An investor in the startup that fired its CEO after he microdosed LSD at work reportedly sold roughly $92 million in shares before the ousting

awilliams@insider.com (Annabelle Williams) 

4/28/2021

© Iterable Iterable co-founder Justin Zhu Iterable

Index Ventures recently sold about half its shares in Iterable, The Information reported.

The sale, to Silver Lake Partners, came before Iterable's CEO was fired for LSD use while at work.

Two investors on the board previously had concerns about the CEO's leadership, The Information reported..

Prior to marketing startup Iterable firing its CEO, Justin Zhu, this week, a major investor sold roughly $92 million of its shares in the company, The Information's Kate Clark reported Wednesday.

Iterable, founded in 2013 by Zhu and Andrew Boni, made headlines this week after Bloomberg reported that its CEO had been fired for violating company policy. Zhu told Bloomberg he had used LSD while at work in an effort to boost his focus and creativity, taking a small dose of the drug in a practice commonly known as microdosing before an investor meeting in 2019. Boni is taking over the top job as a result of Zhu's departure.

The new report from The Information, arriving a day after the news of the CEO ousting, sheds light on broader investor concern of the CEO's leadership that could extend beyond his use of LSD.

The investor, Index Ventures, sold roughly 50% of its shares in the marketing startup to Silver Lake Partners, which took the investor's board seat as a result, according to the report. The sale happened in early April, according to The Information, just weeks prior to Zhu's ousting.

While it's not clear what exactly happened at that investor meeting in 2019, The Information reports two investors, Murat Bicer at VC firm CRV, and Index Ventures' Shardul Shah, who departed the board as a result of the share sale, had previously been unhappy with Zhu's leadership of the startup.

The Information reports the CEO had also voiced plans to be more vocal about the issue of racism against Asian Americans in the US, which has seen a rise in hate crimes. Zhu is Chinese, and helped create Stand With Asian Americans, a group of hundreds of Asian American and Pacific Islander business leaders who are spending $10 million in an effort to combat discrimination.

In a Monday vote, three board members, including co-founder Boni, voted to remove Zhu, The Information reported, with his drug use being listed as the main reason.

Iterable, Index Ventures, Silver Lake Partners, CRV, and Zhu did not immediately respond to requests for comment on the sale of Index Venture's shares and the circumstances surrounding it.

Iterable, based in San Francisco, was most recently valued at $2.1 billion, according to PitchBook.

Zhu may be the first Silicon Valley CEO fired for using LSD, an increasingly common trend where users take small amounts of the psychedelic drug in an effort to experience purported beneficial side effects. Emojibator cofounder and CEO Joe Vela told Insider in 2020 that psychedelics helped him solve problems at work: "Even a microdose can flip the prospect of a long, boring task into one that is exhilarating," he said.

While some in Silicon Valley, including Apple co-founder Steve Jobs, have embraced LSD and spoken positively about their experiences with it, the drug remains illegal in the US.

 LSD