As Juul announces mass layoffs, a new lawsuit alleges it shipped a million contaminated pods

A lawsuit filed a by former Juul executive alleges that the company knew a batch of contaminated e-liquid had been used in about one million pods shipped to retailers earlier this year, but did not inform customers. The lawsuit, first reported by BuzzFeed, was brought by Siddharth Breja, former senior vice president of global finance at Juul from May 2018 to March 2019, who alleges he was fired after complaining about the contaminated pods.

News of the lawsuit comes the same day as Juul’s announcement it will lay off about 500 people, or 10% to 15% of its workforce, and the departure of four executives, including chief financial officer Tim Danaher. Juul is currently under scrutiny by the Food and Drug Administration, which claims the startup made misleading statements about its product and targeting of teens.

In the lawsuit, Breja claims that during a meeting on March 12, he learned a contaminated batch of mint e-liquid was used to make 250,000 refill kits, or a total of one million pods, that had already been shipped to retailers.

Breja alleges that when he complained about Juul’s refusal to issue a product recall or health and safety notice, Danaher said doing so would cost the company billions of dollars in lost sales, hurting its then-$38 billion valuation. About a week later, Breja says the company fired him, telling him that it was because he had misrepresented himself as former chief financial officer at Uber. In the lawsuit, Breja says the claim was “preposterous,” and that he had accurately represented his former position as a chief financial officer of a division at Uber.

In the lawsuit, Breja also claims that Juul wanted to sell pods that were almost a year old and when he asked the company to include an expiration or best by date, or a date of manufacture on the packaging, he was told by former CEO Kevin Burns that “half our customers are drunk and vaping like mo-fos, who the fuck is going to notice the quality of our pods?”

TechCrunch has contacted Juul and the law firm representing Breja for comment. In a statement to BuzzFeed, Breja’s attorney Harmeet Dhillon said “Mr. Breja became aware of very concerning actions at the company, and he performed his duty to shareholders and to the board by reporting these issues internally. In exchange for doing that, he was inappropriatey terminated. This is very concerning, particularly since some of the issues he raised concerned matters of public safety.”

Burns was replaced in September by K.C. Crosthwaite, a former executive at Juul’s largest shareholder Altria . A replacement for Danaher has not been announced yet.

Slack investor Index Ventures backs Slack competitor Quill

Slack created a new solution for workplace communication, one copied by many, even Microsoft. But the product, which is meant to help individuals and businesses collaborate, has been critiqued for sending too many notifications, with some claiming it’s sabotaged workplace productivity.

Quill, a startup led by Ludwig Pettersson, Stripe’s former creative director and design aficionado, claims to offer “meaningful conversations, without disturbing your team.” The company has raised a $2 million seed round led by Sam Altman with participation from General Catalyst, followed by a $12.5 million Series A at a $62.5 million valuation led by Index Ventures partner and former Slack board observer Sarah Cannon, TechCrunch has learned.

Quill and Cannon declined to comment.

The company, based in San Francisco, has created a no-frills messaging product. Still in beta, Quill plans to encourage fewer, more focused conversations with a heavy emphasis on threads, sources tell TechCrunch . The product is less of a firehose than Slack, says former Y Combinator president Altman, where one can get stuck for extended periods of time filtering through direct messages, threads and channels.

“It’s relentlessly focused on increasing the bandwidth and efficiency of communication,” Altman tells TechCrunch. “The product technically works super well–it surfaces the right information in the feed and it’s pretty intelligent about how it brings the right people into conversations.”

Pettersson previously worked with Altman at his current venture, OpenAI, a research-driven business focused on development that steers artificial intelligence in a “friendlier” direction. Pettersson was a member of the company’s technical staff in 2016 and 2017, creating OpenAI’s initial design.

Index Ventures, for its part, appears to be doubling down on the growing workplace communications software category. The firm first invested in Slack, which completed its highly-anticipated direct listing earlier this year, in 2015. Slack went on to raise hundred millions more, reaching a valuation of over $7 billion in 2018.

Since going public, Slack has struggled to find its footing on the public markets, in large part due to the growing threat of Microsoft Teams, the software giant’s Slack-like product that debuted in 2016. Quickly, Microsoft has gobbled up market share, offering convenient product packages including beloved tools used by most businesses. As of July, Teams had 13 million daily active users and the title of Microsoft’s fastest-growing application in its history. Slack reported 12 million daily active users earlier this month.

Startups like Quill pose a threat to Slack, too. It created the playbook for workplace chat software and proved the massive appetite for such tools; companies are bound to iterate on the model for years to come.

Quill is also backed by OpenAI’s chairman and chief technology officer Greg Brockman and Elad Gil, a former Twitter executive and co-founder of Color Genomics.