FLOW or Smartisan Vape: An Opportunity for Luo Yonghao or for Vaping?
Is FLOW/Smartisan Vape Luo Yonghao’s chance, or a chance for the vaping industry? After setbacks in smartphones and chat apps, Luo now seems to be searching for a new breakthrough.
Is Flow e-cigarette or Smartisan e-cigarette an opportunity for Luo Yonghao or for vaping? <\/strong> Once full of sentiment, Luo Yonghao now seems to be running out of tricks. Selling phones has led to unpaid wages, layoffs, supplier debts, and frozen bank deposits and shares; a brief revival with the bullet message service ended in a flash, leaving him relying on the so-called upgraded "chat treasure" to continue the legacy of bullet messages. Just when Luo Yonghao seemed to be at a dead end, the emergence of e-cigarettes appeared to be a glimmer of hope. At the launch event of Kuai Ru Technology on January 15, besides the widely discussed social product "chat treasure" alongside toilets and Duoshan, there was also a trendy product—Flow e-cigarette.
This e-cigarette has been embedded in the "Song Huanduoduo Action" (a play on words meaning "send, exchange, seize") of chat treasure. Users can get this e-cigarette for free during the event period by using chat treasure. This move aims to attract new users to chat treasure while also leveraging Luo Yonghao's IP popularity to enhance market awareness for Flow e-cigarettes.
Many people may not be familiar with e-cigarettes, so let's start with a brief introduction. As the name suggests, e-cigarettes are electronic smoking products that mimic traditional cigarettes, consisting of components such as nicotine solution, vaporizing device, and battery. Besides resembling traditional cigarettes in appearance and taste, e-cigarettes can also vaporize the liquid nicotine in the pods, allowing users to experience a "smoke-like" sensation when inhaling.
The Flow e-cigarette launched alongside "chat treasure" uses pods containing nicotine salts (used to replace nicotine), also known as "small vapes" in the market. This type of e-cigarette does not produce tar, carbon monoxide, or other combustion waste, thus effectively reducing harm to the body compared to traditional tobacco.
Like the bullet message service, the founder of Flow e-cigarette is also a former employee of Smartisan Technology who left to start his own business. Zhang Ji, the legal representative and founder of Kuai Ru Technology, was originally a product manager at Smartisan Technology under Luo Yonghao; while Zhu Xiaomu, the founder of Flow e-cigarette, was Smartisan's first employee and former vice president of user experience. It can be said that Smartisan Technology is indeed a "cradle" for entrepreneurs, but on the flip side, it also suggests that the company is in decline, forcing its veterans to seek their own paths through entrepreneurship.
As for Luo Yonghao's endorsements for bullet messages, chat treasure, and Flow e-cigarettes, it gives the impression that he is indeed running out of tricks, having shifted his hopes to social media and consumer goods after failing in the smartphone battlefield. Social media is self-explanatory; the rise and fall of bullet messages seem to foreshadow the future of chat treasure, especially considering the countless competitors in this entrepreneurial space. What about the emerging field of e-cigarettes? Can it provide a glimmer of hope for Luo Yonghao, who has been disheartened by the smartphone industry?
Globally, the "2017 World Tobacco Development Report" indicates that the global e-cigarette market reached $12 billion in 2017, and it is expected to reach $48 billion by 2023, with an average annual growth rate of 26%. Based on China's large population base, domestic e-cigarette consumption is also rapidly increasing, with production reaching 1.205 billion units in 2016, 1.6 billion units in 2017, and 2.2 billion units in 2018. It is expected that within the next five years, the domestic e-cigarette market will reach 112 billion RMB, with a compound growth rate of 89%.
The profit margins for e-cigarettes are extremely high (currently), which is why Luo Yonghao is venturing into this field. However, this industry is quite complex. It requires significant marketing skills; simply offering low prices is not enough, especially since Smartisan has never excelled in either of these areas.
"An average year-end bonus of $130,000"—this is the year-end benefit given to all 1,500 employees of American e-cigarette unicorn Juul Labs, celebrating the acquisition of 35% of its shares by Altria for $12.8 billion, with the company achieving a gross profit margin of 75%!
It is worth mentioning that Juul has dominated the U.S. e-cigarette market in just two years, achieving a valuation of $38 billion! The windfall effect is vividly demonstrated in Juul's case.
In such a high-growth, high-margin environment, the e-cigarette industry is naturally seen as a hot commodity in the capital market. Especially for e-cigarette companies with their own brands and strong resource integration capabilities, they are highly sought after by investors.
On one hand, there is a trillion-dollar market space, and on the other hand, the entry barrier for the e-cigarette entrepreneurial track is quite low, requiring about 5 million RMB in startup capital, which includes brand and channel development costs, while the profit margin for e-cigarettes can reach 60%. The combination of low barriers, high profit margins, and a large market space has made e-cigarettes attractive to many entrepreneurs and investment institutions. According to data from IT Juzi, in the past three years, well-known investment institutions such as IDG and Zhenge Fund have invested over 10 million RMB in e-cigarette startups. It is no wonder that Luo Yonghao is promoting Flow e-cigarettes so vigorously.
However, in reality, starting a business in the e-cigarette industry may not be as rosy as it seems. The biggest roadblock remains the uncertainty of policies. On October 10, 2018, Hong Kong Chief Executive Carrie Lam stated in her policy address that Hong Kong would completely ban e-cigarettes. On January 1 of this year, Hangzhou's new "strictest smoking ban"—the "Hangzhou Public Places Smoking Control Regulations"—was officially implemented, which also includes e-cigarettes. Whether a comprehensive ban on e-cigarettes will be introduced in the future remains uncertain. From the current financing situation of e-cigarette brands, most are still in the angel round, A round, or Pre-A round stages, with very few exceeding 100 million RMB in financing, indicating that capital is mostly adopting a trial-and-error approach to investing in e-cigarettes.
On the other hand, there is the target user base. Although e-cigarettes contain lower levels of tar, carbon monoxide, and nitrous compounds compared to traditional cigarettes, and the taste and experience are quite similar, the attitudes of old smokers and new smokers towards e-cigarettes and traditional cigarettes are bound to differ, much like the different perspectives of seasoned tea drinkers towards Pu-erh tea paste and Pu-erh tea. For old smokers, no matter how e-cigarettes promote themselves as healthier and less harmful, they still lack that certain "kick" compared to traditional cigarettes. Therefore, the target users of e-cigarettes are actually the "new smokers" who pursue health and quality of life and are more willing to accept new products, but how long it will take to cultivate this target user group to fully adapt to e-cigarettes and accept their not-so-cheap prices (Flow e-cigarettes are priced at 299 RMB) remains an unknown.
In reality, China is the most developed and competitive country in the e-cigarette industry, with a vast market and numerous opportunities. If the e-cigarette path does not work out, what other new tricks will Luo Yonghao come up with? This is what the onlookers are most curious about. Finally, I would like to ask Smartisan fans, would you buy Smartisan e-cigarettes?
This e-cigarette has been embedded in the "Song Huanduoduo Action" (a play on words meaning "send, exchange, seize") of chat treasure. Users can get this e-cigarette for free during the event period by using chat treasure. This move aims to attract new users to chat treasure while also leveraging Luo Yonghao's IP popularity to enhance market awareness for Flow e-cigarettes.
Many people may not be familiar with e-cigarettes, so let's start with a brief introduction. As the name suggests, e-cigarettes are electronic smoking products that mimic traditional cigarettes, consisting of components such as nicotine solution, vaporizing device, and battery. Besides resembling traditional cigarettes in appearance and taste, e-cigarettes can also vaporize the liquid nicotine in the pods, allowing users to experience a "smoke-like" sensation when inhaling.
The Flow e-cigarette launched alongside "chat treasure" uses pods containing nicotine salts (used to replace nicotine), also known as "small vapes" in the market. This type of e-cigarette does not produce tar, carbon monoxide, or other combustion waste, thus effectively reducing harm to the body compared to traditional tobacco.
Like the bullet message service, the founder of Flow e-cigarette is also a former employee of Smartisan Technology who left to start his own business. Zhang Ji, the legal representative and founder of Kuai Ru Technology, was originally a product manager at Smartisan Technology under Luo Yonghao; while Zhu Xiaomu, the founder of Flow e-cigarette, was Smartisan's first employee and former vice president of user experience. It can be said that Smartisan Technology is indeed a "cradle" for entrepreneurs, but on the flip side, it also suggests that the company is in decline, forcing its veterans to seek their own paths through entrepreneurship.
As for Luo Yonghao's endorsements for bullet messages, chat treasure, and Flow e-cigarettes, it gives the impression that he is indeed running out of tricks, having shifted his hopes to social media and consumer goods after failing in the smartphone battlefield. Social media is self-explanatory; the rise and fall of bullet messages seem to foreshadow the future of chat treasure, especially considering the countless competitors in this entrepreneurial space. What about the emerging field of e-cigarettes? Can it provide a glimmer of hope for Luo Yonghao, who has been disheartened by the smartphone industry?
Globally, the "2017 World Tobacco Development Report" indicates that the global e-cigarette market reached $12 billion in 2017, and it is expected to reach $48 billion by 2023, with an average annual growth rate of 26%. Based on China's large population base, domestic e-cigarette consumption is also rapidly increasing, with production reaching 1.205 billion units in 2016, 1.6 billion units in 2017, and 2.2 billion units in 2018. It is expected that within the next five years, the domestic e-cigarette market will reach 112 billion RMB, with a compound growth rate of 89%.
The profit margins for e-cigarettes are extremely high (currently), which is why Luo Yonghao is venturing into this field. However, this industry is quite complex. It requires significant marketing skills; simply offering low prices is not enough, especially since Smartisan has never excelled in either of these areas."An average year-end bonus of $130,000"—this is the year-end benefit given to all 1,500 employees of American e-cigarette unicorn Juul Labs, celebrating the acquisition of 35% of its shares by Altria for $12.8 billion, with the company achieving a gross profit margin of 75%!
It is worth mentioning that Juul has dominated the U.S. e-cigarette market in just two years, achieving a valuation of $38 billion! The windfall effect is vividly demonstrated in Juul's case.
In such a high-growth, high-margin environment, the e-cigarette industry is naturally seen as a hot commodity in the capital market. Especially for e-cigarette companies with their own brands and strong resource integration capabilities, they are highly sought after by investors.
On one hand, there is a trillion-dollar market space, and on the other hand, the entry barrier for the e-cigarette entrepreneurial track is quite low, requiring about 5 million RMB in startup capital, which includes brand and channel development costs, while the profit margin for e-cigarettes can reach 60%. The combination of low barriers, high profit margins, and a large market space has made e-cigarettes attractive to many entrepreneurs and investment institutions. According to data from IT Juzi, in the past three years, well-known investment institutions such as IDG and Zhenge Fund have invested over 10 million RMB in e-cigarette startups. It is no wonder that Luo Yonghao is promoting Flow e-cigarettes so vigorously.
However, in reality, starting a business in the e-cigarette industry may not be as rosy as it seems. The biggest roadblock remains the uncertainty of policies. On October 10, 2018, Hong Kong Chief Executive Carrie Lam stated in her policy address that Hong Kong would completely ban e-cigarettes. On January 1 of this year, Hangzhou's new "strictest smoking ban"—the "Hangzhou Public Places Smoking Control Regulations"—was officially implemented, which also includes e-cigarettes. Whether a comprehensive ban on e-cigarettes will be introduced in the future remains uncertain. From the current financing situation of e-cigarette brands, most are still in the angel round, A round, or Pre-A round stages, with very few exceeding 100 million RMB in financing, indicating that capital is mostly adopting a trial-and-error approach to investing in e-cigarettes.
On the other hand, there is the target user base. Although e-cigarettes contain lower levels of tar, carbon monoxide, and nitrous compounds compared to traditional cigarettes, and the taste and experience are quite similar, the attitudes of old smokers and new smokers towards e-cigarettes and traditional cigarettes are bound to differ, much like the different perspectives of seasoned tea drinkers towards Pu-erh tea paste and Pu-erh tea. For old smokers, no matter how e-cigarettes promote themselves as healthier and less harmful, they still lack that certain "kick" compared to traditional cigarettes. Therefore, the target users of e-cigarettes are actually the "new smokers" who pursue health and quality of life and are more willing to accept new products, but how long it will take to cultivate this target user group to fully adapt to e-cigarettes and accept their not-so-cheap prices (Flow e-cigarettes are priced at 299 RMB) remains an unknown.In reality, China is the most developed and competitive country in the e-cigarette industry, with a vast market and numerous opportunities. If the e-cigarette path does not work out, what other new tricks will Luo Yonghao come up with? This is what the onlookers are most curious about. Finally, I would like to ask Smartisan fans, would you buy Smartisan e-cigarettes?
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