NYC

A Curation of Information About New York City

In Ellen Pao’s Suit vs. Kleiner Perkins, World of Venture Capital Is Under Microscope

Photo

Ellen Pao at the San Francisco courthouse this week where she is suing Kleiner Perkins Caufield & Byers. She was a junior partner at the firm.

Credit
Robert Galbraith/Reuters

SAN FRANCISCO — Speak up — but don’t talk too much. Light up the room — but don’t overshadow others. Be confident and critical — but not cocky or negative.

Ellen Pao got a lot of advice about how to succeed in the clubby, hypercompetitive, overwhelmingly male world of venture capital. Her annual evaluations were filled with suggestions about how she could improve and perhaps even advance to the inner circle of Kleiner Perkins Caufield & Byers, the blue-chip firm where she was a junior partner. She would be paid millions and be at the red-hot center of the crucible of the tech economy.

Ms. Pao did not make it. Exactly why is the subject of a lawsuit she filed against Kleiner, which is now being heard in civil court here. Ms. Pao contends she was discriminated against. Kleiner says she failed to improve despite all that coaching and was terminated.

The money she might win if Kleiner is found liable is probably trivial in a world where start-up geniuses are worth billions. What is really under examination in this trial is the question of why there are so few women in leadership positions in Silicon Valley. At stake is any hope that the tech world can claim to be a progressive place, or even a fair one.

Photo

John Doerr, a venture capitalist and Ms. Pao’s former boss, arriving to testify in the trial.

Credit
Robert Galbraith/Reuters

The judge in the trial, which opened on Feb. 23, is allowing the jury to question the witnesses. One anonymous member of the jury put it well this week when he or she asked the star witness, John Doerr, perhaps the most famous and successful venture capitalist in the world and Ms. Pao’s former boss, this question: Were women simply not interested in becoming venture capitalists, “or did the venture capital world fight them off?”

In essence, Mr. Doerr said, it was not his fault. Venture capital firms draw from successful companies, and few entrepreneurs are women. It is a very slow process to change, although Mr. Doerr agreed that the percentage of female venture capitalists was “pathetic.”

Mr. Doerr, who backed Amazon and Google and whose net worth is estimated by Forbes at $3.5 billion, came across as an ambivalent figure during his hours of testimony.

Ms. Pao, now 45 and interim chief of the social media site Reddit, was somewhere between Mr. Doerr’s protégée and surrogate daughter. He promoted her, encouraged her and defended her after his colleagues soured on her. And his interest in having more women in technology seemed genuine.

On the other hand, he said that Ms. Pao had “a female chip on her shoulder,” according to a report by an independent investigator hired by Kleiner. Mr. Doerr testified that he did not recall having said this, even after he was shown the relevant page in the report. He also said he had never read the report. “It was summarized for me,” he said.

The report, by Stephen Hirschfeld, was not admitted as evidence, but was extensively discussed in testimony Thursday. Ms. Pao’s account to Mr. Hirschfeld depicted an office where sexism was rampant and she was told — in a friendly way — “you had to be one of the guys to be successful.”

Kleiner, during its portion of the trial, will undoubtedly seek to undermine that view. Its lawyers told the judge on Thursday that they planned to call 17 witnesses, a number he found so astounding he repeated it in surprise.

Yet even allowing for the fact that all the witnesses so far were called by Ms. Pao’s team, documents and testimony in the trial show a firm whose attitudes derived from an earlier era. When Mr. Hirschfeld asked for a copy of Kleiner’s manual on discrimination, it could not be found.

Kleiner is only a few miles from Facebook, where the chief operating officer, Sheryl Sandberg, wrote a popular book telling women to “lean in,” by, for instance, seizing a seat at the table during meetings instead of hanging back at the edges.

Not everyone at Kleiner appeared to have heard of such notions. At one meeting discussed in the trial, Ray Lane, a senior partner, needed someone to take notes. He asked two female junior partners, and was surprised when they said no, according to testimony.

Ms. Pao, who is expected to testify as early as Friday, began at Kleiner in 2005 as Mr. Doerr’s chief of staff. She had a consensual affair with a married junior partner, Ajit Nazre, that ended badly. Her suit maintains that Mr. Nazre was in a position to retaliate against her, and did so, and that her position at the firm suffered when she complained.

Mr. Nazre later approached Trae Vassallo, another junior partner, on a business trip, showing up at her hotel room door wearing a bathrobe and carrying wine, according to testimony. She rebuffed Mr. Nazre and complained to Mr. Lane.

“I feared somewhat for her safety,” Mr. Lane testified. Later, he underscored his alarm, adding: “This could have gone in a different direction. He could have pushed his way into the room.”

Mr. Lane conceded his response to Ms. Vassallo’s complaint was less than appropriate: He asked her if she really wanted to go public and if she had talked to her husband.

“I made a mistake,” he told the court. “I cared more about her feelings than anything else.”

Mr. Lane also jokingly told Ms. Vassallo she should be “flattered” for Mr. Nazre’s attention, Ms. Vassallo testified. He denied having said that.

The men and women sitting in judgment of all this behavior look nothing like what Silicon Valley would consider a jury of its peers. Instead of being young, white and male, with a sprinkling of Asians — what critics say is the furthest limit in Silicon Valley in terms of diversity — the jury is half female and ethnically diverse. Testimony ended abruptly Thursday afternoon when one of the jurors had a family emergency.

Before then, the jurors had been hearing for days about a world distant from that of most Americans.

Ms. Pao, a Harvard-trained lawyer with deep experience in the tech field, was initially paid $220,000 a year, plus 30 to 60 percent of her base salary as a bonus, plus much more as her share of Kleiner’s investment funds. In return for this, she was expected to do whatever she was told, according to testimony and emails shown at the trial. She polished a speech for Mr. Doerr on her honeymoon. When he recommended a book, she wrote the blurb. She worked so much that he begged her to stop, writing her at one point to “please, please really take a real leave. You deserve it!”

Kleiner has had about 24 junior partners in its history, Mr. Doerr testified. Most of them were male. Most of them did not make it to the inner circle.

“What’s unusual, what is truly unusual, is for a partner to be promoted,” he said. “It’s happened only five times in the 30-year history of the firm.” The others, he said, were asked “to move on.”

One of the five who made it was Wen Hsieh, who joined as a junior partner in 2006. Mr. Doerr saluted Mr. Hsieh, saying, “this guy bleeds for Kleiner.” For a photo shoot, Mr. Hsieh literally gave Mr. Doerr the shirt off his back. When he moved to China, he took his family even though they did not want to go.

Mr. Hsieh’s testimony involved a lengthy examination of his annual evaluations, which had as many recommendations for improvement as Ms. Pao’s.

“Wen needs to speak up more and be willing to challenge our thinking,” one review said. But another said: “He tends to fill every vacuum with his voice.”

These contradictions were “hard to weigh,” Mr. Hsieh told the court. And in any case, he had no time to discuss them further: He was flying to China that night.

Correction: March 5, 2015
An earlier version of this article misspelled the surname of a junior partner at Kleiner Perkins. She is Trae Vassallo, not Vasallo.

Correction: March 5, 2015
An earlier version of a picture caption with this article misspelled part of the name of the firm being sued. It is Kleiner Perkins Caufield & Byers, not Caulfied.

Leave A Comment

Your email address will not be published.