Juul & its House of Smoke & Horrors

Back in the day, when Silicon Valley was about silicon and technology, our industry elders used to wisely caution that Silicon Valley doesn’t invest in tobacco, alcohol, porn, and guns. Not anymore it seems. Thanks to an influx of new money and an increasingly porous definition of what is a Silicon Valley company, what was taboo once, is now a hot deal.

And there is no better example than Juul Labs, a San Francisco-based e-cigarette company (which makes a rechargeable vaping device and nicotine pods) which is raising $1.2 billion in fresh cash at an eye-popping $15 billion valuation. They have already raised as much as $650 million. The gawking coverage of the company makes it seem like anything but a cigarette peddler.

In a CNBC news report, Juul spokesman Matt David said: “Like many Silicon Valley technology startups, our growth is not the result of marketing but rather a superior product disrupting an archaic industry.” First of all, there is nothing technological about this company — unless you count behavioral addiction as a common ground with Facebook and others like them.  It is utter bullshit, and reporters should know better than letting this slide without serious questioning.

From Business Insider (which called it iPhone of e-cigarettes) to CrunchBase, everyone seems to marvel over their growth rates, their post-Unicorn valuations, and jaw-dropping success at raising capital. And very rarely have I seen anyone stand up and point out that it is no different than traditional tobacco peddlers like Marlboro and Camel. They are peddling nicotine-based addiction. By focusing on charming founders, their backgrounds, large amount of funds raised and crazy valuations, no one is asking the right question: why are we supporting this company that is essentially Camel 2.0?

Addiction is a profitable and high-growth business. Ask the cartels selling other addictive products. “And is it an ethical business?,” asks Crunchbase. “We can’t answer the latter question here as we’re not equipped for it.” Yes, you are! Any halfway decent person percent can see that tobacco & nicotine industries are driven by greed and have preyed on human frailty.

After all, just because it is an e-cigarette doesn’t make it less risky, less addictive and less amoral. So yes, it is pure greed on the part of Juul investors for turning a blind eye to the company’s negative impact on society. And I am glad regulators, parents and their victims are suing the company. The same nicotine salts that Juul claims as a “breakthrough” are being blamed for causing addictive behavior, especially among young people! The state of Massachusetts is digging into the ill-effects of this company, and I am glad they are.

The network has a unique ability to turbocharge everything. Whether it was Facebook users, Uber’s growth, conspiracy theories and the Kardashians. Juul is a perfect example of addiction being pushed at network-scale. By using Silicon Valley-pioneered growth tactics, Juul has seen it revenues ballon. Axios recently reported that Juul’s revenues in 2017 were $245 million in 2017 vs. $60 million in 2016 and are projected to be $940 million. With “gross margins at 70 percent”, their “2018 EBITDA projection is around $250 million,” Axios added.

And yet that doesn’t make it right. I think all those who are complaining about the addictive effects of smartphones, need to step up and denounce this poison. That is not me — the downsides of vaping have been outlined in a research study as well. If I am outraged, it is because I am an ex-smoker. I started as a teenager, and it got worse over the years until it nearly killed me. I still struggle with nicotine withdrawals, even though last time I smoked was in December 2007. I know one thing – tobacco and nicotine addiction don’t ever go away. The health risks never end, and the insidious grip of this poison never leaves our minds.

And just because instead of paper and tobacco, the nicotine is delivered in specialist pods that fit in vape devices that resemble a cute USB stick — it doesn’t make the product less addictive. Or less evil. Statutory warnings on these products should be a start. But I am all in favor of authorities coming down hard on them.

July 25, 2018, San Francisco

Feature Photo by Thomas Bjornstad via Unsplash

A letter from Om

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