45Bloomberg Businessweek July 27, 2020The e-cigarette Juul Labs Inc. introduced in the spring of
2015 was known internally by an eccentric code name:
Splinter, after a rodent martial-arts master in the comic
Teenage Mutant Ninja Turtles. Splinter, about the size of
a thumb drive, got off to an undeniably splashy start. It
appeared on billboards in Times Square. Influencers flashed
it on Instagram. Wired magazine ran a story on Juul head-
lined “This Might Just Be the First Great E-Cig.”
Three years later, despite having entered the market
almost last, Juul became its No. 1 seller. This unlikely coup
was in large part about the cool factor and how it drew
in younger people, ultimately engulfing middle schools
and high schools across America. But Juul didn’t just out-
maneuver its competitors. It did the same with regulators.
For all the market share, fame, and opprobrium Juul cap-
tured as it ascended, Splinter was a flawed product. The
little plastic pods that held the device’s nicotine solution
leaked. Customers complained of the liquid burning lips and
blistering tongues. The stuff also seeped into the device’s
circuitry at times, causing it to fail. That was a potential
catastrophe for a venture-capital-backed startup facing aphalanx of competitors, almost all from the deep-pocketed
tobacco industry.
So Juul quietly did something that manufacturers in other
industries do as a matter of course: It fixed the product.
According to four former employees who spoke on condi-
tion of anonymity, the company’s engineers changed the pod
design, added new, heartier internal components to resist the
shutdown problem, and rewrote the device’s firmware. The
updated model, delivered in late 2017, was given the inter-
nal code name Jagwar, after another Ninja Turtles character.
No fanfare accompanied the launch of Jagwar, which
looked identical to Splinter. Users who bought a Juul in
early 2018 wouldn’t have had any clue it was an upgraded
device. They probably never noticed any change at all.
Instead, the new Juul likely made customers less prone
to turn to a competing product, or throw their Juul in the
trash, or—this would be the worst outcome for a company
that had vowed to destroy the tobacco industry—go back to
regular cigarettes.
Federal regulators were similarly unaware of the full
extent of the product changes, even as the Food and DrugJUUL HAD A FAULTY PRODUCT IT WAS
PROHIBITED FROM MAKING BETTER. IT DID
IT ANYWAY. WILL THE WORLD’S BIGGEST
E-CIGARETTE MAKER PAY A PRICE?
BY LAUREN ETTER
PHOTOGRAPHS BY IAN LORING SHIVER