doesn't really help if you have sea urchins waiting around there to get their snack and I see the smashing videos I mean it's interesting to see. It's probably really good meditation. I've seen daggers with hammers but yeah, that's hardly scalable.
Speaker 2:Yeah, yeah, I mean I think this is one of those cases where I do think you need a commercial approach.
Speaker 2:Again, I might be sort of subjectively biased on this, but someone once asked me well, what happens when you pull all the urgencies out of the water? You're out of business. And I told them, if you do the math, you will make a very small dent, even at a few hundred thousand pounds a year. In the grand scheme of things, to pull, you know, even a third of that um from the reef in oregon and, by the way, that 300 million sort of number that you quoted is just off of a reef in oregon. And so when you look worldwide you'll never really make a a massive dent writ large at the entire ecosystem. I think the focus from a commercial perspective is you have to still focus on the areas, the liminal edges, where the kelp forest and these urchin barrens are kind of colliding, and you want to protect the areas that are still protectable and then you kind of want to move out in concentric circles year over year to sort of push things out.
Speaker 1:So you don't want to go to the desert of cows, you don't want to start farming, or harvesting in a desert.
Speaker 2:Exactly, there's never a good idea to harvest in a desert, for obvious reasons. Number one when they do become a zombie urchin, reanimating them actually takes a lot more work than pulling one.
Speaker 1:that's kind of on the precipice, if you will, of zombifying themselves depends, of course, what you want to do with them, because you're you're not smashing them, you. You came up with the approach let's take them out, in this case, the ones that are on the verge of being a zombie, and actually ranch them, grow them and then sell them into the sea urchin market. As we started this. They taste amazing.
Speaker 2:Yeah, I would also caution people from smashing just going out into the wild and smashing urchins If it happens to be urchins that actually are full of roe. Smashing an urchin will actually release more eggs and sperm into the water because urchins have this death rattle eggs and sperm into the water because urchins have this death rattle and when they are threatened or on the precipice of extinguishing their lives, they will actually spawn in the water. And so there are certain studies that say you know, you really want to focus also on where you want to smash if you are going to go out there and smash. But I think this is also where having a sort of a semblance and a sense of sort of what the ocean and the ecology is telling you is going to be the wisest approach to the problem.
Speaker 1:So you're saying, okay, the solution might be eating them, but of course you don't want to eat a semi-zombie one, because they're very thin. How do you even get that into a form or an idea of a company?
Speaker 2:So there have been budding research across the world usually within the dregs of a PhD thesis around various attempts to ranch urchins.
Speaker 2:Norway actually has done a good amount of research into animal feeds.
Speaker 2:There's been a few companies in South Africa that are trying to broaden their abalone portfolios and branch off into urchins, because they're both detritus feeders and they may consume similar types of feeds.
Speaker 2:I think a lot of this comes down to the fact that the people that understand seafood are rightfully seeing that commercial harvests of wild urchin have basically been precipitously falling for the last 15, 20 years. In fact, in Oregon there used to be armies in California as well, armies of basically divers whose livelihoods would be to jump in the water, pull those urchins out, meet a buyer, most likely from Japan, and that Japanese buyer would basically send those wild urchins over to Japan for consumption. The challenge has been obviously that now, with the kelp forest being decimated, the wild harvest has dropped precipitously, and so the whole notion of ranching an urchin didn't necessarily start from the fact that there was a kelp forest crisis. It literally started from the fact that there was a necessity because the supply was dropping, and if you've sort of seen the proliferation of sushi restaurants, especially during COVID, people are actually eating more and more sushi, and so what you have is basically this supply constraint and this hyperbolically, or hyperase, if you will, in sushi demand across Western countries.
Speaker 1:And how difficult is it? I mean, you're finding out now to ranch sea urchins. Has that been done before? For the food side of things, how difficult is it to take these semi-zombies out of the water? I mean, apart from that, you shouldn't get stung, but then what? What do you do? How do you feed? How difficult is it to take these semi-zombies out of the water? I mean, apart from that, you shouldn't get stung, but like. And then what? Like, what do you do? How do you feed them? Is this like domesticating sea urchins? Is that what we're talking about?
Speaker 2:Yeah, you got to train them so they'll respond to a few commands. And so you pull them out of the water and what people have traditionally done is they've they've dove for them. I mean, this is a, this is a traditional harvest. Um, if you go all the way back to what you know, native americans and indigenous folks did, they harvested this way. They dove for them.
Speaker 2:Nowadays, you harvest with an air hose and you'll pull them out of the reef. You actually need something quite hardy to pull them out of the reef. It looks like a crowbar, it looks like a fork. Various divers have various implements, but you're in the water and you're pulling them out, and when you pull them out, you put them into a basket. The basket floats up to the top of the water and we pull it into the boat and then we take it back to shore. And we pull it into the boat and then we take it back to shore and we transplant it into a warehouse.
Speaker 2:Now, what do we have in the warehouse? As I mentioned to you earlier, we had actually been doing a lot of research on ways to build raceway systems. A lot of this research can be borrowed from existing aquaculture research and existing aquaculture proof of concepts adapted to the specific biological traits of an urchin. But we've built raceway systems that essentially will hold an urchin, will allow them to feed and also will allow their waste to be consumed by other species. In this case case specifically talking about the west coast and the pacific northwest at large, there are red sea cucumbers that will actually eat the urchin waste and there's actually kelp that will remediate the effluent, so we can build, essentially, a truly circulatory recirculating system that is as as sustainable as possible.
Speaker 1:And what do the urchins eat? I mean, they eat kelp normally. Do they eat, then, the kelp that you grow? How do you feed these new?
Speaker 2:semi-arrowed. We're growing Pacific dulse in a tank. That's for trial purposes. We're actually also sourcing some really interesting third-generation urchin pellets that the Nature Conservancy down in California has actually been iterating on. So they have researchers down in California that have been actually testing out urchin feeds based off the fact that the urchin barren problem has been persisting for over a decade in California as well. So we partner with them pretty closely and we are testing out pellets. Obviously, at the commercial scale you want to use pellets, you can control the actual formula of pellets and with an open source feed like the one that the Nature Conservancy has, you can bring the formula to an industrial presser and you can basically commercially produce those pellets as well.
Speaker 1:And then, where do you sell? I mean, where do you're going to sell? Where do you sell already? How easy then is the market? Is that relatively straightforward? Because a lot of the wild supply has disappeared.
Speaker 2:Yeah.
Speaker 2:Or how easy is going to be the selling part beard, or how easy is it going to be to sell it? I mean, I think the Pacific Northwest is a really good test bed for this, because the ecology in Oregon just happens to produce some of the best tasting urchins in the world. We have cold upwelling of nutrient-dense waters, again, as I mentioned, we still have some relatively intact kelp forests, and so the animals that you bring on shore onto land and ranch actually taste really wonderful. And you just happen to be also close to what I would say was the third largest market for sushi in the world, which is actually the West Coast of the US. You could also imagine us sending urchins to Japan, but I think, from a supply chain perspective and from just being a little bit less carbon intensive, the West Coast of the US.
Speaker 1:Because they have to be flown, of course.
Speaker 2:They have to be flown, obviously on a cargo plane, obviously overnight. But on the West Coast you're looking at Seattle, portland, San Francisco, l LA, san Diego, santa Barbara. In the middle of the country you actually have Dallas and Houston and Chicago, places you don't think people would actually eat urchin but actually are starting to have a really high demand for it, and then obviously on the East Coast. So the US actually is a market that I believe is actually very ready for sustainable urchin.
Speaker 1:And then how long does it take? You take the semi-zombies, let's say, out of the water. You start feeding them a bit of the pellet. How long are you ranching them? For? How long do you have to, of course, depending on their state of starvation.
Speaker 2:Yeah. So it's interesting, you actually do want to start them out. We found that if there's any amount of existing uni inside the urchin, that the flavor and the color profile will persist all the way through the the fattening cycle. And so, in ideal state you actually do want these zombie urchins. You want as close to a zombie urchin without being a zombie, if you will. But then from then it takes about eight to 10 weeks to fatten them up to an index. We use this term called gonadal index. It sounds kind of weird because, yes, the term gonad is in there, but it's basically a percentage of uni inside of an urchin and around 15% is. When you harvest them. Anything over 15%, they actually start getting kind of soft and really hard to open the urchin and sort of shuck out that lobe, if you will, will. And so we really try to make sure that we harvest them, uh, and fatten them within a 10-week cycle at about a 15 percent genital index and we're learning so much about sea urchins?
Speaker 1:um, if you're not a fish person, this is not your episode, but um, still fascinating. And then, like, how's been the response from the market so far? Like restaurants you've tested with, you worked with, like um, you showed some like what's the? Um? Because this is different, obviously, than any kind of other urchins. They normally would source, but maybe they didn't source so much anymore because of the the crisis. Like, what has been the response from that side?
Speaker 2:I think a few things. I think our approach has really been to keep it as organic as possible and as much as we can in these early stages, we will. What that means is that when we pull the urchin out of the water, it's either on someone's plate or it's shut and on someone's plate in a matter of days of days. That means that the quality and the taste of the urchin is probably the most pure that you can get out in market when you traditionally eat one at a sushi restaurant. It's been flown from Japan. They may claim it's high end, which it may be, but if it's been sitting in a cargo plane and then it's been sitting in a warehouse for a few days. But if it's been sitting in a cargo plane and then it's been sitting in a warehouse for a few days, it's also been sitting in a preservative and when you get that uni it may taste really really good. But once they've tasted one of our urchins, there's just really no comparison.
Speaker 1:So why do you do that so fast then, like in terms of out of the water into, because they're ready, they're fat already, or?
Speaker 2:because you don't need to fatten them or that process when they're harvested and then fattened. Yes, correct, but I would say that it's really important in these early stages to basically make people fall in love with with the story and a better. The best way to make people fall in love with the story and the best way to make people fall in love with the story is to have the product that tastes the best out in the market.
Speaker 2:Flavor, flavor, flavor and flavor, flavor and Pacific Northwest California at large. There are a lot of chefs that have been searching for these ingredients and have a mission of serving local and sustainable foods, and when they do have something like uni that is not from Mexico or Japan or Chile and they can actually claim and say that it's local, you can see their eyes light up. And similarly, there are increasing number of wholesale distributors that also want to align around that mission, and so I don't think it's a hard thing to sort of get people bought into our mission. I think it's actually, uh, the challenge that we will have is making sure that our stuff tastes better than everyone else's out there and why do you think it's a challenge?
Speaker 1:because of the ranging piece, or how do you see that?
Speaker 2:Well, our urchins are unlike maybe, a compache or a salmon. Not that you want to have frozen salmon, but you can freeze fish. You can even freeze oysters. I've seen oysters frozen. You can freeze clams. You cannot freeze sea urchin, and so the ability for you to basically get it from your ranch to a table um is predicated on how quickly you can get it there. Yeah, because its shelf life is actually a lot lower than other foods, but therein lies also why it's just so darn expensive, um it's because the cost people like compared to Japan.
Speaker 1:Your cost of course different now, beginning startup etc. But your cost thinking, how is that compared to flown in?
Speaker 2:I think you could use a baseline. I mean, there are comparables on the market. Right now you're seeing 100-gram trays sell for about $60. 200-gram trays will sell for anywhere from $100 to $150 for 200 grams. And so when you scale the model as all aquaculture and even agriculture commodities need to be in order to sort of find their cashflow break-even points and their gross margins, there is a model that makes sense here, based off of the fact that those price points will support this type of regenerative model at scale.
Speaker 1:Yeah, it's probably one of the more expensive things you find on the plate anywhere without going to caviar and things like that, which potentially means it can drive a lot of regeneration.
Speaker 2:I mean, that's the hope you. You want to get to commercial scale, because the more commercial scale you can meet, the more of an your impact goals you can meet as well.
Speaker 1:So and we discussed this in the pre chat we had as well Like how, how many? Like, how soon do you have an impact on that kelp forest? Like you're removing them just where the kelp forest is like under threat. Like how, how many square meters or square kilometers? Like how, how big do we need to think in terms of sea urchins? How many do you need to move when you can say, okay, we're, we're starting to have an impact on um, on this piece of ocean?
Speaker 2:I would say this the the research is still ongoing. Um, we do know that focusing on a kelp forest on the precipice is much more productive from an impact and protection standpoint than obviously focusing on an urchin baron. We do know that the ratio of urchins to square meter of kelp if you will, the sort of healthy ratio is about one urchin per square meter, and so there are certainly measurements that we use and that partners like ReefCheck use on the West Coast when they're doing their scientific monitoring every single year to determine sort of how healthy or not healthy certain areas of the ecosystem are. I think one thing that needs to happen more of is basically bringing more real-time monitoring into the kelp forest so we can sort of see the correlation. But there are certain ratios we're working off of and certain areas of the kelp forest we know where we can make the biggest impact right now and, just so you know, in the Oregon reef we are attempting to protect about 50 hectares currently under our sort of subscale harvest model.
Speaker 1:Wow, and how many grams or kilos or tons of urchins are you or how many urchins are you talking about? Just to give a sense of scale. You're currently we're now in end of summer Northern Hemisphere 2024. What your your numbers or your figures looking like?
Speaker 2:yeah, I mean for for this year we like to produce about a hundred thousand pounds of urchin, of gross weight urchins and with additional funding and ability to build out a small-scale facility. I mean you could be talking about the millions of pounds. But even in that 50-hectare region we're trying to protect, if you will, there's hundreds of thousands of urchins out there. So even harvesting 100,000 pounds this year, we will hopefully at least protect that area. But there will still be plenty of urchins even in that 50-hectare area.
Speaker 1:Wow, yeah, it's just. The sense of scale is just crazy.
Speaker 2:And I can also send you a video by the way of one of our dives so you can get a sense for sort of how dense the urchins are clustered in the reef. Dense the the urchins are clustered on in the reef. Um, it's, it's really crazy to think about if you had ever, you know, gone, gone diving or watched underwater um documentaries with david attenborough when you were little, to see that that sort of uh juxtapose against sort of what what the current reality looks like. It's, it's quite um, you know, it's quite visceral when you actually see it with your own eyes.
Speaker 1:So in 15 years, and that's nothing, basically yeah, yeah and so how does it make you feel, then, like, how, how is your longer term vision on impact? Like, how, how does this impact more reefs, even though it seems like an impossible task to harvest so many urchins that are potentially needed? Like, how does that as an entrepreneur? But, of course, the impact side as well, how does it make you feel about, of course, eating urchins, but how do you impact more than that? Or what's your vision there to impact the reefs at scale?
Speaker 2:Yeah, I, I mean there's, there's a, there's a partnership model. I think we are going to have to forge um, they're having organizations that have forged in the past that I've studied but it really has to be a partnership approach where everyone's incentives are aligned and the you know the divers that have been doing this for decades in their current livelihood, just like any commercial fishermen right now you talk to, they're struggling and every single year gets worse and worse, and you really also want to think about a model that makes them whole. Without them being made whole, this enterprise doesn't work, and so I think you have to think about a systems design that includes not just the ranching technology but also the economic incentives that bring them along. And I think this has been done in various iterations, not to perfect effect, because there are still definitely some political considerations around what urgent divers want, what researchers and regulators want, what communities want.
Speaker 2:But I think there has to be a few things. The urgent divers obviously have to be brought along the journey. The longer term thesis, I believe, for branching in general and sustainable aquaculture, is that some of these systems have to be able to be decoupled from the ocean and brought closer to urban centers where the vast majority of commodities and seafood is actually consumed, closer to where the markets are, and so there is a lot of research and discussions around how to actually build a recirculating system that can truly be decoupled and moved closer to major urban centers like Los Angeles, seattle, new York, whatnot?
Speaker 1:And what would that mean in this case? That you wouldn't be harvesting urchins from the sea anymore, or that you would grow them basically from ag?
Speaker 2:I don't know how that works in urchins, but you still want to harvest them because you need to get them out of the reef, but instead of ranching them close to the coast, you would basically move them into a large warehouse.
Speaker 2:And that obviously obviates the needs for one major thing, which has been a huge hindrance for aquaculture at large in a lot of Western countries, which is your ability to basically secure not only permits but also secure sites that sometimes compete with wealthy landowners and people that want an unobstructed view of the ocean from their waterfront home. You know when you sort of think about aquaculture today.
Speaker 2:you think about Vietnam, you think about, you know, philippines, asia, norway. But in order, I think, for it to really sort of take off in what I would sort of say Western wealthier countries, you do have to acknowledge that there is a land use issue that has to be resolved.
Speaker 1:There's a land use issue that has to be resolved and there are definitely companies that are already starting to set up land-based systems that are decoupled from the coast and moved inshore into warehouses. Yeah, and the question is, where does your water come from? Or your seawater?
Speaker 2:You cannot have a flow through or a hybrid system, but you would pull the water in from basically the municipal tap but you would add your own salt. That part actually is not necessary and you would obviously dechlorinate. That part in and of itself is actually not a huge challenge, if you will. It's actually really just getting the whole recirculating system down from a waste removal perspective which doesn't seem to be such an issue in the sea urchin side of things no, I mean we, you can.
Speaker 2:You can have bio filters um you can have good filtration, just like you would if you uh went to like your, your, your city aquarium. They have really good bio filters. Uh, in our case actually, like I mentioned earlier, we're using kelp and actually sea cucumbers to sort of fully utilize the natural stacking functions of these species. But you could arguably use different systems designs to resolve the waste issue.
Speaker 1:So what do you see as the biggest barrier now for this to and the challenge to to take off on the specifically on the sea urchin side?
Speaker 2:I think one of the things around aquaculture, agriculture in general, is kind of what I would call the Capex Valley of Death, if you will. When you think about the capital markets, you know you've got debt, you've got equities, project financing, you've got non-dilutive grants. The mix of all of these in some format will make it amenable for ag and aquaculture. But the learning curve is quite steep and actually trying to figure out how to bridge the capex gap is something that I think a lot of companies talk about. Some of it comes down to writing the right grant application. I do think with some of the infrastructure investments that the government is making, it's starting to percolate down to these companies, but again, there's not enough funding there.
Speaker 2:Early stage investing is a huge piece that I think folks like you are focused on, which is just getting more folks that are interested in the space, helping companies through that gap that we've built to demonstratively show that we can actually knock down one or two risk factors.
Speaker 2:But I also think for us, especially in aquaculture, the biggest thing that we hear from investors is just the fact that they don't understand biological risk, and that seems to sort of be one of those idiosyncrasies where I would say, if you don't understand it, hire domain experts that do, but make a bet in the space. And if you're one of the first ones to make a bet in the space, you're usually the one that makes a lot more of the money versus the follow-on investors. So I think a lot of this just has to do with a lot of the financing and capital markets folks waiting, you know, waiting in, waiting in more into the space, because the phase shift is happening a lot faster. I think, at least on the ground, that I think a lot of folks actually realize right now the disconnect between the the shiny glass office, let's say and the ground itself.
Speaker 1:it's a facility where you grow sea urchins or rent sea urchins, or it's an agroforestry system or um like. The disconnect is enormous and and absolutely people really don't and I think it it paralyzes as well, like if you don't understand the risks or don't even have a mental framework to put the risk somewhere, you probably don't do anything, like you would click away, oh, oh, this is interesting, and then go to the next. Yeah, exactly, and do something that fits in your framework, which might be real estate or something maybe way riskier. Yeah, but it fits in your mental framework and your friends are also doing it, so you don't lose your job if it goes wrong.
Speaker 1:Exactly, you know, and again, that's just human nature. That's how do we overcome human nature.
Speaker 2:I mean, that's the way I've seen capital markets work for my entire career is that you know, there's very few of those innovators out there in capital markets, just like there's very few innovators that actually truly want to sort of build something new.
Speaker 2:We need to find, like change agents within the investment community, and I think it's hard, but you know the burden is on the entrepreneur to basically prove that the idea makes sense to someone that has a receptive mind.
Speaker 2:I think you know my sort of philosophy has been quickly divide and conquer, Like don't spend your time on sort of convincing folks that might not necessarily be open to it, but you do have to find the people that are going to be open to it. And then you have to spend the time to educate them. And they do have valid questions and you have to spend the time to basically answer those questions or figure out ways to ameliorate their concerns. And those are all just conversations we all need to keep having. But as long as there are investors that are open to the space, which I think there are more and more of, I think it's going to keep growing and I just think we have to kind of ignore the broader investment ecosystem at large because we can keep complaining about it all day, but we need to focus on the folks that are actually considering investing in the space and continuing to educate them on sort of what it is that we think is an investable thesis for them.
Speaker 1:Yeah, I think it's an innovator dilemma of how much time do you want to spend on education versus convincing. You're clearly saying don't convince, but focus on the ones that want to be, um, educated and are interested. But it's probably they're asking a lot of questions, simple questions let's not call them stupid questions um, simple questions that are you're like, oh, that we figured it out five years ago and but you need them to go on that journey because they need to tell others about that story. Exactly like then dan miller um introduced me to you and and are you interested in, in sea urchin ranching? And of course I'm like, why is that important? And and then you understand why.
Speaker 1:And then that let's say, but that that's something you must be doing all day, but it's. It's a very fundamental piece of advice, I think, for other innovators that are doing similar things, or similar things out there that are so far out there that most people would consider them crazy, but that's exactly the ones that are going to change. Not all of them, obviously. This is not investment advice, but we rely on all of them trying to figure out the things that actually do work and end up being normal, not crazy.
Speaker 2:I mean, I think you're right and I think I've thought about this a lot because you either take a top-down approach which is, what do investors care about?
Speaker 2:And you build a company within their thesis, so their ecosystem, if you really want to do something, grounds up and you've kind of crafted your own narrative. I think the burden is on you to educate people and help them understand why they should broaden their thesis to include you, and obviously there's some overlaps. There are some areas where I think we can sort of shift the mindset and framing where this does fall into a very investable thesis. The burden is always on the entrepreneur and the innovator, and I have heard a lot of entrepreneurs say, well, don't waste your time on a lot of these investors. They're just doing their diligence. And I say, well, it depends on what your story is Really. If you're really sort of just creating a company in a sector that you know is investable, maybe you can take that approach, but if this really is sort of like one of those things that you formulated, without that top-down criteria, you're probably going to need to spend some more time educating people on it.
Speaker 1:Yeah, I think this is going to resonate with a lot of people, and so it's a natural bridge to a question we like to ask. Let's say we do this in san francisco or los angeles, in in a theater, and the room is full of investors either their own money or other people's money and what would be the main message? Or if you have, if you can give them, um, if you can plant one seed in their mind, let's say something they remember the next day, and what would that be?
Speaker 2:I think it's similar. The best corollary I could probably give them is that just like AI.
Speaker 1:So, ai, I was in San.
Speaker 2:Francisco for many years, you know and actually AI was around Now were these sort of generative model, these like large language models, around, you know, maybe, maybe not, but they're in R&D. And then one day there was a company that did something big, open, ai, released their models quickly, and then everyone basically jumped in. And I would say this which is the people that jumped in first were the ones that made money, and now you have all these funds that are investing on the edges because they can't get in. And if you understand the phase shift that we're going through right now with agriculture and harvesting wild seafood we don't even harvest wild animals anymore on land I mean the phase shift that needs to happen.
Speaker 2:Well, people say, well, we want it to happen. Well, there's a forcing function here, which is climate change and I think investors intuitively or viscerally understand this, just like we all do which is this entire system is going to get re-architected, whether you like it or not. And so, from an investment perspective, I would say if you believe in that thesis, do your homework, hire the right experts. You don't have to understand everything People don't still understand everything about AI. You just need to understand that it's happening and you just need to basically be one of the first ones that get into the space.
Speaker 1:That's all I would say.
Speaker 1:Place your bets wisely Place your bets, yeah, wisely obviously Not investment advice, but it's interesting how you know the phase shift in aquaculture with climate change, and in agriculture as well. Like, fundamentally, we're in an acceleration of many things that have been happening and we've been talking about it how to get fossil fuels out of it, how to, et cetera, et cetera. But now suddenly we have to because massive floods, droughts, et cetera, massive heat effects that you see like a blob of warm water for a little over a year, can basically turn an ecosystem upside down.
Speaker 1:And a whole industry of wild harvesting sea urchin people disappears.
Speaker 2:Yeah, I mean we can call them exogenous factors, we can call them biological risks, we can call them whatever. I think the sort of future from an investor's standpoint is that there are going to be many more risks that pop up and if you are no longer willing to accept exogenous risks, biological risks, any other risk your investment criteria will become more and more narrow and you will no longer be able to sort of raise money for your fund because there'll be so much, so many investors crowded in certain spaces that they'll have to return the money back to their LPs. I honestly think, if you're going to start a fund today, you should look into the regenerative space, because it is really just what you know. There's just so much, so much investment that needs to be made to re-architect this entire system that there's just a lot more returns to be had here than there is if you're going to invest in the 10th AI startup. There's only room in that ecosystem for a handful of them.
Speaker 1:This is like the perfect bridge to the next question what would happen if you would be in charge of a large fund, let's say a billion dollars? Of course, again, we're not giving investment advice and also not looking for dollar amounts, but what would you focus on, like what would be big buckets of your attention if you had to put a significant? I mean, it is day and age. I think open ai is raising for more than a hundred billion valuation. Let's see when this airs and let's see if you listen in a year, if they're still around, it might be fun to look back at it. But anyway, we're in that time of where billions don't seem to matter anymore, but in ag and food it still matters. Let's say a billion dollars. What would you do?
Speaker 2:Yeah, and I'm not going to claim that I've ideated this completely in my own black box, because there are certainly folks out there that are starting to do this. In fact, there are some clusters like Washington Maritime Blue up in Seattle that I'm a part of Hatch Accelerator.
Speaker 1:Shout out to Hatch George Carson.
Speaker 2:Carson and George, but you know, it needs to be scaled up.
Speaker 2:This concept of ocean clusters and even agricultural clusters, by the way is that they all need to be connected so that they can cross pollinate. This is not something that you know. You would learn something in the Pacific Northwest that you wouldn't be able to share with someone in Norway. We need to basically create these investment clusters. We need to basically create these investment clusters. Ideally, they're centered around university or research organizations, although that need to make a bet on experts.
Speaker 2:We may not necessarily be the experts in everything, but surely we can make a bet on EIRs and create venture studios and basically just germinate a lot of these ideas from C to series A to series B. I think right now, a lot of the funds are saying, well, we're gonna invest at the series A level or we're gonna invest in growth stage, but how do you basically get all these entrepreneurs to actually start these companies? And I think therein lies the challenges. I wouldn't. I would put the entire billion dollars into a cluster of venture studios and now I basically just go about basically bringing in the best domain experts and entrepreneurs from each of these sectors to start companies.
Speaker 1:And then when you say a cluster, just to make it visual, like what do you mean by a cluster? Is that the Oregon coast around the kelp forest? Like what is a cluster to you?
Speaker 2:Yeah, I mean I would center them around areas where obviously there's a good ecosystem not just environmental and ecological, but researchers. There would be at least a good cohort of budding entrepreneurs and master's and PhD students. They would actually be possibly folks that are already in workforce development. And I think one big piece missing still that I think we should not exclude is that these centers should also include areas of expertise for grant writing. I don't think that's ever going to go away in our space, and I think I see this duality where either you're focused on experts who can help you write the grant or you're focused on experts that can help you possibly raise a safe note, but unless you really sort of coach entrepreneurs on how to do both, or how to do everything and walk and chew gum at the same time, I think you're doing them a disservice, because entrepreneurs themselves are thinking about their entire capital stack, not just, not just one or two things in isolation.
Speaker 1:So and that's something that venture studios are like those kinds of services like no entrepreneur should do that themselves, or in isolation, Like it doesn't make any sense to to and and grant writing is is a skill and some people are really good at it and really enjoy it Not me, I don't enjoy it. Not me, I don't enjoy it. But definitely if you're good at it, it unlocks so much. And if you're good at fundraising as well, and if you're good at pitching and et cetera.
Speaker 1:It's a skill and it's something of course you have to learn as an entrepreneur, but not necessarily grant writing. So it's one of those services that should just be centralized in a hub and let's go, because everybody's doing that themselves. I think a lot of grants actually never get like. Submissions are in many places very low because it's so tedious, and also then after grants get applied, then the administration piece is also an absolute disaster usually, and reporting, and if that can be slightly centralized, that would be amazing. I'm speaking for a friend.
Speaker 2:Yeah, I mean when you think about sort of a.
Speaker 1:The lost time.
Speaker 2:It's lost time and it's also it's similar in some ways to like deep tech, in that there's a lot of equipment and there's a lot of accounting and there's a lot of post-grant administration. There's a lot of things that I think hamper a lot of ideas from getting germinated, but I do think that pushing all those resources into one place also resolves some of the pernicious questions that investors might have, which is like I can't get any deal flow right now. You know, there's just not enough deal flow for me and I think unless you sort of start at the very initial phase, all the follow on funding, that entire ecosystem will just not happen by its own.
Speaker 1:It's almost like a natural ecosystem to be regenerated. Yeah, it needs a full, a full force and yes, it does and it's fascinating.
Speaker 1:I don't think anybody ever said I would put it all in venture studios in a cluster. Um, but very fair. Fair answer to to the billion dollar question and leading to another. I mean, we take away fund, but we do give you the magic capabilities and magic wand to change one thing, but only one thing overnight. What would that be? We've had answers on consciousness, on very practical disappearing of subsidies or animals outside, et cetera, et cetera. It could be literally anything. What would it be if you had that magic power?
Speaker 2:I think the biggest thing that I'm worried about right now is antibiotics. I think it's been in the news a lot. I know it sounds like sort of a. It is one of those things that kind of keeps me up at night. I think some countries are doing better than others, but honestly I would try to sort of stop or severely limit antibiotic use in agriculture and aquaculture. It just is one of those things that terrifies me that the artifact of our modern world is based off of antibiotics and yet we're overusing them to the point where once some sort of that resistance happens in our entire ecosystem, you could literally move yourself back into the Stone Ages or medieval times, and it's just something that I think we sort of like not all of us but the overuse of antibiotics is the biggest thing that I would. Just if I had a magic wand, I would try to regulate it a lot more than it is now a regular part of feed and and meaning like anywhere else.
Speaker 1:You get in this case super viruses and super bacterias, mostly, of course, not viruses, but like super weeds, like if you resist enough, something will, will figure its way around it. And that means also for us we don't have the antibiotic suite anymore we used to have and actually we're down to very few. Of course, new ones get discovered, but not so often anymore, and which simply means if something jumps from the animal kingdom to our kingdom, which of course is the same um, we have a huge issue because we, we just don't have any, any of our weapons left, let's say to to fight and, uh, and it's very under underestimated, I think, or very under reported. How, how much is used? I don't know the numbers, but do start Googling if you want to.
Speaker 1:In agriculture regularly. Now, not just something is sick, we need to. No, just dumping it in water, dumping it in the feed, just because it makes animals grow faster, and that's, of course, a complete misuse of that and super risky for basically the whole animal kingdom. Yeah, that's, it's also a first one we ever heard somebody say that, but a very very fair, fair one.
Speaker 1:And we like to ask this contrarian question like where, where are you contrarian? In your bubble, which of course is a bit of a specific one in this case, like I don't know if the sea urchin bubble is necessarily very big, but maybe in the aquaculture space? I don't know what conferences you go to, what groups, let's say, you visit. Where do you within your group, let's say, think very differently? What do you believe to be true that others don't? Definitely inspired by John Kemp's question.
Speaker 2:I always think that things are going to happen a lot faster than they are.
Speaker 2:You know, honestly, in this case, I think aquaculture and regenerative at large is going to happen a lot faster than people think. Going back to my permaculture days, when we were studying soil health 10, 15 years ago, it was already sort of a holy shit moment for me in the fact that we were stripping all of our top soils, you know, depleting our aquifers, basically stripping our oceans of wild harvests. These things have follow-on effects that we are seeing more and more, that we are seeing more and more, and I think that there's definitely a steamrolling of the effects, the consequences of all of our collective decisions or lack of decisions in a modern industrial area, and, I think, a lot of these. That's also why I think, for me, urchins are a straw man for a model that I think can be used going forward for whatever you want to call it regenerative, blue economy, sustainable. There needs to be case studies and models for how we're going to transition from the old way to another way, and so I do like to sort of dive deep into urchins.
Speaker 2:But I'm also just trying to prove that there is another model that people can glom onto. People right now are looking for different models. Everyone knows many people know that the current paradigm doesn't work, and so I always believe that the future needs to be manifested faster, and I honestly believe, in this case, that it will bite by sheer necessity.
Speaker 1:So yeah, it's an interesting entry point. You chose with something extremely exclusive, high quality and great tasting, which I will discover at some point, but like it's an interesting entry point compared to to, I don't know, carrots or tilapia or something that definitely is not as sexy or as appealing as a sea urchin, and then it happens to have all these other side effects and happens to be a zombie to a certain extent.
Speaker 2:And, of course, it's not responsible for the kelp forest disappearing, but definitely helps if we eat more of them and not flow, let's say, from from japan yeah, I mean there's, there's a school, certain school of thought within sort of uh, modern sort of conservation that you want to protect the wild lands that are left. I think the challenge right now is that our the damage we've done is so large that, unless you kind of go back in and what I call wisely intervene in certain ecosystems, you know they're just going to keep deteriorating. And so I think the approach that I urge people to look at is where in the ecosystem you see these impacts happening, and to sort of focus your entrepreneur, your innovative mindset into and there are many examples across the agriculture, forestries and aquaculture notions where these effects are obviously manifesting and if you wouldn't be building this and focus so much on sea urchins?
Speaker 1:what are other places, what other things you might be building or might be focusing on? What are other nodal points or intervention, wise interventions, as you mentioned?
Speaker 2:I think there's a really good model for harvesting lionfish in Florida. In the Caribbean. They're making this crazy leather they're making sustainable leather out of lionfish skin. There has been some efforts to um ranch why is lionfish an issue?
Speaker 1:just for so lionfish um lionfish lionfish are these?
Speaker 2:they're actually beautiful, beautiful fish. They have these uh, crazy spikes if you've ever seen them and they have all these really beautiful scales, and so they were very popular in the aquarium trade because they're just so freaking beautiful. But, like anything in the aquarium trade, one day someone decides they don't want it and they leave it and they put it into the ocean, thinking nothing bad is gonna happen, and then they start proliferating, just like the Python in Florida. But you have a lot of these species that either didn't exist in their current native ecosystem or they've simply proliferated based off of factors that we talked about with urchins. And there needs to be some intervention here, because the ecosystems are out of balance and if you leave the lionfish in Florida, for example, they're going to eat all the native species and then you're going to have a huge imbalance in terms of all the other fish on the coral reef, and so there have been efforts to basically catch these lionfish. First, people were trying to cook them. The latest iteration of that is that there's actually people that are trying to make sustainable leather out of the lionfish skin high-end leather. Again, I kind of gravitate towards high-end. I know most of us don't want to be catering to the wealthy. But if you really think about the model that capitalism sort of encourages, you always have to start there in order to scale down, and that's just a recognition sort of how business models and how some of these markets work. So the lionfish is a great example.
Speaker 2:Asian, invasive Asian carp that have been also introduced into a lot of the waterways in the US. People are attempting to farm those. Those are great ideas. Attempting to farm those, those are great ideas. There was invasive blue crabs in Italy last year that the Italians simply didn't know what to do with and they're grinding them into a pulp and throwing them in landfills. Well, whereas in East Asia there are people that will eat those crabs as a delicacy. So there's a lot of ecosystem issues. If you just stay in tune with what's going on in the news, that could be could be all sorts of viable business models.
Speaker 1:So it's interesting, yeah, your natural inclination to go to the high-end market or the delicacy one, which I think is very fair because there's money there, there's margins, there is a, a need for stories, there's a need for taste and flavor.
Speaker 1:There's a, there are supply chains in place that can handle delicacy in in certain ways. Of course, letter is different, um, but you can feel and you can make a point like there's a, there's an easy storytelling point to be made, regardless if you're going to catch a lot of lionfish but maybe it does take off, and if it does, you're going to have like you're going to catch a lot of lionfish but maybe it does take off, and if it does, you're going to have people hunting for lionfish because of the leather potential. So it's a very, very interesting one. There are a lot of these not niche but potential more than a niche businesses I think we haven't really captured, and it seems a lot better than running a company that does anger management of smashing sea urchins with hammers, because then you have to pay attention if they're still fully alive and full of seeds. That might create more trouble.
Speaker 2:Yeah, I think you just have to be clever about it. No, I mean, I just think that any problem that exists out there with our ecosystem Can be eaten, can be turned into a delicacy.
Speaker 2:Yeah, turn into something. You know, I think just kind of looking at something and just unpacking it. I mean it takes time, but there are certainly a lot of layers to all these stories and once you peel back the top few layers you start to understand that there's actually a lot of commonality in the way that you approach a lot of them. There's not necessarily just one-off cases. There starts to become parallel patterns across a lot of these challenges that I see. Even when I sort of read about a lot of companies that get funded, there are patterns that you start to sort of see pop up over and over again.
Speaker 1:Yeah, no, of course, this is ideal for an adventure studio focused on how to make invasive species that happen to be a delicacy somewhere else, or maybe in your place. How to do that? I mean, that's written all over it.
Speaker 2:let's say yeah, that's actually the other thing that I would do. Cohen is, instead of doing this, I would start the venture studio. I mean you start to see the patterns pop up and there's just a lot of opportunity out there.
Speaker 1:And do you see more entrepreneurs entering the space or wanting like entrepreneurial people, let's say, people that have experience elsewhere in running teams, raising maybe money, either for-profit, non-profit, but are able to to go from zero to one or to get stuff done, um getting interested. We see that, but of course in our bubble that that we see talent getting into regeneration, um, have you seen the same?
Speaker 2:I think you see it at the edges. You definitely see a wellspring of people that want to, because the sheer issues going on are just so large vis-a-vis Maybe some of the issues that they're dealing with on a daily, day-to-day basis in their day jobs. You see a lot of people that join water coolers, like the one that you hold, which are great for Mindshare. I think people are trying to convince themselves how to take the leap. I still see fewer people taking it realistically, but I see a lot of people kind of trying to figure out how to dabble and I don't know how to get the dabblers into sort of firmly within the problem space.
Speaker 2:There are certain things, I think, that preclude them from doing it, which is you know, how do you self-fund a regenerative startup from zero to one when there's just not enough sort of funding available?
Speaker 2:So I think there are people sort of there's sort of successive types of people kind of waiting to be unlocked, if you will, as the ecosystem itself kind of de-risks. That's kind of what I would say. But I do think there are some folks moving in, like Dan that we met, that are trying to sort of push forward and make that ecosystem more amenable to innovators, but I really think, in order to get people that are really innovating on the ground, I do think we need to basically figure out how to build more support systems for them, because, unlike in tech, you could basically, you know, go raise $5 million with the PowerPoint. That just doesn't exist in this space, and I think people always compare how hard things are with the spaces that they understand, and you really have to be mission driven to sort of pull yourself into this space, given the fact that it is still inherently more risky than other spaces.
Speaker 1:Yeah, I think it's a perfect moment to wrap up as well and I want to thank you so much for coming on here and share early in the journey and definitely looking forward to keep track of it and follow and how and, of course, taste at some point, but how Sea Urchins become from a zombie to, of course, again a delicacy but actually help restore a lot of the kelp forest and who knows what other delicacies are occurring invasive somewhere and we could eat and have to, can feel good about.
Speaker 2:Yeah we'll definitely have to send you a sample soon.
Speaker 1:Thank you so much for listening all the way to the end. For the show notes and links we discussed in this episode, check out our website investinginregenerativeagriculturecom. Forward slash posts. If you liked this episode, why not share it with a friend or give us a rating on Apple Podcasts? That really helps. Thanks again and see you next time.
