Young, Liberal, Silicon Savvy – Why did they join Juul?

Posted on | February 7, 2020 | 4 Comments

Mike Magee

In late 2018, young tech-savvy future entrepreneurs streamed into the offices of e-cigarette start-up Juul. Four thousand strong, they were attracted by the $38 billion valuation and the promise of stock sharing in the high-flying techie new business with moral cover – a mission to make cigarette smoking obsolete. At their Christmas party in the San Francisco Giants baseball stadium, all agreed, morale couldn’t be higher.

Nine months later, their vaulted CEO, Kevin Burns, formerly of Chobani, stepped down. Valuation had sunk by over 2/3s to $12 billion, leaving those sign-up stock bonuses highly devalued, and 16% of the staff were fired as the new CEO pledged to cut $1 billion. What happened?

Reality bit! Juul was a 2017 spin off from cannabis vape manufacturer Pax Labs. CEO Burns engineered aggressive expansion into Europe and Asia, sold a 1/3 stake to tobacco giant Altria, and embraced teen friendly marketing tactics and flavored pods. The latter delivered in more ways than one.

Yes, 1 in 4 high schoolers are now hooked on nicotine (1 pod has as much nicotine as a pack of cigarettes, and a 4 pod pack costs $15.99). But in return for massive profits, Juul is now public enemy #1 in the eyes of concerned parents, school boards and progressive legislators.

Juul has now pulled its ads and their most popular flavors off the market. But that’s not the worst of it. Over 50% of employees are tied up in an all-hands-on-deck effort to deliver to the FDA a “pre-marketing tobacco application” (PMTA) due May 12th that will expose ingredients, components, manufacturing processes, and health and environmental impacts of their product. As one anonymous employee posted, “We’re going to get the PMTA or die trying! Lol…do we have a plan b? No.”

The executive team has a Plan B – Hire former FDA Officials. That includes former lead toxicologist at the agency’s Center for Tobacco Products, Roxana Weil, and FDA tobacco inspector, Gabriel Muniz, who signed up recently as director of regulatory compliance.

It isn’t as if we weren’t warned. Back in 2018, Jonathan Winickoff, former chair of the American Academy of Pediatrics Tobacco Consortium, said: “Juul is already a massive public health disaster.” But others saw addicted adults, not kids as the real problem. David Abrams, former director of the Office of Behavioral and Social Sciences Research at the NIH, commented blithely “It changes your heart rate a little bit. The AAP is doing its job. And we should be protective of kids. But there are adult lives at stake, too.”

A recent executive order has put a temporary federal ban on flavored vaping products. But health advocates note that the pronouncement is filled with intentional loopholes. The West Coast workforce is predominantly Silicon savvy, young, liberal, and have one foot out the door. As one employee put it, “To be sort of beholden to Trump and Republicans for the existence of our industry is disheartening.”

Comments

4 Responses to “Young, Liberal, Silicon Savvy – Why did they join Juul?”

Chuck fahey
February 12th, 2020 @ 8:18 am

Thanks again.
Mike Magee
February 12th, 2020 @ 9:43 am

Thanks, Chuck!
Warren Hebert
February 24th, 2020 @ 7:00 am

Mike, thanks for bringing your moral compass to health and healthcare issues. Unethical, unjust, and nefarious actions impacting the well-being of the world’s population are ubiquitous today. I pray you’ll be doing this vital work for years to come. ??
Mike Magee
February 24th, 2020 @ 8:12 am

Thanks, Warren, for your continued encouragement and support!