I don't know what the solution should be. Is it on the restaurant to do their own due diligence here? Or should he be (and maybe he was!) upfront about the lack of expertise and do the initial install for minimal profit?
Keeping cephalapods would be a great engineering challenge, in terms of what's necessary to make a viable habitat, but it seems so cruel given their apparent intelligence. Perhaps these things shouldn't be cheap?
Cephalapods on the other hand are significantly more intelligent that previously though, and therefore unless you could provide a sizable (like med-large house sized) enclosure for several of them... Don't keep cephalapods.
But I don't think keeping jellyfish in captivity is unethical. They're somewhere between a goldfish and a houseplant in terms of sentience. They have no central nervous system; just a loosely connected net of nerves that control their muscle contractions and very simple senses, like swimming towards light and migrating up in the water column at night and down during the day.
I would argue that it definitely is unethical to keep cephalapods in captivity unless they have a big tank and some sort of stimulation.
 Coates et al. 2006 "The spectral sensitivity of the lens eyes of a box jellyfish" JEB
I keep some very small fish in my reef tank, but I find my non-fish livestock generally more compelling.
I think it's also important not to project our human minds onto jellyfish – it's very possible they are completely enlightened and are supposed to teach us something
I would suggest that they go into the tank business and focus on unique designs, that's a scalable business with a big market. I wouldn't buy the Jellyfish again, but if they had another interesting tank, I would get that.
Perhaps the Jellyfish aren't the crucial piece of the experience for Jellyfish Art? With your anecdote plus the story about the restaurant keeping the tank and using it for fish, perhaps there's something there.
But then I thought about Fab.com and companies that have a unique angle to aggregate a certain KIND of customer.
If Jellyfish Art can do that, it's their brand that customers are buying, and you CAN preserve margins with a great brand.
It takes at least a couple of weeks to settle, with the added reef salt and everything. Then I was going to purchase jellyfish - and found out that they actually cost more than 50$ a piece, because of overnight shipping (from Germany, I live in Denmark).
So I started doing some research on the tank, and read about 5 horror stories about how they always died within 3 days, even after following instructions very accurately.
I later emptied the tank, and now it's sitting in the attic.
Build quality is decent, but not perfect. After sitting still for about 3 months, the top lid started bending/skewing quite a lot, now it almost doesn't fit anymore. It's also quite noisy, not something that you'd like to sleep in the same room as.
If anyone wants a jellyfish tank where the jellyfish apparently dies within a couple of days, I have a cheap one for pickup here in Copenhagen.
On a separate note, I'm always excited when I see a new blog post from priceonomics. They always choose super interesting topics, do a ton of research, and express the info in a succinct way. Good stuff.
It's fascinating that the barrier to further growth is breeding jellyfish to fill the demand of a cheaper aquarium, once it's released to market. Is Jelly Fish Art (the company) focused on researching the science of scaling the process? Have you looked into selling other exotic aquatic animals that fit the aquarium you've developed?
This is simply unacceptable. His achievement at the expense of local fauna is not to be applauded, but condemned. Regardless of whether jellyfish feel pain, exploiting nature is such destructive ways is simply ridiculous in this day and age.
Sad that so many comments here completely overlooked this, and focused solely on success at any cost.
Still, it does sound like Jellyfish Art is moving towards farming their own.
I consider my reefing keeping ability as advanced with a 220 gallon main display. This tank was also advertised for beginners. As someone who understands the ecosystem, how to mix the salt/water and test for common parameters I would highly discourage this tank and jellies to beginners.
This tank had too many issues.
There are competitors:
They may cost more but the reviews are much better.
Could the jellies be captured and shipped in polyp form to cut down on the cost?
1 quick suggestion: on your sales page food is listed in ounces. I think it would be more helpful and may increase conversions with impulse buyers to list that as "X months of food".
Daring and a bit crazy.
Sadly, we only have one distributor in Australia and they mark the price up 110% for just a basic tank setup. There's an untapped market over here, only problem is in the distribution channel.
That would be deflationary and, as we all know, deflation is the worst possible thing that could happen, ever.
(Great story on true entrepreneurship in action and, in particular, the focus on lowering, lowering, lowering costs and bringing more to more people.)