Welcome to my second installment in my continuing series of interviews with relevant people in the reefkeeping industry.  As you may remember, my last interview was with Ken Wong, CEO of Marine Depot. Today, I pleased to be joined by Kevin Kohen, Director of LiveAquaria.com and Drs. Foster and Smith.  Kevin’s bio is available on his site.

Derek:  Thank you for joining me today.  Let’s jump right in.

Kevin: It is my pleasure.

Derek:  It seems that the market is crowded with internet retailers catering to the aquarium trade.  What sets you apart?  What are the key benefits a customer gets from you versus the competition?

Kevin: We have hands down the best customer service and most comprehensive guarantee in the business. Some folks may be apprehensive to purchase aquatic animals sight unseen, but we stand behind every fish, coral and invertebrate we sell. We have an incredible staff of very talented and hard working individuals who share a passion for the animals we offer which can be seen by the quality of the animals we sell. Lastly, our Divers Den or WYSIWYG animals housed in our Aquaculture Coral and Marine Life Facility in Rhinelander, Wisconsin, are thoroughly conditioned, quarantined, and adjusted to captive conditions. I am not aware of any other internet provider of marine animals who goes to such great lengths with the fish we offer in our Diver’s Den.  All of the fishes that enter our Rhinelander facility are held for a minimum of two weeks, and are properly quarantined, medicated, conditioned, and eating well prior to their listing in the Diver’s Den section of LiveAquaria.com. I am very proud of the reputation for our quality and consistency that we have worked so hard to achieve over the years.

Derek:  As the largest provider of livestock for aquariums, what role do you have in ensuring that the hobby continues to grow and preserves a positive image?

Kevin Kohen, Director, LiveAquaria.com

Kevin: I have been in the marine aquarium industry since my first job working at a local aquarium store. It’s important to me, and is our philosophy here at Drs. Foster and Smith/LiveAquaria, to see our industry move forward in a more sustainable and positive direction. The benefits of marine aquarium keeping are immense, from not only an educational standpoint, but also for what the reefing community has done for increasing the awareness of coral reefs, as well as our contributions back to the scientific community. Our philosophy is to try to support livestock suppliers who have the same philosophy as ours regarding sustainability. Dealing with quality suppliers both here in the US, and overseas, ones that genuinely care about the animals they harvest, as well as the environment are crucial to growing the hobby and preserving the habitat.   Sustainability is something that all of us in this hobby need to be cognoscente of regardless if we are suppliers or consumers. Seeking out animals from quality sources are a win-win situation for everyone, and ultimately benefit coral reef resources around the world.

Derek:  Drs Foster & Smith is dedicated to being a “green” company, from packing materials to invasive species protection.  What other “green” initiatives are you employing to help protect our environment?

Kevin: First, invasive species is one topic that could ultimately negatively impact the marine aquarium trade. This issue is important because invasive species push out native species and alter ecosystems. Educating consumers about invasive species through initiative like the Habitattitude Program is something we fully support and feel strongly about. Every package of aquatic life we ship contains details about the Habitatitude “Do Not Release” on how to be a responsible aquarist.  Second, being as energy efficient as possible in the design and construction of our Aquaculture Coral and Marine Life facility was an important part of the project and step in the right direction for going more “green” to reduce power consumption wherever possible without jeopardizing the corals we grow in house. When we built our 20,000-gallon facility, we selected and designed our systems to utilize as many HVLP (high volume low-pressure) pumps as possible; all wired either dual phase or three-phase power, which reduces the amperage draw on the equipment. Through the utilization of moving light rails, we were able to reduce significantly the total number of high-powered metal halide lamps used in the facility to provide the proper spectrum and PAR values to grow corals in a captive environment. Moving forward, we are currently testing some of the new lighting technologies in the facility in the hopes to reduce further our power consumption.

Derek:   LiveAquaria has a stellar reputation in the market today (I am a big fan).  What is the logic behind the location?  Many people find it interesting that you have your coral farm so far from their point of origination.

Kevin: The location of our Aquaculture Coral and Marine Life Facility in Rhinelander, Wisconsin, makes perfect sense to us. For one, the owners have lived in this area for over 30 years, and this is the location of our main warehouse and call center. Having adequate space and an incredible staff of talented people to build the facility from scratch was another factor. Lastly, we feel strongly about supporting our local economy and community by employing folks from right here at home, so there never were any doubts about where our facility would reside.

Derek:  What challenges do you face when acquiring livestock around the world?  I assume there is a certain amount of loss when importing fish and coral.  Of course, you strive for 100% survival, but what are the actual numbers and does it vary by their originating location?

Kevin: There are numerous challenges when acquiring marine livestock from around the world. It’s not too terribly difficult to purchase marine life, but it’s very difficult to procure quality animals from quality suppliers. Every step in the chain of custody can have an impact on mortality. From proper collection practices and techniques, post-harvest handling and holding, transportation and logistics, and finally the proper acclimation techniques once they are in our hands all has an impact on mortality of the animals. Having years of experience helps immensely, as my background in working in this industry my entire working life from retail environment, then onto wholesale import/export after college, and finally into the retail side again with LiveAquaria teaches you important lessons along the way. Survival rates can vary based on the origin of the animals, but the biggest contributing factor to mortality in our industry is from improper collection, mishandling, and lengthy transit times. Our philosophy is to steer clear of these sources as it’s not only bad for the animals, but more importantly is damaging to the habitat where they reside. There are however, plenty of good sources for quality marine life, but they are more expensive, as cheap and quality surely does not go hand in hand when dealing with marine aquarium fishes.

Derek:  Can you talk a little more about your Certified Captive Grown Coral program?  What are the goals of the program?

Kevin: Drs. Foster and Smith Certified Captive Grown Coral program (CCGC) was something we started from the inception of our Coral Farm. There is literally hundreds of what I like to call coral “chop shops” around the country. It doesn’t take a great deal of skill to bring in wild harvested corals, chop them all up and glue them down to something solid and turn around and offer them for sale.  These corals may live, and then again, they may perish quickly or not adjust to the conditions in home aquaria. Doing things the correct way is what takes a great deal of diligence, effort, patience, and skill, which is how we operate our coral farm. First, selecting desirable corals that are hardy and can adapt well to artificial seawater and artificial lighting is our approach. From there the selected corals are inspected for pests or disease and are then quarantined, dipped/medicated, and held for several months prior to being selected for our propagation program. From there, growing these corals out over time and propagating them in a way to allow the fragmented corals to take hold and start growing again before releasing them for sale is something we feel very strongly about. Ultimately, we want all of our valued customers to be successful with the corals they purchase from us. We are so confident in our philosophy that we offer a 30- day guarantee on all of our Drs. Foster and Smith Certified Captive Grown Corals.

Derek:  Do you see a time when all corals available for the home aquarium are captive raised and propagated?

Kevin: I actually hope this is not the case, which is probably not the answer that most folks are expecting to hear. In my opinion, there needs to be a balance between a managed fishery with sustainable wild harvest of marine aquarium animals, along with Mariculture initiatives overseas, combined with captive raised and propagated fish, corals, and invertebrates. Let me explain further; there is obviously an immense amount of pressure on coral reefs around the world. The biggest contributing factor to reef degradation is from population pressure. The more people on the planet, and specifically in these regions of the world where coral reefs are found, the more need arises for housing, food production, energy usage and ultimately waste. Building infrastructure in many areas consists of the utilization of local resources such as deforestation for timber, grazing area for cattle or other animals, and the production of sugarcane. These activities all negatively impact the reefs either by sedimentation or polluted water runoff which can smother or poison adjacent coral reefs. This is just one example of hundreds that are having an impact on the habitat. First, when talking about wild harvested animals for our trade, I feel we all need to think more globally about this circumstance. When managed properly where the animals are harvested in controlled numbers in a sustainable manner, this model benefits both the local village community as well as the coral reef resource itself. Who better to protect their coral reef than the fishermen and women who utilize these resources to feed their families and generate an income? Secondly, balancing wild harvest with Mariculture efforts overseas is a positive thing as well. To me it’s great to see some of the more desirable color morphs and species being sustainably grown. Our company fully supports these efforts, and offers an immense amount of Maricultured corals in our Diver’s Den section of LiveAquaria.com every single day. I feel these Mariculture projects, if done properly, can ultimately have the biggest positive effect on coral populations through initiatives because they not only help offset some of the wild harvest, but the corals, in some cases, are also utilized to replant damaged reefs in these countries. This creates new habitats and encourages the recruitment of a diversity of coral reef species.   Lastly, captive propagation of soft and stony corals here in the US of the more “rare” color morphs or species is beneficial. This surely benefits both the hobbyist as well as coral reefs, by appeasing the demand for the most desirable species/color morph that may be in short supply or in very limited numbers in specific collection areas around the world. By balancing all three initiatives of wild harvest, Mariculture efforts, along with captive propagation, I feel this is the very best strategy for all of us to have who are in this great hobby and passionately care about coral reefs around the world.

Derek:  CORAL Magazine reported recently on legislation that may mark the end of the coral business. What is your take on this legislation and what are you doing to ensure that corals are available for hobbyists in the future?

Kevin: Legislation such as the recently proposed ESA listing of 83 coral species to be placed on the endangered species list could potentially affect all of us who are in the business of selling marine coral species as well as basement growers of coral frags. This legislation could potentially make it illegal to sell, trade, or distribute any of the 82 species on the listing, where a good number of these species are quite prevalent in the aquarium trade. A few major issues need to be addressed regarding this legislation. First, there is a lack of accurate scientific data pertaining to these species distribution and populations in the wild to make an accurate assessment. More studies are needed to see if in fact such a listing is even necessary. Second, is the fact that it’s extremely challenging to identify many of the corals on the list down to the species level without skeletal samples from dead fragments. The issues that the US Fish and Wildlife Service has right now identifying corals down to the species level to ensure they are correct as listed on CITES permits and import documents is oftentimes problematic as things stand now. If the ESA listing were to pass, the likelihood of a legally imported species being mistakenly identified as one listed as endangered is highly likely. All of us, from hobbyists, to retailers, importers, and distributors could be affected by this petition which can be found here:  http://www.regulations.gov/search/Regs/home.html#documentDetail?R=0900006480a90b1f I had submitted a letter on behalf of Drs. Foster and Smith prior to the deadline on April 12^th, and I hope numerous others did the same.

Derek:  Thank you, Kevin, for taking the time to discuss your business and the positive impact you are making, not only on your customers, but on the environment as well.

Kevin: It was my pleasure, Derek.

Ken Wong, CEO of Fins, Furs, & Feathers, Inc., parent company of MarineDepot.com and PetStore.com, was kind enough to take a few minutes out of his busy day to sit down with me and discuss the state of the saltwater market. Thank you, Ken, for taking the time to answer my questions. I appreciate your insight and commentary as both a fellow, dare I say, obsessed reefer and successful business owner in the space.

Let’s jump right in…

Derek:  It seems that the market is crowded with internet retailers catering to the aquarium trade.  What sets you apart?  What are the key benefits a customer gets from you versus the competition?

Ken: There are quite a few things that set Marine Depot apart.  #1 is that our level of customer service is vastly superior to our competition in the reef and marine aquarium space.  Everybody wants to achieve this and very few companies ever do.   We have been one of the few, due to a number of reasons.  From being situated in an area with very knowledgeable and well trained hobbyists, to nurturing a company ingrained a with strong work ethic, and to our hyper focus on continuously improving everything we do, we are able to ensure that customers receive the best service available.

Derek:  To me, it looks like retailers fall into 2 categories, those who stock generic goods and those who carry the high-end, specialty gear.  Marine Depot seems to span both categories.  What is your philosophy on what you carry?  How do you decide to carry Item X versus Item Y or do you try to carry everything on the market?

Ken: Selecting the right products to carry is more about quality and value to the consumer than about high, mid, or low end.  This ties in with the customer service I mentioned.  It is easy to carry the latest and greatest, and I see our competitors making a small fortune on this approach.  Our philosophy is a bit different.  Our goal is to find products that would a) benefit our customer’s aquariums at a reasonable cost, b) add value to our current offerings, and c) has the manufacturer support necessary for our customers to truly be satisfied with their product.

Derek:  Speaking of the “right products”, how would you segment your customers?  By that I mean, what percentage of your customers are general aquarium owners versus the borderline obsessed folks, like myself, who are willing to spend more for better equipment?

Ken: I think we would first need to define the segmentation more clearly.  First of all, it has to do more with what our hobby means to us more than what equipment we buy.  I would define myself and most our technical support staff as borderline obsessed.  I would say 25% or so of our customer are like us.  While all of our customers have much success and fulfillment from our hobby, I would venture to say it is our “geek” segment of our customer base that gets the most enjoyment out of hobby.

Derek:  As a self-described “reef geek” I am always evaluating new technologies.  It appears to me that while innovation is occurring all the time in reef keeping, there also appear to be fads that come and go.  In terms of new (or re-born) technologies that are here today, what are your thoughts on items like Turf Scrubbers , cone skimmers, LED lighting?

Ken: As an ethical retailer, I have strong feelings about fads.  My longstanding philosophy has been it is taking advantage of customers to bring to market a product before it has been established whether it would a) benefit our customer’s aquariums at a reasonable cost, b) add value to our current offerings, and c) has the manufacturer support necessary for our customers to truly be satisfied with their product.  This is a very, very difficult responsibility to implement, but I have seen Marine Depot to vastly outperform our competition in this regard.

Derek:  Let’s talk lighting for a second.  Right now, people are typically using metal halides and/or T5 lighting systems on their reef tanks.  Yet, technologies like LED lighting and now, plasma bulbs are starting to enter the market.  What is your take on the technologies?  Do you see these technologies replacing Metal Halides and T5 bulbs in the next 2-5 years?

Ken: There is a fit in the hobby for a more efficient longer lasting light. LED lighting definitely fills that void and looks to be quite promising. We carry a few different types of LED aquarium lighting which are new to the market and see a good demand for them. We have many customers that still use VHO and PC lighting over their tanks and continue to have success with them. As you know many people thought the VHO’s and PC’s would have gone away when the use of Metal Halide Lighting and T5 aquarium lighting became prevalent but they are still around. We see more people using LED’s in the future, however we feel that there is room for metal halides and T5’s in the market too. Manufacturers will continue to support the older technologies as readily as they have in the past.

Derek:  Let’s switch gears to talk directly about Marine Depot for a few minutes.  You used to sell live coral and fish, but I can’t find that on your site anymore.  Are you totally out of that business? Or do you plan on re-entering it?  If you are out of the business, who do you like to buy from or recommend?

Ken: I am a big fan of LFS that work hard, are knowledgeable, and help create success for their customers.  These LFS’s have invested into well maintained, high performing systems that livestock can thrive in.  I have learned that, in its current form, it is very difficult to outperform these LFS when it came to providing consumers with livestock we absolutely love.  Let’s use me as an example to illustrate the point.  I find my livestock purchases to be quite personal.  While I have purchased some livestock sight unseen, I have a strong preference to observing my coral or fish for extended periods of time before purchase.   The caveat is that the LFS must employ aggressive protein skimmers, use the best salt mixes, maintain alkalinity and calcium levels with good calcium reactors, and much TLC.

Derek:  Fins, Furs, and Feathers, Inc. is your parent company and also runs www.petstore.com.  I was surprised to see that you also have a wholesale business, Bayside Aquarium Supply.   As someone who deals in both the wholesale and retail side of the business, how do you see the market changing over the next 5 years?  Will we have more internet retailers, specialty players, or will there be a consolidation the market to just a few players.

Ken: There has both been consolidation of quality internet retailers and an increase in total internet retailers.  The number of quality retailers that provide a true value add to customers is really just Marine Depot and one other company.  The total number of internet retailers has skyrocketed, and I think it will continue to skyrocket.  With the net, it is hard for consumers to separate the great from terrible companies.  While the terrible companies will not really ever do well from a repeat business perspective, there are enough customers in the marketplace for them to churn and burn to keep them around for a long, long time.  While on this topic, it is interesting to know it is usually the customers that have shopped at these places that appreciate us the most.  I love hearing customers tell me we are doing a good job.

Derek:  Do you know how you rank nationally in sales against what I consider to be your top 2 competitors, Drs Foster and Smith and That Pet Place?

Ken: Number 1

Derek:  As with many reef tank enthusiasts, I border on obsessed (thus the name of the blog).  At some point or another, many of us, myself included, have contemplated getting into the business somehow.  In my case, I can never find a business model that will work.  Is there any advice you can give to those who are thinking about starting a business around their hobby?

Ken: That’s an easy one: know what you want from the business.  I worked over 100 hours per week (steady >5000 hours per year…not spurts) for over five years, and I made an average of about minimum wage net net.  I was fine with that, because I like what I do and I live modestly.  I’ve seen many, many people regret the decision to run their own business in this industry.  There are just so many people willing to do it for very, very little and that will severely restrict your ability to charge what you would need to to make a reasonable living.  On the flip side, if you love the hobby, love business, love learning about business, love process improvement, love technology, love automation, love working, love data analysis, love continuously improving EVERYTHING, love thinking about the hobby and the business all waking hours, there is no better industry to be in.  I feel extremely blessed to have found a home in this industry.

Derek:  Ken, Thank you for your time today.  I think my readers will definitely enjoy the perspective and appreciate your philosophies on running your business.  I know it makes me feel comfortable knowing that you put so much effort and care into your product selection.

Ken: Thank you, Derek.  We appreciate the opportunity and look forward to hearing feedback from your readers.

Well, there you have it folks! I hope you found it interesting and informative.  I know I did.  I am working on some other interviews in the near future, so stay tuned.  In the meantime, do you have feedback regaridng this interview or for Ken?  Just post your comments here and I will make sure he gets them.

Do you have a question you would like to ask or someone you would like to see interviewed?  Let me know!