- [Host] This little
e-cigarette made Juul Labs one of the most valuable startups
in Silicon Valley in 2018. At its peak, the company
was worth $38 billion, Juul's popularity swelled
as US cigarette sales fell. It even spawned a verb, Juuling. - And it upended the
entire tobacco industry, today, its future is in doubt. - [Host] Juul has narrowly
escaped bankruptcy, laid off nearly three
quarters of its workers, and one of its largest shareholders
divested its 35% stake. Now it's in limbo waiting
to see if it can continue selling its products. So what went wrong? (upbeat music) The first Juul vaporizer
was released in 2015, its stated mission eliminate
traditional cigarettes, some early reviews were positive. - [Narrator] The Juul from PAX might be the best designed
e-cigarette out there. - [Host] Following its
release e-cigarette use jumped among teens while use of other
tobacco products declined, thanks largely to the popularity of Juul. - It had this cool sort of sleek device that
looked like a USB charger. It was unlike anything
that had come before it. It was sort of like the
Apple of e-cigarettes. - [Host] Juul's early ad campaign in 2015 featured young
people puffing and partying and flavors like mint and
mango appeal to younger users. - I've never been exposed to
tobacco, why would I try it? But since I was exposed to fruit obviously and mango and mint that I
just thought it was okay. - [Host] Juul was the
e-cigarette brand of choice. - In 2018, Juul was dominating
the e-cigarette market, its sales were soaring and it was the number
one e-cigarette brand. - [Host] But in April of that year, the FDA started taking a closer
look at the products appeal to teens facing that probe
and mounting criticism, Juul said it would stop
selling flavored refill pods in an effort to stem underage use. - As a mom of teenagers,
it is certainly a step in the right direction. - It's the least they could do. - [Host] Then in December,
despite these concerns, the biggest tobacco
company in the US, Altria, the parent company of Philip Morris USA, took a 35% stake in the startup. Altria saw smokers switching to vaping and its own e-cigarettes
couldn't match Juul's popularity. It paid 12.8 billion for its stake, valuing Juul at $38 billion. But the deal only increased
regulatory scrutiny on the company. - We are in the midst of
a youth vaping epidemic. - Regulators started looking
at Altria's investment and the FDA, the Federal Trade Commission and Attorneys General
across the country were all still investigating
Juul's marketing practices. - And so we have a responsibility as the Chief Law enforcement officer in the state of New York
to protect young people, and that's what we are
doing with this litigation. - As the US cracked down
on the e-cigarette industry and Juul voluntarily stopped
most of its marketing, Juul sales and market share fell. In 2021, Juul reported a
net loss of 259 million and an 11% decline in sales, according to a disclosure the
company made to employees. Juul said it was working to
regain the public's trust. Then in June, 2022, the FDA
dealt Juul a major blow. - Juul electronic cigarettes
can no longer be sold in the US. - [Host] The agency ordered
Juul to pull its products off of US shelves, but not for
alleged marketing to teens. According to FDA documents viewed by the Wall Street Journal, Juul hadn't sufficiently
answered the agency's questions about whether Juul's
products might expose users to chemicals that could
pose a health risk. - Juul immediately appealed
and the FDA issued a stay on the order, which means that Juul's products were
allowed to remain on the market, pending an appeal. - [Host] In July, the FDA
said it would allow Juul to continue selling products in the US, its most important market. By this point, underage vaping had fallen
and Juul was no longer the number one e-cigarette
brand among teens. It wasn't even in the top 10, Juul was soon facing bankruptcy. - It was unclear whether
Juul's products were gonna be able to remain on the market
or would have to be pulled off. And because its future
was unclear, Juul suddenly was unable to take out traditional
loans or get investments that would help cover the
cost of its legal liabilities. And some of these lawsuits were scheduled
to come up soon for trial. - [Host] In November, Juul said it had secured
financing to avoid bankruptcy. Its saviors came in the
form of Hyatt Hotel's heir, Nick Pritzker and California
investor Riaz Valani. - These two men basically
gave Juul a lifeline. They gave Juul a cash infusion
to help Juul stay afloat and cover some of these legal settlements. - [Host] Juul announced
plans to lay off a third of its global staff leaving
the company with a fraction of the 3,000 workers it had
in 2019 and a month later, Pritzker and Valani helped
Juul make another big step. The company agreed to pay $1.7 billion in a broad legal settlement covering more than 5,000 lawsuits
over marketing to teens. Juul denied wrongdoing. - It really helped clarify Juul's future with those lawsuits hanging over it, its future had been somewhat in doubt and so it was able to resolve the bulk of the legal liability that it faced. - [Host] Fast forward to March, 2023 when Altria divested its minority stake in Juul at a loss of
at least $12.5 billion. - The fact that Altria was a
big shareholder in Juul meant that Juul did not have
complete freedom to enter into new investment
agreements with other parties. Juul is has complete freedom to either, come up with distribution agreements, new investment agreements or sell the company
outright to someone else. - [Host] On April 12th, Juul agreed to pay $462 million
to settle lawsuits filed by six states and the
District of Columbia. Five days later, it settled
its last pending lawsuit. - The declining health and wellbeing of millions of teens and
young adults will not be a footnote in Juul's business plans. - [Host] Today, Juul's
future is uncertain. - The big question remains, what is the FDA going to say and decide about whether it's products
can remain on the market, if its products do have
to come off the market it would need a lifeline
of some sort to keep going. (soft music)
