Interview with Cal student Ben Einstein about his venture VapeSecret, which is an e-cig company that is focused on helping smokers quit smoking
TRANSCRIPT
Speaker 1:Okay.
Speaker 2:[inaudible]
Speaker 3:you're listening to Kale expert, clear 90.7 FM. This is the method to the madness coming at you from the Public Affairs Department here at Calex, dedicated [00:00:30] to the innovative spirit of the bay area. I'm your host aliene Huizar. And today we have the founders of vape secret with us. We have Shawn Linehan. Hey Sean. How's it going? Good, how are you? Good. And Ben Einstein. Yeah. What's going on? What's up man? And then we got Dave, you lead. Thank you for having us. Hey, thanks for coming on the show. And this is really exciting cause we have three entrepreneurs with us who are actually cal students. That's right, right? Yeah. Okay. So two of your seniors and Davey, you are a junior. The Junior. Okay. [00:01:00] This is very exciting. And um, we reversed the first question we usually ask on this show is your, you've created something out of thin air. It's came from your brain, right? So give me, why don't we start with you, Ben. Give us the problem statement. Why did you, what is, what is the problem that you're trying to solve?
Speaker 1:Hi Ma, I'm actually glad you asked me that because, uh, I think the problem that we had was mine. Um, Sean and I were actually working on a different project, [00:01:30] um, and we're working on the 11th floor of a building and every 20 minutes he would leave to go smoke. And it's really hard to develop any software if you're a coder is leaving every 20 minutes. Um, and so I said, why don't you try e-cigs and he said I did and they all suck. And I said, okay, let's make a good one. And 44 days later we did. What was the project you guys were working on? Yes, so we were [00:02:00] still working on, on that project as well. We're kind of doing two simultaneous things. It's crazy, but it actually is managing to work. Um, the other project is einstein.com which is an intelligent product recommendation
Speaker 3:software. It's a mobile app that we're working on and is also making significant progress. Okay, great. So maybe we'll get to that later on in the day of the program. So, um, so you wanted to make an e cigarette cause you saw your friend Ben not be able to Sean not be able to [00:02:30] work for more than 30 minutes in a row, although a lot of coders have the same problem.
Speaker 1:Yeah. Um, it was also the scent, um, the owner that, you know, smokers have, we're working in a small space and that was obviously, uh, not pleasant for everyone else. Um, but most of the Burton Lee's my friend, I didn't want him to die. So a good friend. Yeah. Smoking smoking's really bad. My grandfather died from smoking. I've always been pretty against it. And so I didn't really know much about the e-cig business. Sean [00:03:00] did a little bit of research and tried a couple, a couple of products and didn't like them. And so we figured out what the problems were with the existing product on the market. And what are those problems? Um, the most popular electronic cigarette is called blue. Uh, it's a little cigarette looking device, um, lights up blue at the end and it's very small and it doesn't produce a lot of vapor and smokers required a large amounts of smoke or in our case [00:03:30] vapor in order to be satisfied.
Speaker 1:So it's not satisfactory. Um, it's also limited in that it's small in size, which means the battery's small, which means that you can't use it all day straight. Um, and we wanted to create a product that, first of all, it delivered the experience of smoking, uh, while simultaneously being able to do that all day while simultaneously being able to be affordable to people like us college students. Um, [00:04:00] and so we looked around and there were similar products that we wanted to create on the market, but there were being marketed for over 60 bucks. And that's out of the price range of most college students. And it's definitely out of the price range of putting entrepreneurs who are going broke. So, um, on here slash students, some students who are, who are on a student budget and spending all their extra money on trying to build, build the company. So, um, it came down to quality, um, [00:04:30] and affordability and, um, you know, we, we were hoping, we were luckily able to, uh, go through the entire product development, um, stage in, in just, uh, 40 days. And, uh, we were proud to have developed a pretty good product.
Speaker 3:So what I want to get to your product development, we wanna tell that story. Um, but first tell me a little bit more about, it seems like from someone who's not really into this industry, that the e-cig market and in vape [00:05:00] market has exploded over the last few years or kind of they're everywhere, where you didn't used to see them very often. Tell us a little bit about the, the kind of macro backdrop again of the industry that you guys are trying to disrupt.
Speaker 4:Yeah. So the industry has been around for a good number of years. Five to six years was actually invented by a dentist and in Asia, which is interesting, but you know, it, it, it's one of those products that sounds too good to be true. [00:05:30] You know, you get all of the benefits of smoking without any of the, the bad things. Right. And so for the past couple of years, um, you know, people were using them, they were being sold online, but there was so much pessimism about the product because nobody had ever really done any studies on them. Uh, so, you know, more, more and more research was done on the products. Uh, basically we find that although they're not perfectly safe, they are so
Speaker 3:much safer [00:06:00] than traditional cigarettes, but they started to gain mass appeal. Um, and you couple that with companies like blue, who we, we don't really like, and they don't think they're that good of a product, but them having a lot of money in their bank accounts has, has really fueled the distribution of e-cigs. So you're 100% right in saying that they've totally exploded recently. Um, you know, it's interesting though because the products that have exploded are, are not the best products on the market. They're just the companies that have the most [00:06:30] money to have a blue, which is, you know, funded ridiculously. And then you have the other guys which are actually owned by big tobacco trying to keep people smoking. And I think they caught the realization that these products weren't going to go away and people were going to use them and people did want them and they joined the bandwagon.
Speaker 3:So you're talking, you're listening to Shawn Linea and one of the founders of vape secret and all three founders are here helping us to learn more about the [00:07:00] product that they've come to market and they're also cal students to seniors and juniors. This is very exciting to have some cal local entrepreneurs on the program. So you guys are telling the story about, and this program by the way, as method to the madness on KALX Berkeley 90.7 FM. And so you were telling us about, you guys were building this software program, einstein.com and um, and Ben, you realize that Shawn was going [00:07:30] out and smoking every 30 minutes. Like, Hey, let's do another project to building a e-cig. And I would assume this is my belief. But you were not at e-cig expert when you came up with the idea. Is that right? I'm not at all.
Speaker 1:I, uh, I, I was not an expert at then, but I can pretty confidently say that I'm an expert. Now. Tell me
Speaker 3:about like when you, you had the idea, and I'm always interested in this kind of, this spark of innovation, like the thunderbolts hits, you're like, Whoa, [00:08:00] that's an idea. I know nothing about it, but it's an awesome idea as to take us from that moment to how you 44 days later, whatever it was, had a product.
Speaker 1:So, uh, so first of all, Sean and I are not, uh, engineers in the sense that we don't, we're, we're primarily business guys. Um, we're primarily nerds and second, secondly, we're primarily business guys. And, um, the electronic cigarette idea kind of came about, um, for, for two reasons. First [00:08:30] of all, obviously it was practical because, you know, I didn't want John to smoke cigarettes anymore. But also, um, starting a company with no profitability in forecast is very difficult. Um, especially if you don't have much money. And so we saw this as an opportunity to solve a problem that we had and we assumed that other people had, but also to make money, um, so that be able to find that through our lives so that we can actually work on einstein.com. Um, [00:09:00] electronic cigarette industry is huge. And what we noticed is that aside from there not being a good product for this specific type of, of, of use case that we envisioned, it was also very complicated.
Speaker 1:Many people didn't know about this. Um, it's almost as if, you know, you take an alien and introduced an iPhone too. I mean, you wouldn't really understand how to use it or how to, how to get, how to, how to get the value out of it. And a lot of electronic cigarette e-tailers are websites, um, had many, many products and it's very, [00:09:30] very confusing and overwhelming for someone to go through that and figure out what to use. So we saw our space as being the simplest electronic cigarette you can buy in that it literally takes 30 seconds to go through our entire website and fully customize an electronic cigarette. You get to choose from 20 different flavors. It's all done in a very, um, user friendly and beginner focused, uh, way so that people [00:10:00] who know nothing about electronic cigarettes can successfully purchase from us quickly, easily, and with confidence because we explain everything in such simple terms.
Speaker 1:And so we sell one product, we have one unit, it's available in six different color combinations. Um, we literally walk you through the process. We tell you exactly what you're getting wide good, what's good about it. Um, and we're really focusing on the people that have been thinking about it. I've [00:10:30] heard about it, but haven't really pulled the trigger on getting electronic cigarettes. And we kind of want to be that first step, that stepping stone, taking them away from smoking these dangerous cancer causing traditional cigarettes and moving them on to this new, this new type of, of electronics of electronic cigarette so that they can get all the benefits of smoking without dying young or through the business car talking. I get that you are a good business guy. He's just giving [00:11:00] me exactly the problem and what you're trying to do to make it easy to solve.
Speaker 1:But it take us a little, a little detour here and talk about the engineering side of it. So you guys have, you wanted to build an actual product that like does some stuff right? That creates more of a vapor and is cheaper. And so how did you go about the manufacturing process of coming up with the actual product? Um, so from a, from an engineering perspective, the electronic cigarette [00:11:30] consists of three components. First of all, as a power source, which is a battery, uh, second of all is what's called an atomizer, which actually, uh, takes the vapor, takes the liquid and vaporizes it. And the third component is the liquid that you're actually uprising. What we did is we did a huge amount of research into various manufacturers of these components. Um, we did a huge amount of testing on these products. I would get prototypes, give them to Sean, he'd smoked [00:12:00] them for a couple of days, tell me what was wrong with them.
Speaker 1:And we work with suppliers all around the world who made this stuff to put together the unit that we have today, which is basically a collection of components from a bunch of different places. And the way we selected each part was first of all, for again for quality, which is our core. And second of all, for affordability, we wanted a product that was sub $30. Um, and so the, for example, our [00:12:30] liquids, um, they're made with food grade, all food grade materials. Um, our flavorings come from Italy. They're, they're food based flavorings. Um, again, we're trying to move away from the general idea of electronic cigarettes as being dangerous and trying to attach some sort of, of tangible, um, healthfulness though as much as we can in this type of product. So that we can actually say that we've [00:13:00] done our, our, our, our, our, our best effort in terms of trying to make this product as good for you as possible.
Speaker 1:So, um, you know, the, the battery we selected was, was selected with, with people like Shawn in mind, people that smoke all day, they need a product that lasts all day. A battery can't die because that's my biggest fear. That's our biggest fear is that someone's battery dies and then they go to seven 11 to buy another pack of cigarettes are real vision is helping people quit. And we've done that very successfully. [00:13:30] And the way we do that is by, by creating a product that lasts all day, it's got a USB charger in the bottom so you can literally plug it into your, your phone charger or your laptop and use it while it's charging, which is a very unique feature. Um, our atomizer is some, one of the simplest on the market. And most importantly in terms of, in terms of, of, of, of our, our consciousness towards the environment is [00:14:00] everything about our product is rechargeable and we fill up. So unlike most of the products on the market where you buy a product and then you have to keep on buying the refills and cartridges and all sorts of new components, which you then throw out. Our product is fully rechargeable and we fillable. So not only is it more affordable for the customer, but in our opinion it's also better for the environment. Um, so yeah, that's basically the, the, the focus that went into the engineering side of what we were doing.
Speaker 3:Okay, thanks. [00:14:30] You were listening to Ben Einstein, one of the founders of vape secret, a new company formed here on the UC Berkeley campus dedicated to helping people soft smoking by creating a affordable high quality e cigarette. Um, and I have the founders with me here, Sean Linehan, Ben ice, the name Davey Lee. Um, so 44 days. That's a quick time. So how did you get, it sounded like you had to test some different components and stuff. So how, [00:15:00] how did you get the capital to, go ahead. I'm Shawn you and tell me about how, how did that process work? How were you, how many atomizers did you have to buy before you found the right way?
Speaker 4:Yeah, so it's, it's, it's actually really interesting. So we didn't take sort of the bottom up approach to engineering our product. Like you might imagine some companies do. We didn't go into cad and, and mock up all of these individual components that we then have to tool ourselves. We recognize that we [00:15:30] only really had a couple thousand dollars of our personal savings left and we needed to make due on that limited bandwidth. So what we did is exactly what Ben was saying was like, we, we went to factories with premade components and figured out how can we put them all together. Right? Um, so the, the capital constraint was pretty significant. We, we took some of the money from our other company, which we also completely self-funded just from our savings accounts, um, and bought [00:16:00] dozens of dozens of these atomizer components and just kept testing them and when they wouldn't work, uh, and some, some of them just outright didn't work, which is ridiculous.
Speaker 4:You know, you're getting samples from companies that were trying to become our main suppliers for these components and they chest were broken, um, and cross them off full list. Yeah, exactly. Those guys we don't even have to worry about, even if their first sample doesn't work, you know, it's just not worth that. Um, so, you know, Ben Ben took the efforts in terms of [00:16:30] getting all of the different sample products and the, the engineering components of it. Um, and he did all of these different pieces simultaneously. So it wasn't like, okay, now we've got to find the perfect this, finished that and then find the perfect that and finish that. No, he, he sourced batteries and clear misers and liquids and atomizers and all of these different pieces concurrently so that we could, you know, test all the different configurations. Um, and you're right, 44 days was, it was a sprint.
Speaker 4:So, you know, we had [00:17:00] this other company that we didn't want to ignore for too long. So Ben, while he was doing that, I then went with Davey to work on the website. I don't, we're primarily an ecommerce driven product. We don't sell in stores, we sell exclusively through our website. And so Davie and I worked on trying to perfect a beautiful design for our site, making it sleek, making it intuitive, making it the type of experience that I would feel comfortable having my mom on. [00:17:30] Right. And funny story, she actually did, did quit using our product, which I'm really proud of for my mom, my stepbrother, my brother and my stepdad and my best friend all quit using my product [inaudible] and myself. Quit, quit using it. So you know, that that was the aesthetic that we set out to do. And you know, luckily between Davey and I and Ben's input as well on the design, we were able to make something that, that we're really proud of. Um,
Speaker 3:that, that's amazing. Congratulations. I mean, your [00:18:00] return on investment right there is huge. If you have your whole family quit complete smoking cigarettes and you have to, I mean when you say quit, I mean you still smoke, you smoked a e-cigarette. Right? And I've, I've been interested in this. I've seen like people and I was in an airport last week and it's like guys smoking and E-cigarette in the airport. And I was wondering like, what's the, um, there's no actually no second hand smoke issues or bathe second hand vapor issues [00:18:30] with an e-cigarette.
Speaker 4:No. So, uh, at least according to the most recent studies, and I'd cite the name if I can think of it off the top of my head, but, uh, basically the, the deal is the only detrimental piece of the second hand vapor is exposure to nicotine. Now to your average healthy adult, non infant adult, like, you know, anybody 10 and up, um, and 80 and down, this has absolutely no problem. Or like, if you're pregnant or you're an infant, [00:19:00] I still would not recommend, you know, having vapor blown directly in your face. It's just, there's no proof that it's very bad for you, but you know, nicotine is in a high enough quantity, not good for you. Um, but for your average person, I mean this, this really has very little health health side effects. The, the vapor itself is comprised of a, of a thing called propylene glycol. It sounds scary, but honestly it's one of the most heavily researched [00:19:30] just components, um, over the past eight years. And it's found to be completely safe. It's in inhalers, it's in food. I mean, it's literally in a significant portion of the products we use on a day to day basis. Um, and that's what makes it visible, the vapor visible, um, and it's safe. So,
Speaker 3:so when, when smoking is bad for you, it's not necessarily the nicotine that
Speaker 4:creates a lung cancer. It's the smoke, certainly not the, the, the deadliness [00:20:00] of, of cigarettes is significantly, significantly not associated with the nicotine. Nicotine is a chemical is bad for you in high doses, like very high doses, but in the dose, that level that you're using cigarettes, it's not the component that's hurting you. The component that hurting you is the smoke itself, right? Like you're literally burning plants. There's thousands of other chemicals added to cigarettes and that's what kills you. Yeah.
Speaker 3:Okay. [00:20:30] Very interesting. So we're talking to Shawn Lenahan, then Einstein and Dave, you either the founders of vape secret. It is a e-cigarette company founded here on the UC Berkeley campus. They're all students here at cal and have launched this new enterprise. When did you guys launch?
Speaker 1:We launched a late July, late July, July. We, uh, we, we actually launched a website and a, it's funny, we actually got, um, interviewing by cvs in [00:21:00] San Francisco, um, on television and that was kind of the jumpstart for our business. And um, the, the core for what we're doing is not you selling your product today. We put you on a regimen where we wean you off of nicotine completely, which is kind of backwards. Our business professor theta sort of this,
Speaker 4:yeah. Basically we, we aim to lose our customers over time. And the way we do that is [00:21:30] we,
Speaker 1:you start you off at at a certain nicotine content and we slow you month to month. We send you new liquids every month that lower at, at increasingly lower nicotine contents. Shaun started off at 18 milligrams, I think. Yup. Um, and he, and now he's, what are you smoking now?
Speaker 4:Three. And it's funny because for the first two months I actually was at the 18, um, for a longer period of time than I should have been. Cause I didn't want to, we were running out of inventory. Right. We had a very little capital. So we kept having to [00:22:00] continue to buy small quantities, smaller quantities, bigger quantities at a time. Um, so I was using the 18 cause we had a lot of that and I didn't wanna use the inventory that we were going to sell to our customers to help them quit. So, you know, somebody, somebody that we would, that we would have as a customer starting today would quit much faster than the 10 months that it's taken me. They would quit over a period from lot of nicotine to no nicotine, three to four months, just for frame of reference, 18 milligrams.
Speaker 4:So you said, yeah. [00:22:30] What does that equate to? Like how many packs a day is that? It's about, uh, between like three quarters of a pack to a pack a day. Um, it's depending on how often you actually use the device. It works for somebody who's up, even up to two packs a day. It's really the strongest, uh, levels that we recommend using. And how does the, so the, it's almost a years of a service. It's not just a product. Correct. Cause you're sending people the lick, the smokeable liquid, if that's the right term. So a Cho, what are the economics [00:23:00] on our liquid versus packs of cigarettes? Yeah. So one, one liquid, which we sell for $5 is equal to about three packs of cigarettes in terms of time spent using it. Um, so one, one liquid lasts an average person. I'm a little bit under two, a little bit more than a week, which is about the same that somebody would have about three packs of cigarettes. Um, unless they're very heavy smokers. But with the vape it's about a week with the one bottle. So we're [00:23:30] literally saving lots of money. Right. I mean I was a smoker for 15 years, but that was years ago when I quit cause I'm an old guy. So what was the, uh, what are the packs of cigarettes go forward today? The ones hours I was, were
Speaker 1:about $7 on the average in Berkeley. Wow. So just right there just to save money, you should, you should buy vape secrets, right, man, we actually have a calculator on our homepage where we can tell you exactly how much you'll save this year. [00:24:00] Uh, if you switch, if you switched to electronic cigarettes. Nice. Um, okay, so you guys started in July, so you've been around for about three quarters now and you, you're showing your whole family as quit basically. It's not a like, yeah, you're on the road to quitting. Tell us some more, like how many have you sold? How many stories do you have of people quitting? Um, we, we try to keep in touch with all our customers. Some people it's easier. Some people it's harder. We actually have discovered [00:24:30] that we appeal more to older people because of the simplicity of the site.
Speaker 1:Um, because of the simplicity of the product. And older people are generally not as, uh, into communication, especially the email and things like that. Um, so there's been a little bit difficult for us to, to keep track of those numbers. Exactly. Um, we've taught, we've helped dozens of people quit and we've sold hundreds of units. Um, so, um, the business is growing and our only constraint right now is [00:25:00] really, um, is just, you know, getting the word out there. Um, getting, getting people to learn about it and word of mouth has proven to be our strongest marketer. Uh, we hope maybe this, this presentation might help us also a little bit. Um, but the, the important thing for us is that we want to be able to maintain this experience, this personalized experience, um, without getting that diluted by, by getting [00:25:30] too many customers too quickly.
Speaker 1:And so, you know, every package we s we ship out is hand packed by us. There's, you know, we, we hand write a note to every customer and we try to develop a really strong personal connection and relationship with them because smoking is an emotional thing. It's a very personal experience. And we're, you know, who are a bunch of kids that come into someone's life who's been smoking for 30 years and tell them, hey, we can help you quit. Um, it's, it's a very bold statement for us to make and it's something we don't take lightly [00:26:00] and we try as hard as we can to make that experience as pleasant and as professional as possible. So it's only, you guys have two businesses, but you're also seniors. A cow. What majors do you guys have? A, I'm a business major. We've mastered the art of, of being good students while simultaneously, uh, trying to be good entrepreneurs. So you are your business as well then? I know I'm not a business major, I'm just the business guy. Um, I [00:26:30] uh, I made development studies major. Um, I learned about developing economies and things like that. Um, but I read a lot about business and uh, Shawn teaches me everything that's important to know that he learns in Oz. You
Speaker 3:guys are, uh, it's April. So graduation is staring you in the face and you have two businesses. Yeah. Is that the plan, you guys are going to go full force after May.
Speaker 4:That's, that's the plan. Yeah. And we're not, not gonna [00:27:00] not gonna hesitate, you know, actually can't wait to graduate so we can really sit down and focus. Right? Like focused is the biggest issue. Um, with school you, you have varying schedules all the time. You have different wake up days every day, right? Sometimes you have class at eight, 10, 1112 and we're, we're ready to be able to, to truly dominate.
Speaker 3:Yeah. So did tell me about the path to domination you felt like your, and we're speaking with the founders of vapes, secret hearing methods [00:27:30] of the Madison on KLX Berkeley 90.7 FM, Ben Einstein, Sean Lennon and David Lee. These guys who started this business while trying to graduate from cal, they're about to do that. So I want to know now you're going to graduate. The shackles are off. You can drink from the capitalist Downton as much as you want. So what, what's the difference? How are you going to get from where you are today to selling thousands of these helmets? How big a market did you save? This was Ben
Speaker 4:big, is it? [00:28:00] So last year it was a one point $3 billion industry and it's projected to hit 15 billion over the next 10 years.
Speaker 3:Okay. So if you can get half, half of a percent, you're doing well, how are you going to get there?
Speaker 1:Um, we were really working on trying to get our, um, our supply chain in place so that we can actually, uh, produce these products in, in really high quantities. Um, right now we're kind of doing small dots [00:28:30] runs, which keeps our costs higher than they should be or merged. Immersions are still fairly healthy. Um, but we can always do better in that sense. Um, but again, it's in test. This is, um, this is something that we started out of necessity and we realized that this was an opportunity to really help people quit smoking. And so we're actually passionate about it. We really care about this. And you know, anyone we meet who smokes weed, you try and convince them to quit, not just so [00:29:00] we can get a customer, but also cause we, we think smoking's bad. Shawn is in better shape than he's ever been.
Speaker 1:He, he doesn't get tired running up and down stairs anymore. Um, not that programmers do that much, but he actually goes to the gym more than any of us do. Um, but you know, for us the, the important thing was, um, you know, what did Winston Churchill said, don't let your school and getting in the way of your education. Um, we, we've learned more in the past year working together than we probably have [00:29:30] in all four years of college. And so at this point, um, where we're going to go, just in terms of the time commitment. Also for me, I'm putting myself through school. So, um, you know, the financial and the financial responsibilities of paying for college, um, have been, have been, uh, pretty serious on my family and you know, the opportunity to be finally be able to work full time, um, on what we're trying to do. Um, the ability to dedicate not only all [00:30:00] of our physical time, but our mental capabilities. I mean, if we're studying for a test until three in the morning and then we try to come into work the next morning, we're not 100%, whereas if we don't have tests anymore, we can actually dedicate our entire, you know, she be you in our brains to, um, to building new businesses
Speaker 3:and thanks to you guys for coming on today and telling your story about how you sorted vape secret. We'll have to have you on another time to talk about Einstein. Um, but you've been listening to the band, Einstein, Sean Lenahan [00:30:30] and David lead of the founders of vapes secret. They're a seniors here on campus about to graduate and go full force into this, um, e-cigarette company that I've created. Um, and to learn more that you guys can go to vape secret.com right. That's the URL to check out.
Speaker 1:That's correct. And actually there's a, a special cow promotion for Berkeley students. Uh, if you place an order, you put into words, go bears into the coupon code and you'll get 10, 10% off of your [00:31:00] sale.
Speaker 3:Alright, we got a plug in at the aunt's, a nice word fan. And uh, thanks for coming on guys. You've been listening to KLX Berkeley's method to the madness. Have a great Friday. Everybody.
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