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Entrepreneur expects to see growth through the haze
Vapejoose produces the liquids used in e-cigarettes, and business is booming.
Stephen Knight has owned several businesses throughout his life, but he realized none of them were scalable, not his green taxi service or his photography business.
Then his girlfriend, now his fiancée, tried to quit smoking and bought an electronic cigarette. The e-cig starter kit broke, so Knight went to the e-cig shop to pick up a new one for her and realized the product might be something he could improve upon.
He started to experiment with the various liquid solutions e-cigs utilize in his spare bedroom in 2014, starting his new company, Vapejoose, with about $3,000.
“I started trying some different things and, a month later, I ended up quitting my job,” Knight said. “After about eight months of struggling, it started to take off and making about $1,000 a month.”
Grand Rapids is home to several e-cigarette and e-liquid companies, including Joost Vapor, Grand Rapids E-Liquid, Mister E-Liquid and Electronic Cigarettes International Group.
For the most part, the industry is made up of small businesses across the globe, with no one company controlling more than 10 percent of the market, Knight said.
Knight believes the concentration of e-cig companies in Grand Rapids is largely because the city has a maker mentality that leads entrepreneurs to want to establish a brand. The lack of a major player in the industry also allows a small start-up to grab more of the market, he said.
“People are willing to try anything if it’s a good-looking product,” he said.
Within a few months, Knight’s product began to prove itself and he had five employees working in two of his home’s bedrooms.
In October 2014, he rented a 750-square-foot space and saw Vapejoose’s revenue climb to $10,000 that month — and then in November, Black Friday hit.
“Our business grew tenfold in that month, and we went to $100,000 a month in sales,” Knight said. “We had 16 people working overtime on top of each other in that small space.”
Knight said he paid off the year lease and moved into a 6,000-square-foot building and began to focus on branding and product.
Learning to run a business with such fast-paced growth was tough, Knight said. He had to figure it out quickly as Vapejoose again outgrew its location and, in November 2015, moved into an 8,000-square-foot space that includes a retail outlet, at 1021 28th St. SW near Rogers Plaza in Wyoming.
For the most part, however, the company is a direct-to-consumer business, selling its products at vapejoose.com and shipping them to doorsteps across the globe. He said the ingredients used in the United States are purer than those from sources in other parts of the world.
“We have purer sources for our ingredients, including nicotine,” Knight said. “Chinese nicotine is harsh and they don’t have the same purity standards for their ingredients.”
Now the company is set to release a wholesale line for other retailers, and he expects it to nearly double the business in the near future.
Knight said if someone suggested when he moved his business out of his home and into the 750-square-foot space that he’d sell $1.5 million in Vapejoose products in 2015, he would not have believed it. This year, he’s projecting at least $3 million in revenue and 30 employees — possibly $4 million if the wholesale line launches well.
“Next year, if this new line catches on and we launch another line or two, we could hit $10 million,” Knight said. “It’s hard to tell, but the future looks great.”