A therton, Calif., once a quiet whistle-stop along the Southern Pacific Railroad, is situated 30 miles south of San Francisco and minutes from downtown Palo Alto. Fewer than 10,000 people live there, many of them behind tall hedges and forbidding gates. It’s the wealthiest city in America, with an average annual income above $525,000, and its residents have included some of the world’s most famous technology executives, including Eric Schmidt from Google and Sheryl Sandberg from Facebook. NBA star Stephen Curry bought a $31 million estate there. Microsoft co-founder Paul Allen had one worth $35 million.
In comparison, Kevin Burns’s stately home in an Atherton neighborhood called King Estates seemed modest. Toward the end of the summer in 2017, Burns was sitting in the kitchen with his son and some of his son’s friends. They were students at Palo Alto High School—Paly, as it’s known by locals.
About a year earlier, Burns had left Chobani, the yogurt company, where he’d pulled off an operational miracle. After being brought in from the private equity firm TPG Capital, he’d righted the ship of a promising company that had been almost ruined by a crisis that saw sour, bubbling, oozing cups of moldy yogurt wind up in grocery store coolers, sickening dozens and leading to a nationwide recall. The feat solidified his reputation as a turnaround guru. Now he was considering a new job, as the chief executive officer of Juul Labs.
Juul was the nation’s most popular e-cigarette. It was born from a provocative thesis project several years earlier by Stanford graduate students James Monsees and Adam Bowen. With more than 34 million smokers in the U.S. and 1 billion worldwide, they envisioned creating a less harmful version of the notorious burning stick. It would vaporize little tufts of tobacco, providing smokers with the nicotine fix they desired while reducing or eliminating the combustion that causes lung disease and contributes to more than 480,000 annual deaths in the U.S. In a closet-size room in a shared, rickety house just offcampus, beside an old apple orchard, Monsees and Bowen shaped a product they hoped would—this was Silicon Valley, after all—change the world. Ultimately their project morphed into Juul, a device that dispensed a potent nicotine aerosol that could taste like dessert and fruit.
By the time Burns was up for the top job at Juul, the company had grown into one of Silicon Valley’s most illustrious startups. It had also become one of the most controversial, for its role in hooking millions of teenagers on nicotine. Burns wanted to do his own market research. The New Yorker described how he convened a meeting with his son and his friends and asked them about vaping. Three of them pulled Juuls from their pockets. Juuling had become a thing at Paly. The bathroom by the art classroom had become the most popular location, and the best place for teachers, if they came in at the right moment, to catch students exhaling vape clouds before they vanished into nothingness.
That fall the Palo Alto High student newspaper, the Campanile, conducted a survey in which more than half of the 269 students surveyed reported vaping. Of those, half-used Juul. “Clearly, vaping has become a habit on campus,” the accompanying article read. “For many students, Juuling brings a very attractive social aspect. Students pass around the Juul and meet new people through this act, breaking the ice with a simple drag of the Juul.”
Burns’s son and his friends regaled Burns with stories of vaping, how they’d procured the devices, and how popular they’d become. For some people, the conversation might have served as a red flag. Not Burns. He’d been in private equity long enough to know that when you smell smoke, you run toward it, not away from it. That’s where the money is. (Burns did not respond to requests for comment for this story.)
“We could not be more pleased to announce Kevin as Juul Labs’ new CEO,” said Monsees in a news release on Dec. 11. “He was a key contributor to the extraordinary operational and strategic success at Chobani that positioned the company for long-term growth, strong financial fundamentals and continued innovation. We fully expect that he will bring similar success to Juul Labs.”
Burns arrived at Juul just as the company was moving boxes to its new, 30,000-square-foot headquarters on Pier 70 in the Dogpatch neighborhood of San Francisco, a stone’s throw from Bowen and Monsees’ first offices in an old tin-can factory. They kept their neighborhood haunts, but this time they had a better view of San Francisco Bay. And instead of a handful of employees, Juul had more than 200, with the count growing by the day.
Burns was 54 when he took over. With closely cropped gray hair and a stocky build, he exuded an unyielding Rust Belt vibe. A metallurgical engineer by training, he’d gone straight from college to General Electric in the days when Jack Welch, the ruthless godfather of lean manufacturing, was running the company. While there, Burns attended the company’s prestigious manufacturing management program; it set him on a path whipping ailing manufacturing companies into shape, Neutron Jack–style. He’d been doing it—for tire makers, and solar panel manufacturers, and chemical companies—for more than two decades.
At Juul it looked as if Burns had been dealt a series of fairly run-of-the-mill challenges. This company was a long way from yogurt, but Juul and Chobani shared a common problem: They’d both scaled too quickly and couldn’t keep up with all that the growth entailed. Burns had a plan and, because Juul had recently concluded a funding round, a war chest. But the enormity of what he walked into at Juul made sour milk and moldy yogurt seem like a dream.
While Burns sent his kids to the public high school in Palo Alto, many of Atherton’s elite sent theirs to Sacred Heart Schools, a private institution on 64 serene acres in the middle of town. Founded as a boarding school in 1898 by an order of French nuns, it was now a day school for more than a thousand children, from preschool to 12th grade. For parents paying full tuition, the cost was up to $50,000 a year.
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