San Francisco Unicorn Juul to Lay Off Over Half its Remaining Staff: Altria’s $12.8 Billion Go to Heck, But Not in a Straight Line

From 3,200 employees down to 1,000 employees in half a year.

By Wolf Richter for WOLF STREET.

San Francisco-based e-cigarette maker Juul – into which Marlboro-owner Altria plowed $12.8 billion in 2018 at the peak of the startup unicorn bubble – is planning to cut over half of its remaining 2,200 employees, after having already cut 1,000 employees in April. This will shave them down from 3,200 folks earlier this year to about 1,000 folks when everything is said and done.

It is also considering ending sales in Europe and Asia, and focusing instead on the US, Canada, and the UK, where 90% of its sales are concentrated, sources told the Wall Street Journal.

K.C. Crosthwaite, Juul’s new CEO as of a year ago, said in an email to employees on Wednesday that the business units under review don’t generate enough revenue to justify further investment, and that the cuts would allow Juul to invest in developing new products, in technology to curb youth use, and in research to demonstrate to regulators that vaping is less harmful than smoking cigarettes, according to the Wall Street Journal.

“While those investments will not provide short-term revenue, they will help us earn trust and build a company for the long term,” he said in the email.

For Altria, this is a gigantic mess. In 2018, Juul had revenues of $1.3 billion. In late 2018, Altria acquired a 35% stake for $12.8 billion at a “valuation” of $38 billion, during a funding round that raised $13.6 billion.

In February 2019, revenue for the year 2019 were expected to soar to $3.4 billion. Juul had made smoking cool again, and the sky was the limit, though regulatory problems had already cropped up in 2018.

But 2019 was the year when the big S hit the fan, and revenues came in at just $2 billion, generating a loss of $1 billion. Altria in turn, booked a $4.1-billion loss on its $12.8 billion stake, writing it down by one third in Q3 2019.

And according to Juul’s disclosure to employees, reported by the Wall Street Journal today, in Q1 2020, its revenues were $394 million, generating a loss of $46 million.

In 2019, a raft of deaths and hundreds of hospitalizations due to severe respiratory illness associated with vaping woke up researchers and regulators. In May 2019, North Carolina became the first state to file a lawsuit against Juul, accusing it, among other things, of targeting teens. Other states followed with legal action, and this has continued through this day. The latest was Washington state, which today filed a consumer protection suit against Juul, alleging that it targets underage consumers.

In September 2019, the CDC recommended that people “consider refraining from using e-cigarette or vaping products.” The FDA began investigating Juul’s political ads and other activities with which Juul was fighting legislative moves to ban or limit the sale of its products at the local and state levels, and in September 2019 ordered Juul  to immediately cease making the claim that vaping is safer than smoking. By that time, Juul was smarting from having gotten slapped in the face when its hometown, San Francisco, banned the sale and distribution of e-cigarettes.

So Juul did a 180. It stopped these campaigns, and it stopped most advertising in the US.

But the problems went on. In April 2020, The Federal Trade Commission filed an antitrust suit against Altria, alleging that Altria made secret deals with Juul in 2018 under which Altria exited the vaping market and acquired what had been its competitor.

Juul tried to expand overseas, as so many startups with tons of money like to do, without getting the necessary approvals. This led to confrontations that Juul lost, including in China. And now Juul is throwing in the towel. It has already pulled out of South Korea, Austria, Belgium, Portugal and Spain and is considering pulling out of Germany, Italy, Russia, Indonesia, the Philippines, and other countries.

When the WSJ reached out to Juul concerning the new round of layoffs and the pull-back, a spokesman said, “No final decisions have been made and we will continue to go through our evaluation process.”

Juul also is losing ground to competition – which comes in two forms, from regular cigarettes to which some vapers are returning after all the turmoil in 2019, and from makers of other e-cigarettes, such as Vuse, which Reynolds American had launched in 2013.

Juul sales at retailers in the US has plunged 33% in the four weeks ended August 8, according to Goldman Sachs analyst Bonnie Herzog, and it market share has dropped to 58%, down from 75% in November 2018, the period when, facing a regulatory crackdown, it stopped selling through retail channels flavored nicotine products that were favored by teens – though it kept selling them on its website where it could try to block underage purchasers.

Altria now has this gigantic mess on its hands, in the form of its $12.8-billion crown jewel that continues to lose money, that it has already written down by one-third, that is shrinking and is steeped in regulatory problems and is getting hammered by competition.

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  62 comments for “San Francisco Unicorn Juul to Lay Off Over Half its Remaining Staff: Altria’s $12.8 Billion Go to Heck, But Not in a Straight Line

  1. andy says:

    Why not incorporate Juul into a mask.

    • Morty Mc Mort says:

      Looks like someone… Misplaced the “Family JUUL’S” – heh heh…
      I remember Pud’s Famous Website F**cked Company.. years ago.. (He was shut down by Lawsuits) .. Tracked the dumb moves Big Companies, Big Executives and Big Consulting didn’t want highlighted..
      God I miss that Website…

      • Ethan in NoVA says:

        He wasn’t shut down by lawsuits AFAIK. He said he became friends with a lot of the people running the companies. He made quite a bit of money from that site (sort of front running the stories to investors and journalists at a higher subscription free) and then started doing his own startups I think. Shortly thereafter he hid all the content which was a bummer.

  2. polistra says:

    The other tobacco companies must have paid larger bribes to FDA and CDC. Regulation is a shakedown racket.

    • YuShan says:

      Today’s “capitalism” is all about raising tons of money to bribe yourself into a monopolistic position.

    • thephathalo says:

      Obviously not true since the 2 e-cig companies are owned by tobacco companies

      • Just like Kodak got into the digital camera business, and the bitcoin mining business, and the generic drug making business. They would be a conglomerate if any of these things worked.

  3. xear says:

    Altria bought Juul to dismantle it.

  4. kk says:

    These tobacco companies are like cockroaches they just won’t die.

    • Frederick says:

      Always some crazy people willing to pay money to kill themselves I suppose

      • Anthony A. says:

        Maybe MO will take a hit today and go under 40. Might be a buying opportunity for the dividend guys.

    • JC says:

      Making money off the pain and suffering of others. These are companies investors can do without.

      • MO money says:

        “Making money off of other people’s suffering.”
        You just described every government employee.

        • OutsideTheBox says:

          “Making money off of other peoples suffering”

          You just described every doctor and health care worker.

          Also every single member of the armed forces.

      • Jdog says:

        There is a strange moral concept that America was founded on called free will. Apparently, something a few of you have never heard of…….

        • JC says:

          We are a bunch of mechanical monkeys susceptible to all sorts of outside influences that lead to manipulation and worse.

          In many real ways, the concept of free will is a pathetic gibberish.

          Addiction is real and recognized in extreme cases like drugs, but it’s not binary. Most actions by most people are just more subtle forms of what gets labeled addiction. From cars to bars to clothing it’s all a whirlwind of thoughts carefully influenced to satisfy their greed, to get your money.

          You think you have free will but you don’t. You are just a mechanical monkey being manipulated day in and day out.

          Juul does so at the expense of suffering for profit. The worst of the worst.

        • OutsideTheBox says:


          Next time you have an extremely full bladder…At that point please expound all about free will.

          Should be very entertaining.

  5. Crush the Peasants! says:

    Putting anything in your lungs except good clean air is a bad idea. Anybody buring wood in anything but a certified wood stove is harmng the health of their neighbors. Science.

    • Lisa_Hooker says:

      Business opportunity!
      Official Woodstove Certifier, and with proper donations to Congress-folks Official Woodstove Licensor.

    • roddy6667 says:

      All wood stoves pollute.

      • Paulo says:

        Heating with wood is actually considered to be carbon neutral, unlike NG, NG fired electric, etc.

        • Wisdom Seeker says:

          It’s the particulates, SOX/NOX, carbon monoxide and other non-CO2 output that’s the problem. With burning anything.

          California has no right to ban wood stoves, though, considering how many trees and shrubs they light off in wildfires every year. More pollution and noxious air from that than anything else.

    • Anthony A. says:

      Very few places that have good, clean air these days.

      • Wisdom Seeker says:

        That’s actually not at all true, but it’s true where all the people are.

        Which tells you a good deal about how humanity is wrecking its Garden of Eden yet again.

      • khowdund Flunghi says:

        “Very few places that have good, clean air these days.”

        The Planet Druidia?

    • nodecentrepublicansleft says:

      I used to say something similar:

      “Wait a second…are you telling me that setting something on fire…and then sucking the smoke from the fire into my body…you’re saying that’s bad for me?!?! No way….it just doesn’t make any sense how sucking smoke from a fire into my body would be bad for me????”

      Do people really be told this? I guess so since Americans now eat Tide Pods, bleach and the President is telling his supporters to vote twice.

      We have jumped the proverbial shark as a nation…

  6. Mindwerk says:

    With these companies closing down shop and others keeping their employees at home, Im wondering what will be the impact on REIT when lease renewal time comes around. It probably will be very negative, but with all the nonsense going on the market today, it can be seen as a good thing as all these empty spaces can be turned into – fill in the blank – ,who knows.

    • Frederick says:

      Homeless shelters perhaps

    • A says:

      Given how the federal government rules over us with conservative socialism-for-billionaires programs, I assume the FED will buy them all up at a premium so the rich people don’t feel any pain.

    • Ethan in NoVA says:

      If my landlord tries to increase my rent and there isn’t anything interesting to buy I might try living in a commercial space. The rent might be lower than similar residential, and it would jive well with some of my hobbies.

      • Paulo says:


        About 20 years ago I took a silver smithing course in Boulder Colorado. It was an intense 8 hour per day casting and soldering marathon operated by an avowed free enterpriser. I think it went for two weeks straight.

        Anyway, the course was run out of an industrial park. We pulled our truck and camper into the lot for the 1st week, and later stayed in Estes Park. What was interesting is that all the production facilities had live in residents. All owners had made apartments in the back of their warehouse/shops. There were boat builders, bong makers, metal fabricators, all sorts of people. It was pretty interesting and a very friendly place.

        • Lisa_Hooker says:

          Works until someone discovers you’re violating zoning laws and should be made an example. Then it’s very expensive.

  7. 2banana says:

    All data I can find is that Juul still makes money.

    Not as much as before but still very positive.


    “Altria now has this gigantic mess on its hands, in the form of its $12.8-billion crown jewel that continues to lose money…”

    • Wolf Richter says:

      Nonsense. Juul lost $1 billion in 2019 and $46 million in Q1 2020, according the financial disclosure sent to employees in an email on Wed., reported by the WSJ, which I linked in the article.

  8. Just Some Random Guy says:

    Every Juul employee got $1.3M when Altria bought the company. They’ll be OK post layoffs. The buyout was announced in late 2018 so obviously there have been new employees since then. But the majority of employees affected are millionaires.

    • Wolf Richter says:

      Yeah, I’m not too worried about the people that were able to cash in their stock options before or after getting laid off — not just at Juul, but other startups with big valuations. They’re doing fine.

    • Trinacria says:

      $1.3M is nice….but after taxes less than $1M. From my peruse of the landscape, especially in places like SF (and maybe Wolf can interject here or correct me if I am off…) if one wants to retire/live comfortably… a home with NO mortgage + at least $2.5M in invested assets…carefully invested….and that does not get one a second home.

      • Lisa_Hooker says:

        Right on. But the heck with a second home. I need a yacht with a helicopter deck and a helicopter on it. OTOH, I enjoy reading silly dreamers that are in for a very inflationary surprise no matter what their portfolio.

      • OutsideTheBox says:

        One million is an income of 50k/yr for twenty years. Without a single moment of work.

        And this is not a resounding good thing?

        Compare that to median income in the good ole USA….

  9. Michael Engel says:

    1) US markets are smoking.
    2) For the first time the weekly NDX Futures and SPX Futures
    will end up as a red bar with a long selling tail at the top, or at best as
    a doji (the market hesitate).
    3) Perfect time symmetry : 11 weeks between Mar 23 low until June 8 //
    and additional 11 weeks between June 15 to this week.
    4) There are 57 trading days between Mar 23 low to June 12 volatility
    low // and additional 57 TD from June 15 til yesterday.

  10. A says:

    Real tech companies are doing better than ever. But fake “tech companies” like Juul and Wework are finally getting exposed and getting their come-uppance.

  11. polecat says:

    “Puhhhff … Ahhhh” (behold the pal of acrid exhalations..) it’s a well known fact .. that Unicorns never fail to blow smoke outta their own, as well as their acolytes, A$$e$!

  12. gary says:

    “research to demonstrate to regulators that vaping is less harmful than smoking cigarettes”

    You mean “bribes”? LOL

  13. Lou Mannheim says:

    I use a pod system called ________. They are made in China, and the pods last weeks as opposed to days or never like others. The nic juice is the equivalent of about a carton of cigarettes for me, there are a lot of brands, and a 30ml bottle runs $10-15. Using this has helped reduce my cigarette consumption by 60-70%, hopefully on the way to zero. That’s $3-4K annually in savings, depending on where you live.

    I don’t know this company Juul other than what I’ve read of their issues here and in the press. I’d like to think there is a middle ground where these devices can be used for good, like smoking cessation. However this being the US, maybe I should research the dangers more closely.

    • Tony22 says:

      You poor man. I’m sure there are those out there who have advice and preferences for injecting heroin who might want to share their tips with us. Feel free to commit suicide. Just do it in your own private airspace.

    • Wisdom Seeker says:

      I’d be very, very careful about what is actually in your Chinese pods. Some of their entrepreneurs have been caught poisoning baby formula, drywall…

      Culturally, it seems that a large fraction of the population has no moral issue with privatizing profits and socializing losses. Maybe more than US or Europe.

    • Lisa_Hooker says:

      Switched to 6″ thin panatellas from Ireland. They’re organic.

  14. Michael Engel says:

    After showing a Sign Of Strength SPX is backing up below & above Feb 19 high.

  15. c1ue says:

    Overheard on one of my flights last weekend:
    I think it is great that vaping is banned on planes. The air is recirculated and there are babies here.
    Also: the American Airlines standard pre-flight safety video specifically calls out the ban on vaping.

  16. Rosebud says:

    I smoked cigarettes rather heavily last winter, especially December and January. Came down with BellsPalsy, February 1st. Cigarettes aggravated the nerve damage after that. Not sure if I’ll smoke again. Depends who I’m around. Never tried vaping, but if it’s in your mouth the effect on Palsy is similar? Maybe this company can do a study. Piicked tobacco when I was a teenager. $30-35 per day. A friend of mine recently asked if I remember the time we got hit by lightning. We were on the tobacco picking machine together, but I don’t remember now. I do remember my hands being covered by tar. That was a hard job, picking tobacco, 16 years old.

    • Tony22 says:

      Residual pesticides all over your hands and in your body from that job. It takes decades for the slow tumors and neurological effects to happen. Epigentic changes to your genome too. The grandchildren may suffer for it.

  17. Seneca's cliff says:

    When I think of these modern corporations like Juul or Uber or Tesla and compare them to the great American Corporations of the 60’s and 70’s it is very Sad. Perhaps it was the high corporate tax rates, or different laws or different times. Companies like IBM ( the 360). Boeing (747), AT&T ( transistor, laser, etc) Tektronix ( all modern electronics test and design equipment), Grumman (lunar lander) accomplished great things, provided small but consistent returns to shareholders, and lifetime jobs and pensions to employees. The executives had comfortable salaries, plush offices, executive dining rooms and country club memberships but had no expectation to become filthy rich off stock options and bonuses, and only made a reasonable multiple of the average employees wage.

    • polecat says:

      Yes. How far we have allowed things to devolve into such a state of affairs …

      So now, all that’s left .. are the Dice Rollers of Hyperfinancialization – akin to a bunch of voracious maggots, hollowing out a corpse!

    • Lisa_Hooker says:

      Seneca – in those days many of the execs came up the hard way, had hands on experience with their company, and tended to finance a lot of the growth out of cash flow. I think I can say none of these are characteristic of current management.

  18. Wisdom Seeker says:

    Yes, there’s a market for mood-altering chemicals, and probably always will be, but it’s a tough moral choice to supply that market…

    Huey Lewis and the News:

    I want a new drug, one that won’t make me sick
    One that won’t make me crash my car
    Or make me feel feet, feet, feet thick
    I want a new drug, one that won’t hurt my head
    One that won’t make my mouth too dry
    Or make my eyes too red
    One that won’t make me nervous
    Wonderin’ what to do
    One that makes me feel like I feel when I’m with you
    When I’m alone with you
    I want a new drug, one that won’t spill
    One that don’t cost too much
    Or come in a pill
    I want a new drug, one that won’t go away
    One that won’t keep me up all night
    One that won’t make me sleep all day
    One that won’t make me nervous
    Wonderin’ what to do
    One that makes me feel like I feel when I’m with you
    I’m alone with you
    I’m alone with you, baby
    I want a new drug, one that does what it should…

  19. Have some friends who got nasty coughs vaping that other tobacco. They went back to the pipe. The vaping system delivers the high dose that long time users require. This doesn’t have as much to do with tobacco as we think.

  20. CreditGB says:

    I am no expert but I’ve been around over 67 years.
    This entire scenario reminds me of the rise and fall of the shopping mall concept. Like city storefronts, they were packed with big crowds of shoppers. Gradually, smaller shops became vacant and “boarded up” using cute murals painted on the windows. Next, the big anchors closed one by one, and the crowds turned into gangs with no money and looking for trouble. Finally, the last of the anchors left and virtually no shoppers, and finally complete closure and demolition. This same scenario seems to be gradually taking place in some of our formerly great cities. Just observing the passing parade.

  21. Derek Niece says:

    Not sure if someone mentioned it in the 60 comments above but despite the high price Altria paid, I am inclined to believe that the original acquisition was a type of “catch and kill” operation intended to maim Juul. Think of the following events:

    1. Altria purchases 35% of Juul in December 2018 for $12.8B
    2. The sudden appearance (and disappearance) of the vape lung damage. Mid 2019.
    2. The ban on fruit flavored cartridges. Jan 2020
    3. The departure of Kevin Burns from Juul Sep 2019
    4. The ascension of K.C. Crosthwaite former CEO Altria Chief Growth Officer as Juul CEO Sep 2019
    5. The U.S. launch of launch of Altria’s IQOS “heated cigarette” technology in October 2019 (Crosthwaite was responsible for this product at Altria)

    All this makes me wonder if this was a complex Altria operation to take down Juul and perhaps the vaping industry from the inside.

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