The chemist who helped create the magic sauce behind Juul, Xing Chenyue, unveiled the product of her new startup Myst Labs this week after two years of growth: digital cigarette alternate options designed for China’s 350 million people who smoke, the world’s largest smoking inhabitants.
This new contender makes for a probably heated battlefield on condition that Juul will reportedly enter China quickly. TechCrunch has reached out to Juul about its enlargement, however has not heard again on the time of writing.
Pax Labs — the corporate that spun out Juul in 2017 — was a 20-person workforce when Xing joined as one among its first scientists in 2013. Throughout her practically three-year submit at what would change into America’s largest vaping firm, Xing helped invent nicotine salts, the compounds that made Juul an immediate hit. The patented expertise impressed a raft of followers as a result of it permits excessive ranges of nicotine to be inhaled extra simply and with much less irritation, in line with the U.S. Facilities for Illness Management and Prevention.
Xing left Juul when the corporate made a foray into marijuana vaporizers, a transfer that didn’t significantly curiosity the scientist, a non-smoker whose ambition is to “assist people who smoke meet their nicotine wants while lowering the dangerous substances they eat,” Xing instructed TechCrunch in a cellphone interview.
The China-born scientist took up a challenge administration position at publicly-traded pharmaceutical firm Dermia earlier than finally returning to cigarettes analysis by beginning Myst Labs, which she co-founded in 2017 with Thomas Yao, a enterprise capitalist she had met over a decade in the past at Fudan College in Shanghai.
As Myst started to take type, Juul was on the right track to succeed in its whopping $38 billion valuation even whereas it was beneath hearth for luring youngsters into vaping. In the meantime in China, vaping had simply begun to catch on. Analysis from Soochow Securities (in Chinese language) reveals that China, regardless of being the world’s largest producer of vaping units, accounts for merely 6% of the world’s e-cig market. Xing needed to grab the chance and this time, she’s in management over what comes out of the lab.
“We definitely wish to attain the identical stage of society-wide affect in China as Juul does within the U.S. We hope Myst can go away a optimistic mark on Chinese language people who smoke,” mentioned Xing. “Myst can slowly rework the way in which individuals smoke and regularly scale back the extent of their nicotine consumption.”
Myst’s first product, dubbed the P1 collection, is a 399 yuan ($58) flash-drive-shaped gadget that comes with a nicotine stage of three% or 5% and sports activities a retractable cigarette holder for hygiene and a “click on” sound that mimics a lighter. Myst will ship in China by on-line and offline channels and mentioned it plans to promote in worldwide markets down the street. Its value level is corresponding to Juul’s pricing within the U.S.
Myst doesn’t market itself as a smoking cessation instrument as a result of to take action would require approval from China’s drug regulator. Relatively, the startup payments itself as a “new sort of cigarette substitute for grownup people who smoke.” It has averted utilizing pictures of younger, cool-looking fashions, the type of campaigns that backfired on Juul. To confirm prospects’ age, Myst applies facial recognition, an more and more ubiquitous expertise in China the place individuals scan their face to pay for issues or entry sure leisure providers corresponding to video video games and reside movies.
That positioning additionally permits the corporate to probably evade stepping on the toes of China’s highly effective cigarette monopoly, which gives the federal government with good-looking sums of tax revenues.
From Silicon Valley to Shenzhen
Myst deploys about half of its 20-person workforce to conduct analysis and growth in Silicon Valley. The remainder of the corporate primarily works out of Shenzhen, the electronics manufacturing hub that additionally produces nearly all of the world’s vaporizers.
“We’re combining Silicon Valley analysis and China’s provide chain, a technique that units us other than most vaporizers in the marketplace,” Yao, who heads up enterprise growth at Myst, instructed TechCrunch.
He in contrast China’s vaping craze to what occurred to smartphones between 2010 and 2011 when copycats of incumbents crowded the market in a gold rush. Numerous knockoffs of Juul and different established manufacturers now flood the market. Firms with varied levels of growth capabilities have additionally mushroomed — no less than 20 Chinese language e-cig startups have obtained enterprise funding within the final seven months.
As with the smartphone market that’s now dominated by a small rank of gamers, Yao believed the unhealthy apples in vaping will finally be weeded out. “This [counterfaiting] occurs every time China experiences a technological breakthrough. Chinese language manufacturers get eradicated at a fee to which no different nation can examine. Maybe a number of [e-cig] corporations will exit of enterprise by the top of this 12 months.” A sector reshuffle will end in half from authorities regulation, which may arrive in China anytime quickly.
Xing believes Myst’s edge lies within the high quality of its merchandise. In response to Yao, the corporate spends about 20% of the cash raised on R&D.
Yao declined to reveal how a lot the corporate has banked however mentioned it has enough funds within the coffer and that “cash isn’t a problem” as a result of he has personally invested in Myst. Yao had beforehand picked some winners by backing mobility unicorn Lime and India’s pockets chief Paytm of their early days.
The co-founder has additionally dropped at the desk key personnel for the enterprise, together with Myst’s chief govt officer Daniel Chen, who beforehand managed Hong Kong-listed robotics agency Tremendous Robotics; chief operation officer Martin Liu, former CEO of Blackberry China; head of product Yingqun Cao, a former product supervisor at Google Dwelling and Juul; and lastly head of design Jiandong Hao, beforehand a design director at world design agency IDEO.
The pool of expertise is reflective of Myst’s imaginative and prescient to digitize smoking, which may manifest within the type of a related vaporizer that tracks customers’ well being situations identical to a sensible wristband does. Myst’s present technology of merchandise doesn’t but allow the futuristic state of affairs, however Yao maintained that digitization is vital to smoking.
“For people who smoke, vaporizers may change into the second most used digital units after smartphones,” he mentioned.