(Bloomberg) -- In this week’s episode of Elon, Inc., we discuss Elon Musk’s alleged drug use. Were we talking about almost any other executive, the report by the Wall Street Journal over the weekend would have qualified as a bombshell. According to the Journal’s unidentified sources, Musk’s alleged substance abuse has caused consternation within his companies, with Tesla board members and SpaceX executives privately expressing concerns.

But it’s not clear that many people inside or outside Musk’s companies are genuinely worried. Investors have been largely unmoved by all of this, partly because during the period that Musk is alleged to have indulged, he also made them a great deal of money. Musk himself mostly laughed off the report. On this episode of Elon, Inc., we are joined by Loren Grush, Bloomberg aerospace reporter and author of the NASA history The Six, to discuss why the drug allegations haven’t hurt Musk, and why a labor dispute involving SpaceX employees might be a bigger threat.Here is a lightly edited transcript of the conversation. Listen in full below, learn more about the podcast here and subscribe on Apple and Spotify to stay on top of new episodes.

Joel Weber: Welcome to Elon, Inc. where we discuss Elon Musk's vast corporate empire, his latest gambit and antics, and how to make sense of it all. I'm your host, Joel Weber, sitting in for David Papadopoulos. It's been the talk of the town, so to speak, for these last few days. On Saturday night, the Wall Street Journal dropped a story detailing Elon Musk's alleged drug use over the past few years and discussed how it has, or hasn't, impacted his businesses.

Brad Smith, Yahoo Finance , on tape: After a report from the Wall Street Journal claimed illegal drug use was the cause of some of Elon Musk's questionable behavior. And executives are concerned about the impact on his companies, including Tesla and SpaceX.

Weber:  Musk has admitted to drug use before, and of course, smoked weed with Joe Rogan that one time during a taping of Rogan's podcast. So this wasn't exactly news, but the anecdotes raise important questions, like, could this impact Musk's status as a federal contractor, especially given how much business SpaceX does with the US government. And we'll dig into another headache from Musk and SpaceX. Last week, the National Labor Relations Board issued a complaint over the 2022 firings of SpaceX employees who were critical of Musk's tweeting. SpaceX has since sued the NLRB in an attempt to halt the case. To discuss this and more, we'll convene Loren Grush Bloomberg's expert on all things SpaceX. Hi Loren.

Grush: Hi. Thanks for having me.

Weber: Dana Hull, the world's most tenacious Tesla reporter. Hi, Dana. 

Dana Hull: Good morning. 

Weber: And Max Chafkin, senior reporter at Bloomberg Businessweek. 

Chafkin: Hello. 

Weber: Okay, Loren, I'm gonna start with you. What did this article say and was there anything newsworthy in here for you?

Grush: I would say the biggest thing that stood out to me, having covered SpaceX and this saga for some time, was an all hands meeting that occurred in 2017 in which some executives were concerned about Elon's behavior. Apparently he was slurring and about 15 minutes into the all hands, Gwynne Shotwell, the president of SpaceX, supposedly had to step in and take over the all hands meeting. And then I think most of the article referred to or referenced the 2018 Joe Rogan podcast incident, which I think a lot of people are familiar with, in which Elon Musk, you know, openly smoked something on Joe Rogan's podcast. It's thought to be marijuana. And that was a little more direct and that we all saw happen. But that one was well documented at the time. There was a lot of fallout from that. SpaceX or NASA, you know, got concerned. They did an audit of SpaceX and Boring's safety cultures in the wake of that incident.

Weber: Okay. You mentioned what happened on the Rogan Podcast. We're just gonna play that episode so that everybody can hear what went down.

Elon Musk, on tape: So is that a joint or is it a cigar? 

Joe Rogan, on tape: No. It's marijuana inside of tobacco.

Elon Musk, on tape: Oh, okay. So it's like posh tobacco. 

Joe Rogan, on tape: You never had that. 

Elon Musk, on tape: Yeah, I think I tried one once.

Joe Rogan, on tape: You probably can't, 'cause stockholders, right?

Elon Musk, on tape: I mean, it's legal, right?

Weber: I think we call that a blunt, Dana. So, Dana, how do you feel like this Wall Street Journal reporting and story compares to the incident that Elon waded through when he was on that Rogan podcast?

Hull: Yeah, well, the timing of this is very interesting to me. You know, 2018 Elon's companies were in a very precarious position. SpaceX had not yet flown astronauts to the Space Station. Tesla was struggling to ramp up the Model 3, and the guy was exhausted trying to keep both businesses afloat. It was like a really precarious time. And then the Joe Rogan thing was just the stupidest thing he could have done. Five years later, he's the richest man in the world. Both companies are doing great. SpaceX is the dominant launch provider. Tesla's the bestselling EV maker in the world next to BYD. From where I sit, Musk amplifying anti-Semitism had a far more severe market impact in terms of stockholders being upset, pension funds writing letters, the stock actually moving, than this story about drug use. And I hate to break it to the school moms in the audience, but a lot of people in tech and finance do drugs. Like a lot. It is a thing, and I'm not trying to excuse the behavior, but you know, Steve Jobs openly talked about how doing LSD like helps him become this creative genius. And I think that for Musk's fans, the fact that he is running all these companies while potentially being on drugs is like another sign of how he's this incredible genius and blah, blah, blah. And it just sort of feeds into his aura.

Weber: Okay. So there's, you know, things that he’s used before that had been known, the Ambien, the cannabis, but Max – LSD, cocaine, ecstasy, mushrooms, ketamine, some of which are, you know, ketamine in particular – he seems to have a prescription to help him do his thing with, but isn't that a different nature of drug use when we are going into some illegal territory there? 

Chafkin: I mean, I think, what Dana is getting at, like none of this is outside of the norm in Silicon Valley.

Weber: But he's left Silicon Valley, he’s in Texas now.

Chafkin: But, as described by the Wall Street Journal, which is a handful of isolated incidents – at Rogan, he smoked a doobie on the Rogan Podcast. He takes some ketamine. There was a party at Art Basel. It isn't that much. And I think there are really two possibilities here. One is, Elon Musk is doing a lot of weird stuff online, and we talk about it all the time. And, some of this stuff is damaging. And one way to talk about that, if you are a Tesla board member or a SpaceX board member or a critic, is to blame something like drug use. The other possibility is maybe there's more to this story that was unreported and that's kind of what Dana is hinting at. Like, I guess that's the other possibility. But as it exists now, it just doesn't seem all that damning.

Weber: I'm gonna bring up his response, which he posted on X on Monday: “Whatever I'm doing, I should obviously keep doing it.” And then he responded to himself a little bit later, or actually just another user, and said, if drugs actually helped improve my net productivity over time, I would definitely take them. So let's say he is a drug user and is using them a lot. How does this go over with his people?

Chafkin: I mean, the way you read that, it's funny, it sounds like he said, as he took a long drag from a healthy joint. It's hard to say. I mean, proviso, it is not good to violate federal contracting rules if you are a federal contractor. But on the other hand, it's very hard to see the US government taking any kind of serious corrective action because of course, as we've talked about many times, they need SpaceX and people are not necessarily calling into question rockets. And also, newsflash – not a huge surprise that Elon Musk is not respecting laws, norms or regulations.

Weber: Dana, do you think there's any version of key man risk here? Key man risk being a term that we talk about a lot around corporations, right? If there is a CEO who can no longer do his job or her job, perhaps that puts the company at risk. Do you think that there's any version of this that key man risk plays out over this scenario?

Hull: Well, so Tesla and their regulatory filings always talk about key man risk. I mean, they always say we are highly dependent on the services of Elon Musk, who is not our full-time CEO and runs several other companies. And so, yeah, I will roll over if the next 10-K says, our CEO is a drug addict and there's a key man risk that he might go to rehab and we'd be without a CEO. I mean, that would be amazing. Elon is just not a typical CEO. And I think that the trap that a lot of journalists frankly fall into is like, we're trying to establish these norms for him when he has broken all the norms, and been wildly successful at it. And investors care about one thing, and that is the return on their money. Since he smoked pot on the Joe Rogan show, which we all know was a big deal that really hurt his reputation, hurt his standing with NASA, caused this big furore. The stock has returned – I didn't even check – I don't know, like 1200%. I mean, so fundamentally the investors are used to him being a weird guy.

Chafkin: I love that Dana is a 420 friendly money manager over here. Saying like, ever since he started smoking weed, his performance has improved.

Hull: You know, that's not to say that, I mean, clearly it seems like the board has concerns. So, you know, I would love to know more about what exactly were the concerns. But obviously I'm not trying to be like, do drugs, drugs are great, but I'm just saying that a lot of people in power use drugs and a lot of people in power also use alcohol.

Chafkin: The thing is though, if the financial performance turns around, then the story changes completely. And, Dana wrote a story about this the other day and made the point that this is gonna wind up in shareholder lawsuits. And by going around talking about how fun it is to mix red wine and Ambien, you're essentially giving ammunition to critics if the stock ever takes a dive. Now anyone who wants to explain why companies aren't performing well, if they stop performing well, has a great story to tell.

Hull: I mean, you'd have to really prove that it was because of the drug use. You'd have to prove that he made a critical decision that was bad for the company, because he was on drugs at the time.

Weber: Loren, I want to bring it back to you because if there were one company that seemed like it might have to deal with this a little bit more than anybody else, it would probably be SpaceX, because of the federal contracts the company has. And one thing that's different now than in the Rogan episode was that, as I think Dana alluded to earlier, this is how the US gets astronauts to the International Space Station. So what might happen and unfold at SpaceX, or between SpaceX and any sort of drug testing that might have to go down?

Grush: Well, there's two key things that I wanna bring attention to and why it's different now and why I think the response will be different. Back in 2018, SpaceX hadn't launched people yet. So there was still concern about whether or not this was a good idea, using commercial companies to actually launch astronauts to the International Space Station. And so when he took that drag, they were thinking, okay, maybe we do one last gut check in terms of the safety culture at these companies. And so that was really what prompted it. Now SpaceX has proven that it can safely deliver astronauts to and from the International Space Station on a routine basis. So giving up that capability is gonna be extremely difficult. The other thing that I think is different is that we saw him take the hit on the Joe Rogan podcast, we had direct evidence that he did that.

Grush: Whereas with this Wall Street Journal story, they're referencing that 2017 all hands meeting. And they even said in the story, it could not be determined if the reason for his slurring was drugs. And SpaceX did post what appears to be the all hands that was referenced in the Wall Street Journal article. And having covered Elon for a long time, I watched that video and it seemed pretty standard, awkward public speaking Elon, to me. But you know, I can't determine what was going on before he took the stage in that video. But point being, I don't think we have a direct piece of evidence as we did with the Joe Rogan podcast, to prompt another substantial audit like NASA did back in 2018. 

Weber: Is it clear if Elon has ever taken a drug test and or passed or failed a drug test, Max?

Chafkin: They've said he has. I think our assumption is that he has, and he's passed. If I'm wrong, please correct me.

Hull: He tweeted that he has, right, he tweeted that he was tested randomly at –

Weber: Tweeted or X-ed?

Hull: I'm sorry, he X-ed that he had been randomly drug tested at SpaceX for three years and always passed with flying colors. I mean, I don't know when the most recent test was. I have no idea.

Weber: Okay. Now we're gonna focus on SpaceX and some dueling stories that involve the National Labor Relations Board. The NLRB issued a complaint about SpaceX and, and a labor situation there, and is scheduled to hear that case in March. SpaceX has since sued the NLRB saying the agency is unconstitutional and the suit should be dismissed. All of this relates to a story that Loren Grush broke for the Verge before she joined Bloomberg. So, Loren, we're gonna start with you.

Grush: Yeah, so that was a very intense week back in 2022. Basically I was going home for the day, which is when you get your best tips, you know, and someone leaked to me that there was an internal letter going around within SpaceX, and it was a letter posted to their Microsoft teams channels, and that it was pretty critical of Elon. And they were saying, you know, I think the line that I kept pulling for stories was that he was a frequent source of embarrassment for the company, and that they were calling on SpaceX to distance itself from his public comments, that they should be better about sexual harassment.

Weber: How did the company respond?

Grush: Yeah, so the letter was up for about a day and a half before they pulled it down from the teams channels. And then, after we published our report, I started to hear that a bunch of the people associated with the letter were getting fired. And then Gwynne Shotwell sent out an email to the company, a really peculiar email in my opinion – because it was basically saying, I don't remember the exact text, but it was like these rogue employees were distracting all of their coworkers and harassing them by telling them to sign on to this letter. It was a really very aggressive email painting a negative picture of the employees. And so it was a saga that ended very quickly because they swiftly fired the employees. And then after that, I spoke with some of the employees who were involved, and they told me, you know, how many people actually signed onto the letter before it was taken down. It was hundreds of employees. But then, yeah, after they were fired, they were discussing, you know, whether that was actually a lawful move for them to be terminated, because they were simply expressing concerns about their workplace conditions.

Weber: And Shotwell, Chief Operating Officer for SpaceX, what is the most recent news that's come out? Because everything that went down there was 2022. So here we are now, 2024, National Labor Relations Board files this complaint, which is technically its first move. What does that complaint say and how has SpaceX responded?

Grush: Yeah, so essentially it confirms what the employees were thinking is that they were illegally fired for voicing concerns about their workplace conditions. And given the fact that Elon Musk is the CEO of the company, you know, what he says and does can be considered as affecting people's workplace and how they perform their job. And then not very long after the complaint was issued, SpaceX sued – and this is the part where it gets a little wonky – but essentially they were saying that the way that the NLRB is structured is unconstitutional, and so they're trying to basically get out of it. But what was really interesting about that lawsuit is that SpaceX alleges that the letter was a source of distraction for SpaceX employees, and that the employees who were fired were fired for violating various company policies. They didn't go into detail about it, but that's their defense. That's the biggest defense I've seen from SpaceX since this whole thing went down.

Weber: Loren, as best as you can tell, what's the vibe within SpaceX right now?

Grush: I think the vibe, to be honest, is that everybody's kind of putting their heads down and working. This was probably the first time I had seen employees within the company openly speaking about Elon, and it sadly confirmed a lot of their fears, which is that if you do that, you'll get fired. And so I think the vibe within the company is that they're just not gonna do that anymore. You know, if they do, I'll be surprised, and will happily report on it. But yeah, I think it confirmed most people's suspicions that you can't speak up against the boss or you'll be in trouble.

Hull: The reaction is also just sort of classic in that now SpaceX is suing the NLRB, basically saying that what they're doing is unconstitutional overreach, and really going guns blazing at the agency itself, which is another tactic that Elon has never shied away from using. He thinks that regulation has run amok, and there's too many rules, and they're gonna really go all out after this agency.

Chafkin: And I gotta say, I do think talking about these two stories kind of in tandem is instructive. 

Weber: You mean the drug use plus this?

Chafkin: A hundred percent. Because there's this divide between the weird stuff Elon tweets and the weird stuff he says, and then the stuff he actually does. And I really think we spend probably, and not just us, but investors, and everybody, too much time talking about the says versus the does. And here we have some legitimately bad behavior, right? We have credible allegations of sexual harassment. There was also an earlier allegation made by some SpaceX interns of sexual harassment at the company. And the response was, basically to shut it down, to be dictatorial. It's basically the opposite of what Elon Musk says he is. 

You had employees who seemed to be, and maybe I'm putting too much on them, but, and Loren can correct me, raising, number one, legitimate questions in a way that doesn't seem from the outside to be not constructive. It seems like they were attempting to address this real issue, and they were squashed. Right? And that's concerning. And I'd argue more concerning from a perspective of safety and all the reasons you might be worried about Elon Musk drug use. This should concern you because what happens if there's a legitimate, if there's a door fall, not to make the Boeing comparison, but there's the doors falling off of these Boeing jets. You know, what happens if there's a similar safety problem? You have employees calling attention to it, you wanna have reporting mechanisms. You don't wanna have a company that just shuts down any dissent. It's really bad at any company. And it seems especially bad at a company like SpaceX.

Weber: And Dana, if there's one thing that’s sort of linked thematically across Elon’s companies, it would seem to be labor relations and the poor state of them. There's SpaceX, and X obviously, when it went through the transition from Twitter. Tesla, we've had multiple NLRB stories there. What about the other ones in his universe, the Neuralink and the Boring. Is there anything else out there?

Hull: Well, I guess I would just say that I think that fundamentally a lot of employees really take pride in their work, particularly engineers. I mean, these are mission-driven companies that have–

Weber: Within Elon's companies you mean? 

Hull: Yeah, within Elon's companies. I mean, these are mission-driven companies and people are really drawn to the mission and people really like working there in general, and they wear the SpaceX jackets and the Tesla ball caps and there's just an enormous amount of pride. I think you have to separate out working for the company and working for Elon. But yeah, I mean, these are not unionized workforces and any effort to unionize or criticize dear leader is completely shut down, almost instantly, which is what we've seen at all of his companies. I mean, I can't speak to Neuralink nor Boring, but you can't criticize the boss, basically.

Grush: I also think the through line through these two stories is kind of the double standard of when Elon's antics are a problem. And then when they aren't, you know, when he smoked pot, everyone was very upset because there is a very clear clause in NASA contracts that states that you're supposed to have a drug-free workforce. But I think what SpaceX tried to do after that was say, oh, you know, this wasn't a big deal. See, we have a totally drug-free workforce. It's totally fine. But then when you call out behavior about sexual harassment and making light of sexual harassment, then they say, oh, you can't do that. You know, Elon is SpaceX and SpaceX is Elon. That was something that one of the vice presidents said. So there's the moving goalpost of when we are allowed to be upset about Elon's behavior, and when you can't criticize him at all.

Weber: Now for our final segment of the week, Feud of the Week. Max Chafkin, do you know who the feud between Elon and–

Chafkin: Oh man, it's my favorite other billionaire, slash professional wrestler. He's not named Mark Zuckerberg. Mark Cuban, who's kind of like the original, in some ways, a pioneer of the trolling, billionaire category.

Weber: I think Elon took that to new heights. So what is the feud with Mark Cuban then? 

Chafkin: So Elon Musk has been, for whatever reason, going on and on and on and on and on and on about the woke mind virus and the evils of diversity in the workplace. Again, this is probably a potential problem for some of the companies he runs, but let's leave that aside. Mark Cuban chimed in and offered what was really just a bland, I'd say, kind of conventional wisdom defense of diversity, equity, and inclusion in companies. Mark Cuban was saying essentially, hey, like, this allows us to overcome some of our biases to hire from more diverse pools of people, consider new perspectives. I also should say Mark Cuban, a big time libertarian, right? You know, too much for Elon Musk. And he's basically, essentially, spent the next few days calling Mark Cuban a racist, cringe, essentially using Mark Cuban as a punchline for his conservative followers. Which let's be honest, it's not that hard to do that with Mark Cuban. I mean, there is a lot that is obnoxious and cringe and so on about Mark Cuban. So it's kind of like easy pickings, and we have what essentially is a professional wrestling match between two billionaires.

Weber: Which, you know, we've seen this unfold before. How has Cuban responded so far?

Chafkin: He's continued to offer sensible, and I can't believe I'm saying this – 'cause again, this is a guy who, you know, is famous for getting fined by the NBA and is a Shark tank judge, like has not always behaved like the most serious figure – but has generally attempted to defend DEI in libertarian friendly ways, and is essentially just getting shouted down by, Elon and his buddies. And it seems like both are kind of riding the engagement wave on this.

Weber: Okay. Dana, I'm gonna ask for an impartial view of feud of the weeks. How does this one rank compared to other feuds of the week that Elon Musk has had?

Hull: I would call it a mid-level feud. 

Weber: Like a simmering five. Is it a rolling boil yet?

Hull: I think what's interesting to me is that you have to remember that Tesla is currently being sued by the EEOC and the state of California for anti-black racism at its factory in California. And you know, Tesla has an incredibly diverse workplace and the company released its first ever DEI report in 2020. Now, the DEI stuff is always part of the annual impact report. So you have this company that has made enormous strides in terms of DEI as a corporation, and now the CEO is basically crapping all over DEI saying that it's reverse racism. So I just really wonder, is Tesla gonna have a DEI report for 2023 or not? Like, is that work being dismantled? Like what exactly are they doing at the company level here?

Chafkin: It's easy to sort of laugh at this. It's like two billionaires barking at each other loudly. Texas billionaires. But if you're a person of color at one of these companies, it would feel pretty bad to have basically a pretty sensible explanation of why it makes sense to not hire an exclusively white male workforce. And to just have that kind of laughed off, it isn't good for sort of regulatory reasons, but also just for morale reasons and so on. It strikes me as not great.

Grush: I also wanna point out that, given my experience with SpaceX and what I know about SpaceX, it does fly in the face of at least past experience, because they do have DEI efforts. They have women's groups within the company that they celebrate. You know, Gwynne has also spoken publicly about trying to do better in terms of boosting diversity within the company. So I don't know if that's going to change, but I at least know past efforts at SpaceX have tried to make that a priority.

Weber: A somber ending to this feud of the week. 

Chafkin: I will say, I think Dana is right, it's like a mid-tier feud. This is not like your Michelin star, 11 course tasting menu of feuds. This is like, solid midweek date night, it's like a farm to table restaurant. It's pretty good, but nothing out of the ordinary.

Weber: Max Chafkin, Loren Grush, Dana Hull. Thanks so much for joining us on Elon, Inc.

Chafkin: Always a pleasure. 

Grush: Thanks for having me. 

Hull: Great to be here.

Weber: This episode was produced by Stacey Wong. Naomi Shavin and Reyhan Harmanci are our senior editors. The idea for this very show also came from Reyhan. Blake Maples handles engineering and we get special editing assistance from Jeff Grocott. Our supervising producer is Magnus Henriksson. The Elon Inc. Theme is written and performed by Taka Yasuzawa and Alex Sugiura. Sage Bauman is the head of Bloomberg podcast and our executive producer. I'm Joel Weber. David Papadopoulos will finally be back next week. If you have a minute, please rate and review our show. It'll help other listeners find us. See you next week.

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