Justin Zhu, chief executive of digital marketing startup Itrable Inc., was walking down Broadway in San Francisco on April 26 when he was called in for a surprise conference call and abruptly fired. His co-founder, Andrew Bonnie, and the entire board of the company told him that he was losing his job, mainly because he had taken LSD before a meeting in 2019.
The incident did indeed occur — Zhu says that he was trying to take a small dose to focus his attention and accidentally got too much, but was fired for other reasons. For the past 10 months, Xue was talking with a reporter at Bloomberg Businessweek about his experience as CEO, the challenges of being Chinese in Silicon Valley, and his disputes with two of Iterable’s key investors. When investors asked him, he did not make the final strugle in a long-running feud.
Xue’s shootings have blossomed into a bizarre saga that hits many of the cultural touch points of classic Silicon Valley: founders who don’t act like traditional businessmen, discover additional productivity through drug use, and pressure The risks of talking openly. work. It is also a story steeped in tense ethnic politics that currently haunts the tech community and American society at large.
“In the early days, they are looking weird,” says Zhu, now 31, of venture capital investors. He took Eyetable from an idea to a company valued at around $ 2 billion, which by most measures was a resounding success. But when a company reaches that stage, he says, the new mantra has been created: reduce risk.
Zhu started his career as a software engineer on Twitter in 2011. Two years later, she and Bonnie, now 32 years old, poured their life savings into a new startup, Iterable, which created marketing campaigns and information that targeted customers in a highly tailored way. , Such as telling customers the status of their food delivery orders via email or text alert. Before long, it started winning customers, and investors climbed to sign. As of the end of 2016, Iterable was valued at $ 125 million.
In person, Zhu fits in with the freethinking ethos of Silicon Valley, which experiences quirkiness in a way. At a recent business lunch, he wore a planet- and star-embellished mound velor sweatshirt, which he says he bought because it reminded him of Antoine de Saint-Exupé; He likes to discuss the immortality of capitalism, the principle of cosmic debt and the need for more love in the world.
Even though iterable, Zhu says he sometimes felt isolated and depressed. He believed that he and the company focused on sales and money at the expense of philanthropic goals. When he attended the 2019 wedding of one of his investors in Lebanon, Zhu met an entrepreneur who suggested that he take small amounts of LSD to improve his concentration and overall well-being. Zhu researched the idea and the study found that microdosing is associated with better focus and less stress.
Back in San Francisco, Xue was preparing for an important meeting with a major investor group. Believing that LSD would improve their pitch in limited quantities, Zhu, who had never used the drug before, decided to try the microdosing scheme. He thought that he had taken a small amount of LSD shortly before the meeting.
It did not go as expected. When he tried to walk potential investors through a series of financial projections, Xue looked at the screen and saw numbers and images swollen and shrinking, making him impossible to contemplate. His body felt like it was melting away, he says. After a strange pause, a colleague stepped in. Zhu took a piece of her tea, decided to speak from memory, and pressed forward. The pitch did not result in investment.
Zhu’s relationships with venture investors had already become tense. He wore cargo shorts and a T-shirt to a meeting with Geodesic, a VC firm founded by former US ambassador to Japan, John Roos. An Iterable board member later informed him that Geodesic would not invest, implying that this was partly due to his casual attire. A person who is familiar with the firm’s thinking says that Zhu’s dress gave no reason in the firm’s decision not to discuss matters of private business.
At another investor meeting, Zhu said that AI, the abbreviation for artificial intelligence, sounded like a Mandarin word for love. Later, a co-worker asks him if he is “becoming Adam Newman”, referring to the ousted CEO of WeWork on similar topics. He says he later heard that an investor questioned whether he was high at the time. Zhu says he was not describing his workplace involvement in microdosing as a one-time event. Bonnie tells him that he prefers the more circumspace version of Zhu. Using his given Chinese name, Zhu says that he replied that he was finally showing the real Zhu Ren.
At the end of 2019, Iterable succeeded in raising an additional $ 60 million, with two of its investors, Murat Bisar, general partner in CRV, and Index Ventures partner Shardul Shah, taking dinner to celebrate Zhu. At a corner table in the restaurant Hakkasan, two VCs directed a conversation on the subject of the company’s leadership. Surprised, Zhu asks him if he is thinking of replacing him as CEO. “It’s still your company,” Zhu says, assuring him of Biser, but Bisser also asks him to consider the benefits of a more experienced leader.
Zhu, who was born in Shanghai, says he recalled an early conversation with an Asian investor who said that Zhu would likely one day be asked to step aside for an executive. He told investors that he wanted to live in part to set an example for other East Asian migrants. “I didn’t get any sense,” he recalls. “They were like, ‘Okay.’
When asked about the dinner, among other details of Zhu’s account, Index Ventures declined to comment through a spokesperson. CRV did not respond to repeated requests for comment and Beeser did not provide comment.
In the early days of the coronovirus epidemic, Zhu gave a $ 30 million loan to keep the business running in the event the economy fell below it. To close the loan, the bank wanted a reference from its board, and Zhu says Shah stayed. Eventually, Shah asked to meet with co-founders Bonnie and Beeser at VC Hub, South Park in San Francisco. The men gathered on the bench outside, and investors again brought up the subject of finding a new CEO. “You’re just matching patterns,” Zhu tells them. “Your last 20 CEOs who went public were probably all Caucasian people.”
This was not a wild claim. Most Silicon Valley CEOs are white men; Many are from India, but some are from China, Japan or Korea. Nevertheless, both Index Ventures and CRV have supported notable East Asian CEOs. CRV was an early investor in Dordash Inc., led by Nanjing-born Tony Xu. The index had invested in Zuora Inc. and other companies run by East Asian executives.
Some disconnect with Shah, Zhu felt, was due to his East Asian background. Zhu prefers to seek consensus rather than shutting down disagreeable views or engaging in noisy debates, a cultural trait to the weakness of his investors, a stereotype about East Asians, whom Academics have cited reasons for the demotion of leadership positions in the US. In a paper last year, an MIT professor and his colleagues wrote that the “bamboo ceiling” reflected “an issue of cultural fit.”
Later that week, Zhu said that Shah asked him to commit to running his board meeting with “more presence” and “driving it harder” — Zhu says he was not in his nature. Most boards also wanted Zhu to commit to memorizing key company metrics as part of a performance improvement plan. Zhu says he went with the plan and the loan came through Shah’s approval. But the conversation did not sit well with Zhu.
“I run the company with Eastern values,” he says. “This does not mean that I am not equipped to be CEO.”
Zhu states that the controversy amounts to discrimination, even if it is not compatible with the stereotypical image of racial prejudice. Twenty-two grew up in Turkey, and the Shah is of South Asian ethnicity. And when Zhu was fired, the board replaced him with Bonnie, who was president of Iterable and who, like Zhu, is of East Asian descent. (Zhu says he suspects that the board sees Bonnie as a placeholder and will replace him.)
By the late summer of 2020, business in Iterable was booming again. It was time to raise more money. But by this point, mistrust towards Zhu Shah had increased and he wanted to reduce his involvement in the deal. In collaboration with Shah, he arranged for investment firm Silver Lake to buy about half the shares of the index and occupy Shah’s board seat, a portion of a funding round that would be valued at $ 2 billion in Iterable.
The issue of bias and violence towards Asians entered the national conversation after eight people were killed in Atlanta in March. Zhu, who can remember the escape from the bullies of the schoolchildren who beat him up and tells him to go back to China, helped organize an expedition called Stand with Asian Americans. The effort pledged support by 7,500 Asian-American business leaders and allies.
Zhu becomes more convinced that he needs to tell his story. He informed his board, which no longer included the index, that he was speaking with a reporter in Bloomberg, and first told him about the microdosing incident. They asked him not to discuss his discussions with or with his investors. Zhu said that he wanted to tell all this even at the risk of his situation. “The only reason to share it is to help the founders who are suffering, and anyone who is going through the things I’m going through,” he says.
In late April, Zhu’s investors again asked her not to speak with the press. Shortly afterwards, he gets a call that he has been fired. Zhu assimilated the news by sitting in a park in the Financial District of San Francisco. “That’s the price of justice these days,” he says. “I tell the story and throw it out.”
(Except for the headline, this story has not been edited by NDTV staff and published from a syndicated feed.)