Like many other Silicon Valley entrepreneurs, James Monsees uses technology to disrupt stodgy industries. Unlike most of his Valley peers, he enjoys describing himself as a tobacco executive, which tends to elicit a mixed response. At a small dinner party recently, a handful of the other guests booed that statement, he says. “Then I explained that we don’t just make tobacco products; we’re trying to bring vaporizers to the marketplace.” The room was more sympathetic to vaporizers, typically electronic pipes that heat liquid to produce an inhalant with lower levels of carcinogens than smoke. “Eventually, they applauded,” Monsees says.
Monsees is the chief executive officer of Ploom, a San Francisco startup that emerged from Stanford University. Its loose-leaf vaporizer, the Pax, can be used to inhale heated vapor from marijuana as well as tobacco, though Ploom officially downplays that. The vaporizer—on sale in Austria, Italy, South Korea, and thousands of domestic retail stores—has become almost ubiquitous at concerts and music festivals throughout the U.S. Named one of the year’s best products by GQ and Fast Company, it’s been unofficially endorsed by actor Alison Brie of Mad Men, rapper Big Boi, and actor-rapper Donald Glover.
Ploom is also gaining traction with a novel electronic cigarette called the modelTwo. The device heats small pods of tobacco, unlike most e-cigarettes that use liquid mixtures of nicotine and synthetic materials. Seven-year-old Ploom has weathered protests from antismoking activists and says it’s profitable, but it wouldn’t disclose sales figures or other financial data. In 2011 the company took a minority investment from tobacco giant Japan Tobacco International (JTI), the global division of Japan Tobacco, which sells Camel and Winston cigarettes. “We think there is an opportunity for tobacco to be reinvented and consumed in different ways,” Monsees says.
E-cigarette sales are projected to double to $2 billion this year, according to Wells Fargo Securities, as tobacco companies such as Reynolds American (RAI) enter the market to compete with leader Lorillard (LO), which sells the hit e-cigarette Blu. Many e-cigs are disposable and designed to resemble conventional cigarettes—white sticks with glowing lights at the end.
Ploom’s modelTwo, a $40 device released in July, looks more like a pen. Its LED light is on its midsection, surrounding a power button, and glows brighter or dimmer to indicate the strength of its rechargeable lithium ion battery. The device comes with an assortment of pods that contain either pure tobacco or tobacco-heavy flavor blends such as Orchard, which tastes of peaches, and Rocket, which includes hints of cinnamon and mint.
The larger, cylindrical Pax, released last year, is a $250 vaporizer with a pop-out mouthpiece and a lid that rotates open to reveal a small compartment for loose-leaf tobacco or other substances. By vape standards, it’s slim, stylish, and easy to use. Monsees says Ploom isn’t targeting the market for marijuana, but he doesn’t seem to mind taking advantage of the Pax’s potential for repurposing. He’s not ruling out marketing his device for weed in the future. “It certainly seems like deregulation is where the category is headed,” he says.
The U.S. government has just begun to look at electronic smoking gear. The White House’s Office of Management and Budget is reviewing draft regulation that would expand oversight by the Food and Drug Administration. The FDA could forbid e-cig companies from selling online, advertising on TV, or selling flavored tobacco products, which are thought to be targeted to children. (In which case, goodbye, Orchard and Rocket.) Erika Sward, assistant vice president at the National Lung Association, says Ploom and its peers need more thorough vetting. “We don’t know what’s in them and what the health consequences might be,” she says, adding that nicotine is highly addictive in any form.
The Federal Food, Drug and Cosmetic Act prohibits companies with unregulated products from making health claims, so Ploom doesn’t get too specific in arguing about tar or other cigarette fillers. “Everything I’ve seen at least points to e-cigarettes being a substantial improvement to traditional tobacco products,” Monsees says. Co-founder Adam Bowen says, “People need to question their biases against tobacco.”
Photograph by Amy Harrity for Bloomberg Businessweek
Ploom dates to 2007, a couple of years after Monsees and Bowen met studying art and mechanical engineering in Stanford’s graduate product design program. Bowen was working on ways to reduce clutter in the workplace; Monsees was designing chairs that could mold into different shapes. During breaks they smoked together behind the school and often discussed the appeal and drawbacks of their habit. (They’ve since switched to vapor.) The two reviewed tobacco-company documents posted online as part of the landmark 1990s litigation against the industry, which suggested that the iconic white stick couldn’t be improved upon. They took that as a challenge and began work on a joint thesis project later incorporated as Ploom. Their prototype, dubbed the modelOne for its beta launch in 2010, was a kludgey affair powered by liquid butane. “It was a little foreign to customers,” says Bowen. “The whole butane concept was fairly outdated.”
Dozens of Silicon Valley venture capitalists declined to fund Ploom over the years because their firms’ bylaws prevented investments related to vice. Several big tobacco companies sniffed at the startup but didn’t invest, either, and Ploom came close to running out of money several times before JTI’s investment, Monsees says. JTI, which didn’t have a stake in the new world of e-cigarettes, now coordinates the manufacture of modelTwo tobacco pods in Trier, Germany, and handles Ploom’s international marketing from its headquarters in Geneva.
The 35-employee company recently moved its offices to a building it shares with the administrative offices of Burning Man, the annual communal walkabout in the Nevada desert devoted to art and indulgence. Ploom’s office has a testing lab in the back and vast tracts of open space, which the company says could fit up to 100 workers as it expands. One thing sets the office apart from that of typical Valley startups: Employees puff away at their desks and in conference rooms, exhaling scented vapors into the air.