Sexism in Silicon Valley: in the courtroom at Ellen Pao v. Kleiner Perkins

This year, former venture capitalist Ellen Pao captivated Silicon Valley by suing her former firm, Kleiner Perkins, alleging gender discrimination. Pao lost the case, and hasn't yet said whether she would appeal. In some of her first extended comments since the trial, Pao appeared at the Code Conference today calling on other people who have experienced discrimination to share their own stories — and said doing so may help improve diversity in Silicon Valley as much as anything.

According to documents filed today, Kleiner Perkins is now threatening Ellen Pao with $973,000 in court costs if she decides to appeal the case. The decision to press the issue comes one month after the Silicon Valley giant was found not liable in the highest-profile gender discrimination case in years.

Pao, who currently serves as interim CEO at Reddit, took the venture capital firm to trial earlier this year, armed with claims that a brief, consensual affair with a partner during her tenure at Kleiner Perkins resulted in retaliation and lost wages — all part and parcel of the entrenched sexism in VC culture. The trial did much to expose the uneven playing field for women in Silicon Valley. However, the jury could not prove that subtle sexism was responsible Kleiner's failure to promote Pao, or fire her after filing this suit.

Almost a week later, I do not know how I would have voted if I were on the jury for the gender discrimination trial against Kleiner Perkins. Given 14 pages of instructions from the judge, seven pages of questions to answer, and a mandate to decide whether Kleiner had been biased in 2012, using performance reviews from 2007 — who knows? I may have arrived at the same decision as the six women and six men who found the venture capital firm not liable. So much about this trial seemed to hinge on whether or not you found Ellen Pao sympathetic, credible, or a crusader. From the gallery in room 602 each day, my worldview changed with each new witness. But in the aftermath of the trial, I've arrived at a handful of discomfiting conclusions.

The jury can’t indulge in these kind of hypotheticals, but the best way to determine gender bias is to consider how Pao would have been treated differently if she were a man — not by comparing her to perkier partners, or a co-worker who was nicknamed "Queen of the Internet" a decade before she got to Kleiner. The questions on that seven-page jury form focused on the time period after Pao first officially complained about gender bias in December 2011. But Pao’s trajectory toward termination was set in motion much earlier than that.

After less than 72 hours of deliberation, the jury in the gender discrimination lawsuit against Kleiner Perkins found the powerful Silicon Valley venture capital firm not liable for all four of Ellen Pao’s claims, including retaliation and failure to prevent retaliation. There was a dramatic, last minute upset when Judge Kahn realized there was a miscount on the fourth claim. They needed nine out of 12 jurors for a decision and only eight voted "no." They went back into deliberations and came back with nine out of 12.

The most excruciating moments in the last leg of the gender discrimination trial against Kleiner Perkins happened Tuesday afternoon when Lynne Hermle, Kleiner’s formidable attorney, walked away from the podium to deliver parts of her summation a few feet closer to Ellen Pao. Outside the courtroom, Pao seems light-hearted, impish even. In the elevator last week, a reporter loudly kvetched about sitting through the month-long trial, and Pao piped up: "It’ll be over soon!" From the plaintiff’s table, however, Pao can be inscrutable.

"Plays it close to the vest" was a critique in one of Pao's performance reviews, and Hermle has quoted it to the jury a number of times. (Like "aggressive," when applied to Pao, Kleiner Perkins meant it as a ding.) But with deliberations imminent, Pao seemed to want to telegraph her frustration with Hermle’s version of events, shaking her head and typing in intense bursts on her MacBook as the defense attorney argued that her lawsuit wasn’t about being held back by the boys' club at Kleiner Perkins; it was about "a huge payout for Team Ellen."

Judge Harold Kahn just finished giving the jury in the Ellen Pao v. Kleiner Perkins case the verdict form they will use as a guide to determine whether the venture capital firm is liable for gender discrimination, retaliation, and failure to prevent retaliation for not promoting her to senior partner and terminating her employment after she complained about discrimination.

Pao, now the interim CEO of Reddit, is suing for $16 million in compensatory damages for income she lost by not being promoted and later fired. The jury has been instructed not to take into account Pao's stock options at Reddit or the loss of "carried interest," which refers to profits she may have shared as a general parter on one of Kleiner's investment funds.

Ellen Pao is suing for both punitive and compensatory damages in her gender discrimination trial against the venture capital firm Kleiner Perkins. Today, Judge Harold E. Kahn upheld the punitive damages claim, saying, "There is sufficient evidence from which a reasonable juror could conclude that Kleiner Perkins engaged in intentional gender discrimination."

The trial is expected to reach closing arguments Tuesday. Pao, now the interim CEO of Reddit, will also be allowed to sue for compensatory damages. She is asking for $16 million in lost wages from being denied a promotion and fired from the firm in 2012. Punitive damages, however, are typically much higher because — as the name implies — the amount is meant to punish the defendant for inflicting harm. According to the Mercury News, in Pao's case, punitive damages would have been "likely more than $100 million."
Kleiner's attorney Lynne Hermle asked the judge to dismiss the punitive damages claim on Tuesday — and it was a bit of a shock that Kahn entertained the notion, questioning whether Pao had proven the malice, fraud, or oppression, the standards for punitive damages.
The motion was initially filed on Tuesday unbeknownst to the jury, in one of many on-the-record discussions that happens out of the earshot of the six men and six women who will decide this case. Yesterday both legal teams were presenting arguments to Judge Kahn for hours after the jury, when the San Francisco Superior Court is normally closed. It was clearly a tough call. The ruling is a pitfall for Kleiner Perkins, the prestigious Silicon Valley venture capital firm that has financed companies like Google, Amazon, Electronic Arts, and Uber.
The back-and-forth between Judge Kahn and Pao's lawyer Alan Exelrod on Tuesday was very telling. In addition to gender discrimination, Pao is also suing for retaliation and failure to prevent retaliation after she complained about a partner named Ajit Nazre. Pao claims Nazre pressured her into a consensual affair and he was later fired for sexually harassing another female partner. The lawsuit alleges Kleiner soured on her after she complained about being excluded by Nazre and a host of other subtle instances of sexism. But Judge Kahn seems unconvinced about aspects of Pao's complaint:

One catchphrase that keeps popping up in the Kleiner Perkins trial is "needed a win." Why was Ellen Pao denied a board seat? Kleiner patriarch John Doerr said the senior partner who got the gig "needed a win." "Kleiner needed a win. Everybody needed a win. I could use some wins," he added. If a billionaire venture capitalist like Doerr is aching for a win, just imagine how equal rights advocates in Silicon Valley — faced with platitudes about diversity, being called crazy, or deafening silence — feel. However, yesterday’s testimony from Mary "Queen of the Internet" Meeker reinforced the sentiment that Pao’s $16 million lawsuit may not be the case to hang their hopes on.
"I think Kleiner Perkins is the best place to be a woman in the business," Meeker told the court without a hint of hesitation. For Meeker, who joined the venture capital fund almost five years ago to lead Kleiner’s digital growth fund, it certainly sounds like it has been. The Morgan Stanley veteran, known for identifying companies like Microsoft and America Online before everyone else, said she had not been excluded from events because of her gender or observed any gender discrimination. For the past three weeks, Pao, now the interim CEO of Reddit, has been trying to establish a pattern of bias against female employees. Meeker’s testimony plowed right through it.

But the three male junior partners who were promoted over Pao in 2012 each had a sponsor. Pao, on the other hand, testified that she and another female partner named Trae Vassallo wouldn’t get that much time from management and had trouble getting people coming to their meetings. Ted Schlein, the leader of Kleiner’s digital group, sponsored Chi Hua-Chien, but for women, Pao said, "It was more of an advice from time to time vs. investment in their career."
Meeker’s testimony, not to mention her success, undermines Pao's argument about endemic gender bias at Kleiner Perkins. However it also demonstrates how hard it is to prove gender preferential treatment; too often, you know it only when you see it — even then it depends on who’s looking. And Pao’s complaint doesn’t paint a clear crime scene. That makes it hard to imagine Pao or the advocates who support diversity in Silicon Valley ultimately getting "the win" they need.

To get a sense of how mercilessly Ellen Pao’s testimony was excoriated this week, first you have to envision Lynne Hermle, the lead attorney representing Kleiner Perkins: picture Laura Linney from Primal Fear, but dripping with Paula Deen's Southern charm. (Hermle is actually from the Bay Area, but there's something unhurried and showy about her shtick.) As an employment lawyer for Orrick, she's defeated discrimination and sexual harassment claims against clients like IBM and AMD. Hermle is known around town for making her opponents throw up.
Pao, now the interim CEO of Reddit, is suing Kleiner, a well-known Silicon Valley venture capital firm, for gender discrimination. Pao claims she faced retaliation after a Kleiner partner named Ajit Nazre manipulated her into a brief affair. The complaint was filed in 2012, the same year Kleiner fired Nazre for sexually harassing another female investor. Hermle has been on the case since then, building towards this week’s cross-examination crescendo that spanned three days.
Hermle carries herself differently from the other lawyers in the room. When the attorneys confer in chambers, Pao’s lawyer Alan Exelrod shuffles back to the plaintiff’s table; Hermle walks out with a smile on her face for the jury to see, aware of all her angles. Exelrod and Therese Lawless (Pao’s co-counsel) rarely crack jokes, unless befuddled inquires like "What’s Tinder?" are intentionally amusing. Hermle, on the other hand, is in her element. While crossing the street outside San Francisco Superior Court, she told a photographer that he was the only one who made her look thinner.
Hermle relied on that easy rapport with the courtroom when she began slicing up Pao’s testimony on Tuesday afternoon. She had one goal: convince the jury that a highly educated woman running a massively popular site like Reddit is amateurish and amoral without coming off like a bully.

For the first two weeks of the trial, Kleiner partners described Pao as unimpressive, someone who was unable to own a room. But when she finally spoke this week, Pao proved herself to be wry and confident — remaining defiant against Hermle’s rhetorical tricks like ending questions with an accusatory "didn’t you Ms. Pao?" or adding a deferential "Thank you for correcting me, Ms. Pao," every time the plaintiff pointed out something she didn't know.

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.

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.

As soon as Wen Hsieh got on the witness stand during the Ellen Pao gender discrimination trial last week, it was obvious: this is the kind of guy who gets promoted at Kleiner Perkins Caufield & Byers.
Both Hsieh and Pao — who helped hire and train him — shared chief of staff duties for billionaire investor John Doerr at Kleiner, the Silicon Valley venture capital fund. Hsieh was promoted to senior partner in 2012, along with two other male colleagues. Pao, who is now the interim CEO of Reddit, was not. Her $16 million lawsuit against the once fabled, now faded investment firm is the most closely watched case in the tech industry right now.
In court last Wednesday, Hsieh grinned at the jury, hamming it up from the plaintiff’s first questions. Was Pao a better speech writer than him? "It’s hard to compete with a Harvard lawyer vs. a Caltech engineer!" What was it like joining Kleiner Perkins? "I didn’t even know how much I was paid until my wife told me." Did anyone show you the ropes? Partner Brook Byers asked him "to go to China to help source avian flu viruses ... people were dying at the time."

It was like The Aristocrats, except for model minorities. The courtroom, relieved after more than a day and a half of tense testimony from Doerr, ate it up. Doerr had been Pao’s mentor and champion, touting her achievements when the other partners tried to push her out. He paid for coaches to teach Pao how to be likable and "own the room." It didn’t work. The jury won’t hear the sound of Pao’s voice until she testifies later today, but from the plaintiff’s own witnesses, they were told she was too quiet, "resentful," "territorial," and "dismissive." Now here was Hsieh, owning.

What seemed to be lost on Kleiner Perkins management, including Doerr, is that Pao was set up to fail. She could've jumped through every hoop they put in front of her, but the firm was predisposed not to like her.