In June 2015, Juul Labs opened its doors in San Francisco. Founded by James Monsees and Adam Bowen, two Stanford design graduates and former smokers, the startup set out to "improve the lives of one billion adult smokers by eliminating cigarettes." Their slick, minimalist e-cigarette device and nicotine salt pods would soon shake up the multi-billion dollar tobacco industry.
Juul’s growth in its first two years was meteoric. The discreet, flash drive-shaped vape delivered a powerful dose of nicotine without irritating the throat, winning over both former smokers and new nicotine users. Clever, Instagram-ready marketing positioned Juul as a cool, socially acceptable product to carry around. By late 2017, Juul controlled a staggering 72% of the e-cigarette market share in the U.S.
Behind the scenes, Juul Labs was pouring money into influencer marketing, billboards, and launch parties, all part of its “Vaporized” ad campaign. Their ads featured young, attractive models and came in bright, playful colors. While the company claimed it was only targeting adult smokers, the Federal Trade Commission later found their ads wildly appealing to youth.
Juul’s wild popularity attracted a deep-pocketed investor in December 2018: Altria, one of the world’s largest tobacco companies and maker of Marlboro cigarettes. Valuing the three-year old company at $38 billion, Altria purchased a 35% stake in Juul Labs for $12.8 billion. For the young startup, it was a massive vote of confidence.
But in the background, storm clouds were gathering. U.S. Surgeon General Jerome Adams declared youth vaping an “epidemic” in 2018, noting that Juul’s high nicotine content was exceptionally addictive for teens. By early 2019, the FDA was investigating Juul’s marketing practices. Several congressional hearings grilled Juul executives on their role in the youth vaping crisis.
Pressured by regulators, Juul suspended sales of its sweet and fruity flavored pods in 2019, costing the company billions in revenue. The hammer fell in January 2020 when the FDA banned all flavors except tobacco and menthol. Juul’s valuation fell to $19 billion almost overnight.
In September 2020, with FDA scrutiny mounting and lawsuits piling up, Altria took a $13 billion write down on its investment in Juul. Newly appointed CEO K.C. Crosthwaite announced plans to cut Juul’s spending by $1 billion and lay off around a third of its 3,000 employees. In a matter of months, Juul shrank from one of the country’s hottest startups into a company fighting for its survival.
Today, Juul is a shell of its former self. The company that once revolutionized vaping now controls less than 25% of the e-cigarette market. Its valuation has dropped over 80% from its peak. Under intense regulatory oversight, Juul has halted almost all U.S. advertising and discontinued its fruity, sweet flavors that attracted young users.
While Juul is not dead yet, its era of exponential, unfettered growth has ended. The company stands as a cautionary tale about Silicon Valley arrogance and the consequences of prioritizing growth above all else. For a period, Juul burned white hot, only to see its fortunes reverse almost entirely within a few years’ time. Whether the company can rehabilitate itself into a responsible, sustainable business remains to be seen.