A Tale of Two Cigarettes

An industry leader shares what’s to come for vaping

By KHADIJA AZHAR

Vaping devices aren’t inherently tobacco products; the sizeable market for e-cigarettes is what drives manufacturers to focus primarily on nicotine delivery.

Two years after the Oxford English Dictionary inducted ‘vaping’ into the English lexicon, photos of Leonardo DiCaprio puffing on an electronic cigarette began circulating the Internet and triggered an intense debate about whether the non-combustible devices should be accepted. Detractors argued the media was peddling manufactured narratives about their benefits and glossing over potential harm, while supporters touted their alleged success in helping nicotine addicts overcome dependence.

Despite this divisive public sentiment, it would be unfair to dismiss the innovation behind the e-cigarette, especially when the product pioneers intended it to aid smoking cessation. Growing literature, such as a January 2019 study in the New England Journal of Medicine, corroborates this claim, showing that e-cigarette users are twice as likely to give up smoking compared to those who use nicotine patches and gums.

Cue the backstory

Cue Vapor Systems CEO Alexander Basile began researching the prospects of breaking into the non-combustible cigarette market after personally using them to quit smoking. Through testing various devices, he found that although traditional e-cigarettes (which look like regular cigarettes) were easy to use, they lacked power. Modified vaping devices were more effective, but required cumbersome assembly. He felt the need for a device that could bridge the two and provide a simple yet satisfying experience for smokers.

Motivated by this idea, Basile turned to his long-time adventure racing partner, Ruben Perez, for help. Perez, who is now Cue’s President, remembers how Basile strode into his office armed with nothing but a “box of junk” and the vision to turn those disparate pieces of hardware into a product with lasting global impact. After years of development, self-funding, and help from local design companies, they were able to produce their first prototype–the Digirette–in 2013.

Cue has come a long way since then. Not only does the company boast an unprecedented range of thirteen flavors with three possible nicotine strengths (including a zero-nicotine option), it also provides technologically superior devices while maintaining ease-of-use.

Cue’s E-Vapor Kits are equipped with sub-ohm tanks, which are as straightforward to use as traditional e-cigarettes, but with more powerful and consistent vapor. Most devices on the market use complex open-tank systems, which comprise numerous, and often costly, components that need to be replaced regularly.

Examples of combustible cigarettes, traditional e-cigarettes, and open-tank vapes, which require the user to refill the device with liquid.

“You can’t give this thing to grandma and say, ‘Hey, quit smoking,’ because she can only use it for three days before she has to start changing stuff,” says Basile.

Cue allows consumers to sidestep the hassle of replacing coils by introducing devices that use closed-tank systems with cartridges that do not require assembly. Moreover, by removing the ability to tinker with individual components, the company can maintain a high standard for customer experience.

Although the prototype was designed and developed in California, the company has since outsourced manufacturing to factories in China, which incidentally happens to be the birthplace of the e-cigarette. Discussing plans for potential expansion to China, Basile and Perez agree that penetrating the market could be lucrative, but their strategy focuses on establishing and maintaining a firm footing in the U.S. first.

“China has always lurked in our background, but our strategy moving forward is that if you want a successful brand in China, you need to have a successful brand in the U.S.,” Basile explains.

A selection of Cue’s cartridges, which are replacable, and offer a variety of flavors and nicotine levels.

Misconceptions and other applications

The e-cigarette industry is mainly criticized for capitalizing on and marketing its products to the youth demographic. The best example is the backlash faced by Juul, currently the industry’s biggest player.

Whether or not this criticism is warranted, it’s easy to see why the device is so popular among underage consumers; its sleek, USB-like appearance facilitates easy concealment for use in schools, prompting concern from parents who fear that it may steer their children toward early nicotine addiction.

Even if marketing messaging is regulated, many still argue that the tantalizing flavors and efficacy of nicotine delivery are making addiction more common among young people. Basile contests this claim, emphasizing that teenagers have historically used and abused combustible cigarettes, and now have an alternative that has less impact on their health. At the same time, he explains that the onus of prevention should lie on retailers who don’t follow regulations.

Cue’s E-Vapor Kits, which are equipped with sub-ohm tanks. Photos courtesy of Cue.

Perez posing with Cue’s E-Vapor kits at a convenience store in the U.S.

“It is an adult product. It already is illegal for kids to vape, so it’s really an enforcement issue. It’s the store that needs to regulate it,” he adds.

Detractors also fail to acknowledge the technological innovation behind the e-cigarette and how its applications could extend beyond the tobacco industry. Vaping devices aren’t inherently tobacco products; the sizeable market for e-cigarettes is what drives manufacturers to focus primarily on nicotine delivery.

Derek Kwik, the third partner in Cue, has held a long-standing belief that the device could disrupt the health and pharmaceutical industry. In fact, its delivery mechanism could administer virtually anything, provided the chemistry allows for it.

“Once you separate the contents from the delivery mechanism, it all becomes crystal clear,” adds Kwik.

While nebulizers are a more traditional example of pharmaceutical aids that allow patients to inhale medication, there exist commercial cases of using vaping to administer vitamins, caffeine, and even a variant of Viagra. Though these applications are yet to be refined, it is quite possible that we could be inhaling aspirin to quell a headache in the near future.

What’s on the horizon

Despite the ubiquity of non-combustible cigarettes, most countries impose either no regulation or a complete ban.

One would assume that regulations would be a bane to manufacturers, but surprisingly, the founders thinks otherwise.

“Regulation is the most exciting thing for us,” says Perez.

Dubbed a proverbial ‘Wild West’ by Basile, unregulated markets allow e-cigarette companies to make and follow their own rules. while regulated ones provide a robust framework for them to enter. It is a favorable scenario either way.

For example, the U.S. Food and Drug Administration introduced the Premarket Tobacco Application in 2008 to vet tobacco manufacturers before they can market their product. The application’s additional processing time became a bureaucratic barrier to entry for prospective brands, while Cue enjoys more protection as an established company.

Once you separate the contents from the delivery mechanism, it all becomes crystal clear.

However, trends have shown that most countries are converging to a middle ground when it comes to their opinions about vaping. Laws are becoming laxer in some places, stronger in others. Undeterred by regulatory uncertainty, e-cigarette companies have gained considerable traction within the startup scene in the past few years. Juul recently sold a 35% stake to tobacco giant Altria to reach a hefty US$38 billion valuation, making it one of the biggest success stories to come out of Silicon Valley in 2018.

Discussing their goals for the coming years, Basile and Perez agree that Cue’s vision is to expand the industry as a lead innovator. They also look at their business as a catalyst for social impact, which was a founding mission.

Basile reminisces about the first time he showed the prototype to his dad, who has lost four brothers to smoking. Having him acknowledge that the device could have potentially saved their lives remains one of Basile’s most treasured milestones throughout his Cue journey.

E-cigarettes may not be as trendy as blockchain or AI in the startup circuit, but it’s not an industry to be overlooked. With vaping becoming more mainstream by the day, the decline of combustible cigarettes is no longer a question of if, but when.

Khadija is Jumpstart’s Editorial Assistant.

Cue’s three partners at their factory in Shenzhen. From left to right: Ruben Perez, Alexander Basile, and Derek Kwik. Photos courtesy of Cue.