Allegedly Fired for Taking LSD, Former Silicon Valley CEO Now Suing Company for Racial Discrimination

Last spring, a brief spate of headlines covered the firing of Justin Zhu. He was terminated as the CEO of Iterable, a Silicon Valley startup that at one point was valued at $2 billion. The reason? At the time, Zhu said he was dismissed for “micro-dosing” on LSD during a 2019 meeting with investors.

The circumstances surrounding the firing certainly came across as odd, given the fact that taking hits of hallucinogenic drugs such as mushrooms and LSD has long been accepted as being part of Silicon Valley culture given the pressures that come with working in the tech sector. Apple’s legendary co-founder, Steve Jobs, after all, was hardly shy about taking LSD. Bill Gates has hinted that he indulged in his youth, too. No one’s endorsing dropping acid or tripping on mushrooms while on the job, but when or why is it all right for some execs and not for others?

A year and a half later, Zhu is hitting back. In a lawsuit filed against his former company and its venture capital backers, Zhu claims the real reason for his sudden firing was because of racial discrimination due to his East Asian background.

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The timing of Zhu’s firing occurred while the U.S. was having another reckoning over race relations, this time after the horrific murders of several Asian American women in the Atlanta metropolitan area. Zhu was among the organizers of Stand With Asian Americans, a coalition that at the time was committing $10 million to fight violence and racial discrimination against Asian American people.

Zhu claimed it was that public stand that contributed to his firing. As detailed in the case filed with the Superior Court of the state of California in San Francisco, here’s what Zhu said happened after Iterable scored $60 million in a Series D funding round during a discussion with two of the companies’ investors, Murat Bicer and Shah Shardul:

"Justin shared the story of how, pre-series A, an Asian growth investor advised him that when the company gets bigger, that success will require hiring a white CEO because that’s what it takes to succeed in America. Justin suggested that this was the investors’ plan.

"The investors did not deny the accusation. Instead they affirmed that they wanted to replace Justin as CEO. They stated that if he cared about Asian causes, he could invest in them, not serve the goal by being a role model as CEO. Shardul pointed to the statement by a potential investor who said that Justin did not look like an enterprise CEO. The potential investor stated that the company’s Caucasian COO looked more like a CEO than Justin did.

"Shardul and Murat stated that Justin would always be the founder; that if one of Justin’s values is humility, he should be humble and say he may not be the best for CEO. Justin responded that the company was thriving under his leadership, and that to achieve the company’s vision, he would need to be in the final decision-making position. The conversation became tense. The investors then sought an independent board member and Justin would search for a CRO.

"After the dinner, the investors pushed for a Caucasian man to be the independent board member. Shardul pressed Justin strongly for a CRO candidate who was Caucasian. Justin met with the candidate for hours in Denver, but concluded that she did not fit the company’s values, and he conveyed this to Shardul during their next one-on-one meeting."

Granted, this is Zhu’s side of the story. However, he also claims that frank discussions about his mental health, including how the eight years of leading the company had taken a toll on him, also came into conversation as his eventual termination drew closer. At one point, Zhu resisted investors’ calls to have him demoted as Iterable’s chief technology officer.

Despite his role in securing close to $200 million in additional funding by April 21, Zhu claimed that continued discussions about his mental health and the challenges he faced as an Asian American further drove a wedge between the company’s co-founder and its investors. Meanwhile, Zhu was set to become the subject of a news story with Bloomberg, a profile that would have focused on his experiences with racial discrimination as an Asian American founder and executive, and why his role as a CEO was important to the wider Asian American community — topics that “further concerned” his colleagues. 

The confluence of the admissions about taking LSD, the Bloomberg story and his claims about racial discrimination led to Zhu's firing in April 2021 — and the company's immediate denial of any access to his company calendar, email and accounts including Slack, he said.

Zhu’s story could resonate with many Asian Americans and Pacific Islanders. Currently, about 9 percent of the U.S. workforce identifies as part of the Asian American and Pacific Islander (AAPI) community — a figure that rises to 13 percent when evaluating white-collar jobs. However, less than 6 percent of senior executives at America’s largest companies are Asian American — suggesting that many AAPI employees frequently find themselves overlooked come promotion time.

If the lawsuit, which was only filed this week, doesn’t settle and makes it to court, this case and the press surrounding it will certainly touch upon many challenges in the workplace: if recreational drug use, at even a micro-dosing level, is acceptable at all in the office, and why it’s all right for some to imbibe but not others; how far discussions about mental health should go in the workplace; and the ongoing discussion about race, diversity and fair opportunities for promotions within corporate America.

Image credit: Adobe Stock/Alexy