SAN FRANCISCO — Christmas was just around the corner. But on the morning of Dec. 12, Juul employees were feeling less than festive for the final staff meeting of the year.
Weeks after hundreds of their colleagues had been laid off, the remaining staff gathered to hear from their new CEO inside Juul’s headquarters on the San Francisco waterfront. Just up the street was the expansive San Francisco Giants baseball stadium where the company held its glitzy holiday party in 2018. In 2019, there was no party.
When the floor opened for questions, one remote employee seemed to sum up what many were feeling at that moment: “Morale is at an all-time low,” they said, according to an audio recording from the meeting. The employee then asked what, if anything, the company could do to cheer up those who remained.
2020 is a make-or-break year for Juul, which, like all e-cigarette companies, will need to submit an exhaustive application to the FDA by May 12 that makes the case for their products to stay on the market. At this critical juncture, anxious staffers are questioning the company’s leadership and future, and thinking about quitting, according to internal audio, memos, and dozens of anonymous employee chats obtained by BuzzFeed News, as well as interviews with current staff.
Last year started out full of optimism. Juul was the biggest e-cigarette maker in the country and had just been valued at $38 billion, thanks to a massive investment from the tobacco giant Altria. Hundreds of new staffers were rushing in, eager to cash in on a booming startup with an altruistic mission: making cigarette smoking, the leading preventable cause of death in the United States, obsolete.
Instead, by the end of 2019, Juul was public health enemy number one. Between the FDA, Congress, anti-tobacco groups, parents, schools, cities, and states, there was no shortage of parties who were angry about the new youth vaping crisis and saw Juul as the main offender.
Buried by litigation, investigations, and bad press, Juul retreated. The CEO stepped down in September. The company pulled ads and stopped selling its most popular flavors in the US, and, in November, did the once-unimaginable: It laid off roughly 650 people, 16% of its 4,000-person staff. Meanwhile, high-profile lawsuits from former employees made headlines, one alleging that the company knowingly sold contaminated nicotine pods and another claiming that a woman staffer was fired in retaliation for reporting sexual harassment. (The company has denied both claims.)
The factors that tended to draw people to Juul in the first place — a genuine desire to reduce adult smoking, lavish compensation packages — have kept many there, despite the scrutiny that comes with working for one of the world’s most controversial brands. But now, the internal communications suggest, a significant number of employees are alarmed by a perceived lack of direction from management and a sinking valuation — $12 billion as of last week. On Wednesday, the CEOs of Juul and four other e-cigarette companies testified about youth vaping at a congressional hearing, where a lawmaker told them that their products “make people sick” and “kill people.”
Many of the other employees are unsure of how to spend their days.
Juul declined to respond to a detailed list of facts and allegations for this story. “We are extremely proud of our team of experienced and committed professionals, and we work hard to foster a supportive and open workplace,” spokesperson Austin Finan said in a statement. “We will continue to engage the entire JUUL team in a transparent manner as we work to reset the category and position the company for the long term.”
Juul now has to prove to the FDA its device is an effective replacement for cigarettes. “The number-one focus for the entire company is getting through the PMTA submission,” one employee told BuzzFeed News, referring to the “pre-market tobacco product application” that will detail the ingredients, components, manufacturing processes, and health and environmental studies behind their product. Then it’s up to the FDA to review.
The employee estimated that at least half the workforce is contributing in some way to the application. As so much hangs in the balance, many of the other employees are unsure of how to spend their days — or what will happen if the FDA turns them down.
“We going to get the PMTA or die trying! Lol.. do we have a plan b? No,” a staffer posted in December on Blind, an anonymous, employee-only messaging app where many Juul workers have turned to vent their anxieties about the company.
In January, one employee on the app asked if anyone was planning to quit, “based on the trajectory of how the company is doing (according to the news lol).”
“I cant help but assume the worst and expect JUUL to be irrelevant within the next year,” they admitted. “Am I overreacting? Should we look for new jobs at other companies?”
Judging by several of the responses, they were not alone.
“I am!” one wrote. “Looking for new opportunities out there with companies that actually care about their employees and are truly mission focused. The work environment here is truly toxic.”
Some employees pushed back, with one saying, “I’ve never heard a single fellow employee voice this concern.” To which another retorted: “You work for PR or HR?”
Until last year, Juul’s trajectory had been straight upward. In 2017, it spun out from the cannabis vape manufacturer Pax Labs and, under CEO Kevin Burns, expanded into new markets in the United Kingdom, Canada, Russia, South Korea, and elsewhere. By December 2018, when Altria snapped up a one-third stake for $12.8 billion, Juul had captured three-fourths of the market.
Juul’s stated goal is to help smokers quit with devices that are a healthier alternative to conventional cigarettes. But critics, including congressional investigators, say its breakneck growth was at least partly built on a new generation of people addicted to nicotine, courted by Juul’s teen-friendly marketing tactics and sweet flavors.
All of it promoted nicotine pods that at their highest doses contain as much of the addictive stimulant as a pack of cigarettes. Today, 1 in 4 high schoolers use e-cigarettes. For its part, Juul says that it never advertised to adolescents and is committed to combating underage use.
Juul’s public image also took a hit during last year’s vaping-linked lung injuries, which prompted health warnings against vaping of any kind. In the end, though, health officials linked the cases back to vaping devices with marijuana extracts and vitamin E acetate, not nicotine devices like Juul’s.
As the scrutiny intensifies, working for Juul has, in at least some circles, become less socially acceptable. Several employees have talked about choosing not to wear sweatshirts and other gear with the brand’s logo in public after being given a hard time by passersby, employees told BuzzFeed News.
The company’s new CEO, former Altria executive K.C. Crosthwaite, is internally viewed as making more thoughtful, cautious decisions. But some changes have been painful, such as cutting nearly $1 billion in costs, according to employees who declined to be named because they are not authorized to speak to the press.
The calculus of whether to stay or go is, for many employees, driven by a single number: Juul’s valuation, which is in a precipitous freefall. (In a staff memo last week, Crosthwaite said that Altria’s new $12 billion valuation represents a “snapshot” in time and that internally, Juul values itself at $20 billion.) Altria’s investment came with a $2 billion bonus to be divided among employees in various amounts of cash and stock. They also began receiving special retention bonuses in installments, which will run out later this year.
Just about everyone is hoping for more stock to make up for the drop. “If I am not getting stock,” a staffer declared on Blind on Jan. 16, “it will be very difficult to stay with JUUL.”
“If I am not getting stock it will be very difficult to stay with JUUL.”
The drop has caused widespread alarm among employees who joined expecting to cash in on the hottest thing since Facebook or Google. “People came here thinking, I could well see the stock double or quadruple while I’m here. Instead it’s fallen by half,” one employee told BuzzFeed News. “It was so outside the realm of expectation for a lot of people that it’s very demoralizing.”
There is anxiety too about how the presidential election could affect Juul’s future. President Trump’s temporary federal ban on most flavored vaping products, which starts this week, contains what critics argue are loopholes favorable to Juul and the rest of the industry.
“Almost universally, people aren’t thrilled to be on the side of Trump,” the employee said of their colleagues. “Obviously this is a very liberal city. To be sort of beholden to Trump and Republicans for the existence of our industry is disheartening.”
On Blind, an employee asked in mid-January if anyone else felt unmotivated and directionless. “My manager only speaks if I reach out to her,” they complained. “its almost as if her team does not exsist. she locks her self in a booth or is no where to be found.”
“Hate to break this to you,” someone replied, “but looks like they might be interviewing.. you should follow suit as well.”
Others chimed in. “I Agree, everyone should be interviewing.” “Definitely — most people are feeling that way.” “Lots of frustration and lack of communication have made it so difficult to stay focused, I feel as though we have drifted from the mission.”
Not everyone, though, is quite so despairing.
“A lot of departments are rudderless but it doesn’t mean it can’t be fun!” another pointed out, optimistically. “this is nothing to worry about so just relax. Collect your pay check and don’t rustle leaves, this is the overall consensus.”
At the December all-hands, remarks made by the head of human resources didn’t do much to quell the staff’s worries.
"A lot of departments are rudderless but it doesn’t mean it can’t be fun"
When the topic of morale was raised, the questioner followed up to ask, “Will we be receiving holiday bonuses or anything to cheer us up?” The audience burst into laughter. Monika Fahlbusch, Juul’s chief people officer, told the room, “We’re aware that this is a difficult time for everyone and we’ve certainly heard that loud and clear,” according to the audio recording.
She also pushed back against the idea that the company was now a bad place to work. Juul was ranked 31st on Glassdoor’s “great places to work” list, she said, “so there is some good news in terms of pride,” adding that they beat out her former employer, Salesforce. She added that Juul was rolling out initiatives such as “flexible Fridays” and would “continue to do VP promotions, which we just did last week, and other promotions.”
To a room of worried people seeking reassurance, the answers came across as insensitive, according to a flurry of Blind posts that followed.
“When an employee notes that morale is low, the head of HR should not and cannot say ‘ya but glassdoor has us 31 so youre wrong,’” one employee said.
“the idea that Juul is a better place to work than Salesforce is deranged,” another added.
“Not to worry, at least VPs are getting their well-deserved pay raises right now for their hard work (our benevolent overlord Monika included),” yet another quipped. “Not that normal employees matter or anything.”
Another source of tension that’s played out in public is a lawsuit recently brought by Carrie Chuang, a former global supply chain manager.
In her Dec. 2 complaint, she said that three male employees made suggestive comments and unwanted sexual advances toward her, and that two of them had inappropriately touched her. Chuang said managers failed to investigate her concerns after she reported the incidents, and retaliated by spreading false rumors about her — such as that she had slept with a vendor, taken bribes, and stolen company files — before firing her in December 2018. (Chuang’s lawyer did not respond to a request for comment.)
Finan, the spokesperson, denied her allegations, saying that an internal investigation found that they had “no merit”: “We are committed to providing a safe and comfortable workplace free of all forms of harassment,” he said in a statement.
Inside her old workplace, the allegations stoked mistrust of management. “If the claims are true with repeated written and verbal complaints to HR and management with no follow up JUUL must call for everyone’s heads in the suit,” one employee wrote on Blind, shortly after the news broke.
Others said that Chuang’s claims resonated with their own experiences at the company. “I’ve been sexually harassed and know multiple women who have as well,” one employee wrote. “Some who reported it to HR and absolutely nothing was done about it. … I can’t believe people are still in denial about this or doubtful of the accusations.”
“We have created a culture of silence here, and it is BAD,” added another.
A few employees said they weren’t aware of any such behavior, or they’d seen it handled appropriately. “I’m lucky to be on a team with a male leader who doesn’t tolerate that kind of bs and I really appreciate that as a female,” one wrote.
Ten days after the complaint was filed, a male employee raised the subject at the all-hands.
“Why have you not yet addressed the recent sexual harassment allegations?” he asked, according to an audio recording. “Please address them. And what are we going to do generally to make this a more inclusive, safe work environment, where situations like these will be handled much better in the future?”
“I’m not sure which sexual harassment allegations you’re referring to,” Fahlbusch replied in part. “But any time we have any legal matters, I would just remind anybody here that we have a hotline, which is a confidential way to report anything that you’re concerned about,” among other channels. She declined to comment on the allegations themselves.
On Blind, multiple people voiced disappointment with Fahlbusch’s handling of that and other questions. “They will not be simple answers, but at least do your job and prepare,” one wrote. “Its obvious that she didn’t care enough to think of a proper response to very hot topic questions.”
In a half-hearted defense, someone offered, “I dont think she has bad intentions.” But another said that the all-hands, rather than put them at ease about Juul’s future, “actually created a lot of uncertainty because of the obvious misdirection.”
Asked for comment for this story, Fahlbusch said through a spokesperson, “I acknowledge that my response to the question posed in the All Hands meeting was unsatisfactory and will be more thoughtful and empathetic in how I engage employee questions in these important forums.”
The day after the all-hands, Fahlbusch tried to do damage control. In a memo to the whole staff, she acknowledged “the toll this year has taken on all of us” and said that Juul would close for the holidays so everyone could “come back in the new year recharged and refreshed.”
She also shared a hotline and a website for anonymously reporting concerns, and stressed Juul’s commitment to a harassment-free workplace. As for the lawsuit, she wrote: “The employee in question raised these allegations several months after her separation from the company, and after investigating her claims, we believe they have no merit.”
Her intention probably wasn’t to raise even more ire. But she did.
Her intention probably wasn’t to raise even more ire. But she did.
“I cant beleive she insinuated that the amount of time it took this woman to file these claims has any bearing on them being true,” a Blind poster wrote. “AWFUL!”
The discourse around the all-hands underscored what some felt had been a long-standing problem at Juul: Richly compensated higher-ups often silence or ignore employees’ calls for transparency. When one Blind user recently described the company as a democratic place — “Fear of voicing an opinion or approaching Leadership with deaf ears is not the culture we are” — another objected.
“That is literally our culture. And if you don’t agree you’re too high up the food chain (I’m guessing).”
After the furor over how questions were handled at the last all-hands, employees have been debating how to make their concerns more visible to leadership. Instead of submitting questions that are filtered through an internal team, staffers are privately floating the idea of letting everyone vote for questions in Slack. But as somebody on Blind recently pointed out, “After the dumpster fire it was last time regarding the sexual harassment questions, I’m sure they will not be taking random questions.”
Meanwhile, the CEO seems to be trying to make clear that he’s listening.
In a Jan. 24 staff email, Crosthwaite declared that 2020 would be dedicated to building a company “that endures for decades to come and leaves a legacy that we’re all proud of.” And he promised: “I and the rest of the leadership team will commit to engaging with all of you more frequently and with candor.” Forthcoming changes would make meetings more transparent, he said.
But he said he wouldn’t be at the first all-hands of the year because he’d been asked to testify about youth vaping before Congress.
This news apparently did not go over well, because three days later, Crosthwaite was back with another memo. The gathering would be pushed to Feb. 12, since he had heard “loud and clear” that people wanted to hear “directly from me.” He also acknowledged the difficulties ahead, calling Juul a “dynamic” business in a “rapidly-shifting landscape.”
Despite the countless battles it’s fighting, some employees who work for him don’t think the turmoil is all that unusual for a Silicon Valley startup.
As one person on Blind pointed out at the end of January: “I figure hey, at least we don’t work at wework.” ●
PMTA stands for "pre-market tobacco product application." A previous version of this story misstated what the acronym stands for.