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The Honolulu Advertiser
Posted on: Sunday, August 30, 2009

Kandoo CEO says boat will sail again


By Robbie Dingeman
Advertiser Staff Writer

Hawaii news photo - The Honolulu Advertiser

Robert Maynard, president of Kandoo Island, on board the venture's boat, a four-hulled vessel tied up at Pier 19 in Honolulu Harbor, where insurance issues have idled the enterprise.

Photos by NORMAN SHAPIRO | The Honolulu Advertiser

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Hawaii news photo - The Honolulu Advertiser

From top: Kandoo Island, a life buoy and one of the boat's inflatables.

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Hawaii news photo - The Honolulu Advertiser

The Kandoo Island has two diving platforms from which four nonswimmers can submerge to up to 15 feet by wearing a diving helmet. A safety diver accompanies the nonswimmers.

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Island of fun

What it is: Kandoo Island is a custom 148-foot by 48-foot double-deck vessel that required $3.5 million in improvements to convert from a dinner-cruise boat to an oceangoing recreation center. It was a former Capt. Bean's Dinner Cruise boat.

How it is designed to work: Anchor daily off Waikiki from 9 a.m. to 9 p.m. offering a variety of water activities including jet skiing, parasailing, underwater motorcycling, swimming, guided snorkel, snorkel and marine education classes.

How much it cost: Entrepreneur Robert Maynard said he's invested about $9 million in the company, even though he had originally hoped to spend $3 million on startup.

When it started: The company first operated the recreation boat on Aug. 4.

Who it affects: The company hired 253 people, then laid off all but 20 after problems with insurance and financing prompted them to stop operations on Aug. 18. Maynard said he is bringing people back in waves and making good on back pay, hopeful that they'll be back in the water soon. It was licensed for 149 customers in the early voyages and is working toward expanding to a capacity of 449.

Source: Kandoo

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MAYNARD'S COMPANIES

National Credit Foundation

Co-founded in 1991 by Maynard and Brian Cutright as a credit repair business. The Federal Trade Commission in 1996 alleged the company misled consumers about its ability to clean up troublesome credit bureau reports, produced a misleading television infomercial and wrongly asked for checking account information from prospective customers so the company could debit their accounts without authorization. Maynard settled the charges a year later under an agreement that barred him from the credit-repair industry.

Internet America

Founded by Maynard in 1995, the rapidly growing company became the country's seventh-largest Internet service provider within a year. Maynard stepped down as president and CEO in 1997. Internet America went public on Dec. 10, offering 2.3 million shares at $13 each. The stock closed Friday at 24 cents a share.

Dotsafe

Founded in 1999 by Maynard as a service to help customers filter out unwanted Internet content. The company was later folded as debts mounted.

Lifelock

Co-founded in 2005 by Maynard and Todd Davis as an identity theft protection company. Maynard stepped down as chief marketing officer of LifeLock In 2007. The Tempe, Ariz.-based company has been the target of lawsuits in Florida, California, West Virginia, Maryland and New Jersey alleging its advertising campaign misled consumers by overstating its services.

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Kandoo chief executive officer Robert Maynard describes himself as "a serial entrepreneur" who's made millions and lost millions but believes his new Hawai'i ocean recreation business will succeed despite a turbulent start.

The Arizona native has poured $9 million into the business since February. The boat welcomed its first passengers Aug. 4 and business was building when he ran afoul of insurance requirements and couldn't make payroll for 253 workers. On Aug. 18, the company pulled the customized boat into Honolulu Harbor where it's still docked.

"We've done this at light speed," Maynard said in an interview last week. "Normally something like this in Hawai'i would take three years, two years. We've done it in seven months."

For an island community, Maynard was surprised that no one had launched a sea-centered business that offers families a chance to do a variety of activities all in one place: kids can play on sea trampolines, swim in an ocean-water kiddie pool created daily, teens and adults can opt for more adventuresome activities that include jet-propelled watercraft, para-sailing, snorkeling and more.

Some of the activities tack on an additional fee above the initial admission after the customers are ferried to the boat moored off Waikiki. The base price ranges from $20 for four hours for tourists; to more than $150 with lots of premium activities.

"It's such a cool project. It's never been done anywhere else where we're doing it. And it's the right thing to do off Waikiki," Maynard said.

He thinks it's a business plan that can work by putting the activities together in the world-famous resort setting in an all-ages emphasis by day with a little more nightclub-by feel after dark.

The colorful two-story ocean recreation center currently sits at Pier 19, whose last occupant was the ill-fated Hawaii Superferry. Maynard remains hopeful that his maritime business will succeed where that venture failed.

FULL SPEED AHEAD

Maynard, 47, lives a colorful life filled with big highs and lows. He arrived in Hawai'i in May 2008, "loved it and didn't want to leave."

He made a big splash with his new company taking out days of full-page newspaper ads to announce the plan and hire employees.

Maynard said he liked the idea of a boat recreation center, rather than a barge. He had targeted a July start but underestimated how long it would take to meet Coast Guard requirements. "The Coast Guard's never seen a boat like this," he said.

But after just two weeks of running, he had to shut down when he learned that his insurance coverage wasn't adequate.

Last week, Maynard said he worked out those difficulties. That was confirmed by Linda Lai, president of Pacific Alliance Insurance Brokers, who said that ocean recreation businesses generally are more complicated to insure because of the risks involved.

"There's a lot of exposure there," Lai said, but she said most of what's needed is in place and she expects other details to be finalized within a few days.

Maynard admits to his problems. "I didn't realize how critical insurance is to this kind of operation," he said. "It was a management oversight on my part. "

And his business history has seen him file personal bankruptcy twice and play a key role in four major businesses two still going, two failed.

His first big venture, a credit repair business called National Credit Foundation went down hard after running afoul of the Federal Trade Commission. As part of a settlement with the FTC he agreed never to work in the business again. He describes that venture as a huge disaster, "but I learned a lot from it."

MIXED TRACK RECORD

Subsequent businesses were Internet America, which is still going; Dotsafe, which folded; and Lifelock, a venture that is still operating and in which he remains a shareholder.

Longtime tourism veteran Frank Haas said starting a business in an economic downturn makes good sense. "The concept seems very sound," Haas said, especially for a visitor destination with lots of repeat visitors.

"A new product with new experiences offers a pretty good prognosis for success," said Haas, now an instructor at the University of Hawai'i-Manoa's Travel Industry Management School.

"It's a smart time to start a business if you have the right product focused at the right time. He's offering something that no one else is offering in Waikiki," Haas said.

Maynard said he's rebounded from tougher times.

"I was on food stamps in 2003," he said."I got really sick. I lost everything I had."

Maynard said he expects to be back operating soon but didn't want to commit to a specific date. "We just don't want to over-promise."

Walk around the boat with Maynard and you see that he's tweaking and shifting as he operates.

He looks at the hills and valleys in the wood dance floor and said children quickly turned the fault into a play asset a rolling playground.

A few yards away, he gestures to square seating pits originally designed to hold large hot tubs. After learning of the regulations required to run those, he's ditched that idea and looking at modifications.

Maynard said it made him sick to learn he'd bounced payroll checks by not keeping track of his finances. He said it was the first time that happened and he'd even sold a dog years back a champion Doberman to make payroll.

But he thinks this will work.

Employee George Longshore started with Maynard in February. Now, he's the port captain for Kandoo making sure the Coast Guard certifications are up to date and all the safety requirements are met.

Longshore, a 31-year-veteran of the maritime industry, has served as captain on the recently closed TheBoat city ferry, local tour boats, beach catamaran and fishing vessels.

Why did Longshore remain after missing a month's worth of pay? "I stuck around because I believe in the vision and the business model," he said. "I've seen businesses come and go and the way that these people operate is refreshing, especially in this down economy."

Longshore said the days of operation were successful with customers saying the business was welcome. Maynard said the kind of personality that it takes to do a major start-up may inherently be flawed in other ways.

Facing these troubles in his latest chapter in business, Maynard looks to a baseball metaphor: "I swing for the fences and I'm batting .500. In baseball, I would be the hottest commodity there was."

Captain Longshore believes this could be a case of growing pains and financing woes that showed up early and got fixed.

"Hopefully, we'll be around for a long, long time," he said.