Tobacco Industry

Juul Labs: Big Vape

Category
Organisations
Last Updated
08 Mar 2024
Reading Time
22 minutes
Category
Organisations
Last Updated
08 Mar 2024
Reading Time
22 minutes

Breaking the Habit

Anybody who knew Adam Bowen as a child would not have been surprised to learn that he had excelled in school and gone on to study product design. He spent his childhood drawing detailed renderings of cars, planes, and anything else with an engine. It was a fascination that Bowen never grew out of. He was keen on researching NASA’s Vomit Comet, a reduced-gravity aircraft known for making its crew members nauseous. He also joined Sigma Xi, the scientific research honour society. Bowen took a few years off from education, but eventually, he landed himself at Stanford University, and it was immediately clear to other students that he was the real deal. “Adam was obviously a standout from the beginning,” said classmate Colter Leys. “He just had an amazing, easy facility for things that other people had a hard time with.”

James Monsees also went to Stanford a year after Bowen, and they did not take long to become a duo. Monsees had always been a curious child who loved dismantling objects and putting them back together. As a teenager, when he realised his parents had no intention of buying him a car for his sixteenth birthday, he built himself one instead, filling his parents’ garage with spare parts until he could make them run.

Bowen and Monsees did not have the world’s most apparent friendship. Bowen was studious and low-key, prone to getting lost in thoughts; Monsees was boisterous and social, always cracking jokes, while Bowen was happy to be silent. Still, the pair had enough in common to strike up a friendship. Both were bright and talented, with an evident gift for a lifelong pull toward product design. Both loved solving complex problems and figuring out how things functioned. Both tended to work late at night and marathon in brainstorming sessions. Although both had tried to quit smoking before, they were frequently bumming cigarettes and hanging around outside the Design Loft, shooting the breeze and lighting up.

During one of their smoke breaks, on that winter night in 2004, Bowen and Monsees realised they did not want to smoke cigarettes anymore. “We’re relatively smart people,” they reasoned, “And we’re out here burning sticks.” All those years of loving and hating smoking in equal measure had crystallised into one moment of recognition: enough was enough. If they could not find a way to quit smoking, they would invent one for themselves.

The pair’s late-night breakthrough came about two years after Bowen enrolled in Stanford’s graduate product design programme, which taught a few students each year to approach the craft through a particular blend of engineering, business, art, psychology, and sociology. It was thesis season, and a cigarette alternative seemed like a great idea for a project. After their smoking epiphany outside the design centre, they started brainstorming and trading emails about how they could design a solution for smokers like them. “What we realised was this was kind of a false choice, this ‘quit or die’ mentality,” Bowen recalled in a 2019 interview. “It wasn’t that I really wanted to quit; I just wanted to minimise the harm from smoking.” Their solution, they reasoned, ought not to stop smoking but to find a better way. Bowen and Monsees shared their idea at their product design programme’s Tuesday night workshop. They wanted to create a product that delivers nicotine in a safer way than cigarettes; they knew it would need to be portable and easy to use, and they wanted it to look more attractive. Their idea soon landed on the name Ploom.

Bowen and Monsees also began to do some research about the tobacco industry and health hazards. They discovered that organisations in this industry were smoking advocates but also surreptitiously sought safer alternatives. For example, British American Tobacco [BAT] researchers developed the “ariel” product in 1962. R.J. Reynolds, the organisation behind brands like Camel and Newport, released its “Premier” solution in 1988. In 2003, a Chinese pharmacist named Hon Lik developed the world’s first modern e-cigarette, and people began calling this new smoking that came out of these e-cigarettes vapour. Early e-cigarettes were not perfect, but they at least offered a new take on smoking – and this appealed to Bowen and Monsees.

Standing in a lecture hall in June 2005 for their thesis presentation, Monsees stepped forward to sell the idea to their classmates. “Adam and I were interested in working on designing for social change,” he said. “There are a lot of people that smoke who are really at odds with themselves. They really enjoy the process of smoking, but at the same time, every cigarette is really self-destructive.” Monsees and Bowen laid out their vision for a portable vape pen using a liquid fuel source to heat tiny, flavoured tobacco pods, which produced a nicotine-laced aerosol that smokers could inhale without harming their health or smelling like smoke. This portable vape, Ploom, would heat tobacco pods without burning them. “It turns out actually that burning tobacco is the real problem. Nicotine is addictive, clearly, but it’s not the nicotine that’s hurting you; it’s mostly the combustion that’s a problem,” Monsees said during their presentation. To support this idea, he pointed to the tobacco industry’s search for a safe cigarette, from Ariel up to Accord.

A classmate, Colter Leys, remembered watching their presentation and realising that Monsees and Bowen would not stop until they succeeded. “For other people, [thesis season] was a finale. For them, it was a milestone in the middle of a process,” he said. “For better or for worse, they were already on their way.” Monsees and Bowen had a vision. They imagined a world where people were smoking something less harmful. Their thesis was merely an opportunity to pursue their vision. Once they finished their thesis and graduated, they established a business venture, revolutionised the smoking industry and impacted millions of people with what became known as Juuling.

JUUL was a vaping device where people could still experience the sensation of a cigarette without burning tobacco by vaporising nicotine salt instead. Unfortunately, their business venture did not revolve precisely how they envisaged the future, and the beginning was nothing short of challenges. JUUL was not just a spark of idea. It was a long and tedious process that started with various models. One model, called Pax, was a commercial success. However, it was not the product that would solve the smoking problem. It was a product for cannabis smokers. They kept refining their idea until they developed the JUUL device that revolutionised the smoking industry and turned start-ups into multi-billion organisations.

A New Industry

From the early innovations, anti-cigarette solutions, such as nicotine patches and electronic devices, had one common goal: to help people quit smoking cigarettes. Hence, for those who attended Adam Bowen and James Monsees’ thesis presentation in 2005, it would have been easy to think they were designing a smoking-cessation product named Ploom. However, the real message was subtler than that. Toward the middle of the presentation, Monsees asked a question that would inform Ploom’s ethos as it came into existence: “What if smoking were safe?” he asked the audience. “And, even better, what if smoking were actually not offensive to others?”

Hence, their habit could remain if smoking was safer, cleaner, and less annoying for bystanders. It would open a better door than closing the existing one with nowhere else to go. The entire presentation was laced with points to Bowen’s earlier realisation that most smokers do not want to quit. Instead, they want to continue smoking but do not want to die because of it. “Our goal,” Bowen said to his classmates, “was to basically create a whole new experience for people that retains the positive aspects of smoking, the ritual and everything, but that makes it as healthy and socially acceptable as possible.” Everything came down to that sentence.

If you read between the lines, Ploom was not meant to be a smoking-cessation product. It was meant to create a new habit – a healthier one than smoking, but one that hooks the consumers. This vision was best reflected when they recruited Kurt Sonderegger, who worked for Red Bull in marketing. “I was a conflicted smoker,” Sonderegger says. “When they said they wanted to preserve the ritual and remove the harm, I was like, ‘Wow, if we can make that happen, it’s a billion-dollar idea.’”

Rightly so, Ploom was not born from a hatred of cigarettes or Big Tobacco; it was born from a desire not to die from smoking and to develop an incredible yet profitable product that could help people continue their nicotine consumption without dying. Bowen and Monsees’ message had been about giving people a long-desired alternative product they could feel better about using rather than convincing smokers to quit using tobacco or nicotine outright. It was a rare solution because, unlike the previous attempts by other people, it gave the notion that smoking was there to stay; the question was how, not if.

Still, establishing the business venture was not easy. They needed a handful of investors, and when they managed to attract enough to launch Ploom, producing its first product was taking longer than expected. Their first product, called ModelOne, looked like a sleek, black fountain pen and vaporised tiny pods of tobacco in flavours. This device seemed promising but soon showed to be riddled with problems. For one thing, Bowen and Monsees chose to power it with butane, a gas often used in cigarette lighters and camping stoves. This meant users had to walk around with cans of butane and deal with manually filling the device’s fuel tank themselves.

However, the most crucially one was that its pods did not deliver nearly enough nicotine to satisfy smokers. “I used to tape two of them together,” said Sonderegger to get a stronger hit. “James used to give me super stink-eye in the office because that showed that it wasn’t working well enough for me.” That, coupled with sales failure, they redesigned it, released the ModelTwo, and showed many improvements on its predecessor.

Still, ModelTwo was also met with disappointments. It straddled two worlds: generic stores had cigarette manufacturers if they wanted to sell simple, mass-market e-cigarettes; vape shops sold mostly open-system devices, e-liquids, and the materials that hard-core vapers needed to build their equipment. ModelTwo fell into a no-man’s-land. It was too techy for old-school tobacco shops, weak for hard-core vapers, and complicated for gas stations and convenience stores.

Meanwhile, they released the Pax device. Unlike ModelOne and ModelTwo, it achieved desired sales records but failed to tap the untapped market it desired. Pax vaporised loose-leaf tobacco, so it was often used for cannabis and had indeed attracted cannabis users as its predominant consumer base. Then, one day in 2014, Monsees came to the office with big news. “This,” he said, holding up what looked like a flash drive, “is going to be the new Juul.” In his hand was the latest prototype of the device he and Bowen hoped would destroy combustible cigarettes, which they had long been working on to succeed in ways Ploom never had.

Juul was a tiny device with a tall and rectangular body, coming in subdued colours like slate grey and black. It looked like a long flash drive; you could even charge it in a computer’s USB port. Most importantly, it came with two crucial elements. The first element was its design. There were no buttons or switches. To activate the device, all the consumer needed was to inhale. Smoking was simple, easy, and resembled a cigarette experience. The second element was its ingredient, JuulSalts. Many e-cigarette liquids, especially freebase nicotine, were fairly weak. JuulSalts offered a powerful nicotine experience that rivalled with cigarettes. Nicotine salt was nothing new; research underlying it had been around for decades, while some e-cigarettes, such as Vuse, already used it. However, JuulSalts had a better mixture with its benzoic acid salt, so it came with a solid balance of flavour, nicotine delivery, and strength.

With Juul’s crucial elements, Bowen and Monsees replicated the cigarette with a less harmful alternative. Juul gave the sensation of smoking a cigarette without actually smoking one. It was even better than a cigarette because it was strong enough to generate the “kick” that a cigarette does, but its nicotine salt, thanks to JuulSalts, tasted so much softer and burned the throat less. If smoking three cigarettes in a row was a typical person’s limit, the same person could smoke a Juul’s pod, which was equivalent to twenty cigarettes.

Juul’s powerful addiction and sensation that could replace the cigarette but keep the habit, and the less harmless approach when compared to combustion smoking, did not only help to penetrate the smoking market but also opened an untapped one as well: people who do not like cigarettes but would consider smoking. Bowen and Monsees opened a new industry with no competitors, which was the key to their success.

Hijacked by the Wrong Audience

Juul Labs officially focused on existing smokers who consumed combustion cigarettes. Since this way of smoking tobacco was harmful, their strategy was to switch them to products that would inhale heated tobacco instead of burning it, thus creating a vaping experience. Therefore, Juul devices were smoking-cessation products. However, Monsees and Bowen were pressured by their investors – or perhaps secretly wanting it themselves – to attract a new audience which is not keen on smoking but would enjoy vaping. This was an untapped market, or, as the article, Blue Ocean Strategy describes, a blue ocean market.

However, success in blue ocean markets is naturally a result of trial and error, but as the name implies, trials and errors come with risks. Juul Labs was not targeting cigarette smokers, a group that has long been studied and observed. Instead, they were targeting a non-smoking audience with no consumption experience of how they would react to tobacco – vaping or not. When it came to the audience familiar with inhaling smoke, there was already much segmentation, targeting, and positioning. Therefore, they could not make educated guesses.

With non-smokers, nobody knew exactly what these consumers sought from the inhaling smoke experience, who they were, and so forth. Indeed, there were signs that Juul was taking off among people much younger than the company’s target demographic of twenty-and thirty-somethings. Many of the same things that were supposed to make Juul appealing to adult smokers – small size, discreet look and aroma – were making it very easy for teenagers to sneak them into school and use them around teachers who were none the wiser. A student could hit the device when the teacher turned to write something on the board, exhale into the backpack or a shirtsleeve, and not get caught.

It was especially popular in schools where students could afford to drop thirty-five dollars on a device that needed to be constantly refilled with pods that cost about fifteen dollars for a four-pack. National data showed that vaping was particularly common among white teenagers: from 2014 to 2017, almost 34 per cent of white high school students reported trying an e-cigarette at least once, compared to almost 20 per cent of Black students. Why exactly did teenagers hijack this product?

Juul Labs created flavours to help smokers switch from cigarettes. It had a great impact, but flavours also attracted teenagers. Furthermore, the slick design and its potential for stealth smoking made it a goldmine for teenagers to take a habit to school. All in all, for Juul Labs to save the billion adult smokers, they jeopardised the billion teenagers.

When Parents and Politicians Get Involved

“By 2018, people had brought to our attention the appeal of Juul to kids,” recalled a former agency official. From the 2017 National Youth Tobacco Survey, FDA commissioner Scott Gottlieb realised that more than two million U.S. middle and high school students were using e-cigarettes, and there was enough anecdotal evidence to conclude that many of these teens were consuming Juul’s products.

With its “Vaporised” marketing campaign, JUUL’s strategy to help a billion consumers who smoked cigarettes switch to vaping as a less harmful habit had accidentally – if not intentionally - hit something that it should not: get the children of deep-pocketed and politically connected parents addicted to vaping. In its campaign, JUUL used 20-year-old models smiling, joyously jumping, and kissing while vaping with JUUL’s products. Juul resonated with a younger demographic, school-age teens, who seek to emulate playful twenty-something models' cool and trendy looks.

Addiction was getting out of hand. “My 20-year-old son is incredibly addicted to Juul and wants to quit,” Katherine Snedaker wrote in May 2018. “He is using three pods a day. Do you have any research or advice [on] how to quit?” She hit send, hoping her email would finally bring her family some relief. When she got a response, it sank in that Juul did not have the answers, either.

Hooking on underage consumers was already alarming. However, having no solution to reverse the situation was even worse. Some parents may have felt stuck with their problem. Others used whatever means possible to fix it. Journalists were writing about students consuming Juul Labs’ products in school and pointing to the Vaporized marketing campaign as evidence that Juul hooked them on purpose. Anti-tobacco advocacy groups, especially the Campaign for Tobacco-Free Kids, were raising hell about vaping, calling for dramatic measures like bans on all flavoured products.

The worst enemies were those who lived in the neighbourhoods around Juul’s headquarters. They were rallying to kick Juul Labs off the city-owned land it occupied. “We demand that the Port of San Francisco take whatever measures available to it to remediate this slap to the face of our community,” a local advisory group wrote to the San Francisco Port Commission, furious that it was allowing a tobacco organisation to occupy city property. Christine Chessen, a concerned mother who’d turned up at Juul’s headquarters the previous summer, was part of this crowd and more fired up than ever.

In early 2019, Chessen started emailing back and forth with Meredith Berkman, the New York City parent who founded Parents Against Vaping E-cigarettes after Juul representatives visited her son’s school. Chessen and Berkman came from similar backgrounds. They were both politically connected and well-acquainted with the social scene in their respective cities. They knew how to play the game and get people to listen to what they had to say, and they were brainstorming ways to make PAVE’s message national. PAVE had become the de facto resource for parents struggling to help their kids quit vaping.

Chessen had also started reaching out to people she knew around town, trying to capitalise on the anti-Juul momentum across San Francisco. One of these people was City Attorney Dennis Herrera, whom Chessen knew from working the San Francisco fundraising circuit. Herrera lived in San Francisco’s Dogpatch neighbourhood, so Chessen thought she might convince him that tobacco organisations have no place in his backyard. In March 2019, Herrera announced that he was considering a plan more dramatic than any introduced by a U.S. city so far. He wanted to ban the sale of any e-cigarette product, flavoured or unflavoured, that the FDA had not approved. In other words, JUUL was in danger. “San Francisco has never been afraid to lead,” Herrera said when he announced the plan, “and we’re certainly not afraid to do so when the health and lives of our children are at stake.”

Shortly after Herrera’s announcement, Ashley Gould and a few members of Juul’s government affairs and scientific teams met with him at his office, hoping to stop the plan before it went any further. Herrera listened politely to Gould’s pitch, but clearly, she was not getting through. “I don’t have any choice,” he countered when she was finished, according to a source in the meeting. Youth vaping had become such a hot-button issue that he felt he had to react. The ban was going to move forward, regardless of whether Juul liked it or not. Juul was used to having harsh critics, but Herrera’s ban was something else entirely. For Juul’s hometown, one of the country’s largest cities, banning vapour products outright seemed like a slap in the face and the start of an alarming ripple effect. Juul's future was uncertain if other cities followed San Francisco’s lead.

Rather than letting the ban go through, “Juul decided to pick up arms and fight it,” said a company insider. Shortly after the meeting with Herrera, Juul Labs began investing in the Coalition for Reasonable Vaping Regulation group, pushing for new e-cigarette sales standards in San Francisco rather than an all-out ban. Once it collected enough signatures to get a measure on the ballot, voters in San Francisco’s November 2019 elections could replace Herrera’s ban with the coalition’s alternative plan.

The decision to fight back against Herrera seemed like a mistake to some Juul Labs staffers, even if the ban set a bad precedent. One high-level employee remembers stressing to a colleague that Juul should “disappear from the fight because the harder we fight, the harder we get overwhelmed.” With the youth vaping epidemic getting more airtime than ever and with the Altria investment tanking Juul’s reputation, the public, not to mention lawmakers and regulators, were already predisposed to be suspicious of everything Juul did. Even if its counter-legislation were spotless, the employee thought that anything Juul did to fight a ban on vaping in San Francisco would make it look bad. Juul poured millions of dollars into the opposition campaign when Herrera’s ban became final in June 2019.

JUUL’s fear was confirmed: bans beget more bans. September 2019 was arguably Juul’s worst month ever. Michigan governor Gretchen Whitmer kicked things off on September 4, 2019, announcing that her administration planned to ban all flavoured nicotine vaping products.

At Trump’s direction, the FDA banned flavoured vaping products until they got the agency’s rubber stamp, a process that could take a year or more. Juul had already stopped selling its flavours in stores, but with online sales still in the picture, Mango and Mint remained its best-selling flavours; Tobacco was at the bottom of the list. If flavoured cartridges were taken off the market entirely, more than 80 per cent of Juul’s pod sales, totalling millions and millions of dollars each year, would be gone in a puff of smoke. Trump’s vow to ban flavours opened the floodgates. On September 15, New York joined Michigan in banning flavoured nicotine vaping products.

Massachusetts came next, on September 24, with a ban on all flavoured vaping products, both nicotine and cannabis. Rhode Island, Montana, Washington, Oregon, and California soon took similar action. It was no longer enough for health departments to issue some concerned statements about youth vaping rates. They wanted this stuff gone.

The anti-Juul outcry in San Francisco had grown fierce enough that Burns was planning to buy a twenty-eight-story, multimillion-dollar office tower downtown, just in case the city evaded the organisation from Pier 70. Things were not looking good. Some employees thought Juul Labs’ only hope of pulling itself out of the swamp of public opinion was launching an all-out apology rather than fighting back against these various threats.

Step one was a marketing makeover. In the first half of 2019 alone, Juul paid an ad agency more than $100 million to design and place ads that were the polar opposite of the Vaporized campaign. Each ad opened with a title card warning that nicotine is an addictive chemical. Then, an adult smoker, indisputably of legal age, would come on-screen to talk about their switch from cigarettes to Juul. “I was a pack-a-day smoker for thirty-three years,” a fifty-two-year-old woman says in one ad. Surrounded by colourful throw pillows on her couch in Florida, she described her switch to Juul “like a weight lifted off of you.” The ad was noncontroversial, safe, and boring. It was the campaign Juul should have launched with. The company had finally gotten the message—three years too late.

Cheryl Healton, the NYU School of Global Public Health dean, watched the public parts of Juul’s apology campaign with a mixture of sympathy and scorn. She had been one of many public health experts who had tried to steer Juul onto the right path as it grew because she believed in e-cigarettes’ potential for smokers. If Juul apologised now, it was only because the company had ignored reason earlier. It had gone with its flashy launch campaign, organised an educational program, failed to understand the regulatory environment, and now it was rich with Big Tobacco’s money. As Healton knew well, there was no way for Juul to un-ring the bell it had rung.

Indeed, in November 2018, in response to a reported increase in youth use of vapour products, we suspended the sale of Fruit, Cucumber, Creme, and Mango JUUL pods in retail. Once one of the fastest-growing start-ups in the US (valued at $38 billion at its peak), the company has now lost 95% of its value and has settled $3 billion in lawsuits over its marketing tactics in the US. Nearly all its flavours have been pulled from the market, and the Food and Drug Administration temporarily banned the device. Mango, which accounted for Juul Labs’ third of its pod sales, was gone.

Final Thoughts

Jamie Ducharme's book, Big Vape, provides a comprehensive account of the tumultuous journey of Juul Labs. When the organisation introduced the Juul device, its co-founders, Adam Bowen and James Monsees, inadvertently opened up a new market. However, this success also came with its fair share of problems. Juul became embroiled in a massive controversy, which led to several lawsuits and public backlash from activists who aimed to shut down the business. Additionally, Juul faced intense competition from rival companies who sought to hijack the organisation.

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Reference List

  • Ducharme, J. (2021). Big Vape: The Incendiary Rise of Juul. United Kingdom: Hodder & Stoughton.

This article has been sponsored by:

The Greatest Work
Roberto Saliba
M. LCGD (Melit.), M.A. (Melit.), B.Com. (Hons.), A.C.I.M.

Author of the Entrepreneurial Leadership book and a seasoned writer who specialises into leadership, vision, strategy, and innovation. During his free time, he enjoys watching movies, reading, and finding new ways to improve Infotopia.

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