The rise and fall of e-cig startup Juul in the US, from Silicon Valley darling to a ban by the FDA

After raising close to $5 million, Ploom launched a device called the Pax, a vaporizer for loose-leaf tobacco that could also be used for cannabis.

To debut the device, Ploom hosted a launch party in San Francisco's trendy Mission District.

At this time, Ploom investors included Japan Tobacco, the maker of Winston and Salem cigarettes, along with the software company Originate and the angel investment group Sand Hill.

As part of the deal, JTI said in a statement that Ploom would buy back JTI's minority stake in the startup.

Goldman left Juul to "pursue new entrepreneurial activities." The company hired Burns from the yogurt company Chobani.

The fresh funds came from firms including Tao Capital, Fidelity, and Evolution, according to PitchBook.

Nicholas Pritzker, Tao's cofounder, joined Juul's board, CNBC reported. Pritzker is a member of the wealthy Pritzker family, which owned the chewing-tobacco giant Conwood before selling it to the tobacco giant Reynolds. The Pritzkers also founded and expanded the Hyatt Hotels chain.

On an undisclosed date, Tao Capital sold its stake in Juul to the hedge fund Tiger Global and Manhattan Venture Partners, PitchBook said.

The venture fund M13, another early Juul investor, sold its shares in the spring of 2018.

This slide has been updated with new information about M13's investment.

National news outlets including National Public Radio, USA Today, and Business Insider reported that the Juul had a loyal and growing following among young people.

All of the reports said teens were taking to social media to brag about being able to sneak puffs in class or in the bathroom thanks to Juul's discreet design.

In what the FDA said was the largest coordinated enforcement effort in agency history, the FDA issued more than 1,300 warning letters and fines to retailers who it said were illegally selling Juuls and other e-cigarettes to minors. The FDA found the retailers by conducting what it called "a nationwide, undercover blitz."

"Let me be clear to retailers," Gottlieb, then the FDA's commissioner, said in the statement, "this blitz, and resulting actions, should serve as notice that we will not tolerate the sale of any tobacco products to youth."

In a research note, Citigroup analysts warned investors that the Juul was beginning to disrupt tobacco stocks.

The note suggested that the rise of the Juul could bode poorly for tobacco companies — including Altria, British American Tobacco, and Imperial Brands — as sales were falling faster than expected.

"The US tobacco market is beginning to be disrupted by Juul," the analysts wrote, adding, "We don't expect underlying cigarette trends to improve much in the rest of 2018."

Bloomberg, the former New York City mayor who is CEO of Bloomberg Philanthropies, called the move "an important step forward for public health" and said it should embolden other cities and states to follow suit.

The seven investors in the round included a maker of marijuana therapeutics, called Applied Biosciences, along with the the venture firm Bracket Capital, the hedge funds Darsana Capital and E Squared Capital, the investment giant Fidelity, the angel investor Sand Hill, and Tiger, according to PitchBook.

In a statement, Israel's Health Ministry said it's banning the sale and import of Juul devices because they contained more than 20 milligrams per milliliter of nicotine and presented "a grave risk to public health," Reuters reported.

In a statement, then-Commissioner Gottlieb said the FDA was working on creating a system to "properly regulate" e-cigarettes like the Juul.

He said the aim was twofold: make e-cigarettes available as a less-dangerous alternative for adult smokers, but also keep them out of the hands of young people.

The Federal Trade Commission began looking into Juul's use of influencers and other marketing tools to appeal to young people, The Wall Street Journal reported in August 2019.

According to The Journal, the FTC's investigation began before it started reviewing a deal between Juul and the Marlboro maker, Altria, in December 2018.

In what the Silicon Valley Business Journal called "the biggest investment ever in a US venture-backed company," Marlboro and the Parliament cigarette maker, Altria, paid $12.8 billion for a third of Juul. That gave Altria more combustible-cigarette market share than the next seven brands combined, according to the Centers for Disease Control and Prevention.

Juul, which had an annual revenue of about $2 billion at the time, also received a $2 billion bonus from Altria to distribute among its 1,500 employees, CNBC reported. That would have been about $1.3 million a person.

On the heels of the deal, Gottlieb called out both companies, saying they were backing away from previous pledges to fight teen vaping.

Gottlieb, a well-liked figure who spent just two years steering the country's top food and drug regulator, said he was leaving in a month to spend more time with his family in Connecticut.

The commissioner had made a name for himself as both a vocal critic of e-cigarette startups like Juul and a speedy approver of new pharmaceutical drugs.

In a resignation letter, Gottlieb wrote that one of his accomplishments at the FDA was taking actions against "bad actors that put Americans at risk."

Eleven Democratic senators, including the party whip Dick Durbin and the presidential candidate Elizabeth Warren, wrote a letter to Juul demanding that the company answer questions about its advertising practices and its deal with Altria, CNBC reported.

House Democrats launch their own investigation into Juul, Fortune reports.

In July, Wisconsin's chief medical officer wrote a memo to healthcare providers warning them about a cluster of sick adolescents who had used e-cigarettes. Chest X-rays of the teens revealed similarities in lung damage, he says.

The following month, the CDC released an emergency notice about 30 cases of vaping-related lung illness in Wisconsin.

In mid-August, officials reported the first death tied to vaping-related lung illness: an adult in Illinois.

By September, the CDC and the FDA said there had been 530 confirmed and probable cases of the mystery illness since June. Seven people died. The investigation is ongoing, and officials have yet to find a substance or brand that's common among all the cases.

In an interview with CBS, Burns said anyone who wasn't already using nicotine, the addictive drug in Juul, should not start.

"Don't vape. Don't use Juul," Burns told CBS.

In a warning letter, the FDA said Juul wrongly painted its e-cigarettes, known in the industry as ENDS, as safer than cigarettes and marketed them intentionally to young people.

"Referring to your ENDS products as '99% safer' than cigarettes, 'much safer' than cigarettes, 'totally safe,' and 'a safer alternative than smoking cigarettes' is particularly concerning because these statements were made directly to children in school," the FDA letter said.

"Our concern is amplified by the epidemic rate of increase in youth use of ENDS products, including Juul's products," the letter added.

A selection of flavored Juul products that went up for sale on two online Chinese marketplaces, JD.com and Tmall, were removed within a week, The Wall Street Journal reported. Both retailers declined to say why.

Juul had long been planning to launch in China, where more than 300 million people smoke, according to the World Health Organization. Its nicotine refills, or Juul Pods, are manufactured in Shenzhen, China.

Juul began preparing to restructure its staff as it faced slower sales resulting from increasing reports about the mysterious vaping-related lung illness, the proposed US ban on flavored e-cigarettes, and a variety of other investigations, The Wall Street Journal reported.

The company employs roughly 3,900 people, according to The Journal, up from the 200 it had in 2017.

For now, Juul plans to hire less aggressively and start outlining plans to cut some jobs, according to The Journal, but will still continue to expand.

Crosthwaite was most recently chief growth officer at Altria, and has worked in tobacco for more than 20 years.

In announcing the change, Juul also said it would suspend US advertising and some lobbying efforts. Crosthwaite said he would "strive to work with regulators, policymakers and other stakeholders, and earn the trust of the societies in which we operate."

Juul announces it will stop selling mint-flavored refillable cartridges, or Juul pods.

In a press release, the company said it would immediately stop accepting orders for the mint-flavored pods from retail partners and stop selling mint-flavored pods online.

According to the release, Juul's decision was based partially on new research released this week which suggested that mint and mango were the most popular flavors among high school students who Juul.

"These results are unacceptable," Juul Labs CEO KC Crosthwaite said in the release, adding, "that is why we must reset the vapor category in the US and earn the trust of society by working cooperatively with regulators, Attorneys General, public health officials, and other stakeholders to combat underage use."

The study found that eight in 10 of those students used flavored e-cigarettes.

"These data highlight the fact that flavored e-cigarettes are still extremely popular with kids," said Mitch Seller, the director of the FDA's Center for Tobacco Products. "And we are equally disturbed by the quarter of high school students who use e-cigarettes and say they vape every single day."

An administrative judge ruled that Altria didn't break antitrust laws by taking a 35% stake in Juul. The Federal Trade Commission had sued in 2019, and can still appeal the ruling.