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`How a startup behind the ‘iPhoneof vaporizers' reinvented the
`e-cigarette and generated $224 million in sales in a year
`
`Melia Robinson Nov 21, 2017, 1:48 PM EST
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`JLI Ex. 2031, Page 1 of 10
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`JLI Ex. 2031, Page 1 of 10
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`JUUL Labs
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`e Juul is the best-selling e-cigarette on the market, with 32% of
`the market share of the total e-cigarette category, according to
`Nielsen data.
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`e The device was created by Stanford graduate students as part
`of their thesis.
`
`e The Juul system uses a proprietary blend of ingredients that
`the company says mimics the experience of smoking a
`cigarette.
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`When two graduate studentsat Stanford set out to turn cigarette
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`smokers on to alternatives in 2007, the solution seemed obvious: Make
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`an e-cigarette that satisfies like a cigarette.
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`Juul, an e-cigarette system consisting of a pocket-size vaporizer and
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`nicotine juice cartridges that can be swapped in and out, is now the
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`best-selling e-cigarette in America.
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`While most e-cigarettes use a type of nicotine called "free-base," which
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`passes quickly into the bloodstream when inhaled, the cartridges that
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`Juul Labs sells — Juulpods — contain a concentrated juice cocktail of
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`salts and organic acids found in tobacco leaves. This blend more closely
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`resembles the experience of smoking a cigarette, according to Tyler
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`, CEO of Juul Labs (which spun out of parent company, Pax
`jer this year). Pax Labs received a patentfor its nicotine-salt
`
`onin 2015.
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`Over the past year, Juul Labs has generated $224 million in retail sales,
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`according to Nielsen data provided by Juul Labs. The brand saw sales
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`JLI Ex. 2031, Page 2 of 10
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`explode 621% year-over-year and captured 32% market share of the
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`total e-cigarette category in the four weeks that ended November4.
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`Related stories
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`One million Juul systems havesold to date. It's available at 12,000
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`convenience stores across the US, as well as online. The vaporizer
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`retails for $35, and a four-pack of pods costs $16.
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`JLI Ex. 2031, Page 3 of 10
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`Pax Labs
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`Pax Labs, formerly known as Ploom,started with a mission to make
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`cigarettes obsolete. Both founders were smokers. The pair dedicated
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`their senior design program thesis to the development of what would
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`become the Juul e-cigarette system. In 2012, Ploom came to market
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`with its first product: a nicotine vaporizer that wassold to Japan
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`Tobacco Company.
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`The Juul, which launched in 2015, looks like no other e-cigarette on the
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`market. The device is shaped like a USB drive with a metallic finish.
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`Userscan inhale to activate the heat source, unlike other devices that
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`-_-
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`gers to unscrew a cap andfill a chamberwithliquid.
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`| who took over as CEO in 2016,credits the Juul's nicotine-salt
`Main content
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`.
`.
`:
`Search
`on, as well as its engineering and sleek form factor, with the
`A
`'
`ccoun
`__-..-..,0pularity. The company produces some 20 million pods per
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`month, but it has struggled to keep up with demand.
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`JLI Ex. 2031, Page 4 of 10
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`According to Goldman, the startup has actually "stopped trying to
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`create new users" by leaving somestores purposefully out of stock of
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`the vaporizers. It sells only refill cartridges to those stores, so people
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`who use Juul and "switched off cigarettes can stay switched," Goldman
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`said.
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`There is no long-term evidence that the vapor from e-cigarettes is less
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`harmful than conventional smoke. Some research suggests e-cigarettes
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`are less harmful than cigarettes because they don't require igniting a
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`material and inhaling the carcinogens and toxins that go along withit.
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`But nicotineis still dangerous, and the long-term effects of e-cigarette
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`use are unknown.
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`The e-cigarette market gained a victory in July, when the Food and
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`Drug Administration delayed regulations that would have banned
`igarettes from the market. It also encouraged e-cigarette
`) talk to the agency aboutgetting approval of their products.
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`his is a game-changing opportunity," Goldmansaid.
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`Watch: This is what your lungs looklike after just 20
`cigarettes
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