San Francisco Chronicle - (Sunday)
Pax, marijuana startup spun off from Juul, hits new highs
Nick Dor, a 42-year-old San Francisco resident, has no regrets about missing out on a million-dollar bonus.
The week before Christmas, Juul Labs gave out $2 billion in employee bonuses, part of a deal with tobacco giant Altria that gave the e-cigarette maker a valuation of $38 billion.
Dor worked on the Juul, a vaporizer used for puffing on flavored nicotine pods, at Pax Labs, the San Francisco company that’s also behind the eponymous Pax marijuana vaporizer. But when the companies split to focus on their respective vices in 2017, Dor lobbied to stay at Pax.
“I had always felt that cannabis had been vilified and misunderstood for many, many years,” said Dor, who’s now vice president of brand operations. At Pax Labs, “I could help tell the true story of cannabis and provide people with a way to consume it in a responsible and predictable manner.”
In a tale of two San Francisco companies, the marijuana startup became the less controversial.
Pax Labs has avoided negative press as it embarks on a nationwide hiring spree. The compa-
ny builds devices used for vaporizing marijuana flower, oil and waxy extracts, but it doesn’t grow or sell the plant. While Juul’s troubled image has been a turnoff for some tech workers, recruiters say Pax Labs is one of the most indemand companies in the pot sector.
In another distinction from Juul, which makes its own nicotine pods for its vaporizers, Pax designs empty pods that cannabis producers fill with oil. Having other companies deal with the actual cannabis is part of why Pax has escaped federal scrutiny. But it also means that suppliers like Level Blends and Bloom Farms that sell filled pods at dispensaries help promote Pax vaporizers.
Pax Labs is growing quickly. It more than quadrupled its workforce since the spin-off and is seeking a bigger headquarters in San Francisco as it plans to hire at least 100 workers in 2019.
Few employees had a choice in where they ended up after the split. The companies have separate staff and leadership, though they share the license on certain patents. Some employees who stuck with Pax rather than defect to Juul say they feel vindicated.
Workers can get behind the company’s mission of bringing ease and predictability around using marijuana. Although a federally controlled substance, it is less controversial than ever, with 62 percent of Americans in support of legalization, according to the Pew Research Center.
Establishing marijuana as “a force for good” is a popular refrain inside the cramped Mission District headquarters, situated two floors below the offices of Burning Man. Its vaporizers connect to a mobile app that lets users dial in the temperature and size of each hit, giving them more control than the clunky desktop vaporizers of the mid-2000s delivering heavy hits.
Pax Labs is working on a new product that fine-tunes these controls and brings even more transparency, employees say.
“This is the most excited I’ve felt about things that we’re working on the entire time I’ve been at Pax,” said Dor, who’s coming up on four years at the startup. Employees would not comment on Juul’s business or team. It’s against corporate policy to do so, a spokeswoman said. Without ever dropping the name, employees made it clear: Pax Labs is very different from its bigger stepsister.
“The core promise is that you’ll never have to be ashamed to work here,” said chief executive Bharat Vasan, turning in his chair in a sunlit conference room.
Juul did not respond to a request for comment.
Three years ago, Pax Labs, whose flagship product has been called the “iPhone of vaporizers,” branched into tobacco with a new kind of e-cigarette.
The Juul, which started out as another product in the Pax Labs portfolio, changed everything. Within a year it was on pace to eclipse sales of the company’s second-generation marijuana vaporizer and became the dominant e-cigarette on the market.
In 2017, Pax Labs and Juul Labs spun into different companies, with the tobacco upstart taking both co-founders and about 160 designers and engineers, leaving Pax Labs with 32 employees. Tyler Goldman, who held the top position at both companies, disappeared from the corporate masthead a few months later. Juul replaced him quickly with Kevin Burns, a seasoned executive from Chobani, while Pax went leaderless. The situation left heads of departments in charge for about two months.
When the company hired Vasan, he tasked employees with figuring out what kind of company they wanted Pax Labs to be. A reset.
Vasan left an illustrious career in consumer hardware — he was president of August Home, a company that makes internet-connected door locks and doorbells, before it sold to Swedish lock maker Assa Ablow in 2017 — to take the helm at his first pot startup.
Employees from across the company formed a committee of 15 people. They met every couple of weeks in conference rooms and coffee shops to develop a set of corporate values. Lauryn Livengood, who was recruited to build brand strategy in 2013, likened those early meetings to “therapy sessions.”
Those values are now displayed on poster boards throughout the office.
“Reinvent constantly.” “Empower our customers.” “Change the conversation.”
The last hit home for Livengood, whose role as senior brand manager involves telling stories about responsible, adult marijuana users who defy stereotypes.
“It’s important for us to get this right from the beginning so that when other folks get on board, they know what train they’re getting on,” she said.
A recent report from Glassdoor showed Pax had more openings than any other marijuana startup in San Francisco, one of the hottest metropolitan areas hiring in the sector, in the month of December. Karson Humiston, whose Vangst job-search site is dedicated to the pot sector, saw “a huge influx of candidates asking us about roles at Pax,” she said.
“They only hire Aplus players,” Humiston said. “It’s hard to get a job there.”
Dor said plenty of candidates apply for jobs at Pax because they want in on the marijuana “green rush” — which has also spurred other companies, like Firefly and Mighty, to make vaporizers. Legal pot could soon become a bigger industry than soda, with sales expected to hit $75 billion by 2030 if marijuana is made legal nationwide, analysts say.
“We really want to make a difference, make cannabis that force for good,” Dor said. “People who want to make a quick buck probably won’t make it to Pax.”