For the past two weeks, Ellen Pao has been sitting quietly at the plaintiff’s table while her former colleagues at Kleiner Perkins have painted her as a prickly careerist, ill-equipped for the high-stakes sausagefest of venture capital financing in Silicon Valley. Yesterday, at long last, it was Pao’s turn to speak. She has not disappointed.
Pao is now the CEO of Reddit. She is suing the venture capital firm for $16 million in damages, alleging gender discrimination and retaliation by Ajit Nazre, a Kleiner investor who was fired in 2012 for sexual harassment.
The self-assured woman who initially took the stand — quick with a smile, confident in her responses, literally leaning in to the microphone — was nothing like the picture her ex-managers conjured of an inexperienced junior partner, who couldn’t command a room. Before their relationship disintegrated, Pao’s mentor at Kleiner, billionaire John Doerr, urged her to use her dry sense of humor. That’s how she came across for most of yesterday, before the trial unraveled into its daily tailspin of performance reviews and emails chains.
"Pao’s case rests largely on her own testimony."
There is lot riding on Pao’s credibility. Many of the headline-grabbing anecdotes from her complaint feel untrustworthy after hearing multiple perspectives. There are only so many versions of joking about porn stars on a private jet before everyone’s motivation seems suspect.
In its trial brief, Kleiner’s lawyer Lynne Hermle wrote: "Pao’s case rests largely on her own testimony— which is predominantly based on the self-serving notes she wrote throughout her employment that are inadmissible hearsay." In other words, Kleiner wants to make the case that she was planning on suing them all along. Hermle's objections like "triple hearsay" and "backdoor hearsay" make Pao's account seem less believable.
Pao is testifying right now and perhaps tomorrow and still hasn’t been questioned by Kleiner’s attorney, but here are the important revelations from her testimony so far.
Kleiner Perkins repeatedly failed to act on complaints
At the center of Pao’s complaint is her relationship with Nazre, who directed some of Pao's work with the green investment team. He allegedly "pressured her" into a brief, consensual affair in 2006, which Pao broke off when she found out that he had lied about still being married. When Nazre was fired in 2012, it was for sexually harassing Trae Vassallo, another female partner, not Pao.
This is where the retaliation allegations come into play. Pao said over and over on the stand that Nazre "made it difficult" for her to do her job by cutting her off from vital information and meetings. Pao also alleges that Kleiner retaliated against her because she would not stop complaining.
When Pao complained, a female partner told her Nazre was "a sex addict."
Yesterday, we learned why she was so relentless. Around the time she contemplated leaving Kleiner in 2007, Pao shared her concerns about Nazre with Juliet de Baubigny, the partner in charge of recruiting who unofficially handled some human resources issues. (At this point, Kleiner had invested in Google, Amazon, and Electronic Arts, but did not have an HR rep.) De Baubigny responded that she thought Nazre was "a sex addict." Pao was surprised. "It was a strong phrase to use," she said in court. Pao spoke with de Baubigny because she heard three administrative assistants dealt with harassment as well. Despite awareness of Nazre's issues, he was soon promoted to senior partner.
Pao repeatedly said Kleiner did nothing to address her concerns. She brought up Nazre again in a self-review from 2009: "Because I continued to bring up the issue and Kleiner Perkins continued to do nothing." According to Pao, Vassallo complained about Nazre in the summer and winter of 2011, and "they had done nothing. Twice." In fact, she found out about Vassallo's concerns when they went to see COO Eric Keller about other instances of gender bias at Kleiner.
Her relationship with Ajit Nazre can’t easily be explained away
Just before Pao was sworn in, the jury got a reminder of how important her credibility is to her claims. Judge Harold Kahn lets the jury ask follow-up questions, and they never miss a beat. The jury asked Stephen Hirschfeld, the independent investigator who looked into written complaints from Pao and Vassallo in 2012, whether he thought Miss Pao had been completely truthful. Hirschfeld said: "She was not truthful about the relationship with Ajit Nazre," and described her mood as disappointed that he misled her by saying he had separated from his wife.
Office power dynamics underscore the need for basic HR policies Testimony from Pao made it seem like Nazre badgered her into a relationship and harassed her afterward, but that the affair was consensual. Pao also said she was pressured by partner Ray Lane to let Nazre off easy. Emails show her asking Doerr not to fire him. But those kind of office power dynamics just underscore the need for proper policies.
Asking the woman facing retaliation from Nazre to weigh in on his fate just highlights how unprofessionally Kleiner behaved. Pao said her requests for an HR seminar went unmet.
(2/2) into having a relationship w/someone who flouts his seniority— Davey Alba (@daveyalba) March 10, 2015
Pao joined Kleiner to become an investor, not support staff
Pao’s discrimination claim rests on the fact that she was not promoted to senior partner, unlike three of her male colleagues. Kleiner has tried to emphasize that Pao was hired in as a "chief-of-staff" for Doerr, working on speechwriting and other behind-the-scenes duties as part of "Team JD." They say she was always destined for an operations role, like the one she has at Reddit right now.
However, Pao explained that she initially turned down Kleiner’s offer because she thought it was too junior. She took the position only after the role was changed to include "an investing component," where she would have "an opportunity to invest in companies along with [Doerr]" with the goal of becoming "an investor at a leading venture capital firm" like Kleiner. This helps explain Pao’s "resentment" at continuing to support "Team JD," while her co-chief-of-staff Wen Hsieh was permitted to dive into the investing side.
Pao implies she tried to save a floundering investment firm
There were a few spit-takes during Pao’s testimony yesterday, such as when she mentioned trying to bring a little company called Twitter to the attention of general partner Matt Murphy. Murphy said the team was not business-minded and told her to drop it. Kleiner would later be the laughing stock of Silicon Valley for investing late in Twitter as a showy, expensive attempt to reassert its dominance in digital companies. Pao also said she played a key role in urging Kleiner to invest in other successes, like Bit9 and RPX, although the credit went to her male superiors.
Pao alleges she was denied a board seat at RPX partly because she was about to go on maternity leave and partly because Doerr said Randy Komisar "needed a win." The company buys patents to help other startups fight patent trolls. On the stand, Pao explained that Kleiner was "nervous because they were worried [RPX] would be viewed as a patent troll itself." RPX had a successful IPO in 2011.
The testimony in this category will be heavily contested once Kleiner’s lawyer Lynne Hermle gets to grill Pao. But it was impossible not to pick up an air of desperation around Kleiner’s investment strategy during her tenure.
As Recode pointed out, Pao worked at Kleiner from 2005 to 2012, during the firm’s "stagnant era." Kleiner secured its status in Silicon Valley with lucrative investments in Sun Microsystems, Netscape, Genentech, and others, but "aged poorly." During the great recession, Kleiner tried to pivot towards investment in China and green-tech. Pao said she urged Kleiner to do more due diligence on green investments because of its inexperience in the field. She also described her role in some of Doerr’s most famous forays into the spotlight, such as the billionaire’s emotional TED talk on climate change in 2007 and his work with President Obama on integrating clean-tech into the economic recovery.
Green-tech ended up a blight on Kleiner’s track record. It will be up to Pao’s lawyer to demonstrate that she helped more than she hurt.