49July 27, 2020“Iftheydidmakea modificationandtheyconcealedit,that’s
a prettyseriousinfraction,”hesaidinaninterview.InDecember2018,justa fewweeksaftertheFDAinspectors
cartedoffboxesofdocumentsandharddrivesfromthe
company’soffices,Juulannouncedthatit hadreceiveda
$12.8billioninvestmentfromAltriaGroupInc.,thelarg-
estsumraisedbya U.S.-basedventure-capital-backedcom-
panyoverthepasttwodecades,accordingtodatafrom
PitchBook.Takinganinvestmentfromthecompanythat
makestheworld’smostpopularcigarette,Marlboro,shat-
teredJuul’santitobaccohaloandfueledcriticswhowere
alreadysuspiciousofitsambitions.Still,thedealboosted
thecompany’s value to $38 billion.
That high point didn’t last long. Around the time of the
Altria deal, scores of consumers and state attorneys gen-
eral began filing lawsuits against the company, alleging
that Juul engaged in advertising practices designed to hookteens,suchasplacingbanner
ads on the Cartoon Network
website and providing free Juuls
toyoung influencers, including
one described by pop-culture
site Complex as “the Internet’s
Coolest Teenager.” Juul has
embarked on what it calls a
“reset.” It has pulled back in key
international markets, ceasing
operations in South Korea and
considering an exit from at least
five countries in Western and
CentralEurope.It’salsoended
itsU.S.advertisingcampaigns,
takenitspopulardessert-flavored
pods off the market, and slashed
its own internal valuation to
$13 billion. For the past year the
company has undergone waves
of layoffs amid a $1 billion cor-
porate restructuring, shedding
more than 1,000 jobs, about 40%
of its workforce.
The FDA probably won’t rule
on Juul’s Premarket Tobacco
Product Application until a year
or more after the September
deadline. While it waits, the
company is forging ahead with
otherinnovations.IntheU.K.
andCanadait’salreadyselling
ane-cigarette called C1, which
uses Bluetooth to pair with an
app that can help prevent minors
from using it by allowing it to be
locked and monitored. Recently,
Juul published a patent application for a heated tobacco prod-
uct, known internally as Caterpillar. In drawings the device
has roughly the shape of the current Juul, but instead of pods
filled with nicotine-laced liquid, it uses little cartridges stuffed
with flexible sheets of tobacco, which are heated and vapor-
ized using battery power. Juul engineers have also toyed with
developing a device that would give users more control over
their nicotine intake from each puff, according to three peo-
ple familiar with the matter. The company declined to com-
ment on the devices under development.
In May, Juul announced that it’s moving its headquarters
from San Francisco to Washington, D.C.—a signal that its cen-
ter of gravity is shifting squarely into the regulators’ orbit.
“It’s not where their customers are,” says Steven Blank,
an expert in startups and an adjunct professor at Stanford
University and senior fellow for entrepreneurship at
Columbia University. “It’s where their life and death is.” <BW>
�With Angelica LaVito“COMPANIES CAN’T SAY,
‘WE’RE GOING TO CHANGE
THAT,’ AND PUT IT BACK ON
THE MARKET. THEY HAVE TO
COME TO THE FDA FIRST”