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Business Observer Friday, Dec. 26, 2014 3 years ago

Revolutionary research

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This year was another year of growth for White Cloud Electronic Cigarettes. With new products and a possible licensing deal, 2015 looks even better.
by: Traci McMillan Correspondent

Tarpon Springs-based White Cloud Electronic Cigarettes still sees itself fighting a David vs. Goliath-type battle against large tobacco companies. The only difference is the 80-person company sees its smaller size as an advantage, allowing it to innovate more nimbly, according to White Cloud Director of Corporate and Regulatory Affairs Robert Burton.

The company's revenues are up 30% from last year, with expected revenue of $18 million for 2014. The bulk of White Cloud's sales come from its Internet business, and November was the company's biggest month ever for sales. Over the four days from Black Friday to Cyber Monday, the company made $400,000 in sales.

In October, the company became part of the University of South Florida incubator program. It was a strategic move so the company could move all of its research and development in-house, instead of contracting for the work. The company invested $2.8 million in research and development over the last two years, according to an interview with Burton in July.

Bringing the research team in-house allows the company to learn more quickly, Burton says. “We benefit in real time,” he says.

It also allows the company to use the university's laboratories and equipment to test its product and benefit from student interns.

Eight weeks ago, the company hired a mechanical engineer, an electrical engineer and a physical chemist to lead its research team. Burton believes the best part about this team is its lack of experience in the tobacco industry. “They are coming at it from blue-sky thinking,” he says. “Revolutionary, completely different ideas, beyond e-cigarettes.” For example, the team is trying to figure out if the vaporizing technology can be applied to certain medical steroids or used for asthma control.

Networking opportunities through the incubator have already proven valuable in providing potential partners for licensing opportunities of the technology, according to Burton.

However, White Cloud intends to stay focused on its clientele and not get too distracted by other products, he adds. Right now the company is working on a product launch that has potential for seven patent filings, all of which will need to be filed before its release. “It doesn't look like a traditional e-cigarette,” Burton says. “It's almost like a key fob for a car.” The new cigarette has gone through extensive ergonomic testing and includes a software program that can communicate and measure details on inhalation. The company hopes to launch the product in March or April.

The company is also about to release its first joint research paper with the university. It focuses on the barriers smokers face when switching to potentially safer alternatives. It hopes to combine this research along with several new products to help its technology achieve medical approval as an alternative.

Many of the new product launches next year are focused on continuing to bring manufacturing back to the U.S., Burton says. Only the company's disposable products are still made in China; all rechargeable products moved to be manufactured in the U.S. in June.

Though it seems to be bringing internal resources close to home, White Cloud is pushing to expand its reach. The company recently hired a United Kingdom-based consulting firm to look at international expansion to Europe in 2015. Before making a decision to expand, White Cloud wants to fully understand the required investment as well as manufacturing locations most suitable for international distribution.

Until that decision is made, Burton says the company plans to march on, “continue to build, and set sights high on performance.” Do that and make products people love, he says, and the customers will follow.

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