72
time,”recallsa formerexecutivefromonemajortobacco
company.“Clearlyit wasn’tafinishedproduct.”Aftera day
ofmeetings,MonseesandBoweninvitedtheexecutivestoa
SanFranciscobartoseethePloominaction.Atthebar,there
werelotsofpeopleexhalingbigpuffsofPloomvapewhilethey
sippeddrinks.Outside,however,thetobaccoexecutivefound
peoplesmokingold-schoolcigarettesandtalkingaboutthe
vapers,whomtheysaideitherworkedforBowenandMonsees
orhadbeengivenfreesamplesthatnight.(AJuulspokesman
saidina statementthatthecompanyregularlysponsoredtast-
ingevents.)“Iwasembarrassedforthem,”theformerexecu-
tivesays.Ontheflighthome,“ourmarketingguyshruggedhis
shouldersandsaidlet’sjustdoit ourselves.”
Every major tobacco company—Philip Morris, R.J.
Reynolds,LorillardTobacco—wouldeventuallybeginwork
onitsowne-cigarettes.Suddenly,BowenandMonseesfound
themselvesina race.Theyhiredchemistswhoreverse-
engineeredthetobaccoplant,andPax’s20-personresearch
teamderiveda powerfulvapeformulafromthenicotinesalts
thatformontheplant’sleaves.Despitethiseurekamoment,
theprocessofdevelopingthenicotineliquidremainedpretty
shoestring.OneformerPaxemployeesaysthescientists
testedtheprototypevapeliquidsthemselvesandoccasion-
allywoundupwiththeirheadsintheofficetoilets.
Nonetheless,Pax’sno-guardrailsapproachgotresults.
Eventually,thecompanyfiledfora patentfora vapeliquid
thatBowentoldInc.magazinehad 10 timesthenicotinecon-
centrationofrivalproducts.
Onemorethinggavevapinganadvantage.Thecigarette
industry’srecord-setting$206billionsettlementinthe1990s
severelycurbeditsabilitytomarkettochildrenandrequires
thecompaniestohelpcoverstateMedicaidcostsforsmoking-
relatedillnesses.In2009,CongressgavetheFDAauthorityto
regulatetobaccoproductstopreventkidsandyoungadults
frombecomingaddicts,whichmostlymeantbanningfla-
voredcigarettesandfurtherrestrictingmarketing.Companies
wouldalsohavetogetapprovalto
introducea newtobacco prod-
uct.Butatthetime,thegovern-
mentdidn’tconsidere-cigarettes
a tobaccoproduct.
Health concerns about the
lackoflong-termvapingstudies
promptedtheFDAin 2014 toadd
e-cigarettestoitsantismokingpur-
viewstartinginAugust2016,giv-
ingvapemakersa coupleyears’noticetoputtheirproducts
onthemarketbeforethatdeadlinetobegrandfatheredin.
R.J.ReynoldscreatedtheVusein2013.Altriareleasedthe
MarkTenin2014.Andthenextyear,PaxLabsunveiledthe
firstproductfromitsnewsubsidiary,JuulLabs.OnJune4, 2015, about 400 people packed into Jack Studios,
a Manhattan event hall, to celebrate the commercial release
of the first Juul. The guests puffed on Juuls, sipped cocktails,and, under glowing
blue lights, danced
to electronic music
with a smattering of
hired models: young
women wearing
cropped T-shirts and
muscular men wear-
ing no shirts at all. In
Juul’s first year on the
market, the company
sponsored hundreds ofsim-
ilar such “activation”events.
Soon, Juul ads were plasteredon
billboards in Times Square.
Aggressive viral marketing accountedfora significantpart
ofJuul’searlysales.Sodidthehardware’siPhone-esquedesign.
EachJuullookedsleek,conspicuouslyinconspicuous,andthe
fashion-conscious could find them in limited-run colors such
as blush gold. They came with a USB charger. The snap-in pods
initially featured a much wider range of tasty flavors, includ-
ing coco mint and apple orchard. Most important, Juul’s 5%
nicotine concentration pods were among the strongest on the
market, the rough equivalent of a pack of cigarettes. And, espe-
cially when vaping was still a new phenomenon, a Juul could
beusedvirtuallyanywhere,anytime.Inlessthana year,the
companycrankedout11 vapecolorsanddozensofpodflavors.
Juul receivedmorethan$46million in venture fund-
ing from the likes of Fidelity Investments and Sivia Capital
PartnersLLCaftertheproducthadbeenonthemarketfor
a week.Bytheendof2016,Juulclaimedtobeoneofthe
fastest-growing vape brands in the U.S. and was prepping
movesintoEuropeandIsrael.TheSanFranciscoheadquarters
wasrapidlyfillingwithstaffersandthehugevapecloudsthey
wereexhaling,likea scenefromthe50thseason of Mad Men.
“We knew that it would be a successful product, but hon-
estly we didn’t expect it to be that successful,” says Chenyue
Xing, who led the development of the Juul pod liquids and
now runs a competing vape company, Myst Labs. She says
that Juul’s high nicotine concentration was meant to make the
product satisfying enough to get veteran smokers to switch,
but that the team also tried to make sure it wasn’t more addic-
tive than paper and tar.
Juul’searlysuccesscamewithhiccups.Inlate 2015 thecom-
panybeganreceivingreportsthatsomeofitspodswereleak-
ing.Thepodsalsofunction as mouthpieces, so people mostly
figured this out when the highly concentrated nicotine juice
seeped directly into their mouth, which some complained
caused a burning sensation on their lips. Then the company
startedreceivingcomplaintsabouttheflavorinsometobacco
andmentholpods.Juulscrambledtofigureoutthecause—
anoff-specingredientina batchofe-liquid, according to two
people familiar with the incident. The company eventually
halted production of the e-liquid, but much of the product
had already made it to store shelves. Juul didn’t issue a recallBloomberg Businessweek employees at JUUL’s
headquarters in san francisco