--:-- [Theme music fades out]
--:-- Noam Hassenfeld: Remember Juul? Who will say? Not that Juul. Teenager sucker known as a USB key. He says at least it's not a cigarette, and you agree. Yeah, that one. Five years ago, everyone was Juuling. The company was worth more than Ford. And then...
--:-- Noam Hassenfeld: This e-cigarette was worth over $38 billion. And now it's practically nothing. But somehow flavored vapes are more popular than ever. So what happened? How did it come to pass that out of the efforts to rein that company in, we got instead this insane Wild West, where it seemed like the vaping problem transformed into something much less manageable, arguably, than it had been in the first place?
--:-- Noam Hassenfeld: That's coming up on Today Explained. Support for Today Explained comes from Adio. Adio is an AI-native customer relationship management platform that Adio says is built for the next era of companies. A powerful data structure adapts to your business model, syncs in all your contacts in minutes, and enriches your business with actionable data. Adio says it also allows you to create those email sequences, those real-time reports, those powerful automations, which they claim can help you build what matters most, your company.
--:-- Noam Hassenfeld: You can go to adio.com slash todayexplained to get 15% off your first year. That's A-T-T-I-O dot com slash todayexplained.
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--:-- Noam Hassenfeld: It's Today Explained. I'm Noam Hassenfeld, filling in as host here with Leon Nafok, co-host of a new show from Audible called Backfired. It's all about the rise and fall of Juul.
--:-- Leon Nafok: So, Leon, let's go back to the beginning of that rise. How did Juul start? It started like so many of our most beloved companies at Stanford with a couple of guys who had an idea for a startup. Were they in like a garage or something?
--:-- Leon Nafok: They weren't in the garage. They were in a design program, actually. Their names were James Monsees and Adam Bowen. They were both smokers. I'm from St. Louis, and when I grew up, I was a kid and exposed to cigarettes. And the fascination sort of lived on with me.
--:-- Leon Nafok: You know, James Monsees had a family member, a grandfather, I believe, who had died of smoking-related illness. They hated the fact that, like, their classmates would look askance at them when they were outside their classroom smoking. They didn't like how it made them smell and so on.
--:-- Leon Nafok: They decided to make a safer cigarette, one that didn't involve lighting tobacco on fire. We were really passionate getting into this about, yeah, as smokers ourselves, to end the combustible cigarette for once and for all.
--:-- Leon Nafok: So this was like coming out of a desire to be healthy. This was actually like something that was supposed to help people. Oh, yeah. No, 100 percent. I mean, you know, people will call me naive for saying this, But I do think their initial mission was to get people off of cigarettes.
--:-- Leon Nafok: They wanted to invent something that would help millions of people around the world stop smoking. They obviously wanted to make a lot of money in the process. They saw that population of smokers, reluctant smokers, as a huge market opportunity.
--:-- Leon Nafok: So you have a trillion-dollar global market where 70% of those consumers don't want to use them. So that's fascinating. But they knew from their own experience that quitting smoking is really hard. And they wanted to invent something that would go further and work better than the patch, the lozenge, all these smoking cessation tools that are not that effective.
--:-- Leon Nafok: They wanted to see if they could improve on it. So how big did Juul get at its height? So big. Tremendous growth in just a short time. It has roughly 72% of the e-cigarette market selling directly to consumers and through 100,000 retail outlets.
--:-- Leon Nafok: I would say peak Juul was probably around 2018, 2019. Ironically, the kind of best or most vivid marker of their success was when Altria, the tobacco company that makes Marlboros, bought a chunk of them, a 35% chunk of Juul for like 12 point something billion dollars, which valued Juul at $38 billion, which made it worth more than Ford and SpaceX and many other companies.
--:-- Leon Nafok: More valuable than Ford, Delta Airlines or Target. Wow. So they were, I mean, they were a juggernaut. They were like the fastest growing startup ever. And, you know, that obviously went up in smoke, so to speak.
--:-- Leon Nafok: Yeah. What exactly happened? I remember hearing stories all the time about how Juul is so dangerous, which is kind of surprising if the original purpose of Juul was to be healthy.
--:-- Leon Nafok: Right. Well, so I will put an asterisk on unhealthy because they never made health claims, right? They weren't allowed to because they were trying to sell Juul as a consumer product.
--:-- Leon Nafok: They weren't interested in being behind the counter at a pharmacy next to the cessation devices that we all know. Fair to say you think you're safer than cigarettes. I'm not going to comment about where I am in terms of that.
--:-- Leon Nafok: Let's just say cigarettes are known to be the number one source of preventable death in the world and are at the far end of the stream of that continuum of risk.
--:-- Leon Nafok: They wanted this to be like something people wanted. They wanted it to be something people enjoyed using. The best they could do in terms of making claims about its relative health risks was to call it cleaner. That was the word they used at the time.
--:-- Leon Nafok: But is it actually bad for you? We don't have long-term data on what happens when you spend you know 30 years or 40 years vaping. It's much safer than smoking. That the thing that I think has gotten lost in a lot of this discourse.
--:-- Leon Nafok: Like there are surveys that show that like 60 percent of doctors think vaping is just as bad for you as smoking. And it just not true. Like the important thing to realize is that nicotine is not the thing in a cigarette that causes cancer or that causes you to develop emphysema.
--:-- Leon Nafok: It's the carcinogens that are generated when you light tobacco on fire. And if I remember correctly, when it came to the controversy around Juul, it was mostly about kids, right?
--:-- Leon Nafok: Exactly. The annual youth tobacco survey came out in 2018, showing a huge, huge increase in kids who were routinely using e-cigarettes. I think it was like a 75% increase in one year.
--:-- Leon Nafok: Millions of high school kids, you know, not quite a million middle schoolers, but a lot of teenagers using vapes and generally using Juul.
--:-- Leon Nafok: Teachers started noticing kids with Juuls in class. How often would you guys say you've been offered a vaping product? Multiple times a week. Multiple times a week? During class.
--:-- Leon Nafok: During class? There were kids bunched together in bathrooms, juuling. Yo, what's good? We got the jewel here. Gonna teach you some tricks.
--:-- Leon Nafok: And that really freaked people out. Take a close look. This student is outfitted with vaping devices, but you can't see them. Why? They're designed to look just like normal school gear.
--:-- Leon Nafok: So we have this fear that kids are using too many e-cigarettes too much they're juuling too much and then we also have this idea that maybe it's not as bad for you as well it's definitely not as bad for you as cigarettes we don't know exactly how bad it is for you.
--:-- Leon Nafok: Why did Juul end up losing essentially so I mean a couple of things happened at the same time I think the the the youth survey Youth tobacco survey numbers came out and were a huge red alert for the FDA, for the Center for Tobacco Products.
--:-- Leon Nafok: The head of the FDA at the time, Scott Gottlieb, announced that there was an epidemic. Summer of 2019, this other thing happens, which is extremely damaging to Juul, which is that people start developing a deadly lung illness.
--:-- Leon Nafok: And it seems like what they have in common is that they vape. I remember we covered that on the show back in 2019.
--:-- Leon Nafok: Today's episode is about vaping, but I can almost guarantee you it won't make you want to vape because now people are dying. Yeah, we didn't know what was causing this lung illness that was literally killing people.
--:-- Leon Nafok: And yeah, kids were in the hospital struggling to breathe. At 18, doctors say Adam Hergenrader has the lungs of a 70-year-old. I was devastated because I didn't think that that little pod could do so much damage on my body.
--:-- Leon Nafok: And people were, you know, in the news were talking about it as the vaping illness, the vaping-related lung illness. The CDC came out with a recommendation essentially advising people maybe to not vape at all, just to consider not doing it.
--:-- Leon Nafok: And what exactly was that was causing it was unclear until eventually the evidence came in and it became pretty, I think, it became a matter of empirical fact that what was really causing this lung illness was black market THC vapes.
--:-- Leon Nafok: So it wasn't Juul? Correct. Huh. There's a thing called vitamin E acetate that was in these black market THC vapes, has nothing to do with what's in a Juul.
--:-- Leon Nafok: and in the meantime everyone got convinced that vaping kills you and gives you this lung illness right just sort of vaping in general without making the distinction between like black market weed vapes and e-cigarettes yeah vaping in general Juul in particular there's probably a lot of um you know I think resentment on the part of people who who believe in vaping as a harm reduction tool uh for what they see as like a basically a politically opportunistic move on the part of the U.S. government to crack down on nicotine vapes on the basis of this lung illness that actually had nothing to do with it.
--:-- Leon Nafok: So what ended up happening? What did the government do? So what happened was, you know, a lot of the analysis of why teens were picking up this habit had to do with the fact that vapes came in attractive flavors, right?
--:-- Leon Nafok: So the early Juul flavors, I think, came in mango. That was like always the people pleaser, the crowd favorite. But creme brulee was one. I never liked that one. Cucumber, that one was pretty nice. Two recent studies found mint pods are the number one flavor among high school users, and Juul is their favorite brand.
--:-- Leon Nafok: Nothing like a fresh mint Juul pod. And the theory was that this was what was making kids want to vape, maybe in addition to the fact that it was just an aesthetically cool thing to have in your pocket.
--:-- Leon Nafok: And so flavors became a major focus of efforts to rein in this industry. And so what happened was that under the Trump administration, there was a flavor ban on nicotine vapes. But we can't allow people to get sick and we can't have our youth be so affected.
--:-- Leon Nafok: So that's the last I feel like I heard about Juul in the news cycle. Was that the end? No, it was not the end. It may have been the end of people paying attention to Juul in the way you just described, but it was only the beginning, I think, of a new phase in the vaping industry's evolution.
--:-- Leon Nafok: In a minute, how the attempt to ban Juul may have made flavored vapes more omnipresent and even more of a black box.
--:-- Leon Nafok: And here we go. Cherry pop, everybody. Let's get into it.
--:-- Leon Nafok: Business model. According to Adio, Adio takes less than a minute to set up, and within seconds, you will have your email and calendars synced. You'll see all your relationships in a fully fledged platform, they say, all enriched with that actionable data.
--:-- Leon Nafok: And they say you can build AI-powered automations and use its research agent to tackle some of your most complex processes to see so that you can focus on what matters, building your company.
--:-- Leon Nafok: You can join industry leaders such as FlatFile, Replicate, Modal, and so much more. You can go to adio.com slash todayexplained to get 15% off your first year. That's attio.com slash todayexplained.
--:-- Leon Nafok: Every day, millions of customers engage with AI agents like me. We resolve queries fast. We work 24 and we helpful knowledgeable and empathetic We built to be the voice of the brands we serve Sierra is the platform for building better more human customer experiences with AI No hold music no generic answers no frustration Visit sierra.ai to learn more.
--:-- Leon Nafok: Support for Today Explained comes from Upwork. If you run a business, you know that scaling your business requires the right expertise at the right time.
--:-- Leon Nafok: I sometimes wonder how many of you are running businesses out there. I would love to know. Please email me, noelle at king.com. With Upwork, you can find specialized freelancers in IT, web development, AI, design, admin support, marketing, and more.
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--:-- Leon Nafok: That's U-P-W-O-R-K dot com, Upwork dot com.
--:-- Leon Nafok: Parents are all the same when it comes to vaping. Bye, Mom. Bye, honey. None of them think today's flamed is doing it.
--:-- Leon Nafok: Leon, we're back talking about flavored vapes. And I guess my first question here is just, are flavored vapes legal right now?
--:-- Leon Nafok: No, they are not. Okay, wait. So the producer for this episode, Miles Bryan, he told me that he brought a mango flavored vape to this taping. He found a mango one? A mango Juul? I don't think a Juul, but he got a mango one and he says he bought it at a convenience store.
--:-- Leon Nafok: So how was he able to do that after this Juul ban? Well, so the ban on flavored vapes really only applied to Juul. I mean, frankly, the way it was written, it only covered cartridge-based or pod-based devices, which left this huge opening for companies that made disposable vapes.
--:-- Leon Nafok: What is going on, guys? Today we're going to be doing a review on the lemon sparkling wine, Lost Mary MO5000. Vapes that didn't include any kind of cartridge. You just bought one, you puffed on it for a week or two or however long it lasted, and then you threw it away.
--:-- Leon Nafok: Very, very sweet lemon. You get that wine aftertaste, but it's not overpowering in my opinion. It's like nice, natural taste.
--:-- Leon Nafok: That loophole that the FDA ban left open gave rise to a massive industry that they're still trying to rein back in, even though the loophole has since been closed.
--:-- Leon Nafok: The reason I say no, none of these things are legal is that... The Food and Drug Administration recently finalized new regulations that would make electronic or e-cigarettes subject to the same federal rules as traditional cigarettes and other tobacco products.
--:-- Leon Nafok: Anyone who enters the market after 2016 who wants to sell vapes of any kind, anyone who wants to sell nicotine e-cigarettes, has to be approved affirmatively by the FDA. They have to submit what's called a PMTA, an authorization request, basically.
--:-- Leon Nafok: And so Juul, which obviously had already been on the market, could continue selling their products even as the FDA reviewed their application. And so the reality is that none of these companies have been approved by the FDA.
--:-- Leon Nafok: Where are all these flavored vapes coming from? Well, they're mostly made in China, specifically in Shenzhen, which listeners may recognize. I mean, it's a massive city, very famous.
--:-- Leon Nafok: That's sort of like the big tech hub, right? Yeah, people remember it because Foxconn was in Shenzhen. It's like where all our iPhones were made. And now it's home to the central hub of the world's e-cigarette manufacturing.
--:-- Leon Nafok: We located in Shenzhen City, Bauan District. It's very, very, very easy to find a full supply chain in this city. And because we have a full supply chain of the electronic products, so it's very easy for us to find all the raw material we need.
--:-- Leon Nafok: There's a neighborhood in Shenzhen known as Vapor Valley, where most of these things are made. The European market is very strong right now. And the Middle East, but U.S. is still the top one sales thing right now of the vaping industry. It's like the biggest market in the world right now.
--:-- Leon Nafok: Most of these flavored vapes that are coming in are coming from this one place? Yeah, that's the sense that the people we interviewed have is that, and I say that and I hedge that a little bit because people know very little about these companies.
--:-- Leon Nafok: Like one of the subplots of our, you know, attempts to figure out who was in charge is that they're really good at kind of hiding. And, you know, there was one company called Puff Bar where there was all this speculation for a long time about whether these two, you know, American guys in their 20s who said they were in charge were actually just a front for a Chinese company that, you know, was actually calling the shots.
--:-- Leon Nafok: And so there's a lot of hazy territory here where you don't really know who is behind these things. All you know is that they're everywhere.
--:-- Leon Nafok: If I understand this correctly, the market for all of these Chinese vapes was created by the American government or the FDA saying Juul is not healthy and habit-forming for kids.
--:-- Leon Nafok: Are these new vapes healthier? Are they tested? No, they are not tested by anyone. We tested some, actually, for our podcast. We took a handful of disposable vapes that we bought in L.A. to a lab where they mostly test THC vapes.
--:-- Leon Nafok: But basically they have this robot that can smoke like 10 vapes at a time. What? Wait, what is it? I just imagined like a robot with a really wide mouth? It's not an anthropomorphic robot, but it is a device that can double fist.
--:-- Leon Nafok: This is unbelievable. Basically a robot sucking down about seven vapes at once. Well, it doesn't one at a time, but yeah. What they told us was that the vapes contained some nasty stuff, but in very, very, very, very small quantities.
--:-- Leon Nafok: There's arsenic everywhere in your drinking water and your, you know, your home floating around in the air. It's nothing to get too crazy about. Okay, so that's the physical stuff. You know, maybe not terrible, but also unregulated.
--:-- Leon Nafok: What about the kids' stuff? So this is sort of interesting. You would think and I certainly did think that disposable vapes which like again come in like insane flavors Like I mean it like literally like seltzer You know what I mean Like the same way that there this insane explosion of flavor specificity in the seltzer world I feel like you have the same thing with nicotine vapes.
--:-- Leon Nafok: They don't look like the Juul. Like they're not, they don't resemble a cigarette in any way. Arguably, the Juul is still like a thin, like thing you hold in your fingers. Like this is like a little egg almost.
--:-- Leon Nafok: And they come in all the different forms. But like the main form is like an AirPods case almost that if I were a teenager, I would want.
--:-- Leon Nafok: But the reality is, and this is why I say it's quite interesting, teen vaping is way down, like way down from its peak. According to the National Youth Tobacco Survey, the number of high schoolers using tobacco products dropped from 16 to 12 percent.
--:-- Leon Nafok: That drop largely driven by a decrease in the use of e-cigarettes. And meanwhile, like the sales of disposables have continued to go up. So it's like it seems as if it's adults who are driving the adoption of these disposables, which is interesting.
--:-- Leon Nafok: So I'm curious. We had this product in America, Jules, that people were really scared about and were at least somewhat regulated. And then there was a push to kind of get them out. and now we've essentially replaced them with much less regulated vapes.
--:-- Leon Nafok: Why aren't these new unregulated Chinese vapes causing kind of outrage? Why aren't they getting crackdowns? So they are. They're getting some outrage, and they're definitely getting at least the trappings of a crackdown.
--:-- Leon Nafok: I, you know, accompanied the New York City Sheriff's Department on a raid of a smoke shop in the Bronx. You just got the elf beer to come in? Yep. It was something they did every single day.
--:-- Leon Nafok: They go to these places that sell flavored vapes and weed, I should say. This is the elf bar. We see this one a lot. Elf bar and then this one, the miles. Once this bagged up, you'll see how many bags that come out of this location.
--:-- Leon Nafok: You know, they sort of like play whack-a-mole with these convenience stores that often just like reopen a week later.
--:-- Leon Nafok: So that's like the small ball effort to crack down. Just the other week, it was announced that the FDA is going to go after disposables in a new way by joining up with like a bunch of different bureaus, including DOJ.
--:-- Leon Nafok: The FDA says it sent hundreds of warning letters to shops and manufacturers over the years, urging them to stop selling the e-cigs, but it just hasn't been effective.
--:-- Leon Nafok: That seems like a signal that they're serious about going after these companies. with like real enforcement power. Up to this point, and I think this is what has been really difficult for them, is that they didn't really have a weapon against these places, against these companies, other than trying to stop them from importing their products.
--:-- Leon Nafok: But there were so many different brands and so many different companies, again, operating somewhat in the shadows, that the FDA just couldn't keep up.
--:-- Leon Nafok: This is kind of a story of unintended consequences in a lot of ways, of good intentions here. I guess it just makes me wonder, is there another strategy the government could have chosen to follow here?
--:-- Leon Nafok: This is a boring answer, but like one thing they could have done differently is not left a huge loophole that these companies took easy advantage of.
--:-- Leon Nafok: So that's one thing. But I think, you know, in a more philosophical sense, they could have, I think, done a more careful job of balancing the need to contain the youth vaping epidemic, as they called it, with the reality that smokers like vaping, that vaping helps people who smoke cigarettes quit.
--:-- Leon Nafok: You know, the research is pretty clear. Vaping is by far the best, most effective tool we have for smoking cessation. And I think in other countries, especially the UK, Today, they've taken a more balanced approach in terms of trying to make sure that kids aren't picking up this habit and developing lifelong nicotine habits, while also encouraging adults to switch and having messaging that didn't completely demonize vaping as a phenomenon.
--:-- Leon Nafok: I think in the United States, the reason so many people kind of assume that vaping is no better for you than smoking, or if anything, it's worse, is that the messaging in the U.S. has been so prohibitionist, so kind of unambiguously negative on this thing that actually could help millions of people not die.
--:-- Leon Nafok: And so I think, you know, there's been this, like, to me, quite persuasive and moving, like, argument made on behalf of people who smoke, who I think, again, plausibly observe that, like, they are being sacrificed on the basis that kids shouldn't be doing this.
--:-- Leon Nafok: Leon Nafok is the co-host of Backfired, The Vaping Wars, a podcast from Audible. Right now I'm on the patch, actually. I've introduced that into the rotation. And it works quite well.
--:-- Leon Nafok: That's sort of where I am now. It's trying the old school method of quitting, which is to use the patch. This episode was produced by Miles Bryan, edited and fact-checked by Matt Collette, and engineered by Patrick Boyd and Andrea Kristinsdottir.
--:-- Leon Nafok: I'm Noam Hassenfeld. It's Today Explained. Support for the show comes from Mercury. What if banking did more? Because to you, it's more than an invoice. It's your hard work becoming revenue. It's more than a wire. It's payroll for your team. It's more than a deposit. It's landing your fundraise. The truth is, banking can do more. Mercury brings all the ways you use money into a single product that feels extraordinary. to use. Visit mercury.com to join over 200,000 entrepreneurs who use Mercury to do more for their business. Mercury, banking that does more.
