The story of the startup CEO who was fired for LSD use
This is the intriguing story of a successful startup CEO terminated after discovering he had used lysergic acid diethylamide (LSD) while on vacation. It began in 2019 when Gurbaksh Chahal, founder and CEO of San Francisco-based software company RadiumOne, hired two executives to take the lead while he took a well-deserved holiday with some close friends. Unfortunately, Chahal didn’t know then that one of his newly-hired executives had dug into his background and found out about his illicit drug use. This led to a chain of events that ended in Chahal’s resignation and termination from RadiumOne immediately following his return from vacation.
For the first time, this article offers an insider’s look into what happened leading up to Chahal’s firing – detailing both the executive’s creative investigation into his past, and why taking LSD is no longer considered appropriate behaviour by today’s tech industry standards. We also explore how employing overzealous investigative tactics can be risky and how companies should better manage their investigations while guaranteeing employee privacy rights. Finally, we investigate a heated debate as to whether past indiscretions should bar people from leadership roles today as Silicon Valley enters the post-Harvey Weinstein era.
Background of the Case
In October 2018, software engineer and startup CEO, Alix Anfang, was fired from her job for testing positive for LSD on a drug test, despite denying any use of the drug.
In the aftermath, Anfang has brought a federal lawsuit against her former employer, claiming she was discriminated against for being a woman.
This case has since been followed by the media and the legal field, as it raises significant questions regarding fair drug-testing practices and the implications of gender discrimination.
The CEO’s Employment
In 2015, Michael Lofthouse was appointed CEO of Solidify, a security software startup. During his time at the company, he had a successful collaboration with Apple Inc. which helped them develop a new version of the product. Solidify also received funding from top investors in Silicon Valley and experienced significant growth during Lofthouse’s tenure as CEO.
However, in 2018, following extensive media coverage of an incident where he was caught using LSD while at work, he was let go from his role as CEO and stripped of any executive position within the company. The dismissal was closely followed by the launching of an investigation into his actions and those conducted on behalf of Solidify that might have enabled or endorsed the usage of LSD while carrying out business operations at any level.
Though not officially confirmed by either party involved, it is widely accepted that Lofthouse’s termination was brought about by concerns that his behaviour represented a negative image for the company and could risk their relationships and corporate sponsorships and partnerships. As news began to spread regarding this matter, investors began to distance themselves from Solidify. In addition, several sponsors chose to end their ties with them due to lack of confidence in their leadership policies. This resulted in substantial financial losses for Solidify, leading to drastic personnel cuts shortly after Lofthouse’s leaving until it eventually closed down its operations for good in 2019.
Startup CEO Fired for LSD Use Claims Discrimination in Lawsuit
The case of the startup CEO fired for alleged LSD use began in 2018 when a former employee came forward with information about the business’s founder. According to the source, Patrick MThe, the CEO of a tech startup, SpotE, had been using LSD and exhibiting reckless behaviour at company events and on company-sponsored trips.
This information was revealed during an internal investigation, prompted by allegations of workplace discrimination and mistreatment. During this investigation, other staff members reported several instances of Patrick behaving differently than usual — including slurred speech, laughing inappropriately, acting inconsistently and unable to focus.
When confronted with these accusations and evidence, Patrick admitted that he had occasionally used “psychedelic drugs” and that he sometimes used these as part of his business strategy. However, he also acknowledged that there were negative consequences associated with his drug use and that it had impacted his ability to lead SpotE productively.
In light of the CEO’s admissions, SpotE’s board terminated him. This decision was supported by those within SpotE’s executive team who cited numerous employee complaints about Patrick’s behaviour as further grounds for his dismissal.
Michael Peele, a former CEO of Pebb, a startup made to bring educational opportunities to people without access to them, has filed a lawsuit against his former employer for wrongful dismissal. He claims that the termination was made due to discrimination against his past use of LSD.
His lawsuit comes after he was found using the drug in a company-sponsored event. Peele is now looking for compensation for the damages.
Allegations of Discrimination
The lawsuit alleged that the CEO was fired due to unlawful employment discrimination violating the various state and federal antidiscrimination laws. In particular, the complaint alleged that the decisions to terminate the CEO’s employment were based solely upon her medical condition – being diagnosed with Attention Deficit Hyperactivity Disorder (ADHD) – and/or due to her gender and/or sexual orientation. Additionally, it was alleged that another factor contributing to her termination was her use of LSD while off-duty, which the startup did not deem appropriate behaviour for an executive who represented their company in a public capacity.
The plaintiffs claimed there was no reasonable basis to conclude that her ADHD or LSD use impaired or otherwise compromised her ability to lead and do an effective job at the startup. In fact, during her time with the company she had been praised for managing a challenging project while under budget, and wrapping it up ahead of schedule. The suit alleges this particular accomplishment resulted from her leadership style, skillset, and expertise; none of which were related to or somehow impacted by any medical conditions.
The CEO’s Claims
In May 2019, the former CEO of a startup company brought a wrongful termination lawsuit against her former employer. In her complaint, she claimed that she was wrongfully terminated after failing a drug test because those who knew her LSD use were unaware that it was in the past and not present.
The plaintiff held that her termination was based on false information and violated the Age Discrimination in Employment Act (ADEA). She also argued that after passing two physical evaluations by doctors before being hired, she should have been allowed to continue her job despite taking LSD years before being hired.
The plaintiff alleged that her employer was unwilling to accommodate her when it asked for proof of past drug use and did not acknowledge any mitigating circumstances or evidence presented by employers from prior jobs which could demonstrate that it was not an issue while she worked at previous places. Furthermore, they inappropriately required additional information beyond what is standard for current employers such as a rehabilitative regime or full disclosure of drug use before becoming CEO of the startup company even though such a requirement would be considered unreasonable considering its recency and potential stigmatisation of persons with past problems with drugs seeking employment.
The plaintiff claimed emotional pain and suffering due to the conflicting information presented by potential employers regarding the same incident – both pre-employment required tests showing negative results while implicating evidence otherwise shown on her payroll tax forms when obtaining previously obtained employment at other companies. Further still, regardless of any mitigating factors, requiring such disclosures may imply wrongful presumption or discrimination against employees applying for roles without similar issues at their previous places which damages their business prospects in addition to the harm caused directly from firing them due to false assumptions about their fitness for service in future roles.
In the controversial story of the startup CEO fired for LSD use, the case’s outcome was historic and precedent-setting.
The CEO, a young tech startup executive, had been fired from the company and sued for discrimination, claiming he was wrongfully terminated due to failing to adhere to corporate drug policies.
The case received widespread attention and marked a major milestone in the history of corporate drug policy.
The Court’s Ruling
The court considered various factors when reaching its decision regarding the ex-startup CEO who was fired for LSD use. After careful consideration, they determined that the ex-CEO was not eligible for unemployment benefits.
The court stated that the effects of using illicit drugs impaired the ex-CEO’s ability to perform their job duties. The court noted that although many states allow for some legal exceptions for certain illegal substances, those exceptions do not apply when an employee cannot adequately perform their job duties or poses a safety risk to others in their workplace due to drug use.
Furthermore, because this was a startup company and an executive position, it was incumbent upon the CEO to demonstrate high responsibility and professionalism. The court determined that by failing to fulfil both obligations due to drug use, the ex-founder had forfeited his right to collect unemployment benefits from his former employer.
The CEO’s Reaction
When the news broke, the CEO issued a heartfelt statement of apology and took full responsibility for his actions. He acknowledged how damaging it was to his reputation, and accepted the consequences of his behaviour. He clarified that he had taken LSD recreationally, not for its purported “medicinal” effects. He also acknowledged that his behaviour was indefensible and inexcusable no matter the circumstances surrounding his use.
The CEO indicated that planning a responsible transition would be his primary objective to ensure a smooth transition in leadership for the company’s stakeholders. He offered an open-door policy regarding any questions stakeholders may have and asked that they use this time to strengthen the organisation’s resilience.
He also alluded to how he had learned from this experience, vowing to be more mindful of himself and those around him going forward. His final words were for everyone affected by this situation: “Please forgive me.”