Silicon Valley gender bias suit puts spotlight on venture capital industry culture

Small Business Associated Press

A sex discrimination trial against one of Silicon Valley's most prestigious venture capital firms is providing a rare peek into the elite investment companies vying to fund the next Google and Amazon.

Continue Reading Below

Their partnership rosters are stacked with some of the nation's most accomplished graduates — multiple-degree holders from schools such as Harvard and Stanford universities who are competing aggressively to back the next big technology company. But they are also places where women are grossly underrepresented.

Ellen Pao's lawsuit against Kleiner Perkins Caufield & Byers goes further, describing the firm as an old-boys club where women allegedly were excluded from parties at former Vice President Al Gore's house, asked to take notes at a meeting like secretaries and subjected to harassment and boorish behavior by their male colleagues such as a conversation about porn stars and a trip to the Playboy Mansion aboard a private jet.

The case has put a spotlight on the gender inequities in the technology sector at a time when it is booming and minting new millionaires, but generating resentment from people who feel left out and victimized by its success, which they blame for higher rents and gentrification. The trial has also brought some of the nation's most accomplished venture capitalists into the courtroom, where they have faced tough questions about sexual harassment and the behavior of men in the workplace.

Pao, who has an MBA and law degree from Harvard, has mostly sat quietly and declined media questions during breaks in the proceedings. She could begin testifying on Friday.

But the jury has heard hours of testimony from her former colleagues, including one of her mentors at the firm, billionaire investor John Doerr, who was placed in the awkward position of defending his company while acknowledging that the dearth of females in the venture capital industry is "pathetic."

Continue Reading Below

A study released last year by Babson College in Massachusetts found that women filled just 6 percent of the partner-level positions at 139 venture capital firms in 2013, down from 10 percent in 1999.

Doerr said 20 percent of partners at Kleiner Perkins are women, and he has worked hard to recruit more women. He has disputed Pao's contention that she was passed over for promotions because she was a woman and then fired in 2012 after she complained.

Like the Kleiner Perkins legal team, he says Pao, 45, didn't get along with her colleagues — a requirement for the junior partner position she moved into in 2010 after serving as his chief of staff.

In a sign of the competitiveness of the industry, Doerr said of the 24 junior partners the firm has taken on during his tenure, only five were promoted. The rest, like Pao, were asked to move on.

Doerr testified he was a loyal supporter of Pao's and tried to help her succeed at Kleiner Perkins. As a member of the Kleiner Perkins management team, he said he fought for Pao to stay with the company and objected when other partners wanted to let her go in 2011.

In a job review presented in court, Doerr said Pao needed to improve her interpersonal skills and not be dismissive of peers who don't meet her expectations, though he otherwise praised her performance in her first year as his chief of staff.

"You can't dismiss people who you want to exchange ideas with," Doerr testified. "It just causes the partnership to fail."

Alan Exelrod, Pao's attorney, has argued that at least some of Pao's male colleagues faced the same criticism — they were deemed "aggressive and opinionated," ''territorial," and needed to improve their delivery — but were promoted while she was not.

"Was there a level playing field for Ellen Pao at Kleiner Perkins?" he said during his opening statement. "We will prove to you in this case that there was not."

Pao is seeking $16 million in damages. The firm is seeking to limit any possible damages by arguing that Pao is well-compensated in her current position as interim CEO of the popular social media company Reddit.