A week after we learned of layoffs at Juul Labs that were set to slash nearly a third of the company's workforce, news arrives that Juul is officially moving its headquarters out of San Francisco to Washington, D.C.
While Juul is expected to keep some office space in San Francisco for its product and software development teams, the company is making both a physical and symbolic move to the nation's capital in order to be closer to the lawmakers and regulators who will largely decide the company's fate. As the Wall Street Journal first reported Tuesday, the company plans to scale back its operations in Europe and Asia, and it's looking to "distance itself from Silicon Valley’s growth-at-all-costs culture."
Juul was riding high on a $38 billion valuation just two years ago, following a major investment by old-school tobacco industry player Altria Group, the parent company of Philip Morris USA. With an influx of $12.8 billion in cash from the tobacco giant, Juul paid out millions to its executives, investors, and employees, keeping only $200 million in cash on hand.
But 2019 was a rough year for the company all around, as San Francisco and other localities enacted bans on vape products in order to protect teens. Then a mysterious illness struck Americans of all ages who were vaping — ravaging the lungs of even the youngest patients. Experts concluded that the illnesses were likely linked only to black-market vape cartridges, but the PR damage was already done.
By late August, the CDC was issuing a broad warning to the public about vaping in general. The agency said that they could not pinpoint a single ingredient or product that was making people ill, so they advised against e-cigarettes across the board.
Then there were ongoing fights with the FDA over evidence that Juul had been marketing products specifically to teenagers, and over unproven claims made by the company that vaping was less harmful than smoking cigarettes. And by late September, CEO Kevin Burns was stepping down, to be replaced by an Altria executive, K.C. Crosthwaite.
Crosthwaite quickly put the breaks on expansion plans, as the Journal reports, and cut production of the most fruity and dessert-like vape flavors. By November the company was laying off 650 people, and dropping ads for a ballot measure it had funded to the tune of $11.6 million to fight San Francisco's anti-vape-product ordinance.
Juul's legal problems don't end at the federal level, either — states' attorneys general have their sights on Juul, too. In February, a suit was filed against the company in Massachusetts in which evidence was laid out showing how Juul had intentionally placed web ads on channels belonging to Nickelodeon and the Cartoon Network in order, allegedly, to lure young customers.
Juul Labs is now valued at around $12 billion, per the Journal, and only about 400 more American employees are expected to be laid off in the latest cuts — meanwhile about half of the company's 1,200-person international workforce will be let go.
Next up, the company is awaiting word from the FDA as to whether its products can even remain on the market in the U.S. And Juul is therefore focused on identifying more international markets where it might make headway.
Also, Juul is trying to off-load a 28-story building it bought in SoMa last year for around $400 million. As we learned last week from the SF Business Times, interest from one potential buyer for the building recently "evaporated."