Humane Fish Slaughter and the Cost of Convention
The way we kill fish is about to change, and it’s going to cost us. Shinkei Systems, a company backed by Founders Fund, has developed a refrigerator-sized robot called Poseidon that humanely kills fish on fishing boats. This machine scans each fish, identifies the species, and locates the brain, piercing it and severing the gills within seconds of the fish coming out of the water. The traditional method of letting fish suffocate on deck can take anywhere from a few minutes to roughly an hour, causing stress compounds that shorten shelf life and dull flavor. Shinkei’s technology aims to revolutionize the industry, but it’s not without its costs.
The cost of convention in the fishing industry is staggering. Roughly 18% of product is lost to spoilage just between dock and store, before retail loss is even counted. This is partly due to the fact that a meaningful share of fish caught in U.S. waters gets frozen and shipped overseas for processing, often to China, before being shipped back to the U.S. for sale. This system is not only inefficient but also raises concerns about forced labor and trade scrutiny. Shinkei’s vertically integrated approach, where they deploy robotics and AI across the chain from boat to plate, aims to change this.
This mirrors what happened to the meat industry when humane treatment of animals became a major concern. The cost of implementing more humane methods was significant, but it also created new market opportunities for companies that prioritized animal welfare. Similarly, Shinkei’s technology could create a new market for “humanely killed” fish, with consumers willing to pay a premium for the product. However, it’s still an open question whether buyers will be willing to pay more for this product, and even Shinkei’s founder, Saif Khawaja, treats it as secondary to the practical benefits of the technology.
Founders Fund’s Outlier Bet and the Decision Logic
Founders Fund’s investment in Shinkei is an outlier bet, but it’s not without its logic. The firm has a history of backing founders who are outside of fashionable categories, and Shinkei’s technology fits this pattern. Founders Fund partner Delian Asparouhov argued that the firm’s exposure to crowded categories like generic AI applications is relatively low, and they intentionally keep their exposure to these areas low. Instead, they focus on backing companies that are building novel solutions in dysfunctional industries.
The decision logic behind Shinkei’s business model is also interesting. The company gives Poseidon machines to fishermen for free, then pays them a premium price for the fish that come out of them. In exchange, Shinkei takes full possession of the fish rather than letting fishermen sell it on the open market. This approach allows Shinkei to control the entire chain, from catch to plate, and ensures that their technology is used consistently across the industry.
Shinkei’s newest product, an in-plant sensor system, tries to quantify the benefits of their technology by scanning fish and projecting an individual shelf life for each one. This matters in an industry where spoilage is a major concern, and Shinkei’s technology could help reduce waste and increase efficiency. However, the company’s ambitions are not without their challenges, and it’s still unclear whether they can make their business model work at scale.
Winners, Losers, and Disrupted Parties
The winners in this scenario are clear: Shinkei, Founders Fund, and potentially consumers who are willing to pay a premium for “humanely killed” fish. The losers are also clear: traditional fishing companies that rely on conventional methods of fish slaughter and processing. These companies will need to adapt to the new technology and business model, or risk being left behind.
The disrupted parties are the fishermen and distributors who are used to working in a certain way. They will need to adapt to Shinkei’s technology and business model, which could be a challenge. However, Shinkei’s approach could also create new opportunities for these parties, particularly if they are able to increase their revenue by selling their fish to Shinkei at a premium price.
The impact of Shinkei’s technology on the broader industry is also worth considering. If Shinkei is successful, it could create a new standard for fish slaughter and processing, which could have far-reaching consequences for the industry. It could also create new market opportunities for companies that prioritize animal welfare and sustainability.
The Skeptical Case
There are several reasons to be skeptical of Shinkei’s business model and technology. One reason is that the company is trying to disrupt a well-established industry, which can be difficult and costly. Additionally, Shinkei’s technology is not without its challenges, particularly when it comes to scalability and efficiency.
Another reason to be skeptical is that Shinkei’s business model relies on consumers being willing to pay a premium for “humanely killed” fish. While some consumers may be willing to pay more for this product, it’s unclear whether this will be enough to sustain Shinkei’s business model. Additionally, there may be other companies that are able to replicate Shinkei’s technology and business model, which could increase competition and reduce Shinkei’s market share.
The Signal to Watch Next
The next verifiable event to watch is Shinkei’s expansion into new markets and distribution channels. The company has already partnered with Erewhon, a Los Angeles grocery chain, to sell its fish under the Seremoni brand. However, it’s unclear whether this partnership will be successful, and whether Shinkei will be able to expand into other markets and distribution channels.
Another signal to watch is the adoption of Shinkei’s technology by other companies in the fishing industry. If other companies begin to adopt Shinkei’s technology and business model, it could create a new standard for the industry and increase the demand for Shinkei’s products and services.
Bookmark this one — it will matter to your business decisions this week.
By Priya Nair, AI & Startup Reporter at TrendFlashy
Ready to launch your own asset?
Check out our guide on Building a Profitable Online Business.
