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This Vaporizer Brand Wants To Defeat Big Tobacco Through Music, Fashion & Art

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As vaporization disrupts big tobacco, PAX Labs has positioned itself as one of the cutting edge producers of vaporization technology in the world. The company recently launched an e-cigarette, JUUL, which joins its existing PAX loose-leaf vaporizer product line to bring vaporization to the more luxury-minded. 

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The Pax Brand has focused on three distinct areas for building its brand – music, fashion and art. “Music has always been a natural fit for PAX. Many within the music community have adopted PAX as part of their lifestyle, and music continues to be a significant means of expression for our fan-base. Through music, we’re able to connect to a universal passion and experience across customer segments,” PAX Labs CMO Richard Mumby states.

PAX can be seen at music festivals like Coachella, SXSW and Pitchfork, at all of which they’ve hosted parties. For Outside Lands in 2015, PAX Vapor threw one of the biggest after parties at the entire festival. The brand hosted a “secret show” featuring Toro y Moi, an American recording artist and producer, that was free with RSVP.

“The Outside Lands after-party we threw was amazing,” James Monsees, CEO and co-founder, told Hacked. “There were 11,000 RSVPs for a venue that could hold 600.” This was a marketing coup of sorts for the San Francisco-based PAX.

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“It was a pretty big moment for us to have the best after-party available for Outside Lands weekend,” Sarah Richardson, director of corporate communications, told me.

The company has the perfect technology for festivals and the like which have traditionally been dominated by smoking. What’s more, vaping offers festival-goers a potentially healthier option than traditional smoking, according to a recent UK study.

That study endorsed vaporization over traditional smoking. Health officials claimed vaporizing is 95 percent safer than other tobacco products and suggested doctors could potentially prescribe vaporization as a means of quitting smoking.

In California and India government has sought to regulate e-cigarettes. The World Health Organization has also called for stricter controls on the devices. That’s what makes the recent UK study stand out: the Public Health England (PHE), an agency in Britain’s Department of Health, recently found e-cigarettes to be a healthy alternative to regular cigarettes.

E-cigarettes are not completely risk free but when compared to smoking, evidence shows they carry just a fraction of the harm, stated PHE’s Professor Kevin Fenton.

PAX 2 - Photo: PAX

PAX 2 – Photo: PAX

In the past two years, sales of the PAX product line have grown nearly 200% over the past two years. The company has sold well over 500,000 PAX 1 vaporizers since the PAX 1 launched Fall 2012. What’s the brand’s secret?

“We approach vaporization very broadly,” Monsees said. “What I see in JUUL is technology that has been hoped for and demanded by consumers for a long time.” His plans do not, however, stop with PAX and JUUL.

“There will be more in the future,” he tells me. “It’s only the beginning for vapor technology.” Monsees believes that, over time, there will be new avenues for exploration in the vaporization realm.

“As the future unfolds there are new categories – new verticals – that we want to penetrate,” the CEO says. “We are trying to take the burgeoning technology in the vaporizer space forward with JUUL, which I think represents the biggest technological advancement in the history of vaporization.” While Monsees is mindful of the vaporization market, he seemingly views many of his main competitors as tobacco companies.

Towards that end, in June, PAX Labs announced a $46.7 million funding round. On July 28, the PAX product line announced a partnership with Notre Shop in Chicago, an upscale menswear and lifestyle boutique, just one of many lifestyle stores with which the PAX brand has partnerships.

“The very longstanding ritual of tobacco use led through to the Industrial Revolution,” he explains. “After the productization of the tobacco ritual, there was stagnation in technological advancements of that product.” It is history which has sowed the seeds of vaporization adoption, Monsees believes.

“Vaporization has received a lot of attention in the last several years,” Monsees notes. “This interest in vaporizer technology comes in part now because of two phenomenon, the confluence of which we see today.” These phenomenon are familiar to the modern consumer.

“They are the dawn of the Information Age, in which people are aware of the new technologies available which lie latent,” he said from his San Francisco office. “The other thing is technology; that is, the miniaturization of technology, lithium polymer batteries, and new manufacturing techniques.” All of this has come together to make these new products possible.

“That is why you see vaporizer technology becoming so ubiquitous,” Monsees says. 

https://instagram.com/p/55wEWGH9a0/?taken-by=juulvapor

PAX and JUUL stand out from other vaporizer pen brands thanks to quality. Theirs is a luxury product, and that is a categorization with which Monsees is comfortable.

“Everything we do in our company in our mind is a luxury product,” he told Hacked. “Neither PAX nor JUUL are products that someone must have.” It is not food we’re selling, nor is it shelter, he says.

“It is not at the bottom of Maslow’s hierarchy of needs,” he goes on.  “These are things you elect to have that may improve the quality or happiness of your life for people who enjoy these kinds of things.” All of this makes his vaporization products a luxury.

“Our culture often talks about luxury goods as ostentatious and out of reach,” he said.  “What we want to do is give people a sense of luxury, not just something that gets you by. We want to provide something that is magical and surprises you in how it satisfies what you were looking for.”

To Monsees, that is luxury. It is this luxury he wishes to spread across the world. For now, PAX Labs has plans for European markets.

“There are going to be a couple markets open certainly before the end of this year, outside of the US and Canada, that we are super excited about.” He expects demand for his product to be consistent worldwide.

“There is so much demand from consumers outside of the US, we are excited to get product into their hands and are excited for new cultures and people to join the PAX family,” Monsees said.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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Justin O'Connell is the founder of financial technology focused CryptographicAsset.com. Justin organized the launch of the largest Bitcoin ATM hardware and software provider in the world at the historical Hotel del Coronado in southern California. His works appear in the U.S.'s third largest weekly, the San Diego Reader, VICE and elsewhere.




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USA Technologies: Thinking Small To Grow Fast

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Malvern Pennsylvania is the home of USA Technologies, a town of just 3,000 people. In Malvern it pays to think small.  USA Technologies (USAT: NASDGM) is trying to make it big by thinking small.

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The word small ticket comes up frequently in USAT’s self-description. Here is why they want to be a big fish in a small pond.

What They Do For A Living

USAT provides wireless networking, cashless transactions, asset monitoring, and other value-added services to the small ticket, unattended Point of Sale (“POS”) market.  This sounds super cool, but what does it mean?

USAT developed something they call ePort technology.  When it is installed into things like vending machines, commercial laundries, amusement games, or stand alone kiosks so you no longer have to carry cash.  It is another application of network technology and it is spreading rapidly.

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While thinking small, USAT also developed ePort Connect, which amounts to a Payment Card Industry Data Security Standard (PCI DSS)-compliant, comprehensive service that includes simplified credit card processing and support, consumer engagement services as well as telemetry, Internet of Things (“IoT”) and machine-to-machine (“M2M”) services, including the ability to remotely monitor, control, and report on the results of distributed assets containing electronic payment solutions.

Competitive Position

Company CEO Stephen Herbert claims the company is a leading provider in the small ticket, beverage and food vending industry.  They are expanding solutions and services to other unattended market segments, such as amusement, commercial laundry, kiosk and others.

Historically, these businesses have relied on cash for payment in the form of coins or bills, whereas, USAT systems allow the acceptance of cashless payments through the use of credit or debit cards or other emerging contactless forms, such as mobile payment.

How Does USAT Make Money

Revenues are generated from the sale of equipment and from license and transaction fees.  It is this last source that helps make USAT most interesting.

During the fiscal year 2017, 73.0% of revenues came from recurring license and transaction fees related to ePort Connect service and just 27.0% from equipment sales.

CEO Herbert believes that a service based business model, will create a high-margin stream of recurring revenues as a foundation for long-term value and continued growth.

Financials: Small Is Getting Big Quickly

USAT strategy seems to be paying off handsomely.  Revenues over the past five years have been growing a better than a 25% pace going from $29 million in 2012 to $104 million in the year ended June 2017.

For the six months ending December 2017 the company surpassed last years total ringing up about $43 million in revenues, a 30% increase.

In their February 8th earnings release, the company raised guidance for fiscal 2018 revenues to $140-$145 million and for adjusted EBITDA to between $13.5 and $14.5 million.

At this time four Wall Street firms cover the company and these folks expect USAT to earn $0.06 per share this year before tripling in fiscal 2019 to $0.18.

Cantaloupe Acquisition

Back in November USAT signed an $85 million deal to acquire Cantaloupe Systems, Inc based in San Francisco.  Just like USAT, Cantaloupe is a provider of cloud and mobile solutions for vending, micro markets and office coffee service.  The two companies tout the deal as bringing together complementary portfolios for the purpose of creating the industry’s top solutions platform.

The acquisition had only minor benefits to reported USAT first half results.  On a pro-forma basis, if the acquisition had occurred on July 1, 2016, first half consolidated revenue would have increased 26% year-over-year.

Management With Beverage Industry Background

CEO Stephen Herbert has considerable history in the beverage industry and has been CEO at USAT for over 5 years. In other words, he needs no on the job training.

For the 10 years prior to joining USAT in 1996, Herbert had been with Pepsi-Cola in their beverage division vending area.

The company believes Herbert’s intimate knowledge and experience with all aspects of USAT for over 20 years and his extensive vending experience at PepsiCo before joining USAT provide the requisite qualifications, skills, perspectives, and experiences to serve.  We would tend to agree.

Featured image courtesy of Shutterstock. 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.3 stars on average, based on 21 rated postsJames Waggoner is a veteran Wall Street analyst and hedge fund manager who has spent the past few years researching the fintech possibilities of cryptocurrencies. He has a special passion for writing about the future of crypto.




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Shotspotter: A New Weapon To Combat Violent Crime

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U.S. violent crime is near a modern day low but the events of the recent past raise disturbing questions.  How does law enforcement deal with random gun violence.  A seven-year-old company named Shotspotter Inc. (SSTI: 17) is using technology to help first responders.

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Taking It To The Streets

Shotspotter claims to be the leader in being able to immediately detect the location of a gunshot and instantly relay this information to law enforcement officials.  The idea is that by cutting the response time to violent attacks lives can be saved and bad guys quickly stopped.

Shotspotter founders have created a SaaS-based subscription model that already has signed up customers in urban high crime areas of the United States as well as Puerto Rico, the U.S. Virgin Islands and South Africa.

In addition the company has tailored Shotspotter for application to school and corporate campuses as well as public transportation centers.

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According to their S-1 filing last June: When our sensors detect a potential gunfire incident, our software analyzes and validates the data and precisely locates where the incident occurred. An alert containing a location on a map and critical information about the incident is transmitted directly to law enforcement or security personnel through any computer and to iPhone® or Android mobile devices.

Shotspotter is not a startup.  They have been around since well before 2010 with close to $20 million in annual revenues on their books.  So far they have not turned a profit.  Proceeds from their $31 million public offering will help with working capital and other needs.

Veteran Management Should Help

Management is lead by CEO Ralph Clark who has been with the company since 2010 and a veteran of the security industry for many years.  The overall age of management is around 50 something.  In other words, they are not kids on skateboards dreaming up the latest super awesome App.

A Complex Problem Needs New Solutions

It hardly needs mentioning that the many outbreaks of gun violence create the need for new and more effective ways of dealing with this problem. A March 2016 report published by The American Journal of Medicine stated that the gun homicide rate in the United States is more than 25 times the average of other high-income countries.  Recent random acts of mass violence merely add another layer.

According to a 2016 report by the FBI, the number of active-shooter events in the United States in 2014 and 2015 was among the highest for any two-year average period in the preceding 16 years.

Recent Financials Show Good Signs

Financial information shows the company revenues rising from $11.8 million in 2015 to $15.5 million in 2016.  For the nine months of last year revenues rose 57% to $17.2 million. Full year 2017 performance is due to come out on February 20th and something over $24 million is the target.

The benefits of the Shotspotter SaaS business model is generous gross profit margins and excellent cash flow it provides.  Gross margins are exploding at 49% for the nine month period of 2017 from just 36% a year earlier.  Even so there is considerable room for improvement.

Slow Adoption Process

A clue to the future may be the $16 million in deferred revenues on the company balance sheet as of September 30, 2017.  Presumably these relate to existing SaaS contracts that call for specific monthly payments over the course of the upcoming 12-month period.

Shotspotter is losing money as you might expect from any young technology company.  But this condition is the result of the heavy cost of sales and marketing of a service as unusual as gunshot location detection.  If revenue growth is a fair measure of the effectiveness of its marketing approach, things are on track for future profits.  In the meantime, like any other tech company, investors will most likely focus on top line performance.  

Featured image courtesy of Shutterstock. 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.3 stars on average, based on 21 rated postsJames Waggoner is a veteran Wall Street analyst and hedge fund manager who has spent the past few years researching the fintech possibilities of cryptocurrencies. He has a special passion for writing about the future of crypto.




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Ripple XRP Announces Yet Another High-Stakes Partnership

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Ripple has announced another partnership with an Asian financial institution designed to boost cross-border payments, signaling continued uptake for its native XRP token.

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LianLian International Joins Ripple Network

Hong Kong-based payment provider LianLian International has agreed to adopt xCurrent, Ripple’s enterprise blockchain platform, for the purpose of sending money overseas. LianLian is an active player in China’s massive cross-border e-commerce market, which is said to have eclipsed $1 trillion in 2017.

LianLian CEO Arthur Zhu said integration with the RippleNet blockchain will offer customers instant payments across 19 currencies.

Emi Yoshikawa, director of Ripple’s joint-venture group, issued the following statement:

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“Cross-border payments related to China’s e-commerce market reached $1.07 trillion in 2017. There is a huge opportunity to make these payments quicker and more cost-efficient. With RippleNet, LianLian will now be able to provide merchants and consumers with on-demand payments, which they weren’t able to before. We look forward to connecting other RippleNet members to LianLian.”

Ripple has announced several partnerships in recent months, bringing blockchain technology to Japanese financial institutions, American Express, IDT Corporation and MercuryFX.

China’s E-Commerce Market Offers Huge Potential

Ripple’s involvement in China’s e-commerce boom could provide the company with new avenues for growth. Wall Street financial giant Goldman Sachs has pegged China’s e-commerce market at $1.7 trillion in 2020. That represents a compound annual growth rate of 23%.

The growth of cross-border flows related to e-commerce aligns with Beijing’s vision of a consumer-driven economy. The Chinese government is undertaking a gradual pivot away from traditional smokestack industries in favor of service sectors that can boost consumption. Although the shift has been partly responsible for China’s weakening growth in recent years, it has also supported middle-class formation in the world’s second-largest economy.

In 2015, China’s middle class overtook the United States as the largest in the world.

XRP Price Levels

Ripple’s native XRP token rose on Wednesday in unison with the broader cryptocurrency market, which was still recovering from a massive slide earlier in the week. The token was trading at 77 cents U.S. at the time of writing for a total market cap of $30 billion.

XRP peaked above $3 last month, but has since declined more than 80% from record levels. The coin emerged as 2017’s best performing crypto asset thanks to a stellar month of December.

Disclaimer: The author owns bitcoin, Ethereum, Ripple XRP and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.5 stars on average, based on 155 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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