Juul vs. Zyn: Business Book Club #2
The consequences of applying the Silicon Valley ethos to nicotine
Welcome back to Business Book Club, where I focus on a specific text I can’t stop thinking about, and dissect what it tells us about business, technology, and culture. In this edition, I’ll focus on a documentary, rather than the book that inspired it, that is as much about a startup’s ambitions as it is about what kinds of new companies we want to back.
Most startups are plagued by fear of failure, wondering what will happen if they don’t win. “Big Vape,” the Netflix documentary chronicling the rise and fall of Juul, begs the question: What happens if everything works? What are the consequences if the startup is a wild success?
Name: Big Vape [Netflix]
Company: Juul
tl;dr: A critical look at Juul’s rise and fall, including its societal and cultural impact, especially on young people.
Vibe check and tone: Gripping four-part docuseries with colorful interviews from staffers and teenage vapers.
Watchability: Visually dynamic and engrossing, including quick cuts, cartoon re-enactments of key moments and meetings, and social media footage that, paradoxically, almost glamorizes Juuling.
Recommendation: Essential for those interested in the intersection of technology, marketing, and public health.
Where’s My Juul?
Do you remember Juul? Juul-ing, as a verb?
Among my most vivid memories from Columbia Business School (MBA ‘19) is the sight of smoke plumes quietly emerging from the necklines of hoodies in the back of lecture halls.
It wasn’t the rebellious flick of a cigarette we’d seen in movies from decades past. With the can’t-sit-still behavior usually reserved for fidget spinners and flipping pens between your fingers, my classmates hitting Juuls. They couldn’t put the USB stick-like devices down, not even for the length of one class.
Many of my friends, between 25-40 years old, wouldn’t have considered themselves as smokers. They occasionally took a drag or five on a rowdy night out, but thought of cigarettes the way many American millennials did after decades of anti-smoking PSAs—as a nasty habit that their parents and grandparents quit.
Juuling felt different. It had a different lexicon. It was a noun, a verb, and a lifestyle. The mint and mango flavor pods smelled good. It was odorless, discreet, and trendy. It was as sexy as a device could be–elegant and stylish in slate gray, a high-tech consumer product.
There were always the classmates who had cartridge refills at the ready. European students and American students found arbitrage opportunities; the American version of the Juul had a higher dose of nicotine than Europe’s regulations would allow so they’d ferry pods back and forth. People were taking leaves of absence, and eventually dropping out of CBS to work at Juul, then a hyper growth rocketship to wealth and success.
What began for many friends as a trendy habit, quickly became an actual nicotine addiction. I remember one friend realizing for the first time that she was addicted after withdrawing on a long-haul flight.
Juul was a trendy consumer tech product built with textbook tech ethos, tech marketing, at breakneck tech speeds…but it was still a nicotine delivery device with nicotine consequences.
Juul, the Documentary 'Big Vape', and Applying the Silicon Valley Ethos to Vaping
Stated mission: Improving the lives of 1 billion smokers worldwide
FTEs: Grew from 200 in September 2017 to 1,500 by the end of 2018. Currently around 650.
Founding year: 2007, first as Ploom.
Founders: James Monsees and Adam Bowen.
Peak valuation: $38B. Altria, one of the world's largest cigarette makers (e.g., Marlboro) purchased a 35% stake of Juul for $12.8B, which valued Juul at $38B, at a time when it had annual revenue around $2B. After legal battles (Juul settled over 5,000 lawsuits, as of 2022), Altria’s stake was written down to $250M, and Altria exited.
What I find fascinating about the Juul saga is that it’s a cautionary tale about applying Silicon Valley’s “move fast and break things” approach to an industry inherently linked to people’s well-being.
Juul started as a nicotine-delivery device called Ploom, built by two product design graduate students at Stanford in 2007. James Monsees and Adam Bowen were smokers themselves, and even though they had tried vaping before, they didn’t find existing vapes satisfying enough to make the switch, even if it was safer for their lungs.
Vapes back then were cumbersome and uncool, with weak nicotine delivery and dragon-like smoke on the exhale.
If Monsees and Bowen wanted to maintain what they liked about smoking (socialization, energy hit) and eliminate what they disliked (ostracization in a society increasingly limiting cigarette purchases and smoking zones, negative health consequences of combustible cigarettes), they would have to design an alternative themselves.
Monsees and Bowen envisioned a future in which smoking was safer, more discreet, and less taboo.
Netflix’s "Big Vape" starts here, and the documentary evolves in four parts: the inception, the meteoric rise, the public health controversies, and the eventual reckoning Juul faced.
Inception & Meteoric Rise
Between 2007-2015, the original Ploom device needed work. People were getting shocked and burned using the product. But Ploom was able to raise funding and began developing a new device, Pax. Pax’s device was the first prototype of what would eventually become Juul, and it allowed people to manually insert tobacco leaves. But most people used it to smoke cannabis. After several pivots and limited initial traction, investors were getting antsy and wanted growth, faster.
Pax Labs introduced the first Juul device in 2015 and got to work on bringing it to market.
This documentary focused most clearly on two storylines: one, the medical implications of health claims around smoking versus vaping, and two, the marketing of Juul. Its marketing propelled its success and also made it easier to tear apart years later.
To accelerate growth, the marketing team hired creative director Steven Baillie, to work on a campaign called “Vaporize”. Baillie had previously directed iconic campaigns for Bonobos and Gap, helped reinvigorate Target's branding, and worked for years with Complex and GQ. For Juul, his brief was to sell the lifestyle. "The direction we decided to take was more focused on the cool factor," Baillie said in the doc.
Vaporize had online and offline components, starting with a swank launch party with Juuls as party favors, suggested hashtags, and influencers exhaling smoke with its signature flavors, which included mint, creme brulee, and mango.
While other e-cigarette companies at the time were relying on television and promotional displays at retailers as their primary marketing channels, Juul spent $2.2M from 2015-2016 mostly on social media marketing. They partnered with beautiful people in fashion, beauty, sports and more who had large social media followings on Instagram.
They worked with Grit Creative Group and hired 300 New York and LA influencers, from Luka Sabbat to Tavi Gevinson, and sent packages to celebrities, actors and models. Bella Hadid posted a photo of herself vaping with Juul.
What wasn’t on social media was on youth-oriented sites from Nickelodeon to Seventeen Magazine, on TV on Cartoon Network, and IRL on Times Square billboards.
By results alone, the campaign was a wild success. The marketing team was praised in weekly team meetings. Demand was outstripping their ability to supply.
At this time, Juul devices needed fine-tuning. They would occasionally explode, leaving people with “juice in mouth,” which was disgusting and possibly toxic. But these problems led Juul to innovate until it had a breakthrough. Juul developed liquid cartridges, which allowed the vaporizer to atomize nicotine salts, solving their problems, but also allowed them to deliver a higher dose of nicotine than any other e-cigarette competitors on the market.
The combination of the marketing campaign and the nicotine-delivery innovation was the growth accelerant they had been looking for.
From 2016 to 2018, Juul’s growth was astounding. The number of e-cigarettes doubled in the US, and six million adults were introduced to nicotine via e-cigarettes. Juul captured more than 75% of the vaping market and reached more than $1B in sales in 2018.
Juul was being hailed as the iPhone of e-cigarettes by Wired.
But its customers were young—from early adolescents and teenagers through age 30, not the demographic of existing smokers Juul promised to convert to safer smoking. Juul didn’t replace the delivery mechanism for people already addicted to nicotine; it addicted a new cohort entirely.
Decades of anti-smoking PSA progress was undone. It was so cool that teenagers didn't even associate it with smoking. The song "Where's my Juul?" and the particular way that people clutched them became status symbols on their own. Teenagers wouldn't say they smoked; they Juuled.
Public Health Concerns & Juul’s Reckoning
Although clearly effective, the strategy raised questions about whether it was meant to convert current smokers or attract a new, younger audience.
Many users were only in high school (ages 14-18). Their rate of e-cigarette use increased from 1.5% in 2011 to over 27% in 2019, driven primarily by Juul adoption.
The documentary shows side-by-side campaigns from traditional tobacco companies like Marlboro, which deliberately advertised to young people. While the Juul staff says they were unaware that Juul’s ads were reaching young people, critics argue that the messaging and distribution channels were intentionally targeted toward young people.
It took the law a few years to catch up. Several states sued the brand for unlawfully marketing nicotine products, adopted by kids and teens. Juul paid hefty fines ($462 million to six states, including New York and California) and promised to no longer target young people, remove certain flavors from the market, and stop showcasing young, aspirational models in its advertising. But Pandora's box was wide open.
Studies showed that most teenagers didn’t know exactly what a Juul contained, but that they liked it.
Juul responded by scaling back its social media presence to more sterile content in beige tones with nicotine risk warnings. But the product had a social media life of its own. There were unofficial Instagram accounts dedicated to Juul memes—of people inhaling from five or more Juuls at once and passing out. There were young celebrities photographed with them. There were people asking each other if they had flavor pod refills on the dance floor.
The question was whether Juul would be able to innovate out of a crisis it created: newly addicting teens to nicotine. Juul staffers started a roadshow to visit schools and give "safety classes," but this only made matters worse and angered parents.
From a New York Times op-ed exploring how difficult it is for parents to stay ahead of, and on top of, what their children are being exposed to online, the article quotes a student, who said, “The first time you rip a Juul, you never feel like that again.”
The documentary cuts between interviews with current and former Juul employees, as well as teen vapers (some of whom were hospitalized, others who became ambassadors for the brand), their parents, teachers, and more. There are also animated re-enactments of key people and moments—for example, all-hands meetings where key employees are hired and fired.
The accessibility of the devices helped Juul scale insanely quickly. But lawsuits, regulation, and constant news reports about teenage health crises emerging from Juul’s popularity soured its reputation.
The destruction of its reputation and eventual regulation destroyed its valuation, which slid to $450M (from $38B) in 2022, a 95% decrease.
Is Zyn The New Juul?
Fast forward to 2024, and we’re living in the age of Zyn.
If you’ve worked a white collar job in New York or San Francisco in the last year or so, you’ve no doubt encountered Zyn. I was surprised how often I heard it mentioned in the US in March. Desk workers slip the white nicotine pouches between their gums and lips for a discreet jolt of energy. Unlike dip, Zyn pouches are tobacco-free, odorless, and do not require users to spit.
Each pouch contains three or six milligrams of nicotine and looks like the silica gel packets that reduce humidity in your pockets. The vibrant packaging looks like chewing gum, with similar iconography and colorways to Ice Breakers or Mentos Pure Fresh. Clean, benign.
Between 2020 and 2021, the sales of nicotine pouches in the US nearly doubled, while cigarette sales decreased during the same period. Zyn has captured 75% market share in the US nicotine pouch segment, and its shipments in the US have surged from 1 million to 334 million over the last six years, or 119% annualized growth.
Despite claims of targeting adult smokers, the flavors—including Bellini, Spearmint, Cool Mint, Citrus, and Espressino—and the marketing strategies evoke a hauntingly familiar debate about appealing to younger users.
Many high schoolers who vape are converting to Zyn during class hours–it’s sneaky and almost invisible to teachers, and delivers high nicotine content throughout class hours.
Did we learn nothing?
“Lord, Forgive Me, For I Have Zynned”
Introduced in the US by Swedish Match in 2014 and acquired by Philip Morris in 2022, Zyn’s sales have soared, especially as cigarette sales faltered.
Zyn has also become a cornerstone of the ugly culture wars playing out in the US, and depending on which side of the aisle you’re on, many Zynfluencers make the product and the associated politics part of their online personality.
Instead of selling a glamorous lifestyle, Zyn’s marketing positions the product on a very contemporary point of debate: “freedom.” As in, regulators came for cigarettes, then they came for vapes, but they can’t come for our Zyns.
It’s a favorite of Tucker Carlson (aka Tucker CarlZyn), for example, who described it “like the hand of God reaching down and massaging your central nervous system”; he’s in favor of leaving regulation as is. On the other side, Senate Majority Leader Chuck Schumer advocated for a ban: “These nicotine pouches seem to lock their sights on young kids—teenagers and even lower—and then use social media to hook ‘em.”
Zyn is meme-ified (#Zynbabwe), just like Juul was. Kids love it, just like they did Juul. Their parents appear powerless to stop it. It’s almost impossible when they have no access to what’s happening.
The critical public health debate about nicotine’s role in society rages on. Some health experts argue that products like Zyn could reduce harm by offering a safer alternative to smoking cigarettes. Others express concern about their potential appeal to underage users and the lack of stringent federal marketing restrictions compared to other nicotine products.
Long-term effects remain unknown, for Juul and Zyn, but both companies raise questions about harnessing modern viral marketing methods to spread trends like wildfire, for products that challenge our understanding of public health, especially as they relate to children, who are notoriously impressionable and potentially customers for life.
We're living in a post-Juul world. Yet products with real and lasting health impacts are marketed and adopted before regulation can catch up.
For companies with venture funding that demands outsized returns, the Silicon Valley growth ethos makes sense. But should the rules be different when the societal impacts are questionable or uncertain?
Most founders keep themselves up at night wondering: What happens if the startup doesn’t succeed? But what happens if, in Juul or Zyn’s case, it succeeds beyond your wildest dreams? Is that an outcome that you would want for society? What would that future look like? Is that a future we want to build?