Dry Drunk: Much mocked Palchohol follows classic Valley disruptor playbook

By Dan Raile , written on April 22, 2014

From The News Desk

There has been a lot of -- uh -- buzz in the last few days about Palcohol, the world’s first powdered alcohol product. Even NPR got in a couple of audible eyebrow raises yesterday. The occasion for all the press is that Palcohol product labels have been "released" by the Alcohol and Tobacco Tax and Trade Bureau, which has approved the powder for sale beginning this coming fall.

This morning CBS reports that a unnamed source says that was issued "in error," so there may be some backtracking going on in the face of much mocking and very real concern about using Palcohol to skirt the law.

But the seeming backtracking from the Alcohol and Tobacco Tax and Trade Bureau is nothing compared to Palcohol's own backtracking.

This company may seem like a joke,but it's actually followed the well-worn Silicon Valley disruptor playbook. Like Lyft, Airbnb and Uber before it, the company has made a quick shift from regulation-be-damned disruptor to an attempt at playing by the rules with arm twisted behind its back. In Palcohol's case, the entire process took only a couple of days.

As Gawker reported, the release of the labels was followed quickly with a rapid shift of the language on Palcohol’s homepage. Previously, the company had played up its product’s uses for skirting the law by bringing its just-add-water formula into stadiums, bars, airports or other places where alcohol is prohibited or prohibitively expensive.

Company founder Mark Phillips has said he was caught off guard by the TTB’s release of the labels. It seems he was similarly unprepared for the subsequent media storm.

After the release of the labels, the company opted for more overtly responsible language on its splash page, focusing on the crucial use cases of hikers who would like to pack a light-weight cocktail for end-of-the-trail relaxation. It kept most of the language about the benefits of adding alcohol to your food, though it did excise the phrase “Vodka on eggs in the morning to start your day off right.”

They also beefed up their suggestion not to snort it. Formerly:

“Let's talk about the elephant in the room….snorting Palcohol. Yes, you can snort it. And you'll get drunk almost instantly because the alcohol will be absorbed so quickly in your nose. Good idea? No. It will mess you up. Use Palcohol responsibly.”
Which has now become:
“Can I snort it? We have seen comments about goofballs wanting to snort it. Don't do it! It is not a responsible or smart way to use the product. To take precautions against this action, we've added volume to the powder so it would take more than a half of a cup of powder to get the equivalent of one drink up your nose. You would feel a lot of pain for very little gain. Just use it the right way.”
Despite the more responsible-sounding language, it seems pretty clear that Palcohol’s most eager users, if they do indeed exist, would be cheap young drinkers who are wont to sneak alcohol into places they shouldn’t, be it stadiums, airplanes, their nostrils or elsewhere.

In trying to spin an irresponsible or illegal primary usage case as completely on the up and up, Palcohol should look to the troubles of far more reasonable businesses like Airbnb, Lyft and Uber, who were all fun-based marketing until confrontations with regulation forced them to wise up and adopt more mature guidelines and policies.

It’s hard to imagine what problem powdered alcohol really solves, if not the problem of getting around laws and rules that apply to its more familiar liquid cousin. Drinking in most bars and at home is not ridiculously expensive.

And the site continues to abound in winks and nods, viz. “ One package weighs about an ounce and is small enough to fit into any pocket,” and “Take your Pal wherever you go!"

If we are to believe Palchohol’s website, investors have been drinking the (hard) Kool-Aide nonetheless. Their investor page is a simple pithy paragraph aimed to make investors drool:

“Thanks for your interest in Palcohol. We have been getting so many responses by people wanting to invest. If you have $100 million or more to invest, we'll be happy to talk to you. :) Otherwise we are not taking on investors.”

We're doubtful. And yet, it's another clumsy nod to the Valley playbook: Easier to raise money when you look like you don't need it.

Jokes aside, if the product launches is in earnest, there are a whole range of red flags concerning its business model and attendant public safety concerns. The parental uproar will make concerns about MySpace seem mild. While the fear was that predators were exploiting MySpace's good friendly intentions, this is a product that has only one real purpose: Breaking the law.

So far, only Palcohol's tax status, labeling and manufacturing have been approved-- and even that appears in doubt. It's worth noting no regulatory entity has said the stuff is fit for human consumption.

If it does ever make it to market, let me be the first to propose a cocktail recipe: 1 packet Palcohol R (rumlike powder), 1 packet Pop Rocks, 1 12 oz. can of Crystal Pepsi. Technically sophisticated and potentially explosive. And like any of those supposed would-be investors offering millions to Palcohol, if you are dumb enough to drink it, you may get what you deserve.