What does a unicorn (vape flavor) even taste like?
Nora and Scott get the story behind the e-cigarette maker Juul, exploring the company’s rise as a Silicon valley startup and the decisions that led to its current relationship with Altria, the tobacco giant behind Marlboro cigarettes. New York Times reporter Sheila Kaplan discusses her reporting on Juul and the documentary Move Fast & Vape Things, along with her investigation "How Juul Hooked a Generation on Nicotine."
Nora Ali: From Morning Brew, this is Business Casual, the podcast that gives you a front row seat to candid conversations with some of the biggest names in business, asking them the questions you wish you could ask. I'm your host, Nora Ali.
Scott Rogowsky: And I'm your other host, Scott Rogowsky, a Jewel fan since '95. Yeah, a proud owner of Pieces of You on cassette. Nora and I are here for your ears, bringing you stories of how business shapes our daily lives now and into the future. So let's get down to business.
Nora Ali: Nearly 15 years ago, the creators of the e-cigarette company JUUL set out to solve a problem. In the words of Co-founder James Monsees, they started Juul with this goal to, "Improve the lives of adult smokers." Improve, in this case, meant developing a non-combustible cigarette that would, in theory, be less harmful than tobacco cigarettes while still delivering a powerful dose of nicotine. But things started unraveling for the company as an increasing number of parents, public health officials and lawmakers accused JUUL of marketing to teenagers, and not adult smokers, and getting a new generation hooked on nicotine and suffering severe or health consequences. The documentary, Move Fast & Vape Things, from The New York Times and Hulu explores JUUL's rise as a Silicon Valley startup and the decisions that led to its current relationship with Altria, the tobacco giant behind Marlboro cigarettes, which now owns a large stake in JUUL. We spoke with New York Times reporter Sheila Kaplan, whose investigation into how JUUL hooked a generation on nicotine inspired the documentary.
Scott Rogowsky: Nora, do you smoke?
Nora Ali: No, I don't. My lungs are weak as is. I actually had a physical recently where they told me my lung capacity was below average, and I've never smoked in my life. How sad.
Scott Rogowsky: Is that because you're just a tiny person and you have a tiny lung?
Nora Ali: Maybe I have squirrel-sized lungs, I don't know. How about you? Have you ever smoked? And also, how's your lung capacity?
Scott Rogowsky: I have a bird brain. Doctors have called me bird brain, and you have a squirrel lung. I don't know between the two of us...my history to smoking is proudly nonexistent. I've never once took a puff of any tobacco product, and I'll stress tobacco product. Look, I've taken a couple hits off of non-tobacco cigarettes, so to speak, and it's terrible and awful. The feeling of hot burning smoke in your lungs, who wants it? So, part of me understands, okay, you come up with a vape, it's, I guess, steam powered. There's no ammonia, right? No tar, none of these carcinogens we heard so much about in the nineties that plagued the tobacco industry back then.
Scott Rogowsky: So on the one hand you say, "Okay, this is a safer alternative, maybe it could be a smoking cessation device for adult smokers." But yeah, as we get into with Sheila, adult smokers never really seem to be the demographic from the beginning, and this company is truly awful. They've pretty much destroyed this whole generation. And why? I think JUUL and some of these new companies have been able to infect the youths out there and really grab them and hook them.
Nora Ali: You sound like an old person when you say youths.
Scott Rogowsky: Youths, I'm watching Sopranos again. No, I think they've taken social media, they've adapted and co-opted, you can say the teenage aesthetic, the Gen Z-millennial aesthetic, and they drove it home to them very clearly as Sheila documents in reporting. So, yeah, this was a tough one, Nora.
Nora Ali: Yeah. Here is our conversation with New York Times reporter, Sheila Kaplan. Take a listen.
Scott Rogowsky: Sheila, welcome to Business Casual, and thank you, and not just for joining us, but for your stellar reporting with your colleague, Julie Creswell at the Times on how JUUL hooked a generation on nicotine which has now led to this new documentary, Move Fast & Vape Things, it's truly on a topic that needs to be discussed, because this is a real problem. For those who don't know what's going on with vaping and e-cigs and how this is pretty much taking over the youth, can you break it down for those who don't know?
Sheila Kaplan: Sure. There are millions of teenagers who are hooked on very high nicotine e-cigarettes. Many of these kids started vaping before they knew there was nicotine in the e-cigarettes. They just thought, "Hey, this is kind of a nice buzz, and we have nice flavors." And they didn't realize that they were getting hooked. The JUUL e-cigarette was a product that was introduced allegedly to be a way for smokers to move to a safer product. So the founders of JUUL said, "We're against Big Tobacco. We are not Big Tobacco. We want people not to smoke and to use our very cool stylish JUUL instead." But their ads were so slick, and wonderful, and exciting, and their marketing and their packaging was so terrific that it appealed to young people. And very soon after JUUL went on the market, teens and middle school kids started using it so much so that now JUUL is a verb.
Scott Rogowsky: JUULing, and Planking, and Ubering. These kids are up to no good.
Sheila Kaplan: Right.
Nora Ali: Sheila, you talked about the founders, James Monsees and Adam Bowen. And the intention it seems, at least in the beginning, was to help smokers, sort of as a smoking cessation device, but talk us through in more detail how that shifted and how they did end up appealing to teens, and what it was about the product that maybe changed what the demographic was that was different from the intended audience.
Sheila Kaplan: Until JUUL came on the market, most people who vaped had to have a sort of bong-like device, it was huge, and they had to buy liquids and put it in, and it was very cumbersome. So teens didn't do it. For one thing, they couldn't hide it. It was huge, but JUUL was tiny, it's the size of a thumb drive. So kids started using it, and they got it from older kids, they saw it used in clubs, they liked the ads which were very hot, and it spread so fast. School principals were calling the company and saying, "Kids are vaping in the bathrooms and we need them to stop. What do we do?" But JUUL took a very, very long time to take any action to protect kids. And so JUUL's public plan was always very different from its private plan. Basically, right from the start they were already talking to tobacco companies about being bought out.
Scott Rogowsky: It sounds very duplicitous, not only on the messaging side, but yeah, even on the business plan side.
Sheila Kaplan: That's what the FDA thought. And for a long time, the Food and Drug Administration thought, "Wow, if only there can be another product that would give smokers nicotine, but be less harmful than cigarettes." But because it was marketed so irresponsibly, they hooked teens and it threatened to really destroy that whole category of Public Health Solution, which it could have been.
Nora Ali: Sheila, all this regulatory concern reminds me a little bit of the Theranos trial, frankly, because clearly something went wrong, maybe everything went wrong, with the blood testing company. But the big question for lawmakers and regulators now is, did that company, and did Elizabeth Holmes have the intent to harm anyone, the intent to mislead investors? So it seems like, at least on the outside, the intention from the founders was coming from a good place, because of their family histories with smoking and that sort of thing, but we still don't know what the motivation was behind the shift in messaging necessarily. So can you give us a little more insight to the beginning days? Why did James and Adam actually start this company? And what was that personal reason?
Sheila Kaplan: James and Adam were both smokers, and they had people in their families who had gotten ill from smoking. And they were very aware of the stigma of being a smoker these days. Having to leave your office and go stand in the rain and smoke, or being screamed at at parties if you took out a cigarette to light it. And so they really were looking for an alternative that would be less harmful, but some of the attorneys general in the country who were suing JUUL say, "Yes, it was their intention to hook kids." I have no evidence that they intended to hook kids, it simply that kids were hooked and they took too long to take action to stop it.
Scott Rogowsky: Well, let me ask you this, Sheila. I mean, your reporting reminds me of the Marie Brenner Vanity Fair article about Jeffrey Wigand, right? “The Man Who Knew Too Much,” which he was the Big Tobacco whistleblower whose life story became depicted in the 1990 movie, The Insider.
Sheila Kaplan: Yeah.
Scott Rogowsky: So that was about the tobacco industry and this whistleblower who had real evidence from internal documentation emails. Were you able to find those types of things in your research?
Sheila Kaplan: Well, I spoke to someone whose name I can't use here. This person is very much afraid of being sued by JUUL or getting caught up in one of the government investing, but this person was a high-level, early JUUL employee who said that everybody knew teens were using JUUL, and that they called that notion of the product getting into the hands of teens known externalities. So, kid smokers were called known externalities, meaning they knew they were using them. And so I have this person just admitting that right on the record.
Scott Rogowsky: Someone who's not ready perhaps to blow the whistle publicly, but someone who's spoken to you and can corroborate these things?
Sheila Kaplan: Yeah. It's one of the number of people who were there early and then realized what was happening and quit.
Scott Rogowsky: Well, I mean, it's, hard to argue with any other assertion other than they were aware of this. And when you have the co-founder, James Monsees, testifying in front of Congress in July 2019 saying, "We never wanted any non-nicotine user, and certainly, nobody underage to ever use JUUL products." Maybe he never wanted to, but it happened and they didn't take any steps to correct it.
Sheila Kaplan: That's exactly right. I can't say that in their hearts James and Adam wanted kids to use the product, but people predicted to them that this would happen. They ignored the possibility.
Scott Rogowsky: It's frankly upsetting when you think about it, and we're going to think more about it, and talk more about JUUL's marketing tactics with Sheila after this quick break.
Nora Ali: Sheila, I want to learn more about the marketing side of this, whether it was intended or unintended to be targeted towards teens. What did the ads look like for JUUL? And how did things like cool flavors contribute to reaching this teen audience?
Sheila Kaplan: One thing that happened very quickly after JUUL became a hit was that there were copycats on the market, JUUL-alikes, and those people took the flavors to a new level. There was bourbon, and banana ice, and unicorn.
Nora Ali: What does a unicorn flavor taste like?
Sheila Kaplan: I was afraid to ask what that really tasted like. So there were so many Chinese imports that flooded the market. Some were fakes and said they were JUUL on there, even though they weren't, and others were just flavor pods that kids who had a JUUL could buy that were compatible with the JUUL, and so that added to the problem. But the ads were beautiful. I mean, the guy, Steve Baillie, who designed the first ads used an ad he had been putting together for the GAP. And so it was very colorful, and it had young people dancing, and looking beautiful, and people kissing. It was nothing like an ad saying, "Hey, are you looking to quit smoking? Here, try this." Part of the reason was because the Food and Drug Administration doesn't allow JUUL to do that, because it doesn't have authorization yet.
Scott Rogowsky: Yeah. The slick advertising reminded me of those Apple campaigns, and the iPods, yeah, and the design of it is also very much like Apple, disrupting this industry...
Sheila Kaplan: Yeah. I talked to one of the designers who told me they were trying to just make it look like nicotine of the future, the cigarette of the future. They wanted it to be very different from a regular cigarette.
Scott Rogowsky: Much in the way that Dippin' Dots is the ice cream in the future. Maybe we're going to see little small balls of nicotine that you could have...flavored frozen balls of nicotine could be nuts.
Nora Ali: They can get at Disney World, that would be terrible.
Sheila Kaplan: One thing that was so interesting reporting this out is that there were so many people who worked at JUUL who thought they were going to a company that was going to become a public health good. They thought they were going to a company that was going to help people and help smokers. And I remember the day my phone rang, and it was a scientist at JUUL who told me that the company was designing something called a Turbo JUUL that would let loose even more nicotine faster to give people even more of a high. And that was when he quit. So, there was always this tension in the company between the people who really were true believers and the people who wanted to make a lot of money and then sell it to a tobacco company and quit.
Nora Ali: In addition to the addiction, there were also tons of health implications that came out over time. I do want to play a clip from the beginning of Move Fast & Vape Things. And this is a clip where Jackie Franklin, who is a young woman interviewed in the film. She started vaping JUUL when she was a teenager, and in this scene, she's riding her bike and stopping to use an inhaler. Let's take a listen.
Jackie Franklin: I've never had breathing problems in my life, ever. That's never been a thing for me. My inhaler helps somewhat, but my lungs literally feel like they're turning to a crisp. I can't explain it, it just hurts so bad. They did a bunch of breathing tests, or whatever, and they said it's probably vaping-induced asthma. It has taken a kind of freedom that I can't express.
Nora Ali: So, Sheila, how much do we know now about vaping-related illnesses, especially since you first started reporting about JUUL? What do we know now?
Sheila Kaplan: We really don't know very much. There are many cases of individuals who say they got sick, they developed long problems from JUULing. There are studies that show that vaping is much, much, much less likely to give you lung cancer than cigarettes, but there's not a lot of data yet on whether or not it can hurt your lungs.
Scott Rogowsky: Is it possible just to ban all cigarettes? I mean, honestly, they banned cigarette advertising already in most media and newspapers, magazines, TV, and I think that had a major crimp, but who wants to see these companies exist besides the companies themselves?
Sheila Kaplan: That's a question I ask myself all the time. When Congress gave the federal government the authority to regulate tobacco, they said they couldn't make them illegal, right? They couldn't make cigarettes illegal.
Scott Rogowsky: Heroin's illegal, why can't cigarettes be illegal?
Sheila Kaplan: Well, it can be, but Congress needs to pass a law declaring that cigarettes are illegal if they want the FDA to get them off the market. They just have to give the power to the agency to do it. I bet they would love to. What they're trying to do instead is to force the tobacco industry to lower the amount of nicotine in cigarettes over time to non-addictive levels so that people will stop. That's the plan. I personally don't think it has a snowball's chance of going through. I mean, I don't think they can do it, but it is the plan and I wish them luck, but I don't think the industry is going to permit it.
Scott Rogowsky: Sheila, have you ever vaped yourself?
Sheila Kaplan: No, I haven't. And I did talk to one of my sources at JUUL who wanted to try it out and he ended up fainting. So, that discouraged me from giving it a try. One thing I should say if we're talking about JUUL, is JUUL did finally try to turn itself around, and they agreed not to do certain advertising, and they agreed to take all their flavors off the market that appeal to kids, except for menthol, which does appeal to kids. And they did that not to be altruistic, but they did that because otherwise the FDA was going to take them off the market.
Scott Rogowsky: You're talking about the fall of 2019, right? When vaping-related illnesses were dominating the headlines? Did taking those flavors off the market, did that work?
Sheila Kaplan: It did have an impact. I mean, the most recent youth tobacco survey showed that only 5.7% of high school kids were using JUUL compared to this other product, Puff Bar. And Puff Bar, 26% of the kids use that. It's cheaper and it comes in more flavors. So, you have to kind of give JUUL credit for what it did. And in a way, they started it. And then they kind of got beat on the market by people who copied them and out-JUULed JUUL. They came up with outrageous flavors, and they made it cheaper, and disposable products, and that ate into a lot of JUUL's profits, but they have stuck as far as I can see to the deal they made with the FDA to truly try to keep it away from kids. But if you've gotten addicted teenager, the promises don't really help you.
Scott Rogowsky: Well, their campaigns haven't worked on us. The three of us here gold star teetotalers. No vapists here, we have a little... Is that what they call them? Vapists?
Sheila Kaplan: I like that, vapists. I think they say vapers, but I think that sounds better, vapists.
Scott Rogowsky: Yeah. Let's start using that term, it could turn some people off to the whole endeavor. No one wants to be called a vapist.
Nora Ali: No, they certainly don't. Let's take another quick break and when we come back we'll talk more about Big Tobacco and how they're involved in this whole situation as well.
Nora Ali: So, Sheila, Altria is in the mix as well. Altria as a reminder owns Marlboro. It bought a 35% stake in JUUL for about $12.8 billion, and it valued that stake at around $1.6 billion last year. And executives claimed it was because of a pullback in international expansion and increased competition, but the CEO still said, "Altria continues to believe that e-vape products, including JUUL, can play an important role in tobacco harm reduction." This seems very counterintuitive. It doesn't make a lot of sense, a smoking giant owning a stake in a smoking cessation company, whatever you want to call it. But what are the current gripes that regulators now have with Altria's relationship with JUUL? Because clearly they're not happy with this either.
Sheila Kaplan: No, they're not happy with it. And they're especially not happy because you know former FDA commissioner, Scott Gottlieb, as he tells us in the documentary, they were having the meetings in secret. So first of all, Altria is the company formerly known as Philip Morris. Probably, they paid a lot of money to someone who came up with that name Altria. And they have this whole plan on their website to move toward a tobacco-free future. They say they don't want to get people addicted. It is very, very hard to believe, and it's hard to believe because it makes no sense. I mean, the tobacco industry needs replacement smokers or it doesn't have customers. It used to be that the tobacco companies would kill their customers and then they needed new ones. Scott, I love the look on your face.
Scott Rogowsky: I'm on the altria.com website here.
Sheila Kaplan: Okay, what do you see? What do you see?
Scott Rogowsky: It's incredible. Moving Beyond Smoking is their big splash on the homepage. From tobacco company, to tobacco harm reduction company. Oh, a federal court has ordered Altria to make these statements. I was going to say, why would they put these on here unless they were not federally ordered? These are court ordered. Health effects of smoking, addictiveness of smoking and nicotine, low tar and light cigarettes being as harmful as regular cigarettes. So they have these links that you have to now click to. Health effects of secondhand smoke, there's información en español. Click aquí. So they're covering all the bases here, but...first of all, who's going to this website besides us right now?
Sheila Kaplan: Well, I know. And also they talk a good game, because they know that tobacco companies became pariahs. Nobody respects them. So what they did is, they say all the right things, they don't want kids to smoke, they don't want anyone who's not smoking to smoke, but look what they're doing out in the real world, they've all sued the FDA to delay graphic warnings, those skulls and crossbones, and pictures of people who have to breathe through a hole in their neck, and corpses. The FDA tried years and years ago to put those warning labels on packs of cigarettes. So, if Altria and RJR really don't want people to smoke, why are they still fighting those graphic warning labels?
Scott Rogowsky: Well, I mean, it's against their bottom line. There's no possible way this company that is massive publicly traded company that needs to make a profit by selling their cancer-causing agents here.
Sheila Kaplan: Yeah. I mean, Altria is the biggest investor now in JUUL. They have the largest share of JUUL, and so JUUL's future means a lot to them. So, they need to act like good citizens so that the FDA will let them continue to sell the products.
Nora Ali: It seems like the FDA is coming around a little bit, at least. You've reported earlier last month that the FDA authorized e-cigs to stay on the U.S. market for the first time. What led to that decision? And what do you think that means for the future of JUUL and other vaping companies?
Sheila Kaplan: Well, we don't know yet if the FDA is going to let JUUL stay on the market. So far it's only agreed to let Vuse, which is owned by R.J Reynolds stay on the market. They applied about a year before JUUL applied. But what it does mean, and what many public health officials are happy about, is that it means that the FDA believes that there is a role all for e-cigarettes in helping get people off combustible cigarettes. Almost a half million people die in the U.S. every year from tobacco-related illnesses. So, think of it. I mean, that's two years, that's more than we've lost to COVID. I mean, that is a lot of dead people.
Scott Rogowsky: Yeah. I'm just stunned by the numbers. I'm also looking at this other vape company. Have you heard of this one? Flum, F-L-U-M. Flum by Gio. This is the new one I'm seeing cropping up in LA now where I live. There are a lot of trendy young women out there with these Flums in their hands.
Sheila Kaplan: Oh, I'm taking a look at it. Let's see.
Scott Rogowsky: There is a website called Vapor Boss. On their top of their website there's no FDA warnings here. It says, "Vapor is life, Matthew 19:26." They're using biblical verses to advertise their vapes. I don't know how I feel about this website, but...
Sheila Kaplan: Flum, look at that, you've got Strawberry Mango, Peach Gelato, Fruity Hawaii.
Scott Rogowsky: All these brands, Hyppe Max, Bang, Ezzy, these are all brands... And it's a massive industry that's sprung up. The way that JUUL sort of come off their high horse, $13 billion down to $1 billion, it has to signal something's changing in this industry, but are we still going to see all these e-cig and vape shops popping every corner like they were in New York a few years ago? Is the whole landscape going to change or is this here to stay?
Sheila Kaplan: I think it's here to stay, but I think the FDA is figuring out how to try to get the bad actors off the market, or at least they're trying. They want to get rid of all those fruit flavors. There's a legal fight now between the companies that are making the disposables in flavors and the FDA. A lot of companies are now starting to use synthetic nicotine, and there's a legal question as to whether the FDA has the authority to ban the synthetic nicotine product.
Scott Rogowsky: I mean, Sheila, if they ban the fruit flavors they're only just going to come up with different flavors. They'll come up with savory flavors. A mushroom risotto JUUL, or a JUUL alla vodka, a little penne, chicken marsala, chicken marsala vape. I mean, that actually sounds pretty good.
Nora Ali: Sheila, you said that the space will still exist, e-cigs are still going to exist even if the bad actors are removed, but what does that mean for JUUL, specifically? Is JUUL considered a bad actor itself? If you had to look into your crystal ball, what's the future of JUUL?
Sheila Kaplan: I think that the FDA by and large views JUUL as having been rehabilitated. It's true that the people who rehabilitated them, the new management, came from Altria, the tobacco company, so that's kind of odd, but Altria is at least used to following regulations and if they don't like them, suing in court. JUUL just did whatever it wanted and kind of went outside the regulations. So I think that JUUL has said it's in a reset mode. I think that we'll know soon what the FDA really thinks. My guess is that they'll give JUUL a chance by authorizing maybe even one product, and then they'll keep a close eye on them, but that's just a guess, I really don't know what they're going to do.
Scott Rogowsky: Has the Grammy-nominated Alaskan singer-songwriter, Jewel, weighed in on this? Her good name is being dragged through the mud here. I think she's outstanding. I mean, if my name were Jewel and I'm seeing these reports of JUUL... I mean, I know it's spelled differently, but my mother doesn't know the difference. The future of our listeners rests in watching Move Fast & Vape Things streaming on Hulu now. We highly recommend that you don't vape, but we do recommend that you watch the doc. Sheila, thank you for speaking with us.
Sheila Kaplan: Thank you very much.
Nora Ali: Thanks, Sheila. BC listeners, we did reach out to JUUL after our conversation with Sheila Kaplan. This is their statement from a company spokesperson. "We will continue to reset the vapor category in the U.S. and seek to earn the trust of society by working cooperatively with attorneys general, legislators, regulators, public health officials, and stakeholders to combat underage use and transition adult smokers from combustible cigarettes. As part of that process, the company reduced its product portfolio, halted television print and digital product advertising, and submitted a pre-market tobacco product application to the U.S. Food and Drug Administration, including comprehensive scientific evidence to support the harm reduction potential of its products and data-driven measures to address underage use. Our customer base is the world's one billion adult smokers."
Scott Rogowsky: And now, BC listeners, we want to hear from you. Do you do the JUUL? Are you a vapist? Did you switch to e-cigarettes from traditional cigarettes? Send us an email at email@example.com or DM us on Twitter @bizcasualpod, that's B-I-Zcasualpod, with your thoughts.
Nora Ali: You can also leave a voice memo on our website, businesscasual.fm, or give us a ring and leave us an old-fashioned voicemail. Our number is (862) 295-1135. As Business Casual grows, we're excited to get to know our listeners old and new. Drop us a line, and don't forget to leave your name and where you're calling or writing from, so we can hear from you in a future episode.
Scott Rogowsky: Business Casual is produced by Katherine Milsop and Bella Hutchins, who are now available in iced watermelon and lime flavors. Additional production sound design and mixing by Daniel Markus. Alan Haburchak is the director of audio, Morning Brew. Sarah Singer is our VP of multimedia, and Jessica Cohen is our chief content officer. Music in this episode from Daniel Markus and the smoking Mysterious Breakmaster Cylinder. If you liked what you heard, please follow Business Casual on Spotify, Apple Podcasts, or wherever you go for ear candy. And we'd love it if you would give us a great rating and a review.
Nora Ali: Thanks for listening to Business Casual. I'm Nora Ali.
Scott Rogowsky: And I'm Scott Rogowsky.
Nora Ali: Keep it business.
Scott Rogowsky: And keep it casual.