JUUL Investment Windfall

Scott Galloway shares his most successful investment in a vaping company called Enjoy.

"My mother died of a smoking-related illness and a couple of my buddies said they were using a vape to get off nicotine. This was like eight, ten years ago, and they had quit smoking using this thing called Enjoy. The company had gone bankrupt.

My friend Jason called me and said, 'I'm about to bring a company out of bankruptcy. Have you ever heard of Enjoy?' I'm like, 'Oh yeah, I know the company and I like it.' So I put 2.5 million bucks in and he brought it out of bankruptcy for $60 million.

He said this is a regulatory play. We're the least bad actor here. There was Juul which had gone up to like 10 or 15 billion in market cap but was marketing to kids and selling bubblegum flavor and was getting hammered correctly in the press.

About three years into the investment, high schools in the Midwest were pulling doors off bathrooms because so many kids were vaping. The absolute low was when there was a huge raft of kids going into emergency rooms with what was called 'popcorn lung.' Kids were getting so addicted to vaping that they were buying vape liquid at festivals and out of people's trunks. People doing home brew of this vaping liquid were cutting it with vitamin A acetate, not recognizing it would have really negative reactions on kids' lungs.

I resigned from the board because I couldn't stay on. I was on the board of my kid's school and the headmaster was putting out memos warning of vaping. I thought, 'I am such a hypocrite.' I tried to sell my stake but there was no market for it.

Jason and the CEO Ryan were real visionaries and said this is all about an FDA play. They spent about a million bucks trying to get FDA approval. Five to seven years later, after 80 or 100 million dollars, we got the regulatory approval and sold the company for $2.2 billion to Altria. That was a 30x on my investment - I turned $2.5 million into $75 million.

It was hands down my best investment - a total classic with a ton of hair on it. It almost went to zero, it was a regulatory play, really unsexy, bankruptcy - all the stuff most people wouldn't want to get near. It was really difficult, and then all the moons lined up and Altria came in."