How Tidal Vision grew a corporation out of crab shells

JUNEAU — Standing outside a boutique seafood processor in Juneau on a sunny September afternoon, Zach Wilkenson held a handful of what looked like pulverized corn flakes.

Wilkinson said he always knew there was potential in the palm of his hand. But doing it the right way — extracting a widely used chemical from crab shells without producing toxic waste — that was the real trick.

Tidal Vision, the company started by former locals Wilkinson and Craig Kasberg, has grown to process about 400,000 pounds of crab shells in the last year, producing about 100,000 pounds of chitosan — a versatile chemical found in crab shells and used in water treatment and textile manufacturing. It now employs 11 people in Washington, with expansion soon coming to a third factory in North Carolina.

Wilkinson met the Empire at Hooked Seafood Company Alaska recently to talk about a homecoming of sorts. The company started by making salmon leather wallets in Juneau in 2015. Those wallets funded the company's foray into a multibillion-dollar chitosan industry.

Now, it's moving salmon leather wallet production back to Juneau, closing the circle on what started as a locally backed crowdfunding campaign.

An industrial idea

Kasberg's experience in commercial fishing started his path toward entrepreneurship. At 15, the Juneau-Douglas High School graduate worked as a deckhand on a salmon gillnetter in Juneau. After five seasons of saving and a successful loan application, he bought his own boat and permit at 19.

He would read materials on the seafood byproduct industry between sets, and quickly realized the economic potential for seafood byproducts was vast, Kasberg said. Alaska seafood processors generate about 2 billion pounds of waste annually. Much of that just gets ground up and pumped back into the ocean.

In more populated areas, that waste might be turned into fertilizer or pet food. But the cost of shipping in Alaska makes it hard to sell most processing waste as-is, Kasberg said. The margins are too small. Any Alaska company working with seafood waste would need to shape its products into something people would pay more for, Kasberg realized.

"I thought, if I am going to get into processing seafood byproducts, are there any higher-value things I could start with?" he said.

His research pointed him to crab shells and salmon leather. Salmon leather is tanned in much the same way as other leathers. Chitosan, though much trickier to produce, is a huge market, he said, estimated to be worth about $5 billion globally.

But most chitosan isn't produced in the U.S. He would combine the two in one venture, growing from wallets to chitosan production.

"Chitosan seemed like the biggest opportunity from the beginning. It was also more challenging to get started than the salmon leather. But I started to develop both at the same time," he said.

He sought out chitosan researchers through peer-reviewed work he could find. It was around this time he met Wilkinson, who was working at the Juneau Economic Development Council at the time. A friend had heard both Kasberg and Wilkinson talk at length about chitosan and its potential. He figured the pair would make good friends, and put them in touch.

"Our mutual friend introduced us and said, you two are the only people I've ever heard mutter the word chitosan and neither one of you will shut up about it," Kasberg said.

With Wilkinson on board, Tidal Vision launched a crowdfunding campaign for salmon leather wallets in May of 2015. The funding goal was set at $17,000. It passed that in 24 hours. A little over a month later, the campaign netted nearly $56,000.

A storage container lab

Kasberg and Wilkinson had always envisioned a company with certain ethics: to reduce waste and encourage sustainable fishing by up-cycling byproducts. But those are hard to abide by when producing chitosan with existing methods, Kasberg said.

The way it's been produced commercially since the '60s or '70s results in toxic chemical waste streams. Environmental regulations in the U.S. make it cost-prohibitive to produce chitosan here, and most of the companies that did produce chitosan domestically shut down in the 1990s.

Water treatment and textile manufacturing companies that use chitosan ship much of it from China, where a lack of regulation allows them to produce chitosan at a lower cost.

"In China, they literally just dump those toxic waste streams in rivers and let Vietnam deal with it. That's no joke, that's how it works," Kasberg said.

Kasberg and Wilkinson knew the potential in chitosan. But they needed a process they felt good about.

Wilkinson knew a chemist in Mississippi who'd done extensive research with chitosan — one of the same researchers Kasberg had read papers from during his downtime on his fishing boat.

The first time Kasberg and Wilkinson met, they phoned the researcher, Dr. Chris Griggs.

With Griggs' help, Kasberg and Wilkinson started tinkering with the chitosan process, developing a few ideas they wanted to test in a lab. Kasberg bought a 20-foot storage container on Craigslist in Washington with the proceeds from the sale of salmon leather wallets. That would be their lab.

"If we can just figure out how to make this, I know we're going to be fine," Kasberg said.

Over nine months of tinkering, Kasberg was confident they'd found it. Their proprietary process is the secret ingredient that makes Tidal Vision profitable. It doesn't produce a toxic waste stream. Chitosan makes up only about 20 percent of a crab shell. The typical production process renders the leftover 80 percent unusable in most ways. Tidal Vision can sell their leftovers as fertilizer.

It also means they can operate under the U.S.'s more robust environmental laws, a selling point for companies looking to source more environmentally friendly products. Shipping costs are cut down compared to their Chinese competitors.

The pitch worked, Kasberg said, and Tidal Vision began picking up clients soon after it opened its first factory in Kent, Washington.

From one product, many

Chitosan works because it's chemically sticky, Wilkinson explained. Its electrostatic charge allows it to bind to things many companies don't want in their products.

In the beer and wine industry, it's referred to as a "fining agent." It helps clarify water in pools and spas. Industrial water treatment facilities use it to clear certain particles.

"It's all the same thing — you're getting all the itty-bitty particles out of water, out of solution. It just makes that stuff stick together," Wilkinson said.

Tidal Vision has developed both industrial and consumer products that take advantage of chitosan's stickiness. They sell a pool clarifier, a game meat protector (which helps deter bacteria growth), a plant supplement that boosts plant immune systems, a germ- and odor-killing sponge, a mold and mildew prohibitor and an odor preventer straight to consumers.

They're still finding more uses for their industrial products.

"We actually just sent our first shipment to Guatemala," Wilkinson said. That'll go to a company that produces latex balloons. It will help replace a more toxic chemical the company previously used.

The growth has helped them move from Kent to two new facilities in Bellingham. They're also scoping a move to increase production with a facility in North Carolina.

Their game meat protector just landed on Walmart shelves in the western U.S., a big win for the company's visibility, Wilkinson said.

With all the expansion, they've done some new hiring too, keeping it local when they could. Kasberg was able to buy out the business of local welder Carleton Shorey, purchasing his equipment and employing him to maintain and improve production processes. Tidal Vision also brought on a locally raised chemical engineer named Michael Reiderer, who's since left but remains an adviser and stockholder.

Bringing it home

In the processing plant at Hooked Seafood Company Alaska, owner Brad Robbins brought out a white plastic container full of what looked like wet socks — another unassuming byproduct Tidal Vision has seen the potential in. They're chum salmon skins that Robbins will tan and prepare for Tidal Vision's salmon leather wallets.

Robbins said he's still perfecting the process. The batch he took out is an experimental one. They hope to have the tanning production process perfected at Hooked by the holiday season.

Since forming, Tidal Vision moved salmon leather production down to Washington. Wilkinson said they always wanted to come back.

"We're really excited to bring this back to Juneau and to be working with Brad," Wilkinson said. "It's such an Alaskan product, for it not to be made in Alaska was kind of a bummer."