The Rise and Fall of Juul, With The Devil's Playbook Author Lauren Etter

You've heard this story before: Two Stanford kids take on a big bad industry, one that harms people, and they disrupt it. Typically, these stories are portrayed as heroic in Silicon Valley. Yet the story of Juul is different. The company sells sleek e-cigarettes packed with nicotine to cigarette smokers looking for a less harmful solution. But flush with VC cash and determined to grow, the company ended up addicting millions of kids, leading to a serious backlash and decline. Lauren Etter, a Bloomberg reporter and author of The Devil's Playbook, which covers the Juul saga, joins Big Technology Podcast to discuss the company's rise and fall. You can buy The Devil's Playbook here: https://amzn.to/2TsMoCK Learn more about your ad choices. Visit megaphone.fm/adchoices

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Alex Kantrowitz?

  This episode is brought to you by Genesis. What does it actually take to put Agentic AI to work across an entire enterprise? I recently spoke with Genesis chairman and CEO Tony Bates about why orchestration is emerging as a competitive advantage in customer experience and what companies need to get right in the AI era. Then I sat down with Adam Mitchell, head of enterprise business solutions at Voya Financial, to go inside a large scale Agentic CX transformation, including the business decisions, trade offs and lessons along the way. You can watch both conversations now on my YouTube channel today. It's never been more challenging to get frontier compute. How do you know where to look, who to trust, or how much to pay?

• 0:43Alex Kantrowitz?

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• 1:14Alex Kantrowitz?

  Hello and welcome to the Big Technology Podcast, a show for cool headed nuanced conversation of the tech world and beyond. Joining us today is the author of The Devil's Playbook, a new book about the rise and fall of Juul, the sleek electronic cigarettes your kids probably hit. She's also a reporter at Bloomberg News, Lauren Etter. Welcome to the show. Thanks for having me, Alex. Great having you here. I don't know why, maybe because I've covered Facebook for a long time, but I have a real interest in vice and addiction. And so I saw that your book was coming out, it's just out and couldn't wait to dive into it. And it's a fantastic book. So thank you for writing it.

• 1:54Alex Kantrowitz?

  But what's interesting about your book is, you know, you, you write about two Stanford kids taking on a big, bad industry, one that harms people who see the need to disrupt it and, you know, take it down with a less harmful solution. And, you know, typically that's a tale of Silicon Valley heroism and we celebrate that out here. But this one's a little different. So why is that?

• 2:17Speaker 01

  So, well, the first thing to say, just a short answer to your question is because it's tobacco. They, you know, they could have chosen any industry to innovate on and they chose perhaps the most controversial one. Tobacco has a very long and sordid history in, um, in America. And it's one that's extremely controversial. We made it through the tobacco wars in the nineteen nineties. The tobacco industry was near bankruptcy. And they touched a nerve like no other. When, you know, there was this long history of deceit and lying to the American public about the addictive and deadly nature of their product.

• 2:58Speaker 01

  They, uh, embarked on one of the most, um, most consequential and large disinformation campaigns about their product.

• 3:07Alex Kantrowitz?

  The cigarette makers.

• 3:09Speaker 01

  The cigarette makers, absolutely.

• 3:11Alex Kantrowitz?

  And so these two guys make sort of the alternative to that, which is a very appealing e-cigarette. Kind of looks like a USB drive. And, well, I, I, you know, why don't you keep going, but it's, uh, it is interesting how they, they see that there's this cancer-causing product. You're right, even that most of the damage is done by the actual, uh, lighting of the cigarette. It's not the tobacco, it's the actual flame and the combustion. And so this is supposed to be a safer alternative, but it goes off the rails a little bit.

• 3:42Speaker 01

  Yeah, I mean, that's one of the most fascinating things. This is one of the most deadly products that remains on the market today. That's considered to be legal and, uh, the cigarette, sorry. Yeah, we should absolutely, we're talking about the cigarette right now. The cigarette is one of the most deadly products. Um, it contributes, you know, causes or is the, uh, most leading cause of preventable death in America. Contributes to the death of four hundred and almost five hundred thousand people every year. So why not innovate on this product?

• 4:09Alex Kantrowitz?

  A COVID each year.

• 4:10Speaker 01

  Yes, a COVID each year. It's a really interesting statistic. Um, so absolutely, it seemed like it was absolutely ripe for innovation. This is what Silicon Valley does. They look for products that haven't been innovated on, you know, gaps in markets, that type of thing. And this is absolutely a product that had not been innovated on in more than a century. It was essentially pa- paper shredded tobacco leaf. You light it on fire, just like Christopher Columbus witnessed, you know, back in the day. And you inhale it into your lungs. So there had been no innovation. So of course, um, Adam and James, Adam Bowen and James Monses, the founder of founders, co-founders of Juul, um, realized that there was a big gap in the market and decided to try innovating on that.

• 4:54Alex Kantrowitz?

  Right. And then Silicon Valley folks also go out looking for problems and try to find ways that they can solve it using technology. So

• 5:01Speaker 01

  Yes.

• 5:02Alex Kantrowitz?

  They had the cigarette, obviously hadn't been changed in a long time. I mean, of course, the tobacco companies have played with it. You know, maybe it's a lighter, you know, drag or a more nicotine heavy drag or um, different flavors like a menthol or something like that. But they were in the Stanford Design Lab and basically said, what are you, no one's touched this yet? And thought that they could design something better. And it's interesting, like through the book, you know, the jewel and I mean, i- i- I feel like if you've been breathing in the last three or four years, you've seen, you know, the jewel out in public, but it is cool. It's sleekly designed. It looks like this USB. It uh, it hits uh, pretty well. And it has what it started out with 5% nicotine, which is more, well, yeah, actually, this is

• 5:46Alex Kantrowitz?

  a good moment to pause. So we talk about cigarettes, there's tobacco, there's nicotine. Um, that the throughout the book, there's this theme that actually it's nicotine. That's the substance that's really so addicting. So

• 5:58Speaker 01

  Yeah.

• 5:58Alex Kantrowitz?

  Is I, I want to hear a little bit more, just like, let's talk about baseline, because so often we talk about these things. We don't go into depth about them. There's just typically a top line cigarettes are bad, tobacco is bad, you know, combining everything, the paper, the tar, the leaf, the nicotine together. But, you know, I'd like to hear your perspective first about, you know, what is it about nicotine, you know, that's so addictive and what's actually the harmful part of these products?

• 6:25Speaker 01

  So that's one of the most interesting aspects of this product and of this debate is that actually it's not the nicotine that kills Americans. It kills 480,000 Americans every single year. It's a combustion of the tobacco leaf. So nicotine taken by itself is not necessarily harmful. There are studies shown that, studies that show that it can contribute to heart disease. It can, you know, there's nothing that shows that it can actually contribute to lung disease, that type of thing. The actual thing that causes lung disease is a cigarette. So nicotine by itself, the proponents of the products will say it's

• 7:07Speaker 01

  just like caffeine, or it's just like, you know, any other kind of enjoyable product that might give you like a little bit of a high or something like that. But the biggest problem with nicotine is that it's highly addictive. It's as addictive as heroin. And, you know, when you're a teenager, when your brain is not fully developed, so the, the youth brain does not become fully developed until the age of 25. So your, it, it, studies show that it can interfere with the development of your brain and cause harms down the road in terms of judgment and that type of thing. So we're really talking about youth addiction and whether or not, I mean, really what you're getting at is a super important question

• 7:50Speaker 01

  about why do we care if there are millions of Americans addicted to nicotine? Like, who cares?

• 7:55Alex Kantrowitz?

  That is the question.

• 7:56Speaker 01

  Right.

• 7:57Alex Kantrowitz?

  Especially if it's not going to harm them to the point that a cigarette is. And that I think is the case that, that jewel and its proponents make. And in fact, what Philip Morrison, I guess later named Altria was trying to make, which is that they're going to do this reduced harm cigarette, get off our backs.

• 8:14Speaker 01

  Right. And the most fascinating part of that with the tobacco industry is that for years, they said, no, it's not the nicotine that keeps people smoking. It's the enjoyable factor of a cigarette. And they denied for so many years that it was the nicotine, that nicotine was even addictive. Of course, we have this. Epic kind of historical moment in front of Congress in nineteen ninety four, nineteen ninety six, um, where they, uh, the, all of the CEOs of the tobacco industry, the seven CEOs, sat before Congress and held up their right hands and said that they believe that nicotine was not addictive. They were splitting hairs there. Um, but they did say that. And, um, so for so many years, they denied that. And suddenly the industry is saying, okay, well,

• 8:56Speaker 01

  no, we all agree that nicotine is addictive. And let's just kind of focus on the nicotine now. So it's a huge kind of one eighty in terms of the public policy and thinking about this, this type of product.

• 9:06Alex Kantrowitz?

  And it paves the way for e-cigarettes.

• 9:08Speaker 01

  Paves the way for e-cigarettes.

• 9:10Alex Kantrowitz?

  Yeah.

• 9:10Speaker 01

  Because suddenly you have people talking about, okay, well, cigarettes are deadly. It's a combustion that kills people. It's not the nicotine. And why don't we just take away the combustion? And if Americans want nicotine so badly, let's just give them what they want and allow them to have it. So what's the big deal?

• 9:28Alex Kantrowitz?

  Yeah. And so, and nicotine, you know, I think that a lot of the ways that the cigarette companies describe it is that it's satisfying, right?

• 9:35Speaker 01

  Yes.

• 9:35Alex Kantrowitz?

  Is the chemical that satisfies, brings a calm over somebody, but then as it, you know, and you inhale it through your lungs, because that's the fastest way to deliver it into your system. But as it dissipates, it leaves you wanting more pretty badly.

• 9:47Speaker 01

  Exactly. It is. It's, it's, it's highly addictive. It can, it, it, it begins a cycle where your, your brain releases these, um, um, neurotransmitters and, um, you know, dopamine and actually the cigarette and nicotine actually contribute to lots of things. It's like, it can relax you. It can give you, um, make you alert. It can, yes, focus.

• 10:10Alex Kantrowitz?

  Make you feel cool.

• 10:11Speaker 01

  It can make you feel cool. It can give you that little buzz. It can, um, it can calm you. It can, I mean, it has lots of different beneficial properties. There have even been studies showing that it can help with people who have Parkinson's disease. So there's a real reframing of what the problem is and how do we solve it? I mean, there's actually multiple threads to this that need to be dissected and talked about. But um, right now, just kind of fast forward a little bit, we can go back. But right now, the tobacco industry, including Altria, is very focused on uh correcting the misinformation about nicotine. They feel like there needs to be a re-education campaign and they've actually asked the FDA to spend some of their

• 10:55Speaker 01

  fundraising dollars that they've spent on youth tobacco use in general and prevention to re-educating Americans about nicotine. Because a lot, the the truth is, a lot of people are confused about nicotine. They, a a substantial and kind of shocking amount of people believe that it's nicotine that kills you, when in fact, it's not. It's a cigarette. So it's a combustion. So

• 11:16Alex Kantrowitz?

  Yeah.

• 11:16Speaker 01

  Um, I think we're gonna hear a lot more about nicotine and certainly it's not going away anytime soon.

• 11:21Alex Kantrowitz?

  Yeah, and listeners, I swear, we're gonna get to the technology aspect of this in a moment, but it's important to set the backstory. So uh, having said what we've just talked about, tobacco, the combustion is the bad part. Nicotine is the addictive element to it, but coffee is addictive and we have that legal. Um, so just briefly, what's the problem here then with having folks addicted to nicotine? If it is having these positive uh effects on people, the focus, you know, the self-confidence and the satisfaction, what's the issue?

• 11:51Speaker 01

  Right. I mean, I think you should think about it this way. It's like, what is the purpose of it? Um, and also the fact, what is the purpose of having nicotine? And who's making money off of it? It always goes back to who's making money. And you have this gigantic industry that is predicated on people being addicted to their product and continuing to use it forever. So um, the the problem really gets at the youth issue. Um, one of the most startling and I think sticking statistics is that ninety percent of adult smokers today began smoking before they were eighteen.

• 12:33Speaker 01

  Ninety-nine percent of them began smoking before the age of twenty-five, of course, is when the youth, the the your brain is fully matured. So you have people who are becoming addicted to a product when their brains aren't fully developed. And they become addicted to it for life. Let's say not all of them for life, but lots of them for life. And it's, you know, essentially inhaling something into your lungs. And if they didn't start when they were kids, they wouldn't start when they are adults. So essentially, the industry is basing its entire business model on the next generation of users. So I don't know, I, this is really a social kind of moral question about whether or not we care.

• 13:16Speaker 01

  Whether or not we care if, you know, if there's a product that's not as deadly as a cigarette. If we care that they're using it. And I think the answer, at least in my mind right now, is that, first of all, e-cigarettes are not proven to be safe. There is a lot of, you know, there's a lot of research going on right now, but there have not been long-term clinical studies showing that e-cigarettes are safe. Because at the end of the day, and you know, the anti, kind of anti-e-cigarette, anti-vape people will, you know, point this out, like, the lungs were designed to breathe air and nothing else. And so you're essentially, while you're not inhaling a fire-burning product, smoke, you are inhaling a vapor or actually an aerosol,

• 13:59Speaker 01

  which contains propylene glycol, vegetable glycerin, lots of flavoring compounds that have subcompounds and, you know, lots of different things that when you heat them up, they can create cancer, potentially cancer-causing chemicals like aldehydes and stuff like that. Um, there just haven't been a long, long enough studies. So when you look back at the cigarette industry and you see how for so many years they obfuscated and lied about the nature of their product. You, and you know, it took a generation to show that there were lung cancer, that there was cancer developed from cigarette. So it begs the question of whether or not in a generation, we're going to see vapors have some sort of lung disease.

• 14:44Speaker 01

  I'm not trying to be an alarmist. I'm not trying to be in that camp that says like, oh, my God, this is like the, you know, the worst thing in the whole world, but like, there are a lot of unknowns. And it begs the question of whether or not the, you know, the FDA endorses a product that hasn't been fully studied and it's like on the market for people to be using. So especially for kids. So I think there are lots of important questions, but yeah, nicotine, you know, it's, I think there's still kind of an open question about why do we care? I think we care. I, I, I think most people would say eh, we don't really want our kids being addicted to anything, you know, especially highly addictive product like nicotine.

• 15:19Alex Kantrowitz?

  Yeah. And what struck me in the book is that Scott Gottlieb, who was running the FDA uh, under Trump for uh, some time, who you describe as libertarian, uh, even he was like, we are not going to have an epidemic of youth smoking under my, or youth nicotine addiction under my watch. And it turns out that's what happened. So.

• 15:39Speaker 01

  Yeah, exactly.

• 15:40Alex Kantrowitz?

  But like when, when a libertarian is saying the government should step in and do something, that's when you sort of know, okay, you know, maybe, maybe this is something that, you know, we should be focused on here and there could be some harm.

• 15:54Speaker 01

  Yeah, I mean, he was in a really difficult position. I mean, this is, there's kind of many dimensions to this, but he, and we can talk about that, but he ultimately saw what was happening and, you know, so after the tobacco wars in the 1990s, there had been this huge push, this huge youth prevention campaign to reduce the number of kid, youth smokers.

• 16:19Alex Kantrowitz?

  And it worked.

• 16:20Speaker 01

  It worked. It had been going down, down, down, down, down, and it had been at the lowest levels. And then e-cigarettes come in, come in, and suddenly it starts ticking back up. And when Juul arrives on the market in the summer of 2015, it just like really picked up. So suddenly it was like, wait, we solved this epidemic. Oh, no, we didn't. Now there's this new product that's contributing to this new nicotine epidemic. And Scott Gottlieb did not want to be the person that oversaw the rise of this. Of course he did, he was that person, um, but it was complicated for Scott Gottlieb. Like.

• 16:55Alex Kantrowitz?

  There were forces outside of his control, but I don't want to get too deep into the politics of that nature, but I do think that it was interesting that he came out, you know, pretty stringently against and had this fiery kind of speech as one of his last actions as the head of the FDA. But I do want to get into, we talked a little bit, and I think the most compelling case against these things is the way that they do hook kids, teens and preteens. So do you have any stats about how many kids were using Juul at its height? Because it has, I think it's declined a little bit, but just give us a picture of how pervasive this was among young people, even a couple of years ago.

• 17:31Speaker 01

  Yeah, so it basically reached more than 5 million kids, more than 5 million teens, high school and middle school students were using e-cigarettes. Now, that's not broken down by Juul, but most of them, or a high percentage of them, were Juul because Juul took off. So we have 5 million students who were using e-cigarettes slash Juul. Over the past year, it did decline by about 1.3 million. So you still have like 3 point some million

• 18:06Alex Kantrowitz?

  That are still on it.

• 18:07Speaker 01

  That are still using it. You know, it's something about the past 30 days they've used this product. So it's still millions of kids that are using it.

• 18:16Alex Kantrowitz?

  Yeah, and like super young kids also.

• 18:18Speaker 01

  Yes. And that was kind of the shocking thing. It wasn't like 18-year-olds, 17-year-olds. It was like middle schoolers. You know, it was, it was, it was cascading through middle schools. So I think that was kind of the most alarming thing. It was just like, wait, is this, is this really the solution to a bigger problem, which is about adult smokers, essentially? And that's a big trade-off in the crux of the issue.

• 18:42Alex Kantrowitz?

  Right. That's what it was marketed as originally. That was the big, you know, well, the marketing, we'll get into the marketing in a second. But that was the initial, oh, the dreamy Silicon Valley language is, we're going to heal the world by being this thing that will take people off these cancer-causing cigarettes and put them onto Juul. So there was a moment where it did seem like Juul was going to take over the world, you know, when those 5 million kids were using it and untold numbers of adults were as well. And now that doesn't seem to be the case. So what happened? Briefly.

• 19:13Speaker 01

  Well, briefly, what happened is the FDA kind of stepped in. They took, they ended up taking off some of the flavored products. So Juul used to be sold in, you know, crème brulee and mint and fruit and that type of thing. The FDA said, we're not going to allow these pod-based products to come in flavored products anymore. So right now you can only buy Juul in tobacco flavor and menthol flavor. So that was a huge, like, really took away a big percentage of their market.

• 19:39Alex Kantrowitz?

  It like, really answers the question of whether those fun flavors actually were intended for kids. And, I mean, once they took it off, the kids are off the market. That's very telling.

• 19:48Speaker 01

  Yeah, I mean, it's a little more complicated than that. There were new products that were coming on the market, like puff bar, the single-use products that came in like, pink lemonade and other, other flavors. And they actually were not subjected, I guess it proves your point, but they weren't subjected to the flavor regulation. So you can still go out and buy pink lemonade flavored puff bar, for example. But, so there was new competition in the market. But, um, but also, I think there was that scare. People suddenly got scared by e-valley, which was the, uh, the lung, the lung injury, um, chronic lung injury that, um, initially was tied to vaping.

• 20:21Alex Kantrowitz?

  Right. To your point, we don't know how, uh, how this will actually impact our health in the long term, but we saw some really scary stuff in the short term, where like, previously healthy people were obliterating their lungs with vape machines.

• 20:34Speaker 01

  Right. And, yeah, exactly. And, and this is like a flashpoint in the debate about e-cigarettes right now. The pro vaping crowd, they're very upset at the CDC for basically causing this panic over e-cigarettes. What happened was, the product that was most directly contributing to the lung injuries was actually a bootlegged, um, CBD product, like cannabis product.

• 21:01Alex Kantrowitz?

  Yeah. It was stuff people were getting, well, anyway, sorry, go ahead.

• 21:05Speaker 01

  Oh, no, yeah.

• 21:06Alex Kantrowitz?

  Yeah.

• 21:06Speaker 01

  Right, right.

• 21:07Alex Kantrowitz?

  Even if it doesn't have the active ingredient, which is THC, but yeah.

• 21:11Speaker 01

  Oh, no, I'm so sorry. It didn't mean CBD. It was actually THC. It did have the active ingredient. They were getting high. They were vaping the the pods that contain THC with um but the the product on the market, they were cutting it with something called um um vitamin E um oil essentially and um that was what they found to be the contributing, one of the leading contributing factors of that disease. So the anti or the pro vaping crowd, they're very upset at the CDC for not coming out sooner and saying it wasn't nicotine containing products, it wasn't Juul that was causing people to get this lung injury. It was actually these, you know, bootleg, black market products that were not, you know, most people weren't using. Um, the CDC

• 21:53Speaker 01

  has remained pretty cautious about this. They they they continue to say that there are a number of uh, you know, people who've come down with the lung injury who used nicotine only containing products, so nicotine containing products only. So it's it's still, I mean, while it's pretty certain that the lung injuries that we saw, the spade of lung injuries that we saw were contributed by this or caused by this um um vitamin E acetate and THC, the CDC has not ruled out that nicotine containing products contribute to this problem as well. Um, so, you know, they're not, the industry is not in the clear necessarily, I would say.

• 22:36Alex Kantrowitz?

  Yeah. Um, well, before we go to the break, I'm just curious, um, you know, we we want to get to the tech stuff, of course, but I'm curious, uh, what inspired you to start writing about this stuff? Uh, are you a smoker? Do you have smokers in your family or was it just an interesting business story for you?

• 22:52Speaker 01

  So I'm not a smoker. I uh definitely smoked um back in the day when I was a teen. Um, and um my grandfather died of lung cancer from smoking, a lifetime of smoking. Um, and uh but for me it was more a business story more than anything. Um, it was a fascinating business story about, you know, Silicon Valley company taking on this very notorious industry that struck me as one of the most interesting business stories I've ever written about. So that was largely what drew drew me to it, but certainly I had some kind of like personal interest in the story as well.

• 23:24Alex Kantrowitz?

  Yeah, definitely. Yeah. One of the things that um I thought about as I was reading was. You know, in high school, of course, I mean, maybe not of course, but it seemed natural to me to try cigarettes and I did. And I would probably still be smoking cigarettes today. And if I was dueling, I'm sure I would be like a jewel addict at this point. But I got lucky and just had a bad experience. I think I got my hands on a pack of like really low quality cigarettes and then led them off someone's, a friend's stove and then just chain smoked like four or five in a row. Threw it for like four hours and that was the end of cigarettes for me. But without that, and if I had like this, like pretty easy device that, you know, delivers a nice hit of nicotine and you could smoke the equivalent of a pack of cigarettes in

• 24:06Alex Kantrowitz?

  an afternoon without, you know, feeling what I felt, you know, I'm sure I would be addicted to that stuff.

• 24:11Speaker 01

  Well, and that's the thing and like they came in these cool flavors, like who wouldn't, what teen wouldn't want to inhale gummy bears, you know? I mean, it's a, it's a very attractive kind of product. And then it was like really cool and flashy and we'll get into the tech and stuff like that. But right, I think it's important to note to re, to underscore what you said is that a single pod of jewel contains as much nicotine as a pack of cigarettes. And there's no on and off switch. There's no like, you know, you light the cigarette, the ash, you put it out and it's done. Like you can just keep inhaling all of this nicotine and you just reload the pod and you don't have to go anywhere. You don't have to step outside. Nobody's like, oh, you stink.

• 24:54Speaker 01

  Like it's, it's really ideal.

• 24:58Alex Kantrowitz?

  Yeah. All right, well, let's get into the tech stuff right after the break. You know, because everyone says, you know, Jules is a tech company, but are they really? All right, we'll be back with Lauren at it right after this. This episode is brought to you by App Point. Everyone's racing to roll out AI right now. Co-pilots, chatbots, agents doing real work. But here's the part nobody loves talking about. All that AI runs on your data and most teams have no single way to see it, secure it and prove it's under control. That's exactly what App Point does. For 25 years, they've been the trusted layer beneath the world's most demanding data, now extended across your entire AI estate. Your data. Your cloud and the agents acting on your behalf.

• 25:43Alex Kantrowitz?

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• 26:10Alex Kantrowitz?

  And we are back here on the Big Technology Podcast. Lauren Etter, the author of The Devil's Playbook. It's a great book about Juul. We've been talking about the rise and fall of Juul. Let's talk about the technology aspect, really dig into that. So Lauren, I mean, is Juul a tech company? Because they do seem like electronics company and they they sell vapes. You know, they're not exactly like software savants. They're not building iPhones, which has hardware and software inside. So we talk about them as, you know, a tech company in Silicon Valley. They obviously set up shop in San Francisco. I always found it weird that like their headquarters are just a few blocks away from our headquarters when I was working at BuzzFeed. And, you know, they're still not too far away from me here in San Francisco.

• 26:54Alex Kantrowitz?

  So I'm curious what you think about about the distinction. Do they really deserve to be a tech company? Because everybody wants to call themselves a tech company these days.

• 27:03Speaker 01

  I mean, it's interesting, like, is Tesla a tech company? You know, like, I feel like they are a tech company. They innovate.

• 27:11Alex Kantrowitz?

  Tesla, I would say, yeah, most definitely, yeah. But let's hear about Juul. Yeah.

• 27:15Speaker 01

  Yeah, no, I mean, I guess the reason that I bring up that comparison is because I think it's interesting that, you know, it took Silicon Valley to innovate on Detroit, right? Like, the innovation did not come from, you know, GM or Ford initially. Well, you know, go back. But anyway, the real innovation didn't come from there. It came from Silicon Valley. And I think it's the same with Juul. Like, I do think they're a tech company. I mean, as much as Juul would like to distance themselves now from their tech company roots and from the kind of Silicon Valley roots. I I think they are. I mean, they solved a problem, attempted to solve a problem, innovated on an old school market, brought to bear technology.

• 28:00Speaker 01

  You know, they they're certainly a hardware company.

• 28:05Speaker 01

  And

• 28:07Speaker 01

  Yeah, I do think I would definitely call them a tech company for sure.

• 28:11Alex Kantrowitz?

  I mean, one of the things that I think distinguishes them is that they did take VC money. And when you take venture capital money, that changes everything because rather be rather than being like an old school business that sort of built, you all of a sudden have some serious growth expectations. And you have to justify, because VCs look for a 10, 20x returns and anything else is sort of considered a failure. And I'm curious, from your perspective, how did taking that VC money change what Juul ended up? What Juul could have been and what it ended up becoming?

• 28:49Speaker 01

  You know,

• 28:52Speaker 01

  when I think about Juul and what the company could have been and how they could have solved this real problem of smokers and smoking epidemic, I really do believe that taking the tech money and, you know, kind of fashioning themselves as a tech company was, in a way, their demise. Because it did put so much pressure on them to meet those metrics. Like, one person kind of close to the company said, "It was like we suddenly had a gun at our backs and we had to run." Like, you have to, once you take the money, you have to basically figure out how to scale and to continue to justify the investment. And so that's exactly what they did.

• 29:34Speaker 01

  They took the money, they figured out how to scale, and they hired the wrong people. They hired people from Silicon Valley who, and this was kind of in their DNA, but they hired people who decided to scale the product as fast as possible to create a return on their investment and to scale the company. And who were concerned first and foremost with marketing the product and getting it out there as fast as possible. And I think I really do think that that was a pain point for them. That was a point where they, you know, they could have done the business differently. There were multiple options. It just would not have been a monster growth company, right?

• 30:16Speaker 01

  So, yes, I think that, you know, by fashioning themselves as a tech company, taking the VC money, kind of plugging into that entire ecosystem, put them in a situation where they had to scale very quickly and scaling for them meant getting a nick- highly addictive nicotine product into as many hands as possible. And I think that ended up being problematic for them and they're paying for it dramatically right now.

• 30:41Alex Kantrowitz?

  Right. And just to hang on to one word that you said, highly addictive part of it. So these, these devices were delivering 5% nicotine. What is that? How does that compare to like a regular cigarette?

• 30:53Speaker 01

  It's not an exact comparison because people smoke differently. Some people smoke slower. Some people don't plug holes on the filter. There's people smoking habits. But the best comparison is that it is

• 31:08Speaker 01

  one pod. I think the easiest comparison is what I've already said, which is the the one pod equals a pack of cigarettes.

• 31:14Alex Kantrowitz?

  Yeah, but the point is that-

• 31:16Speaker 01

  The other, sorry, the other comparison that's I think really useful is that at the time when Juul came on the market, no other e-cigarette was 5%. Like the earlier competitors were like 2% at best, maybe 3%. It was the most highly addictive nicotine e-cigarette on the market by far.

• 31:37Alex Kantrowitz?

  Right. And you couldn't even, if you wanted to get a less, less concentrated nicotine pod from them, you couldn't get it.

• 31:44Speaker 01

  Correct.

• 31:44Alex Kantrowitz?

  So, that, that, yeah, so I think they did that. And then, of course, the marketing to kids, right? Because they knew that that was going to give them the big market and that had a chance to, to blow up due to virality. So, seems like those, those decisions are what, are, are basically a factor of, of this money.

• 32:06Speaker 01

  Right. So this is one of the most contentious issues right now. And this is, you know, the attorneys general are going to be litigating this. It's like a very hotly debated issue right now that has like very high stakes kind of legal ramifications, whether or not Jewel actually intended to market to kids. So essentially, when they created their first marketing campaign, they designed a campaign that seemed pretty cool, you know, and seemed like a very sexy kind of flashy, using bright colors, using super hot models, and

• 32:40Alex Kantrowitz?

  Yeah, not only that, they were talking about how internally, I think you have this detail in the book, they were talking about how the models look young and they were happy about that.

• 32:49Speaker 01

  Yeah, that was, that's going to be probably introduced in litigation, the fact that they were talking about the the youngness of the models.

• 32:56Alex Kantrowitz?

  Crazy to me. It's like, I, anyway, sorry, go ahead.

• 33:00Speaker 01

  Well, but you know, for Jewel, you know, to kind of play devil's advocate or to come to Jewel's defense a little bit, like, they did talk about how we should get models who look, you know, you know, older, or we should get model, they talked about it. And I think that's going to actually be potentially problematic for them because they are aware of it. But they did say, let's try to get models who are at least like 25 or older. So they don't seem like they're young, but like,

• 33:25Alex Kantrowitz?

  But I've worked, I've worked in marketing, like you, you don't get something out the door unless you go through like 50 rounds of approvals. It's not like some rogue marketer is going to go out and say bam, and then you're gonna, you know, you refine the message and when by the time something gets out the door, everyone signed off on it.

• 33:40Speaker 01

  A hundred percent. And Jewel was unique because the board, the board of directors was extremely hands on. This was not a board that met occasionally to kind of like check numbers and make sure like things were going off the rail.

• 33:52Alex Kantrowitz?

  They were living in the offices.

• 33:53Speaker 01

  Yes. And they were extremely involved and they absolutely saw the marketing campaign and signed off on it. And so, yeah, but, you know, they, they were, their mindset was, okay, let's create a product that's cool and that people are going to like and that people are going to use. And how do you market a product to a 25 year old that's not cool to an 18 year old? You know, it's a very kind of difficult marketing kind of line to walk. And yeah, I mean, I think that getting back to tech, they relied heavily on social media.

• 34:30Speaker 01

  You know, Jewel was everywhere. It was on Instagram. It was on Twitter. It was on Facebook. It was, you know, they had these splashy parties that they threw in the Hamptons and, you know, they showed up at um, um, music festivals. And so of course, they marketed their product to be cool. And they immediately got backlash and tried to kind of correct. But the genie was out of the bottle.

• 34:58Alex Kantrowitz?

  Yeah.

• 34:58Speaker 01

  Just like, you know, with um, social media, once something goes viral, you can't take it back. You can't be like, oh, I wish I didn't send that tweet. Or, oh, I wish I, you know, hadn't done that. I mean.

• 35:09Alex Kantrowitz?

  A lot of people find that out the hard way.

• 35:11Speaker 01

  Right.

• 35:12Alex Kantrowitz?

  Yeah.

• 35:12Speaker 01

  Yes. The genie was out of the bottle and their product was out there. And again, getting back, the danger of having a viral product that is also addictive is that there's a snowball effect. People want more of it and they can continue to come back for it. And that's partly the genius of the business model too, right? Is like, it's not like a razor blade. They kind of built their model like similar to like Gillette or something like that. But razor blades aren't addictive.

• 35:44Alex Kantrowitz?

  Right. Cause you wanna buy, you wanna buy the refills, but you don't get addicted to shaving. You might like it, but you're not gonna have a chemical need for a smooth face.

• 35:53Speaker 01

  Correct. Correct. So I really think that it was their entire business mo-, their entire business model was flawed. They could have, they could have like gone the slow route where they, you know, sought approval from the FDA to sell it as a therapeutic device that treated uh, nicotine addiction. Or they could, or smoked the cigarette addiction, rather. Um, they could have, you know, you know, marketed it to adults, truly marketed it to older smokers.

• 36:24Speaker 01

  And they just didn't. I think it gets back to your question about is this a tech company? They had the pressure of Silicon Valley.

• 36:30Alex Kantrowitz?

  And then VC money in particular, which demanded those returns. And I view this thing as such a tragedy, honestly, I view the Juul story as a tragedy. Because as I read your book, you know, I learned so much about the industry. And I learned about how, you know, like we spoke about at the top, the damage is through the burning of the cigarettes. And this is actually a real harm reduction tactic that can be used and can help people. And Juul had that opportunity, you know, through the design and through all the brilliant scientists they brought in to help engineer the product just right. And they could have been, you know, I mean, who knows what will happen to them in the future, but they could have been this great respected business.

• 37:14Alex Kantrowitz?

  That had a massive market, just marketing to the people smoking cigarettes already who are looking for an alternative. And in fact, people in the book, you were talking about how employees started reaching for the Juul instead of their cigarettes in the early stage. So it did have that replacement capability. But it was this drive to just get so big, you know, growth at all costs. We hear that all the time out here in Silicon Valley. And that ended up turning this thing into, you know, you wrote it right in the title, you know, the devil. When you start hooking kids on this stuff, you know, in pursuit of growth at all costs. And, and you're delivering so much nicotine, it becomes impossible to put down.

• 37:55Alex Kantrowitz?

  You know, it's a big issue. So it's, I don't know what you think about it, but I, I view it as a tragedy for sure.

• 38:00Speaker 01

  Yeah, I mean, I think so too. And I, I don't want to speak for the founders at all, but I believe that, you know.

• 38:08Alex Kantrowitz?

  We won't penalize you on this one.

• 38:09Speaker 01

  Yeah, I mean, I do, I do think, I do think that they really.

• 38:16Speaker 01

  Intended initially to solve that problem. And I think that they just got put into the meat grinder. I think that Silicon Valley meat grinder, you know, I think that they like, you know, just. And I think the other thing that we haven't really talked about is at the time, there was actually a lot of competition. So not only did they take VC money, but they had humongous competition from the cigarette companies like Reynolds had created this product called Views. Altria, of course, had created this product called Mark 10. Like they're about to get squashed by the 500 pound gorilla, you know, so like they had to be scrappy. And to like, figure out how to compete and to out innovate.

• 38:58Speaker 01

  Now, those companies were not innovative, which is, you know, why Altria ended up like basically crawling to them and saying, here, take my 12.8 billion dollars. But like, you know, they really did have to like, if there was this moment in time where they were like, it's basically live or die. Like we either compete or we're like out of this market immediately. So there's huge competition aside from the VC money that I think really kind of pressured them to, you know, take on this all growth at all costs model.

• 39:24Alex Kantrowitz?

  But at, at the end of the day, we're all our decisions and I've given the VCs a hard time here so far and they deservedly so. Uh, the people that, that decided to invest, it's not just a problem here with Jules, a problem all over the tech industry. And of course, sometimes it leads to amazing life-changing things. And without it, we probably wouldn't have some great companies, but.

• 39:42Speaker 01

  Yeah.

• 39:42Alex Kantrowitz?

  Um, we, we know the downside of it, which is that sometimes companies go nuts and they do, you know, it's part of the ethos to, to. You know, bend the law, sometimes break the law, get Uber, you know, Jules is another example. Um, they're all over the place. Look at what's happening with Facebook in order to grow. Uh, and so, yeah, the VCs definitely have the blame, but so like, I don't know if I can, um. Let these founders off the hook, like they, you are the choices that you make and at the end of the day. And, you know, even though they were in this meat grinder, they definitely made the choices and, um, you know, they, they knew what they were doing.

• 40:18Speaker 01

  Yeah.

• 40:18Alex Kantrowitz?

  From my perspective.

• 40:19Speaker 01

  No, I think so. And I think they just kind of got like topsy turvy. It's like, you know, they had this idea to create this product and then just, um, it took off so fast. I think it just took off so fast and there was just like a cannon filled with money that was like being blasted at them. And, um, yeah, I think, you know, I think another kind of lesson is that in Silicon Valley, you really need to surround yourself with ethical people, you know, with people who are making ethical decisions. You need to have your moral compass, like really, you know, straight. And I think that they, their moral compass was off.

• 40:55Alex Kantrowitz?

  Yeah, you had an employee who was like asking himself before he took a job there, like whether he was the banality of evil, uh, by going to work for a company like this. And, um, and, you know, then he goes and works for them and then ends up regretting not staying on when they ended up selling a good chunk of their company to Altria, uh, which is what used to be Philip Morris. And it's like, wait, you were worried about being the banality of evil. Now you're kicking yourself for not taking the money from the tobacco company. It is. So of course, like, you know, it's these, these put this push and pull. It's the system and then it's the individual. And, you know, people do make these choices. I, it's, I, I, you know, I guess like who's responsible for it? I don't know. But, uh, people do make choices at the end

• 41:40Alex Kantrowitz?

  of the day and, um, they gotta live with them and they gotta own up to it. My perspective.

• 41:45Speaker 01

  Right. But like a lot of it was when as Jewel was recruiting employees, it was all, it was a story, right? And again, back to Silicon Valley and every company has its story about, you know, how it's going to change the world and how it's going to solve this problem that nobody else can solve. And Jewel's story was that it was solving the smoking problem. And I think that a lot of employees were kind of seduced by that. They liked the idea of going to work for a company that hadn't gone public yet, that had a lot of upside, potential upside. And yeah, um, so.

• 42:18Speaker 01

  So yeah, I I think everybody kind of convinced themselves that they actually weren't working for the tobacco industry, right? Cause at the time they really weren't, but they were in the tobacco space. But yeah. I think that, I think as I say in my book, there was this moment when when Altria invests 12.8 billion dollars where the glass shattered. Where everybody was like, oh shit, like, we kind of told ourselves for a while that we were the underdog, that we were, you know.

• 42:44Alex Kantrowitz?

  Now we work for big tobacco.

• 42:46Speaker 01

  Yeah, now we work for big tobacco. So, and I think that um the founders kind of struggled with that too. It's like, oh wow. Okay, we were supposed to take on big tobacco. Now suddenly we are big tobacco. And it's gone in, you know, entirely different direction. It's basically being subsumed by big tobacco.

• 43:02Alex Kantrowitz?

  Yeah, and now we talk a lot about the regulations also. Um, we might have touched about this earlier, but like, shouldn't like, aren't the people that pick up these things making a choice for themselves to start smoking them? So maybe the government shouldn't intervene. What do you think about that argument?

• 43:18Speaker 01

  Well, I a hundred percent agree with that argument when it comes to adults, like no questions asked. Like you want to use nicotine for the rest of your life? Go for it, you know, enjoy it. Great. Have fun with that. Um, you know, and reap the consequences if there are them. But like for kids, I think it's just a different equation. It's like for kids. Um, you know, and then, you know, people will say, well, it's up to the retailers to police that. They shouldn't be selling to underage kids and stuff like that. But, you know, for a while there, there were not very many barriers for the kids to getting the products and stuff like that. So I don't really think that argument applies for young people.

• 43:55Speaker 01

  Like they, they're teens, like their brains aren't fully developed, like, you know, yeah, they're probably gonna end up doing some, maybe some of them will end up doing something bad. Smoking cigarettes or, you know, smoking pot or drinking alcohol or whatever. But um it's when you have the, that kind of the risk factor that's there with the highly addictive product combined with the marketing that appears to be targeting the kids. I think that's the problem, and I think that's really the problem for Juul. Had they not gotten the kids addicted, I don't think people really would have cared as much. It wouldn't have been a big deal. I think they would have had that more heroic veneer, honestly. It was they stepped on the third rail of American culture.

• 44:38Speaker 01

  I mean, like, we went through the tobacco wars, where, like, you know, whatever, almost thirty percent of teens were smoking, and it was.

• 44:44Alex Kantrowitz?

  Right, and tobacco, they were explicitly marketing to kids.

• 44:47Speaker 01

  Oh, a hundred percent.

• 44:48Alex Kantrowitz?

  Joke in their backpacks, yeah.

• 44:51Speaker 01

  No, that was, there is no, I mean, nobody even, it's not even up for argument. I mean, there were internal memos talking about how to attract the, you know, the next generation. They called them the, um.

• 45:01Alex Kantrowitz?

  Replacement, replacement customers, it's unbelievable. Who were they replacing? Oh, yeah, the people, the four or five hundred thousand people that products killed.

• 45:08Speaker 01

  The die, the die. They literally called them the replacement customers.

• 45:12Alex Kantrowitz?

  Yeah.

• 45:13Speaker 01

  And that's the problem. That's the problem with hooking up with the tobacco industry is like you're hooking up with like the most like, you know, this industry that has been discredited, that has been just continually untrustworthy. And it's hard for people to separate that out. I think Juul has a real uphill battle, honestly.

• 45:33Alex Kantrowitz?

  And I want to get to some more regulation stuff in a minute, but one question before we go to our second break, which is, um, how important was social media, um, in spreading this thing to kids? And do the social media companies bear some responsibility? I mean, I am reticent to call for social media companies to censor stuff, uh, because we know where that goes. Like, uh, this whole, like, they, for a long time, you know, you weren't allowed to mention the possibility that coronavirus could have come from a lab on Facebook. Um, and then now you can because they're now open to it. So they're obviously not very good at, um, you know, monitoring what we can and can't say. But on the other hand, when it comes to kids' health, uh, maybe that is something they should step in.

• 46:16Alex Kantrowitz?

  So I'm kind of curious, like, what you think their responsibility is there.

• 46:19Speaker 01

  Well, that was really interesting, actually. Like, I think the social media companies have kind of dodged a bullet on this one in a way. Like, they bear a lot of responsibility. Like, to be fair to Juul, after their initial campaign, the vaporized campaign that was like, oh, my god, clearly targeting at least youngish people, um, they kind of tried to pull back and then they started dialing back on social media. But like, there were, by that time, the product was already out there. And there were all of these creators on social media that would like, you know, I write about this guy who created the Juul Nation account and like,

• 46:55Alex Kantrowitz?

  Making thousands of them.

• 46:57Speaker 01

  Yes, and you know, you had these people who had figured out how to monetize it on social media. And Juul would actually like beg Instagram, please take down this account, like. And the social media companies wouldn't do anything about it. They're like, they're not violating any of our rules. Like, there's nothing we can do about it. And like, also eBay, I feel like eBay has gotten off the hook too. Like eBay was allowing them to like, you know, anybody to essentially buy Juul, even after they tried to age gate the product more strictly. Like, you could still go to eBay and buy some Juul pods and stuff like that. So like, I absolutely think, you know, whether or not they should have censored Juul, that's a whole other conversation. But like, I absolutely think that the social media companies

• 47:39Speaker 01

  bear a lot of culpability and really kind of dodged a bullet on this whole like youth addiction issue because a lot of it was on social media, a hundred percent.

• 47:48Alex Kantrowitz?

  And there's the right to say something. And then there's a totally separate question about whether algorithms should spread it. And the people that you write about in the book, they got engagement, the algorithm spread it, it wasn't paid for. It wasn't organic. It was, well, it was organic, you know, that it wasn't paid for. But it wasn't, uh, you know, people going directly to their page. It was the algorithm saying, hey, this is an engaging thing and we should show it to more people. And actually, I even looked today. And hashtag Juul Boys is still populated with young looking people.

• 48:18Speaker 01

  Yeah.

• 48:18Alex Kantrowitz?

  Juuling it up. So if you work at Facebook and are thinking about this, uh, I'd love to hear from you about it. Uh, because it, uh, does seem like an issue you should reckon with. Um, all right, let's take a break. I want to talk a little bit about, um, the regulatory aspect here, um, more broadly from like a technology standpoint. So we'll break and come right back, uh, for one last segment.

• 48:40Speaker 02

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• 49:10Alex Kantrowitz?

  And we're back here for our final segment with Lauren Etter, author of The Devil's Playbook and also a reporter at Bloomberg News. Book is great, you should buy it, especially if you're already here, a minute in the 40s in the conversation. You'll like the book, I promise you. Okay, so like the regulation aspect, it's kind of interesting to me because one thing that I've seen, you know, when it comes to social media companies in particular, but tech companies in general, is that the tech moves so fast that a lot of times the damage is done before Congress or the regulatory bodies can, you know, even get their heads around what's happening. It seems like part of that happened here, but they also moved pretty fast. So do you think, I'm curious what you think

• 49:53Alex Kantrowitz?

  about this inside the tech industry and how it's played out with Juul in particular?

• 49:59Speaker 01

  Yeah, no, it's interesting that you characterize it as playing out really fast because actually I think it like, they dragged their feet for years, like really.

• 50:09Alex Kantrowitz?

  I'm coming at it from the perspective of like, what's going on with the big tech companies? And what we see with them is Congress drags them in front of hearings, makes YouTube moments, and then doesn't do jack shit. So actually, they made, they acted here and to me that was, but I guess like when you're addicting millions of kids to e-cigarettes, it's fairly slow, it's a couple of years. But sorry, go ahead, I didn't mean to interrupt.

• 50:32Speaker 01

  No, I mean, I, yeah, no, I think we're on the same page. The point, the important point though, is that Juul was able to exploit a regulatory gap. So essentially, Congress did not act fast enough to bring e-cigarettes under their regulatory structure for tobacco products. So in 2009, the FDA was allowed finally to regulate tobacco products. But in that law... They didn't stipulate that e-cigarettes were a tobacco product.

• 51:00Alex Kantrowitz?

  Mm-hmm.

• 51:01Speaker 01

  So it wasn't until 2016 that the, that Congress finally deemed e-cigarettes to be considered as tobacco products from, so from 2009 to 2016, e-cigarettes were kind of still already out there and they were basically no regulations whatsoever. So Juul launches in 2015, takes advantage of this existing regulatory gap and knows that the gap is going to be closed. That's really interesting to me is that Juul knew that the regulations were coming and that was also part of, we've talked about, you know, the pressure from the B C's and the, you know, existing competition from the tobacco industry. But there is also this, this impending regulatory structure that was getting ready to basically

• 51:45Speaker 01

  close the curtain, as, as people call it, the curtain fell. And so basically Juul was incentivized to act really fast to get their product out there as fast as possible before the regulations kicked in. So yeah, so one-

• 51:58Alex Kantrowitz?

  And that's when they start shipping out all these wacky flavors, because they're like, we're not gonna have a chance to do this afterwards.

• 52:03Speaker 01

  Yes. It's like, it's like Bird, you know, like being like, oh shit, the city's gonna, the city's gonna like regulate scooters, but let's just like dump scooters on every street corner as fast as possible so we can, or like Uber, like Uber doing the same thing. Like it was a similar kind of race between regulators and the company. So yeah, so finally the regulations do come down, um, and they're still sort of in flux. But yeah, they took flavors off the market, um, they implemented, um, age requirements, that type of thing. Um, so now there's basically, um, they do have some sort of regulatory structure, but there's gonna be more.

• 52:44Speaker 01

  The FDA is essentially in the process right now as we speak, evaluating whether or not Juul will meet this public health standard and whether or not they're gonna be able to remain in the market. So the FDA has another few months to decide whether or not Juul will, will be able to remain on the market.

• 53:01Alex Kantrowitz?

  Yeah.

• 53:02Speaker 01

  So yeah.

• 53:03Alex Kantrowitz?

  By the way, there are, there are like these always these negative consequences that we see with regulation and you know, second order effects like when they said, we're going to, um, you know, put these rules in place, then you see these companies scrambling to get everything on the market. Uh, and even when I was reading, I found it was really interesting that the master settlement agreement with big tobacco companies after they had agreed to reform their businesses uh, in order to, you know, reduce the harm on the public, they had agreed to essentially make all their documents public. And yeah, that's great from a public accountability standpoint, but also it ended up, I don't know where Juul would be without those documents because the

• 53:45Alex Kantrowitz?

  company's founders ended up combing through them and all the competitors ended up combing through and they essentially had, uh, maybe that's what it is, the playbook, you know, right?

• 53:53Speaker 01

  Oh, totally.

• 53:54Alex Kantrowitz?

  Right there, you know, because of the regulation that we've done. So I just make this point to say that oftentimes people say that regulation is simple and you know, X outcome will, will inevitably be good if X regulator does this, but it's complicated stuff that can have all these second order effects that aren't immediately apparent and don't get summed up in catchy headlines.

• 54:16Speaker 01

  Yes. And I think in this instance, uh, the most important effect is that if, you know, these products aren't allowed on the market anymore, smokers, legitimate adult smokers who are essentially, you know, have confined themselves to a death sentence, they don't have the opportunity to access a product that's potentially safer than, you know, a cigarette like Juul.

• 54:38Alex Kantrowitz?

  Yeah.

• 54:39Speaker 01

  So, you know, there are super like

• 54:41Alex Kantrowitz?

  It's a balance.

• 54:42Speaker 01

  large consequences. It's a balance. And I think that the regulators, the FDA in particular, has a very tough balance to strike and they're under a lot of pressure from all sides. Um, I can't imagine the FDA taking this product off the market. I think that, you know, they'd be sued. I think that there would be huge blowback, political blowback.

• 55:04Speaker 01

  So, so yeah, this is, I mean, this is an industry that is truly at an inflection point right now. And, um, it'll be very interesting to see, um, which way it goes.

• 55:16Alex Kantrowitz?

  Weird question, but you know, we talked, we've talked a lot critically about the company, but, um, do you think that? Well, I mean, obviously, the damage has been done in some way, but if they do end up getting all these adults that, like, as you mentioned, are hooked on cigarettes and have basically, you know, created a death sentence for them, and it does turn out that this stuff is safer than it seems like it's safer, at least. Can Juul one day be a good thing for society?

• 55:43Speaker 01

  Yeah, I mean, I think if Juul can thread the needle, uh, which is essentially excluding the next, um, generation off from nicotine addiction while treating adult smokers, that they can. But, um, I had this very interesting conversation with Mike Moore, who is, you know, the former, um, Attorney General, who, you know, really brought this, um, one of the first tobacco lawsuits and was super consequential. Um, he essentially said, these companies exist solely because they've gotten people addicted to nicotine. And if you can't convince people to pay money to inhale something into their lungs, then you don't have a business anymore.

• 56:25Speaker 01

  And like, if you think about it, if this industry doesn't have a next generation of users, there's like, there's not a very like long tail on the industry, right? It's going to peter out eventually. So there's this huge fascinating kind of business incentive for them to continue hooking users. But at the same time, they say, no, it's just for adult smokers. So I think if Juul can truly be a solution for adult smokers and adult smokers only, and not lead to initiation of either youth or non nicotine users. Then it's probably a pretty good product. But, um,

• 57:06Alex Kantrowitz?

  There's a big but there.

• 57:07Speaker 01

  There's a big but because what company wants to be in business for a single generation? No company talks about it like that.

• 57:14Alex Kantrowitz?

  Right.

• 57:14Speaker 01

  You talk about multi-generations. How do you build a business, not just for one generation, but multiple generations? And if they're true to their word, that they want to, you know, be a product for current smokers, then they have a, there's a finite kind of element to their business. But everybody knows that they're going to get new users, whether or not those are, you know, teen smokers, perhaps. Whether or not that, whether or not those are, you know, just kids who want to try nicotine.

• 57:43Alex Kantrowitz?

  Mm hmm.

• 57:44Speaker 01

  I mean, I think we're always gonna have nicotine users. Um, so. But yeah, I think it opens up a lot of interesting questions, but if Juul can like be true to its, you know, its stated mission of getting adult smokers off of cigarettes, um, smoking cigarettes, then it could be a okay business.

• 58:01Alex Kantrowitz?

  Yeah. And I asked that question because I was tweeting out the end of your book, uh, which I thought was great talking about. They didn't need to get, basically was saying what we talked about. They didn't need to try to get this big and they could have been, uh, they could have been this force for good that they hoped for in the beginning. And, you know, someone tweeted back, you know, what about the utilitarian argument? And it's like, all right, well, it's still in play. It's just kind of far fetched.

• 58:22Speaker 01

  And what is utilitarian argument?

• 58:24Alex Kantrowitz?

  It's basically like it did, will it, um, take people who smoke cigarettes and end up turning them on to e-cigarettes? Essentially, we've been talking about it. So.

• 58:35Speaker 01

  Yeah.

• 58:36Alex Kantrowitz?

  TBD, TBD, but not looking good. Um, what did they, what have they felt about the book? Have they, uh, contacted you or, um, have you gotten a chance to speak with the founders? Cause I didn't see any direct quotes from them in, in the book. So.

• 58:51Speaker 01

  Right, right. Yeah. So what I'll say is that, um, I've heard a lot of, um, feedback from Richmond, which is very interesting. There's a, Richmond is where Altria is based. That's the hometown of the tobacco industry. And, um, I know that there's a lot of interest there. And, um, you know, I've gotten some interesting feedback and stuff like that, but so far, um, yeah, it's so far pretty interesting, but, um, I'll leave it at that.

• 59:17Alex Kantrowitz?

  Okay. Um, they're not threatening to sue you or anything like that?

• 59:20Speaker 01

  No.

• 59:21Alex Kantrowitz?

  Yeah.

• 59:21Speaker 01

  No, and I don't, I really don't see why, you know, it's like, yeah, I, you know, there are lots of haters out there. People who, you know, think that I'm like, um, some sort of anti vaping person, but like, you know, I feel like it's like a pretty nuanced look at this, you know, complicated, super controversial industry. And if like they read my book, then they'll realize that. But, um, you know, I don't, I don't think that, um, I don't see a lawsuit. I just don't.

• 59:45Alex Kantrowitz?

  Yeah. Last thing I'll, I want to end with is there's a scene at the beginning of the book where the two Juul founders go into Altria, which again is the rebranded Philip Morris. Come on, guys, stick with the name, you know, own what you've done. But okay, Altria, they go into Altria and they try to sell the product to them or try to get investment and they get laughed out of, out of the room. And like they were all gung ho, we're going to destroy Big Tobacco. Then a number of years later, they end up selling 35%, I believe, of the company to Altria for somewhere around $13 billion.

• 1:00:22Speaker 01

  Yeah.

• 1:00:22Alex Kantrowitz?

  A price tag so big that Altria had to lay off a number of people in its traditional businesses and then tank the stock. And then they had to write, either they've written down their investment or they don't believe that it's worth anywhere close to what they paid for. So, you know, in some sense, they actually did stick it to Big Tobacco, but not exactly in the path that they hoped for.

• 1:00:44Speaker 01

  I, I thought the exact same thing. It was like, it was like they, they're like saying they're going to take Big Tobacco down. And I think somebody, there's even a quote in my book where they're like, we just punked this 100-year-old company, you know, cigarette company. And I mean, it was a deal of the century for, for Juul and the Juul board. I mean, they didn't even have to sell stock. They just got a dividend. They got a $12.8 billion dividend and got to continue holding all of their shares and basically just took all of that money off the table. So, you know, they did distribute it, some of it to the

• 1:01:24Speaker 01

  employees, but the, the vast majority of it went into the pockets of the original founders and the biggest shareholders. So, yeah, in a way, they did stick it to Big Tobacco. I agree with you. I like that.

• 1:01:36Alex Kantrowitz?

  And they were, they were so worried that the employees wouldn't come along for the ride, that they had to put aside a billion dollars or so and distribute it among the employees who walked away with what, minimum of $600,000, but often. Million or more.

• 1:01:50Speaker 01

  Exactly.

• 1:01:51Alex Kantrowitz?

  It's amazing what money will do.

• 1:01:53Speaker 01

  Oh, totally. It was like definitely clear their conscience a little bit, for sure. Made it a little bit, made the sugar, the medicine go down, sugar like the medicine go down. So, yeah, for sure.

• 1:02:03Alex Kantrowitz?

  And I read that scene of employees at Phil at Altria, hearing the news that they were going to get laid off and lots of them were going to get laid off as part of this $600 million cost cutting effort in order to bring Jewel in. And I did feel bad a little bit, but not, not too much. I'm going to be honest.

• 1:02:20Speaker 01

  I felt like that was one of the most kind of jarring scenes was like the fact that that happened on the same day. Like one company in Silicon Valley is getting like money rained down on them. And the same day, you know, across on the other side of the country in Richmond, they're being delivered the news that they're going to be layoffs. And it was a much different tone. It was like one was celebrating, the other was very somber, almost like a funeral procession. So, yeah, but that's a, you know, collision of these two industries. It's just they're winners and they're losers in multiple different realms, I guess, in this story.

• 1:02:53Alex Kantrowitz?

  Yeah, it's what disruption looks like, except this is a very unique story of disruption. The book is Devil's Playbook by Lauren Etter. Lauren, thank you for joining so much. It was, it was a pleasure reading the book and it was great getting a chance to speak with you about it. Thanks for coming on.

• 1:03:08Speaker 01

  Oh, thank you so much for having me. It was a lot of fun to talk to you, Alex.

• 1:03:11Alex Kantrowitz?

  Likewise. And thanks, everybody, for listening. Thank you, Nick Guatini, for turning this around on short notice as usual. And with the editing, of course, mastering and Red Circle for selling the ads and hosting the show. We always appreciate that. We will be back next Wednesday with another show with a tech insider, outside agitator or journalist. We'll keep you waiting in suspense for which one. It will be, thanks again for Lauren. Pick up the book Devil's Playbook. It's out and available at all major booksellers today. All right, we'll see you next time.

• 1:03:51Speaker 02

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