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Abu Dhabi, UAEWednesday 23 January 2019

These entrepreneurs have become the first e-cigarette billionaires

Adam Bowen and James Monsees are now among the world's richest after Altria Group acquired a third of their company while Bill Gates is among the backers of Alphabet's energy spinoff

Co-founders of US start-up Juul, Adam Bowen (left) and James Monsees. The entreprenurs came up with the idea while pursuing master’s degrees at Stanford University. Photo: AFP
Co-founders of US start-up Juul, Adam Bowen (left) and James Monsees. The entreprenurs came up with the idea while pursuing master’s degrees at Stanford University. Photo: AFP

Adam Bowen and James Monsees

Juul Labs founders Adam Bowen and James Monsees became the first e-cigarette billionaires after Altria Group acquired about a third of their company.

Altria announced earlier this month that it invested $12.8 billion in Juul, valuing the firm at roughly $38bn. Assuming the transaction dilutes the holdings of current shareholders, the founders each own stakes of 3.6 per cent, or $1.36bn apiece, according to the Bloomberg Billionaires Index. Mr Bowen, 43, and Mr Monsees, 38, each controlled 5.6 per cent of Juul after a July funding round that valued each of their holdings at $843m.

The deal makes San Francisco-based Juul more valuable than Airbnb and Elon Musk’s SpaceX.

“This is a disruptive technology and it shows where consumers want to go,” says Ken Shea, a Bloomberg Intelligence analyst. “It’s growing so fast that the cigarette companies like Altria need to look at a way to mitigate not only cigarette use but also think for the future.”

Mr Shea said he won’t be surprised if Altria eventually tries to take a majority stake in Juul.

Mr Bowen and Mr Monsees came up with their big idea while pursuing master’s degrees at Stanford University and founded Ploom in 2007. They sold the name to Japan Tobacco eight years later and renamed their company Pax Labs. Around the same time, the pair introduced a USB-shaped e-cigarette and called it the Juul. Last year, Juul was spun out from Pax and has gone on to dominate the market.

Bill Gates, co-chair of the Bill & Melinda Gates Foundation, is among those backing Alphabet’s new energy-storage project. Photo: AFP
Bill Gates, co-chair of the Bill & Melinda Gates Foundation, is among those backing Alphabet’s new energy-storage project. Photo: AFP

Bill Gates

Alphabet’s secretive X moonshot lab is spinning off an energy-storage project with backing from billionaires including Jeff Bezos and Bill Gates.

Malta, the newly independent company, raised $26 million led by Breakthrough Energy Ventures, a fund that counts Mr Bezos, Masayoshi Son and Ray Dalio among its investors. Michael Bloomberg, majority owner of Bloomberg, is also a Breakthrough investor and Mr Gates is chairman.

Other Malta backers include Hong Kong-based Concord New Energy Group, a wind and solar power developer, and Alfa Laval, a Swedish industrial company, X said earlier this month.

The money will help Malta further develop a system that uses large vats of molten salt and cooler liquid to store electricity generated from variable sources such as solar and wind. The startup likely will need additional funds to build a full facility, according to chief executive Ramya Swaminathan.

"The challenge we have set for ourselves is to enter the age of storage with the next generation of technology," says Ms Swaminathan, who used to run Rye Development, a Boston-based developer of renewable energy projects.

Storing electricity produced by intermittent sources is becoming a critical tool to reduce carbon emissions and combat global warming. California wants all its electricity to come from carbon-free sources by 2045. The state sees as much as 30 per cent of its solar energy wasted during certain times of day, and a lack of storage options is a big part of that.

Malta’s system can be located almost anywhere, including near solar panel arrays and wind turbines, and it has the potential to last longer than lithium-ion batteries, Mr Swaminathan said. The company would consider China among the possible places where it would locate a pilot project, she added.

Solar developers have tried using molten salt in other ways to store excess electricity, but full-scale applications remain limited. SaltX Technology Holding has developed a salt-based heating and cooling system.

Alphabet’s X was once home to all of Google’s free-wheeling experiments, incubating sci-fi projects like self-driving cars, delivery drones and the Google Glass wearable computer. Since 2015, when Alphabet was formed, the lab has trimmed project budgets and dialed back some of its ambitions.

Now X designs projects with two primary goals: to become a standalone Alphabet division or spin out into an independent company. Other options include shutting down or becoming part of Google. Alphabet once had far bigger plans around energy, but has trimmed those in favour of smaller efforts like Malta inside X. A geothermal project called Dandelion became a standalone startup in 2017.

Funds managed by Mexican tycoon Carlos Slim's Inbursa posted an average return of 4.7 per cent this year. Photo: AFP  
Funds managed by Mexican tycoon Carlos Slim's Inbursa posted an average return of 4.7 per cent this year. Photo: AFP  

Carlos Slim

As Mexican stocks put in their worst performance for a decade, the cautious investment strategy of a pension fund controlled by billionaire Carlos Slim’s bank is paying off.

Funds managed by Inbursa posted an average return of 4.7 per cent this year, compared with 0.4 per cent for the $164bn pension fund industry as a whole, according to data from Bloomberg and the regulator Consar. Each of Inbursa’s funds have returned at least 3.8 per cent year-to-December 22.

Rising Fed rates, the US-China trade war and the arrival of left-wing populist Andres Manuel Lopez Obrador to the presidency have pushed Mexican assets down. Mexican stocks have fallen 15.5 per cent this year, the worst performance since the economic crisis of 2008. In November, the fourth month of declines in Mexican stocks, Inbursa was the only pension fund to post positive returns.

"This is not the result of circumstances, this is about our long term strategy,” Marco Antonio Slim, the chairman of Grupo Financiero Inbursa and the son of Carlos Slim said. "When you consider the low risk of our investments, Inbursa has been outperforming rival pension funds for four years."

Inbursa has historically been the safest bet among Mexico’s pension funds, according to value-at-risk figures - a popular measure of fund exposure to riskier assets - posted by Consar. It is the second smallest of Mexico’s pension funds after Azteca, with 162bn Mexican pesos (Dh1.48bn) in assets.

"Nothing really matters until the retirement of a worker comes due, and we believe we offer the best risk-reward mix," Mr Slim said.

Facebook's founder and chief executive Mark Zuckerberg's latest project is a digital token that will let users transfer money on WhatsApp. Photo: Reuters 
Facebook's founder and chief executive Mark Zuckerberg's latest project is a digital token that will let users transfer money on WhatsApp. Photo: Reuters 

Mark Zuckerberg

The idea that a company as powerful and autocratic as Facebook would ever dive into cryptocurrencies has always seemed unlikely.

Whether it’s the Bitcoin model itself (Wild West capitalism where nobody’s in charge) or the more corporate-friendly efforts to exploit the blockchain approach (distributed databases across networks within a business or industry) it’s been hard to see how a billionaire like Mark Zuckerberg might find a use for it. His entire business depends on centrally harvesting data to sell advertisements at a profit.

So it’s no surprise that Facebook’s latest step toward a blockchain product, looks like more of a simple co-opting of the technology for a pretty humdrum payment system rather than any headlong rush to join the crypto-revolution.

The company’s digital token, still in its infancy, would let users transfer money on WhatsApp, focusing first on the remittances market in India. It would be a so-called “stablecoin,” which are usually pegged to a currency like the dollar to minimise volatility. There would be a pool of assets stored in custody to protect it.

One can already hear the howls of anguish from the crypto-evangelists. This is not a token designed to displace fiat currencies or soar in price. In theory, one FaceCoin would never be more valuable than the $1 backing it (although in practice, markets can do funny things). It’s essentially an online IOU.

Mr Zuckerberg is hardly inventing the wheel here given that migrant workers already sent home $69bn to India last year, and India isn’t a ripe crypto-market anyway after its central bank virtually outlawed digital currencies this year. Facebook would be competing instead with services like PayPal’s Xoom, or WorldRemit, or even Western Union. Society might become more cashless as a result, but it’s not going to be any more crypto.

The prophets of blockchain had once imagined that they could create a way for individuals to control and sell their own personal data rather than letting Big Tech profit from doing it. But Facebook’s project looks like the reverse: Locking users more securely within its walled garden by offering them an in-house currency. Mr Zuckerberg and his lieutenants have long been resistant to giving up control of the data; naturally so, given how lucrative it is.

Updated: December 29, 2018 01:07 PM

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