Ushering Seafood into the Digital Age : BlueTrace

Meet Chip Terry, Founder and CEO of BlueTrace, a Maine based software company aiming to digitize the seafood industry where the vast majority of tagging, tracing and reporting is still done with pen and paper. 

Smart and funny, Chip was a lot of fun to interview. But his story also resonates with many entrepreneurs because the problem he is solving now is not the one he set out to solve originally. A couple years in, he made a full pivot and in doing so transformed his potential customer base from a subset of aquaculturists to virtually any harvester or dealer in the global seafood market. Sometimes it takes getting in to find the right path.

I’d like to thank Maine Venture Fund, a two time investor in BlueTrace, for sponsoring this episode. 

In this podcast we’ll learn the following and more:

• When Chip knew it was time to pivot - and how he did it
• Why digitizing the seafood industry is urgent 
• How racing lasers is good training for entrepreneurship
• How Chip raised money in this terrible fundraising climatee

Mentioned in the episode:
BlueTrace
Maine Technology Institute
Chip Terry
Maine Venture Fund

Transcript

INTRO

HOST VO: Welcome to Happy Planet an impact economy podcast where we speak with entrepreneurs, investors, and thought leaders in search of profit and planetary health. I am your host Abigail Carroll. 

We live largely in a digital world, but some industries are still running on analog. Fisheries is one of them. While meat, poultry and dairy are all fairly traceable, seafood is stubborn and slow to adopt new tech. Maybe at the origin it’s because of the sheer impracticality of working digitally on the water. 

Ironically, seafood is also one of the most controlled foods on the planet. It takes an immense amount of tagging, reporting and paperwork to get products to consumers. Especially oysters, which, as you know, I know something about. In my personal life, I am fully digital all the way to my apple watch. But due to a lack of digital tools, my oyster farm was analog. All of our reporting was hand written. The harvest tags were hand written, our state reports were hand written, and our dealers largely worked the same way. They took the handwritten tags off our bags, tossed them in a box for safe keeping and then they hand wrote new tags before they shipped them off to the next dealer. Lost tags, illegible tags, approximate reporting to state - and no digital backup- was the norm. Until now.

Blue Trace is changing that - you heard me talk about it with Niko in episode 2 as we were discussing big picture solutions for the seafood supply chain. Blue Trace is the only tagging, traceability, and compliance technology designed specifically for the shellfish industry. We’ll hear from founder and CEO Chip Terry, who recognized the ways this mobile technology can help fisheries big and small, and the dealerships they sell to, eliminate redundant data entry, streamline operations, and comply with regulations. 

Abigail (04:42):

Now I have to provide full disclosure to our listeners today. I am a shareholder and a board member at Blue Trace. So maybe the best way to start this podcast today is to ask you, Chip, how are you gonna make me rich?

Chip (05:20):

<laugh>? It's, it's a whole, Abigail, first of all, thank you for having me. Uh, it's great to be here. Um, you know, I spend a lot of time, uh, sailing. It's a whole lot easier to go down wind than up wind. Um, and the benefit of, uh, you know, being in the shellfish world or in the seafood world is there's a lot of winds behind you. There is a growing demand for seafood. There's a growing demand for shellfish. There's a lot more farms out there. Um, there's a lot of un unmet need. Um, and that's, uh, yeah, that's the way you build a business, is you build it by finding things that people really need that they can't do themselves today.

Abigail (05:57):

So, okay, we were talking about shellfish. We're talking about seafood. What is it that Blue Trace does?

Chip (06:04):

So, at its core, we help, um, seafood companies, particularly shellfish companies, comply with very complex regulations, provide a traceable, um, path for their food, the chain of custody, from the time it leaves the tide line to the time it arrives at your table. So they, first of all, you know, it was handled safely. You're not gonna get sick from this two that it is what it says it is so, it's not been a relabeled product. And number three, so you can actually meet the farmer, meet Abigail Carroll in this amazing farm that she had, in uh, Scarborough, Maine. Um, and understand why it was so cool and why it was interesting about it.

Abigail (13:05):

Very interesting. you are not a you, you're not a 25 year old entrepreneur,

Chip (13:19):

<laugh> yes i am not

Abigail (13:22):

I think we're the same age, so don't say it. Chip (13:33):

you know, my wife makes fun of me. My wife's a doctor and she's like, I've had the same job for a long time. And I'm like, I always switch jobs. Cause I'm just very curious. <laugh> someone say a more negative connotation. I like the curious connotation. Um, but I started out to a PhD in American History thing as being a college professor. Um, I started teaching for Princeton Review, the test prep company, and they opened a software office in Boston. And I was there for college in grad school. And they, uh, you know, I came in to write questions. I literally started in like, oh, we need some freelancer to write a few test questions. Um, one thing led to another, and by the time I finished my PhD I was the product manager for what at that point were CD roms, um, launching new gmat lsat, uh, SAT prep classes.

Chip (14:23):

I basically said, ah, this is really fun. I get to build something and I get to put this really unique team together and, launch something into the market and see it make a difference. And so I actually never applied for an academic job and I sort of stuck in the tech industry. I had a bunch of different, uh, steps in that career. I was VP of strategy and marketing at Forerster Research. Um, I was at a couple of different, uh, um, venture backed companies. One of, of 'em Zoom Info, um, did quite well. we were all about natural language processing and deep tech and teaching computers how to read. Um, the last one was Buzz Agent. We got acquired by, um, a company called Dunnhumby that then got acquired by Tesco, the big British retailer. And so I spent about five years managing a, uh, tech team. Um, so about 50 engineers over in London, which was amazing for about three weeks. And then it sort of sucked out <laugh>, um, but

Abigail (15:20):

welcome to management.

Chip (15:22):

Um, but anyways, in the process I, you know, I learned a lot of different things. Um, I was having kids, so, you know, it wasn't a time to start  a new company because when you start a new company, it's inherently risky. and so I waited until my kids were gone off to college, and then I'm like, okay, now I can start a company cause I've got, uh, more time and, uh, you know, less pressure on my schedule.

Abigail (15:50):

you're off, you're in London, you have a PhD and, and why seafood? How did you, how did you make that late? Cause this just seems like completely out of the box. I mean, having, having had an oyster farm, I know we needed some help, but how did you know that we needed that help? 

Chip (16:12):

So, I mean, it's a constellation of things and it's like one of those classic ones where you connect the dots when you look back. first of all, I grew up on the coast of Maine. So I grew up, um, down East Maine, um, for those of you who don't know it up near Acadia National Park. Um, and so I knew people who were in the fisheries. I knew people who were lobstermen, ground fishing. at one point we lived next to what was at one point a shrimp plant that had then closed down. By the way, there were no shrimp, uh, harvested in Maine these days. my favorite foods were all seafood. Um, so, you know, that was sort of the background. Um fast forward while I was working for all these tech companies, we had a place up in Maine, um, and I would go, you know, we call Harass the Farmer Day, <laugh>.

Chip (16:57):

You know, I had some really good friends who had started Oyster Farms up here. and so I'd take the family and the kids and we'd hop on the boat and we'd drive over to the oyster farm and we'd buy oysters and we'd learn everything about it. We were some of the best days we ever had. Um, and as I'm leaving, Tesco, one of my friends who had an oyster farm said, Hey, why don't you buy into my oyster farm and become a, become a partner? I never really thought about it, but I started looking at the industry and saying, okay, let me understand more about this for various reasons. I never, I didn't buy into the farm, uh, which is probably a really good decision, <laugh>, but in exploring it, I'm like, wow, this is an industry that is first of all taking off, back to that, you know, sail down wind not up wind, right?

Chip (17:39):

Um, and looking at the number of,farms that was coming online. I mean, when I was growing up in Maine, there were maybe five farms in the coast, whole coast of Maine. Now there's probably 250 and another 150 in permitting. And that's a global phenomenon. Uh, that's not just Maine, that's the Chesapeake, that's British Columbia, that's Ireland. Um, that's the Gulf Coast to Mexico. That's the Baja Peninsula .you look at this and you say, wow, there's a ton going on here. Um, and it'd be really neat to be involved. And then you begin to look at it further and say, you know, I really want something that's great for our world. Um, and one of the things that really appeals to me having grown up in rural Maine is, you know, this has been a story of economic depression and rural Maine for generations. Basically everybody I knew that was going to college, went to college and never came back. 

Abigail (18:33):

They can't find jobs here.

Chip (18:35):

You can't find jobs every, you know, the industries that are here are extractive or service, right? you're chopping down trees, um, or you're, you know, servicing the summer people who come up for three months a year. Um, and that's pretty much it. Um, and all of a sudden you started to see some of these oyster farmers in particular, college educated, coming back, starting these farms, putting their kids through college, buying houses on an industry that is actually great for the environment. And so, to me, first of all, my first step into it was, I love the economic impact that this can have on these small rural communities. Um, that matters a lot to me. But the next one is, you know, all of these, uh, waterways have gotten a little bit polluted over time. Um, and they were starting to clean up.

Chip (19:23):

Clean Water Act was,, probably the first step there. Um, but you have a bunch of different things going on, and now all of a sudden you can have an industry like shellfish farming that is actually great for the environment as well. And then finally it produces a great food. We all love to eat it, <laugh>. I mean, if you look at the demand for oysters and, you know, muscles and clamps, it continues to skyrocket. Um, and it's also, you know, if you look at the greenhouse gas emissions profile of this, you know, if you just move from chickens to oysters, you're reducing your greenhouse gas emissions by half 

Abigail (19:59):

Or more importantly, cocktail shrimp to oysters. Cause that's the real replacement, right? It's like the imported shrimp and the dead mangroves and everything that oysters are replacing that, that, that's huge. 

Abigail (06:41):

one of the things that's most interesting to me about your story and watching this business grow is that you came to the market with one idea, and then you made a, a really cold, brave pivot. A full pivot. You didn't just hedge the pivot and add a product. You, you came out batting for one thing. You realized there was a different problem to solve, and then you went out to solve it. So I, I wanna hear about that

Chip (07:28):

<laugh>. Sure. so, I'm a historian by background. in history you sort of, you take all these data points and you begin to build a story and you build a story that says, okay, I think this is my hypothesis of what actually happened and why people did what they do. Well, I actually looked at this in the seafood world and I,went around and I had this hypothesis that, uh, was sort of paying out, which is, geez, what farms need is they need a better way to manage their farm. They need a farm management system that allows them to, you know, understand how many, uh, products they're losing, what their yield rate is, what their team has been doing today, all the things. They're gonna make them more efficient. I still believe they need that. But what I missed in my hypothesis is they didn't really want that <laugh>. Some farms did, but not everybody did.

Abigail (08:23):

I wanna get thinner, but I don't wanna do a diet

Chip (08:26):

Exactly. <laugh>. So everybody says they wanna eat organic, but when they get to the grocery store, they don't wanna buy organic. Um, and so, um, we, uh, we sort of started there, um, and we were sort of rolling a boulder up a hill. We'd gave three clients. We'd lose one, we'd gained three clients, we'd lose one. And we're, you know, we're up to 40 or 50 clients, but it was, you know, becoming more and more painful. Um, but what we also did is I visited a ton of farms and this is where the sort of, you know, understanding the market, understanding what's going on. I'd sit there and I'd watch people write out these tags by hand and write out logs. I'm like, what the hell are you doing? This looks painful. Like, oh yeah, we just have to do this because of regulations. I said, well, you know, maybe we could do this a little easier.

Chip (09:08):

What if we, uh, you know, printed out these tags from your phone to a little thermal printer? So we started exploring that and we launched that as sort of a side product. And it took off within the, uh, three months. We had more, uh, people on that than we did on the other. And so then you face this decision of like, you know, do you try to keep both products alive or do you say, you know, we've got a small team, let's try to roll one, you know, move off of one and put all of our eggs in the other basket. And, you know, as a small company, the biggest danger we have is we have a limited runway. We have a limited, uh, bandwidth. We better do one thing really well rather than trying to do two things mediocre. Um, and so we made the decision about a year ago to just walk away from our farm management product.

Chip (09:56):

And what we did is we basically told all of our clients, we're not gonna charge you anymore. Um, we are going to retire this in about eight months. Um, and, uh, we did that. And in the meantime, we invested everything in the tagging solution for Shellfish Farms, which then broadened out to, uh, a solution for distributors and beginning to sort of whole track up the chain. So it was amazingly hard.  Um, and we were very cautious to explain, you know, exactly why we were doing it, what we were doing We still have some people who are unhappy with us, uh, because they love the product. Um, but by and large, I think everybody understood it.

Abigail (10:32):

So did, did your 50 initial clients follow you on the tagging product or did some just storm off angrily? Chip (10:43):

I think at this point we probably have about 46 or 47 of them. There were a couple that sort of, you know, not stormed off, but, uh, said, oh, you know, I don't know if we can trust you or whatnot. So we had to build back trust. Um, yeah, because that's, that's probably the hardest thing. we wanna make sure that we treat our clients right, that we are, you know, doing the right thing by them. Yep. Um,

Abigail (11:08):

So you're, you've got these shellfish farmers, for example, on a boat and they are printing out tags. And what is the mechanism that's making the whole traceability work? I mean, cuz it's, it's a paper tag, right? 

Chip (11:27):

Yeah. So really a paper tag in our world is just a, uh, paper representation of a database record. So, you know, there's a few things that have happened in this world that are really important in the tech world, one of which is cloud computing has come of age. Every one of our computers or our phones is now attached to the cloud. So, you know, we can store a database record up in the cloud, which means you can access it from everywhere. It means it's not, not gonna, you know, disappear when you throw your phone overboard. Um, so the other thing that's happened is QR codes have gotten super easy to deal with and also what they call dynamic so that they can do different things depending on who's scanning them.

Abigail (12:07):

So the tags have QR codes on them.

Chip (12:14):

The tags have QR codes on them, and every one of our phones can scan that QR code and learn more about that product. So this is the database. So that's the link to the database market.

Abigail (12:23):

Very interesting

Chip (12:24):

And then the other thing that's actually really important, it seems really silly, is printers have gotten better. It seems like printers should have been a solid technology years ago, but it really hasn't because we all hate our printers. We all hate the ink, um, et cetera. But now they have these little thermal printers that are relatively inexpensive that print, uh, waterproof paper and they print with heat instead of ink so that, uh, the print never goes away. Um, unless you cook it. You know, if you put it over a hundred degrees, which, you know, if you're doing that, you've got other problems. Um, but, uh, you know, being able to have these Tyvek like ma uh, tags that are printed out on a mobile printer on your boat make all the difference.

Abigail (19:59):

, you know, tell me about the seafood industry you discovered, because I think it was probably a bit of a shocker to find out just how analog to, to use a nice word, <laugh> the industry really was <laugh>.

Chip (20:33):

by, uh, definition it's a mobile rural wet environment. So it's not well designed for, you know, having even a laptop computer, much less a desktop computer. And so by default, almost everybody in this industry uses pencil and paper, wet wax boxes with a crayon literally written on the side of the box. Um, this is what it's, we went, one of our clients is down in Philadelphia, and we went down there at 5:00 AM one morning to watch them unload box of seafood, 14 tractor trailer loads of seafood coming in from all over the world.

Chip (21:08):

Every single box is literally, uh, a crayon on the side of it with, uh, you know, handwritten paperwork that accompanies it, explaining what's in here. We watched them on the, like two pallets worth of squid. And somehow you're supposed to know that these, you know, round cardboard boxes have 60 pounds of shrimp in each one. And the ones that have, you know, SQ are small squid and the ones that have LQ are large squid <laugh>. And then other than that, you know nothing about it. Um, and so just watching what happens, you're like, my God, this is an industry that, uh, you know, has done this for a reason, but it's gotten really opportunities. It's, you know, got some amazing opportunities to move forward.

Abigail (21:50):

So those squid boxes, tell me how your, how your product, when you get to squid, how, how is this gonna change that experience at the dealership?

Chip (22:00):

So at the very simple level, it's labeling and digital record keeping. So put a label that we, you know, we actually tested a bunch of different adhesives. It turns out there's a lot of adhesives out there. And so we found,

Abigail (22:13):

you know a lot about paper

Chip (22:15):

<laugh>. Oh my God. Um, you could, uh, yeah, it turns out there's like at least 35 under regularly used adhesives in the world. Um, and so we had to find the one that could stick to a wet wax box, but then when it froze, didn't fall off. Um, because a lot of see if it gets frozens, but we found that, so at the very simple level, it's put a label on the side of that box that has, you know, information about what it is when it was harvested, where it was harvested, and also has a link to that QR code so that now you have a database record that a accompanies that, so that when that squid harvester, um, packages those boxes, they put the label on the side. And in the process of putting that label on the side, they're also creating a digital record that can be passed to the buyer so that the buyer knows, oh, by the way, I've got two pallets of squid showing up. It was harvested in the Chesapeake on Monday, it's this size. Um, this is the harvester, this is certification. And by the way, it came from a sustainable fishery. It didn't come from some unsustainable fishery somewhere else in the world. So that's, you know, that's the key to it.

Abigail (23:18):

It's kind o f crazy. This is like a 200 billion dollar industry in the United States alone. but how is it that there's so little transparency? I mean, it seems like we know where our beef comes from. We know where other products that we're eating on a regular basis comes from. why is it that this industry is still so opaque? Is it just because it's so hard with the wet, wet environment to take data in?

Chip (23:52):

Yeah, I mean, it's a bunch of things. It's a constellation. It's not one answer, but yeah, certainly the environment matters. But a big one also is, this is an industry defined by a lot of small players. So just US and Canada, there's 96,000 producers and dealers, um, in, uh, the seafood world. So that is, you know, 2,500 different lobstermen on the coast of Maine. That is, you know, crabbers on in Alaska that is, pollack fishermen out on the west coast shrimp fishermen in the Gulf coast. Um, so there's just a ton of small players. And so first of all, that makes it really difficult. Um, you know, other industries tend to be more consolidated. Um, they tend to be very rural, just by definition you harvest in places that are not, uh, in urban centers. Um, until very recently you had very bad internet connections. So having a digital connection from Newfindland was tough. Now it's actually gotten a lot better. Um, and so, you know, those are probably some of the reasons. Um, and it's part of what's the joy of this industry too, which is, you know, it's not five big players, it's 9,600 different players just in the us And that, by the way, we import 70% of our seafood. So if you expand that out, it's 300,000 plus, uh, you know, um, businesses in the global economy that are just importing to the US

Abigail (25:14):

Potential clients. That's how you're gonna make me rich. I can see that

Chip (25:18):

On that. Exactly. <laugh>. And, you know, and one of the challenges with any business like ours is you can target a few clients and sell them, you know, a six figure or a seven figure deal. Um, or you can target the, you know, bulk, the vast majority of the companies and sell 'em a much smaller deal. And our whole strategy is focus on the small to mid-size market. Don't worry about the really big players yet. Focus on the, you know, the start of that market where it's really difficult, but they have a solution that's, you know, fit for purpose.

Abigail (25:50):

So why do you think most clients who use your product are using it? What is the, what is the real benefit to them?

Chip (25:58):

So the real benefit to them is productivity gains. It's how do I, you know, make it so it's faster for my, uh, guys in the front line to process the seafood. Seafood does not get better with age. Um, and so, you know, how do I make it so I can print out tags faster, create the logs faster, file my landing reports, tell my buyer what, what's coming to them, all the steps that you need to do for every single harvest that, you know, from your experience is just painful. Um, and so it's all about productivity gains. and then reducing error rates. The number of errors in your landing reports in your harvest logs, et cetera, is probably about 25%. those are the key things. Um, you know, we talk about traceability with investors and it matters and it's, uh, really important. But nobody buys us for traceability. What they buy us for is how do I make my business better?

Abigail (26:53):

Yeah. Yep. So, um, uh, you've, so right now you've got, you've got clients coming to you. You've, it seems like you demand, you're not having to push sales, sales are coming to you. How many, how many clients do you have right now? And like, what's, what's what's your universe looking like right now?

Chip (27:12):

So we've got about 280 clients. It keeps going up, uh, every time I talk about it. Um, so, uh, last month we added 23. A year ago we had less than 50. Um, so we're, you know, we're closing a bunch of clients every week. Um, uh, well, we do certainly outreach sales, we, you know, we reach out. But, uh, it's a lot of it's reactive sales.it comes through the network too, right? friends telling friends, Hey, by the way, you should use this. It makes it a lot easier. It's,people's tags showing up at a distributor and the distributor saying, oh, this will make my life easier. Let me use that. Um, and so it's, you know, the process of this network and building this network is really critical.

Abigail (27:55):

I could definitely see how the network effect works. The dealer doesn't want multiple systems. They, they're using your QR code system mm-hmm. <affirmative>, and they just, they wanna make sure everybody's on it. I, that must be a very powerful tool.

Chip (28:09):

It is about 60% of our sales come through the network today. 

VO: After a short break, we’ll dive into Chip’s advice for entrepreneurs, his experience with venture capital, and how his technology will ease the transition as major changes come down the pike from the FDA.

BREAK  Spark No 9 and Maine Venture Fund

VO: Welcome back to Happy Planet

Abigail (28:15):

So I just wanna get back to something you talked about earlier. And I had, I known this about you, I, I would've put a lot more money in this business. But you were a small boat sailor. You sail lasers, you race lasers all year round. Um, and, uh, I feel like the small boat racing is just like a wonderful metaphor for startups. You know, you're navigating this precarious vessel that's very caps sizeable, not like a startup, uh, in this dynamic environment with swells and wind and, uh, and you have to stay the course and adapt it. Um, do you think that your laser sailing has, um, had an impact on your, your career, which seems to have been very nimble with navigating and strategic pivots?

Chip (29:10):

that is my great joy in life in many ways is racing boats. I love going out and I do it. You go, as you said, all year round. I race a lot in Marblehead these days. Um, not to brag, but I've won three of the last four championships there against a lot of kids who are in college, uh, <laugh>. So, and I'm not in college. I'm a long way from that, right? to me, you know, there, there's a few things that really matter. One of which is just the incremental improvement. You know, both in startups and in sailboat racing, it's all about getting 5% better every time you do a start. Um, cause if you can keep improving just a little bit every time you do something, you're gonna be a whole lot better by the end of the season.

Chip (29:50):

Um, number two is, you know, as you said, you know, being nimble, you know, one of the things that happens on a lot of race courses, people get locked in. They're, I'm all gunna hold over this side. I'm gonna be locked in over here. And, you know, 80% of the time that was exactly the right call. But you gotta be aware that other 20% of the time, it's not gonna be, there's gonna be the black swan event that comes through and you need to get out of there. And then, you know, the, the third one that I think really matters in this world is it's all about, you know, sensory perception. It's getting your head out of the boat, looking at where the wind's coming from, where the current's coming from, where the fleet is, where the waves are, all the pieces that are gonna make a difference.

Chip (30:31):

And, you know, it's the same metaphor in, you know, a startup. You know, where are the regulatory environment changing? Um, what's changing in the, you know, these people's, uh, businesses. Is there big acquirers coming into this world? Is there something new that's changing? Is the, you know, demand, you know, increasing or decreasing. Um, and so there's a lot of different things that are going on in this world that matter. Uh, so keeping your eyes out the boat is the thing I tell every sailor. It's like, you get good enough so you keep your eyes on the boat and look at what's coming down the line. The same thing applies in business. Get your eyes outta your business so you can see what else is going on. It's the reason I, you know, one of the reasons I love this business is I spent a lot of time going to just random rural locations to meet seafood people. And sometimes I learned something, sometimes I learned nothing that, like I just spent yesterday, you know, at one of the largest clam uh, dealers in Maine who supplies, um, most of, uh, the grocery stores in Massachusetts. Um, and just watching what they're doing and seeing how their package get new stuff and how they're using our system and how, what are the little improvements we could make, you know, that's really critical.

Abigail (31:41):

So right now, um, you seem to have the wind, uh, at your sales, uh, the FDA's doing some changes. How's that gonna affect you?

Chip (32:29):

Yeah, so, uh, you know, again, sail down wind <laugh>, the regulations are for a lot of obvious reasons, getting stronger. There's this thing called the Food Safety Modernization Act, uh, which was passed by Congress about 10 years ago. In that Food Safety Modernization Act, they mandated sort of digital traceability for, uh, high-risk foods. Um, which by the way includes pretty much all seafood except scallops and catfish. Um, and what that mandate it says is, you as a seafood, uh, producer or distributor must be able to give the FDA digital records of all your transactions within 24 hours, which for the big companies is fine. They can do that for small companies, they really struggle with that. Um, and so these regulations are coming for food safety reasons, for illegal fishing reasons, for unregulated fishing reasons. You know, all the reasons that we, you know, we know out there. Um, the FDA actually tried to stop doing this. They tried to say, you know, this is gonna be too much of a burden on the industry. And they got sued and they're now under court order to have it out by November of this year. 

Abigail (33:36):

Wow.

Chip (33:36):

So that's,

Abigail (33:37):

How's that gonna affect your business?

Chip (33:39):

Well, I think it'll be, you know, in some ways, I hate to say it, but it's gonna be positive for our business. Um, because, you know, if I had to guess, 90% of, uh, the seafood world would have trouble complying with that regulation today. The other one that's related to it is NOA, who manage all fisheries in the US. Um, and also all seafood imports has put together what they call the seafood import monitoring program or SIP. And it used to cover just high risk species like tuna, but they've expanded it now to cover pretty much all seafood that's imported to the us and it's effectively the same regulations for all imports. So you've got two sets of regulations that are, you know, impacting the seafood industry.

Abigail (34:25):

Wow. So if you just price it right, you can, you can just get all the clients you need.

Chip (34:32):

That's, that's the goal. Um, you know, obviously it'll be, you know, different than that. But, you know, it's a, you gotta make sure that you've got the right product. You also, you know, one of the things that's really important to me is making something that's scalable. Um, you know, it's pretty easy to solve one person's problem. It's harder to solve three people's problems, and it's a lot harder to solve a hundred people's problems with one product. And so how do you build something that can really scale out?

Abigail (34:58):

And when you're dealing with foreign companies that are exporting their, their goods to the United States, are there different laws and, uh, and protocols that you have to put in place? Does the product have adapt?

Chip (35:12):

It does. And so we, we built this engine underneath our product. It basically says, you know, if you're in, you know, shrimp and you're importing to the US, you know, these are the regulations you have to follow. These are the fields you have to follow. If you're, you know, oysters on the coast of Maine, or your muscles in Newfindland, here are the different pieces you have to do.

Abigail (35:31):

Yeah. Um, so it sounds like everything's just going in your favor. Uh, you made this great pivot. You've got all these clients, they're, they're knocking at your door. Uh, any headwinds at all?

Chip (35:47):

Um, I mean, there's always headwinds. There's always things that you need to pay attention to. Um, yeah. Uh, one of 'em has been supply chain stuff, um, like finding printers and paper has been more difficult than it ever should have been. Um, we've had periods where we just couldn't, uh, get printers of paper. And we've had to work a lot to make, figure that out. Um, you know, um, getting a, you know, one of the things we haven't talked about is team, the number one reason, yet, the number one reason that companies fail or succeed is the team. And so we're really fortunate that, uh, you know, because I've had a lot of different jobs, I was able to hire people that I generally worked with in the past who I really trust and I know are really good at their jobs. Um, but continuing to expand that team as we grow, um, is a difficult challenge. Um, and finding people who, you know, have seafood networks that have some digital aptitude that can, uh, really, you know, work in this world is always a challenge. Um, and, you know, then there is the, you know, the world of this industry, which is, you know, this is an old industry. This is an industry where many of these companies are third, fourth generation ownership. Um, they've been doing it the same way since granddad did it. Yeah. And I don't wanna change. And so just overcoming that, you know, fear of change.

Abigail (37:05):

Yeah, I can see that. Um, but you're not encountering the sort of seaspiracy situation, right? Have you, did you see the movie seaconspiracy?

Chip (37:14):

I did. Uh, so I like to think that we're actually helping, uh, you know, the few things that they got right in that movie. I wouldn't say that a lot. A lot of that stuff was, you know, great for, you know, producing a movie that you wanted be see people, people to see. But maybe it was not entirely accurate or nuanced in the way it should have been. Um, one of the things they, they point out, which is rightly, you know, some fisheries are really well managed and some are not. And, you know, squid, to come back to my squid example, there's squid all over the world. There are four fisheries worldwide. Um, at least two of 'em in the North America and a couple in Australia, and I think Europe, um, that are, uh, really well managed. They're sustainably managed that, you know, you should eat that squid. Um, you know, it's gonna be a sustainable product over time. The rest of them are not. Well, how do you know which squid you got? How do you know you got the squid from that sustainably managed fishery in the Chesapeake and not from a, you know, a Chinese fishery? What's totally overfished or Russian fishery?

Abigail (38:14):

And that seems to be on trend with so many things. Now we wanna buy fashion, we wanna know who's sewed it. We want to know that they were paid properly. We wanna know, we, and it, it's, it's, it's not for the sake of the chain itself, it's for the sake of knowing, you know, our own footprint, our own, our own, um, impact on the world as we, as we consume and, and, and purchase things. 

Abigail (39:25):

so you are out in the market right now looking for cash. What, what's, how, what's that? Like, <laugh>, I've heard the, the VP market's falling apart. Is that true?

Chip (39:43):

You know, we only see, uh, part of the elephant. So we don't know what the, the entire, uh, VC market is like. Um, for us it's actually been pretty positive. Um, we've, uh, we've seen the, uh, market, uh, do quite well. know, the VC market is a weird place. I've been involved in a bunch of different startups where we've raised money and, you know, you gotta do a few things. You gotta convince people that there's a big enough addressable market. Um, well, there is a big addressable market. There's a lot of seafood producers. It's 17% of the protein we eat. It's growing faster than the rest of protein. The fastest growing , protein source in the world is aquaculture. So there's a lot of things that say, you know, this is a big market with the know the right tailwinds.

Chip (40:29):

Uh, number two, you have to convince 'em that you got the right team because you know, you're gonna have pivots, you're gonna have things to change. And, uh, that's really critical. And so we have that. Um, and then you've gotta show what they call product market fit. Do you know, does your product meet the market needs? Um, you know, do you have new clients coming on? Do you have renewal rates at the right place? Do you have pricing at the right place? Um, or can you at least get there? And I think we have that. We keep showing that, uh, over and over with our new, you know, with our tagging and traceability. So, you know, those are sort of the key things you need to be able to show any investor. And then there's a lot of due diligence beyond that. So, you know, one of the things we just, uh, found out is we just got approved for a patent. Our very first patent <laugh>, it's right SY systems and methods for a tracing seafood. Um, and, uh, you know, we got all they, you put basically claims into a patent. We got all 20 claims approved on the first go, which is really unusual apparently. So we apparently should have had like 40 claims, uh, <laugh>, we, uh, you know, wow. And we've got another one that hopefully will, uh, be, you know, following along shortly behind it.

Abigail (41:35):

That's amazing. Uchip, do you see any trends in the industry with respect to sort of aquaculture and wild catch or other trends that are kind of interesting that you may not have expected to see?

Chip (41:55):

he first one that's fascinating is 50% of our seafood today comes from aquaculture. Um, and that continues to rise. So whether it's salmon farming, shrimp farming, oyster farming, clam farming, um, it's, you know, by and large, you know, a lot going on there. Um, so that's a really well known trend. The one that surprised me was wild fisheries. Like I think of that aquaculture side, as you know, it's just taking off and eventually it's gonna replace all wild fisheries. And in some categories that's true. Um, in some categories like, you know, shellfish, that's probably the right trajectory. Um, but in other categories, they've actually gotten really good at managing fisheries. the scallop industry in New Bedford's, a great example. Um, in the 1980s, the scallop industry was dying in New Bedford.

Chip (42:50):

Um, you could buy a boat for nothing. They literally give them away. Um, and you know, NOA, some local researchers at universities in the area and the fishermen all got together and said, what can we do about this? And they started this whole program where they were actually like taking cameras out, all the scallop beds, the known scallop beds, and tracking how many scallops they actually have on the bottom and what sizes they are, um, and what stages of their lifecycle are they at. And then they're able to figure out, okay, so these ones are breeding populations, never touch those. Um, these ones have, you know, two years ago they were, you know, um, small, but now they've reached market size. They've already, you know, bred the next generation. These are perfect ones to a harvest. Um, and, you know, then they figured out a rotational scheme so they can open up different areas, different places they set inside, uh, in place a quota system.

Chip (43:44):

So there's only a certain amount that can be harvested each year based on the, you know, the surveys that they do each year. Um, they tax every, uh, fisherman out there to say, you know, 10% or whatever the number is of your catch, you have to pay it back so we can have these, uh, scientists go out and make sure that the fishery is sustainable. And the net result of it is the fishery. Um, the scallop fishery in, uh, you know, off the Massachusetts coast is probably healthier than it's ever been. Um, that's amazing. And, you know, uh, people are employed. They, uh, you now, if you wanna buy a boat and, uh, you know, buy quota to go along with it, you're talking three to 4 million. Like this is a big number. Um, and so, you know, it's, you know, you have fisheries like that salmon fishery out in Alaska is very similar. Crab fishery out in Alaska is very similar. Um, yet a lot of the European fisheries, um, are really well, well-managed. I mean, they're examples that are not cod fishing in the Gulf of Maine is an example. Totally overfished collapsed, it may never come back, which is scary. Whereas the cod fisheries in Norway, and particularly Iceland, we're well managed at the same time. So pretty much all the cod we get today comes from well managed fisheries in Iceland. 

Abigail (44:56):

Yeah. And are your clients talking about climate change, You harvester clients?

Chip (45:16):

Um, yes. So we hear a couple of different things. So one of which is particularly the hatcheries, um, one of the things that happens with climate change and warming waters is the ocean chemistry changes. It gets more acidic, and that makes it harder, particularly juvenile shellfish to produce shell. Um, which means that, yeah, you can have whole hatcheries that collapse. And MOOC seafood in Maine is a really good example of, uh, figuring that out. Um, another one that's happening is water's warm. Um, different pathogens come in and you're more likely to have things like Vibrio. Um, Vibrio is the number one disease for shellfish. Um, it's the reason that people get sick. Um, and, uh, you know, it used to be you'd never see that in Maine. Now there's regular closures in Maine because of Vibrio. Um, and, you know, the regular, a lot of the regulations are designed to reduce this, uh, Vibrio problem.

Abigail (46:12):

And you're, but your, your product is gonna help with that too, because once, if there's a Vibrio problem in a certain group of shellfish, you'll be able to spot that very quickly, right?

Chip (46:22):

Yeah. By having a digital traceability chain, you can then, you know, figure out, oh, there's a problem here. Um, there's a recall of this particular oyster, let's figure out where else they are. Um, and then, you know, the other thing is it's time and temperature management. The number one, uh, you know, way to manage, uh, particularly vibrio is keeping it cold. And so, you know, what our system does is maintains the cold chain. It records whether it was well managed in the cold chain or not, you know, did what should have been a two hour drive in a truck turned into a 10 hour drive where maybe the guy stopped overnight and turned the truck off and then turned it back on in the morning. Um, yeah, that's something you should know about before you buy those oysters.

Abigail (47:03):

Yeah, for sure, for sure.

Abigail (48:40):

Very cool. Um, alright, so, uh, last question. When you exit and you become a gajillionaire and you make me a multimillionaire, are you gonna buy a bigger boat?

Chip (48:53):

<laugh>? No, I like the small boats. <laugh>. The bigger the boat, the more it sits on the mooning. Um, I want small boats I can, that's <laugh>. I want small boats that I can go on all the time. Right.

Conclusion

Thank you, Chip, for coming on the program. I am delighted to share that since we recorded this podcast, the Food Safety Modernization Act did pass and Chip is just closing his fundraising round now. That will enable the company to ramp up and meet the upcoming demand.

Digital traceability will keep food fresher, and in the case of a problem, we can get to the source faster. It will also lift the operational burden of managing handwritten forms for business while also increasing the transparency of provenance for the buyers and consumers. It’s 6PM, do you know where your fish came from?

Happy Planet Podcast was reported and hosted by Abigail Carroll. I am the Executive Producer. The talented Dylan Heuer [hoyer] is our producer and editor. Composer GEORG BRANDL EGOFF created our theme music.

Learn more about my work and get in touch by visiting happyplanetcapital.com.