juul

Juul launches a pilot program that tracks how Juul devices get in the hands of minors

Posted by | Gadgets, Government, Health, juul, juul labs, Startups, TC | No Comments

Juul Labs is today launching a pilot for its new Track & Trace program, which is meant to use data to identify exactly how Juul devices wind up in the hands of minors.

Juul vaporizers all have a serial number down at the bottom, by the Juul logo. However, it wasn’t until recently that Juul had the capability to track those serial numbers through every step of the process, from manufacture to distribution to retail to sale.

With Track & Trace, Juul is calling upon parents, teachers and law enforcement officials to come to the Juul Report web portal when they confiscate a device from a minor and input the serial number. Each time a device is input in the Track & Trace system, Juul will open an investigation to understand how that minor wound up with that device.

In some cases, it may be an issue with a certain retail store knowingly selling to minors. In others, it may be a case of social sourcing, where someone over 21 years of age buys several devices and pods to then sell to minors.

Juul will then take next steps in investigating, such as talking to a store manager about the issue. It may also enhance its secret shopper program around a certain store or distributor where it sees there may be a spike in sale/distribution, to youth to identify the source of the problem. To be clear, Track & Trace only tracks and traces the devices themselves, and does not use personal data about customers.

Juul isn’t yet widely publicizing Track & Trace (thus, the “Pilot” status), but it is focusing on Houston as a testing ground with banner ads targeted at older individuals (parents, teachers, etc.) pointing them to the portal. Of note: The ad campaign is geofenced to never be shown in or around a school, hopefully keeping the program a secret from young people illegally using Juul.

The company wants to learn more about how people use the portal and test the program in action before widening the campaign around Track & Trace. That said, the Report portal is not limited to Houston residents — anyone who confiscates a Juul can report it through the portal and trigger an investigation.

“It’s important to note that the pilot is an opportunity for us to learn how the technology is working and optimize the technology,” said Chief Administrative Officer Ashley Gould. “It’s not just at the retailer level. It’s a whole process through the supply chain to track that device and find out if everyone who is supposed to be scanning it is scanning it, and the software that we’ve created to track that serial number through the supply chain to the retail store is working. The only way we’re going to know that is when someone puts in the serial number and we see if we have all the data we need to track it.”

According to Juul, every device in production will be trackable in the next few weeks. In other words, Juul vapes that are years old are likely not fully traceable in the program, but those purchased more recently should work with the system.

Juul has been under scrutiny from the FDA and a collection of Democratic Senators due to the device’s rise in popularity among young people. Outgoing FDA Commissioner Scott Gottlieb has called it “an epidemic” and enforced further restrictions on sales of e-cig products.

Juul has also made its own effort, removing non-tobacco and non-menthol flavored pods from all physical retail stores, enhancing their own purchasing system online to ensure online buyers are 21+ and not buying in bulk, going after counterfeits and copycats posing as Juul products and exiting its Facebook and Instagram accounts.

But Juul Labs also committed to build technology-based solutions to prevent youth use of the product. Co-founder and CPO James Monsees told TechCrunch at Disrupt SF that the company is working on Bluetooth products that would essentially make the Juul device as smart as an iPhone or Android device, which could certainly help lock out folks under 21.

However, the Track & Trace program is the first real technological step taken by the e-cig company. And it has been an expensive one. The company has spent more than $30 million to update its packaging, adjust printing standards, change manufacturing equipment and integrate the data and logistics software systems.

For now, Track & Trace is only applicable to Juul vaporizers, but it wouldn’t be shocking to learn that the company was working on a similar program for its Juul Pods.

Editor’s Note: This article mistakenly said that Republican senators were scrutinizing Juul. It has been edited for accuracy.

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Juul Labs hires former Apple employee to lead the fight against counterfeits

Posted by | adrian punderson, altria group, Gadgets, Health, juul, juul labs, Personnel, Startups, TC | No Comments

Juul Labs, the e-cig company under fire for its product’s popularity with young people, has brought on a new VP of Intellectual Property Protection with Adrian Punderson, formerly of PwC and Apple.

Punderson’s job is all about working alongside government agencies, as well as Juul Labs Intellectual Property VP Wayne Sobon, to combat the sale of counterfeit and infringing products. These can range from copycat vapes and pods that are actually marketed as Juul products all the way to products that are designed specifically to be Juul compatible without using the trademark.

These counterfeit and infringing products pose a serious threat to the company. Of course, no business wants its products infringed or its market share stolen.

With Juul, however, it’s far more complicated. Juul Labs is currently under heavy FDA scrutiny over the popularity of its products with minors.

“As you start to enforce generally on the sale of these types of products to youth, oftentimes they are going to look for another seller or distribution point of this product,” said Punderson. “The challenge is that oftentimes they’re going to platforms or places for this and you have no idea what the origin of the product is. A lot of it is counterfeit. So they get something they believe is Juul only to find out they have a counterfeit device or pod.”

He went on to say that, for Juul, a top priority is identifying counterfeit sellers and quickly putting that information into the hands of law enforcement. To the extent that they can’t take action, said Punderson, Juul will take civil action.

Part of the concern is that there is zero transparency into what ingredients are being used in infringing products, whereas Juul’s recipe at least meets the legal requirements for disclosure as it seeks full FDA approval.

Juul doesn’t currently have data around the scale of infringing products on the market, but counterfeit Juul products may inaccurately increase sales figures, intensifying scrutiny from the FDA.

Juul has already taken legal action against many infringing manufacturers and distributors, but Punderson aims to take Juul’s efforts against infringing products to a new level.

He sees the issue as threefold: Juul Labs must work to stop these products from being manufactured in the first place, ensure they aren’t allowed across borders into the country and take action against retailers who sell infringing products and remove them from the market.

“This isn’t a problem where there is only a production problem but there isn’t really a distribution or consumption problem,” said Punderson. “We don’t have the luxury of looking at the problem singly-faceted. From a global perspective, we want to stop the production and distribution of infringing products around the world, and we’ll work closely with government agencies attempting to stop illicit distribution of goods.”

Punderson previously served as managing director of IP Protection at PriceWaterhouse Coopers, VP of Global Anti-Counterfeiting/Anti-Diversion at Oakley and worked at Apple on the Intellectual Property Enforcement team.

Juul is currently viewed by many as a Facebook-ified, 2018 version of Marlboro. Notably, Juul Labs recently closed a $12.8 billion investment from Altria Group, the makers of Marlboro cigarettes. When asked why he chose to work for Juul, Punderson said his initial reaction was no. But after he did some research around the mission of the company, and thought of his own personal experience losing his father to emphysema, he came around quickly.

“I would do anything to get two or three more years with my dad, who was a lifelong smoker,” said Punderson. “[…] We’re trying to do good things here, move people away from tobacco and give them an alternative. To me, it’s a valuable, noble cause that’s worth being involved in and I’m proud to be here.”

It remains to be seen just how big of an issue infringing products are for Juul and other above-board e-cig makers, but Juul is ramping up its efforts to combat copycats from getting into the hands of consumers.

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How Juul made vaping viral to become worth a dirty $38 billion

Posted by | e-cigarettes, eCommerce, funding, Fundings & Exits, Gadgets, Health, juul, nicotine, Opinion, Policy, Recent Funding, Social, Startups, TC, tobacco, vaporizers | No Comments

A Juul is not a cigarette. It’s much easier than that. Through devilishly slick product design I’ll discuss here, the startup has massively lowered the barrier to getting hooked on nicotine. Juul has dismantled every deterrent to taking a puff.

The result is both a new $38 billion valuation thanks to a $12.8 billion investment from Marlboro Cigarettes-maker Altria this week, and an explosion in popularity of vaping amongst teenagers and the rest of the population. Game recognize game, and Altria’s game is nicotine addiction. It knows it’s been one-upped by Juul’s tactics, so it’s hedged its own success by handing the startup over a tenth of the public corporation’s market cap in cash.

Juul argues it can help people switch from obviously dangerous smoking to supposedly healthier vaping. But in reality, the tiny aluminum device helps people switch from nothing to vaping…which can lead some to start smoking the real thing. A study found it causes more people to pick up cigarettes than put them down.

Photographer: Gabby Jones/Bloomberg via Getty Images

How fast has Juul swept the nation? Nielsen says it controls 75 percent of the U.S. e-cigarette market up from 27 percent in September last year. In the year since then, the CDC says the percentage of high school students who’ve used an e-cigarette in the last 30 days has grown 75 percent. That’s 3 million teens or roughly 20 percent of all high school kids. CNBC reports that Juul 2018 revenue could be around $1.5 billion.

The health consequences aside, Juul makes it radically simple to pick up a lifelong vice. Parents, regulators, and potential vapers need to understand why Juul works so well if they’ll have any hope of suppressing its temptations.

Shareable

It’s tough to try a cigarette for the first time. The heat and smoke burn your throat. The taste is harsh and overwhelming. The smell coats your fingers and clothes, marking you as smoker. There’s pressure to smoke a whole one lest you waste the tobacco. Even if you want to try a friend’s, they have to ignite one first. And unlike bigger box mod vaporizers where you customize the temperature and e-juice, Juul doesn’t make you look like some dorky hardcore vapelord.

Juul is much more gentle on your throat. The taste is more mild and can be masked with flavors. The vapor doesn’t stain you with a smell as quickly. You can try just a single puff from a friend’s at a bar or during a smoking break with no pressure to inhale more. The elegant, discrete form factor doesn’t brand you as a serious vape users. It’s casual. Yet the public gesture and clouds people exhale are still eye catching enough to trigger the questions, “What’s that? Can I try?” There’s a whole other article to be written about how Juul memes and Instagram Stories that glamorized the nicotine dispensers contributed to the device’s spread.

And perhaps most insidiously, vaping seems healthier. A lifetime of anti-smoking ads and warning labels drilled the dangers into our heads. But how much harm could a little vapor do?

A friend who had never smoked tells me they burn through a full Juul pod per day now. Someone got him to try a single puff at a nightclub. Soon he was asking for drag off of strangers’ Juuls. Then he bought one and never looked back. He’d been around cigarettes at parties his whole life but never got into them. Juul made it too effortless to resist.

Concealable

Lighting up a cigarette is a garish activity prohibited in many places. Not so with discretely sipping from a Juul.

Cigarettes often aren’t allowed to be smoked inside. Hiding it is no easy feat and can get you kicked out. You need to have a lighter and play with fire to get one started. They can get crushed or damp in your pocket. The burning tip makes them unruly in tight quarters, and the bud or falling ash can damage clothing and make a mess. You smoke a cigarette because you really want to smoke a cigarette.

Public establishments are still figuring out how to handle Juuls and other vaporizers. Many places that ban smoking don’t explicitly do the same for vaping. The less stinky vapor and more discrete motion makes it easy to hide. Beyond airplanes, you could probably play dumb and say you didn’t know the rules if you did get caught. The metal stick is hard to break. You won’t singe anyone. There’s no mess, need for an ashtray, or holes in your jackets or couches.

As long as your battery is charged, there’s no need for extra equipment and you won’t draw attention like with a lighter. Battery life is a major concern for heavy Juulers that smokers don’t have worry about, but I know people who now carry a giant portable charger just to keep their Juul alive. But there’s also a network effect that’s developing. Similar to iPhone cords, Juuls are becoming common enough that you can often conveniently borrow a battery stick or charger from another user. 

And again, the modular ability to take as few or as many puffs as you want lets you absent-mindedly Juul at any moment. At your desk, on the dance floor, as you drive, or even in bed. A friend’s nieces and nephews say that they see fellow teens Juul in class by concealing it in the cuff of their sleeve. No kid would be so brazen as to try smoke in cigarette in the middle of a math lesson.

Distributable

Gillette pioneered the brilliant razor and blade business model. Buy the sometimes-discounted razor, and you’re compelled to keep buying the expensive proprietary blades. Dollar Shave Club leveled up the strategy by offering a subscription that delivers the consumable blades to your door. Juul combines both with a product that’s physically addictive.

When you finish a pack of cigarettes, you could be done smoking. There’s nothing left. But with Juul you’ve still got the $35 battery pack when you finish vaping a pod. There’s a sunk cost fallacy goading you to keep buying the pods to get the most out of your investment and stay locked into the Juul ecosystem.

(Photo by Scott Olson/Getty Images)

One of Juul’s sole virality disadvantages compared to cigarettes is that they’re not as ubiquitously available. Some stores that sells cigs just don’t carry them yet. But more and more shops are picking them up, which will continue with Altria’s help. And Juul offers an “auto-ship” delivery option that knocks $2 off the $16 pack of four pods so you don’t even have to think about buying more. Catch the urge to quit? Well you’ve got pods on the way so you might as well use them. Whether due to regulation or a lack of innovation, I couldn’t find subscription delivery options for traditional cigarettes.

And for minors that want to buy Juuls or Juul pods illegally, their tiny size makes them easy to smuggle and resell. A recent South Park episode featured warring syndicates of fourth-graders selling Juul pods to even younger kids.

Dishonorable

Juul co-founder James Monsees told the San Jose Mercury News that “The first phase is proving the value and creating a product that makes cigarettes obsolete.” But notice he didn’t say Juul wants to make nicotine obsolete or reduce the number of people addicted to it.

Juul co-founder James Monsees

If Juul actually cared about fighting addiction, it’d offer a regimen for weaning yourself off of nicotine. Yet it doesn’t sell low-dose or no-dose pods that could help people quit entirely. In the US it only sells 5% and 3% nicotine versions. It does make 1.7% pods for foreign markets like Israel where that’s the maximum legal strengths, though refuses to sell them in the States. Along with taking over $12 billion from one of the largest cigarette companies, that makes the mission statement ring hollow.

Juul is the death stick business as usual, but strengthened by the product design and virality typically reserved for Apple and Facebook.

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Juul Labs gets $12.8 billion investment from Marlboro maker Altria Group

Posted by | funding, Gadgets, Health, juul, juul labs, Startups, TC | No Comments

After a long year fighting underage use of its products, Juul Labs has today struck a deal with Altria Group, the owners of Philip Morris USA and makers of Marlboro cigarettes.

The deal values Juul at $38 billion, according to Bloomberg, and injects the company with a fresh $12.8 billion in exchange for a 35 percent stake in Juul Labs.

Here’s what Juul Labs CEO Kevin Burns had to say in a prepared statement:

We understand the controversy and skepticism that comes with an affiliation and partnership with the largest tobacco company in the US. We were skeptical as well. But over the course of the last several months we were convinced by actions, not words, that in fact this partnership could help accelerate our success switching adult smokers. We understand the doubt. We doubted as well.

He goes on to explain the strict criteria Juul Labs had for a potential investor, particularly one from the Big Tobacco space. For one, Altria entered into a standstill agreement that limits to 35 percent the company’s ownership in Juul. Altria also must use its database and its distribution network to get out to current smokers the message of Juul.

For the past year, many have seen Juul as a dangerous toy for teenagers. In November, FDA Commissioner Scott Gottlieb announced new measures for the e-cig industry meant to keep the products out of the hands of teens. One of those measures includes restricting the sale of flavored non-combustible tobacco products beyond the usual cigarette flavors of tobacco and menthol.

But after nearly a year of playing defense, this new deal marks a bit of an offensive push from Juul Labs. The company has always stressed that its main goal is to give smokers a meaningful alternative to combustible cigarettes. Partnering with Big Tobacco may not seem like the best way to do that, optically speaking. But Altria has agreed to a few measures that would get into the hands of actual smokers information about Juul, including:

  • providing Juul with access to its retail shelf space, meaning that Juul’s tobacco and menthol products will be merchandized right alongside Altria combustible cigarettes
  • Altria will include direct communications about Juul to adult smokers through cigarette pack inserts and mailings via Altria companies’ databases
  • Altria will support Juul via its logistics and distribution networks, as well as its sales team, which works with more than 230,000 retail locations

In the release, Altria said that part of the reason for the investment is simply that the organization understands change is coming to the tobacco industry.

Howard Willard, Altria’s chairman and chief executive officer, had this to say in a prepared statement:

We are taking significant action to prepare for a future where adult smokers overwhelmingly choose non-combustible products over cigarettes by investing $12.8 billion in JUUL, a world leader in switching adult smokers. We have long said that providing adult smokers with superior, satisfying products with the potential to reduce harm is the best way to achieve tobacco harm reduction. Through JUUL, we are making the biggest investment in our history to achieve that goal. We strongly believe that working with JUUL to accelerate its mission will have long-term benefits for adult smokers and our shareholders.

Altria has made a few big moves lately, including acquiring a 45 percent stake in cannabis company Cronos earlier this month. The company also announced this month that it would discontinue its own e-cig products, including all MarkTen and Green Smoke e-vapor products, and VERVE oral nicotine products.

“This decision is based upon the current and expected financial performance of these products, coupled with regulatory restrictions that burden Altria’s ability to quickly improve these products,” read the press release. “The company will refocus its resources on more compelling reduced-risk tobacco product opportunities.”

Now we know that those opportunities look like an extra-long thumb drive called Juul.

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Twitter buys a startup to battle harassment, e-cigs are booming, and a meditation app is worth $250M

Posted by | calm, equity, Finance, funding, Fundings & Exits, juul, Mobile, Podcasts, smyte, Startups, Twitter, Venture Capital | No Comments

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast where we unpack the numbers behind the headlines. This week TechCrunch’s Silicon Valley Editor Connie Loizos and I jammed out on a couple of topics as Alex Wilhelm was out managing his fake stock game spreadsheets or something. (The jury is out on whether this was a good or bad thing.)

First up is Twitter buying Smyte, a startup targeting fixes for spam and abuse. This is, of course, Twitter’s perennial problem and it’s one that it’s been trying to fix for some time — but definitely not there yet. The deal terms weren’t disclosed, but Twitter to its credit has seen its stock basically double this year (and almost triple in the past few years). Twitter is going into a big year, with the U.S. midterm elections, the 2018 World Cup, and the Sacramento Kings probably finding some way to screw up in the NBA draft. This’ll be a close one to watch over the next few months as we get closer to the finals for the World Cup and the elections. Twitter is trying to bill itself as a home for news, focusing on live video, and a number of other things.

Then we have Juul Labs, an e-cigarette company that is somehow worth $10 billion. The Information reports that the PAX Labs spinout from 2015 has gone from a $250 million valuation all the way to $10 billion faster than you can name each scooter company that’s raising a new $200 million round from Sequoia that will have already been completed by the time you finish this sentence. Obviously the original cigarette industry was a complicated one circa the 20th century, so this one will be an interesting one to play out over the next few years.

Finally, we have meditation app Calm raising a $27 million round at a $250 million pre-money valuation. Calm isn’t the only mental health-focused startup that’s starting to pick up some momentum, but it’s one that’s a long time coming. I remember stumbling upon Calm.com back in 2012, where you’d just chill out on the website for a minute or so, so it’s fun to see a half-decade or so later that these apps are showing off some impressive numbers.

That’s all for this week, we’ll catch you guys next week. We apologize in advance if Alex makes it back on to the podcast.

Equity  drops every Friday at 6:00 am PT, so subscribe to us on Apple PodcastsOvercast, Pocketcast, Downcast and all the casts.

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Juul tightens up social media to focus on former smokers switching to e-cigs

Posted by | Facebook, fda, Gadgets, instagram, juul, juul labs, social media, Startups, TC, Twitter | No Comments

Juul Labs, the company behind the ever-popular Juul e-cig, has today announced a new policy around social media.

This comes in the midst of Juul’s effort to get FDA approval, which has been made more arduous by the fact that the FDA has cracked down on Juul after learning how popular the device is with underage users.

As part of the new policy, Juul will no longer feature models in pictures posted on Instagram, Twitter, or Facebook. FWIW, Juul doesn’t even have a Snapchat. Instead of using models to market the e-cig, Juul Labs will now use real former smokers who switched from combustible cigarette to Juul.

Juul has always said that its product was meant to serve as an alternative to combustible cigarettes, which are considered far more harmful to your health.

Juul has also initiated an internal team focused on flagging and reporting social media content that is inappropriate or targeted to underage users.

The company mentioned that it has worked to report and remove more than 10,000 illegal online sales since February from various online marketplaces.

We reached out to Juul to see if any changes have been made to the way that Juul targets ads on social media and elsewhere. We’ll update the post if/when we hear back.

Here’s what Juul Labs CEO Kevin Burns had to say in a prepared statement:

While JUUL already has a strict marketing code, we want to take it one step further by implementing an industry-leading policy eliminating all social media posts featuring models and instead focus our social media on sharing stories about adult smokers who have successfully switched to JUUL. We also are having success in proactively working with social media platforms to remove posts, pages and unauthorized offers to sell product targeted at underage accounts. We believe we can both serve the 38 million smokers in the U.S. and work together to combat underage use – these are not mutually exclusive missions.

In April, the FDA sent a request for information to Juul Labs as part of a new Youth Tobacco Prevention Plan, which is aimed at keeping tobacco products of any kind out of the hands of minors. The information request was meant to help the FDA understand why teens are so interested in e-cigs (particularly Juul) and whether or not Juul Labs was marketing the product intentionally to minors.

In response, Juul announced a new strategy to combat underage use, with an investment of $30 million over the next three years going towards independent research, youth and parent education and community engagement efforts.

Since August 2017, Juul has required that people be 21+ to purchase products on its own website, but online and offline third-party retailers have not been so diligent.

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The FDA is cracking down on Juul e-cig sales to minors

Posted by | Gadgets, juul, Pax Labs, Policy, Startups, TC, vape | No Comments

The FDA has its eye on Juul Labs, the e-cigarette company that has captured nearly half of the $2 billion e-cig market.

Yesterday, the U.S. Food and Drug Administration Commissioner Scott Gottlieb announced a new initiative called the Youth Tobacco Prevention Plan. While the agency is focused on making sure kids don’t have easy access to any e-cigs, the Juul vaporizer seems to be of particular concern to them.

As part of the initiative, the FDA has sent a request for information to Juul Labs in an effort to understand why young people are so attracted to the product.

Over the past year, a number of reports have suggested that teen vape use, especially with the Juul, is steeply on the rise.

The request is for documents related to “product marketing; research on the health, toxicological, behavioral or physiologic effects of the products, including youth initiation and use; whether certain product design features, ingredients or specifications appeal to different age groups; and youth-related adverse events and consumer complaints associated with the products.”

In response, Juul Labs issued a press release announcing its plan to combat underage use. The strategy includes an initial investment of $30 million over the next three years going towards independent research, youth and parent education and community engagement efforts. Juul Labs also said it will support federal and state initiatives to raise the legal minimum purchase age to 21+. The company website has required that purchasers be 21 or older since August 2017.

Here’s what Juul CEO Kevin Burns had to say about it:

Our company’s mission is to eliminate cigarettes and help the more than one billion smokers worldwide switch to a better alternative. We are already seeing success in our efforts to enable adult smokers to transition away from cigarettes and believe our products have the potential over the long-term to contribute meaningfully to public health in the U.S. and around the world. At the same time, we are committed to deterring young people, as well as adults who do not currently smoke, from using our products. We cannot be more emphatic on this point: No young person or non-nicotine user should ever try JUUL.

Juul Labs is not the only organization that the FDA is cracking down on. The agency said it had sent out 40 warning letters to retailers selling e-cigs, including the Juul, to minors. Some of those retailers were caught as the result of a ‘blitz’ that has been underway since the beginning of April.

The agency has also asked eBay to take down all listings of Juul vaporizers, which run the risk of being sold to minors.

Alongside the FDA’s request for information from Juul Labs, the agency is also sending out similar letters to other e-cig manufacturers.

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PAX Labs brings on Bharat Vasan as new CEO

Posted by | bharat vasan, Gadgets, juul, Pax Labs, Startups, TC | No Comments

 PAX Labs has a new CEO. The company, which makes loose-leaf vaporizers, has brought on Bharat Vasan as Chief Executive Officer. Vasan has spent the last 15 years in consumer hardware, serving as the President and COO of August Home, which was acquired by Swedish lock maker Assa Abloy in 2017. Before August, Vasan was the cofounder of Basis (a fitness-based wearable company), which was acquired… Read More

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Pax Labs brings in Deezer’s Tyler Goldman as new CEO

Posted by | Deezer, Gadgets, juul, Pax Labs, TC, tyler goldman | No Comments

juul4 Pax Labs, the folks responsible for the Ploom and the Juul and the Pax loose-leaf vaporizer, have today announced some leadership changes. Former Deezer CEO Tyler Goldman will be taking over as CEO, and Pax co-founder James Monsees will continue on at the company as Chief Product Officer. Pax Labs launched in 2007 with the original Pax vaporizer. The company quickly picked up steam and… Read More

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