The founders of Juul are worth $ 843 million each

Sophie Alexander, Bloomberg

published

4:20 am PST, Sunday 4 November 2018

Adam Bowen and James Monsees were pursuing a master's degree in product design at Stanford when they decided to do something to combat their tobacco dependence.

This was the beginning of what will eventually become Juul Labs Inc., a $ 15 billion electronic cigarette manufacturer whose product is so popular that it is used as a verb.

"They are becoming synonymous with the electronic cigarette market," said Ken Shea, Bloomberg Intelligence analyst, about San Francisco-based Juul. "They are a phenomenon of a business."

Bowen, 43, and Monsees, 38, founded Ploom in 2007, sold the name eight years later to Japan Tobacco Inc. and renamed their company Pax Labs Inc. Around the same time, they presented a e-shaped cigarette is the Juul. Last year, Juul was separated from Pax and then swallowed the market.

Its growth was meteoric, with Juul's share of electronic cigarette sales soaring from 16% at the end of 2017 to 53%, according to IRI market research data. Vuse Ciro, of Reynolds American Inc., comes in second place with only 10%, up from 22% at the end of last year.

Bowen and Monsees presented their big idea by taking a cigarette break on a 2004 night, while they were facing a deadline for thesis proposals for their MSc degrees in product design, according to a 2012 profile. published in Stanford magazine.

The men, who declined to comment on this story, each owned 5.6% of Juul after a fundraiser in July that gave them a stake of $ 843 million each. This figure is expected to increase in parallel with sales of electronic cigarettes, which have almost tripled in the past year. While e-cigs only account for 3% of the tobacco industry's sales today, Shea said he expected that figure would reach 25% within 10 years.

Bonnie Herzog, an analyst at Wells Fargo, who called Juul a "brand to beat," led an investigation that found the product was attracting new tobacco users rather than attracting traditional brands of cigarettes and cigarettes. other brands of electronic cigarettes. The mission of Juul is to help adults quit smoking.

It is hard to say why Juul has become so popular while the electronic cigarette has been around for more than a decade.

"Some products just become viral," said Shea, citing the example of the craze for cabbage-cabbage children of the 1980s.

But dolls are not addictive.

Most Juul capsules contain the same amount of nicotine as a pack of cigarettes. According to the Centers for Disease Control and Prevention, this is one of the highest nicotine levels in the US e-cigarette market. Juul is also available in mango, cucumber, fruit and cream flavors that can appeal to children and those trying to quit smoking.

The Food and Drug Administration's investigation into the use of electronic cigarettes by minors, which Commissioner Scott Gottlieb described as an epidemic, has made the flavor of electronic cigarettes. In September, the FDA threatened to remove these products from the marketplace if the industry did not do more to combat the increasing use of children and adolescents. The tobacco giant Altria Group Inc. said last week that it was temporarily removing some pod-based products from the stores.

Altria launched its own range of electronic cigarettes after the creation of its NuMark unit in 2011, but it was in the company's interest that this product never become popular because it threatened the sale of traditional cigarettes, which constitute "his bread and butter," said Shea … "To their chagrin, Juul took off like a rocket."

Juul is subject to special scrutiny because of its market dominance. In early October, FDA inspectors retrieved more than 1,000 pages of sales and marketing materials from their headquarters.

Although pressure from the FDA is a cause for concern, most retailers do not think it will have "a significant or lasting impact on Juul or the broader vapor category," according to the Wells Fargo report.

Juul is also sold in Canada and the United Kingdom and has just entered the Russian market. The company is appealing a ban imposed by Israel because of its high nicotine content.