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Five uncomfortable truths about the Ellen Pao verdict

Five uncomfortable truths about the Ellen Pao verdict

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This case, intertwined so closely with feeling, was determined by fact

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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.

It really would have been different if Pao were a man

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.

Pao’s trajectory toward termination was set in motion much earlier

During her testimony, Pao described meeting Twitter co-founder Jack Dorsey and then bringing Twitter to the attention of senior partner Matt Murphy. This was when the social network had only raised "one or two rounds of funding," so 2007 or 2008. According to Pao, Murphy said "the team was not business-minded and that we should not spend any more time with them." Kleiner wouldn’t end up investing in Twitter until 2010, when the party had ended by VC standards.

One of the most salient points Pao made on the stand was that women were not able to find sponsors for their investments at Kleiner, and that junior partners couldn’t push an investment through without a sponsor. The distinction between mentorship and sponsorship helped clarify how someone like Pao, who was actively mentored and protected by billionaire John Doerr, still could have been treated unfairly at the firm where Doerr reigned.

Figuring out who "sourced" an investment is admittedly tricky. But what if Pao had been sponsored to invest in Twitter? Credit for calling it early may have made her sought out by other investors or considered a "thought leader" in mobile development, both qualities dependent on the perception of others. In the closing arguments, Pao’s lawyers compared her to Chi-Hua Chien, a male partner who, like Pao, was called aggressive and arrogant. Kleiner considered Twitter a win for Chien when he led the firm’s investment in it in 2010.

Here’s a video of Chien talking about meeting Dorsey during the company’s first round of funding. "It totally made no sense. I didn’t invest in that round, unfortunately," he said with a laugh. Chien’s arc as an investor began when he was an associate at another Silicon Valley firm, Accel Partners. An associate is equivalent to junior partner at Kleiner — Pao’s position — but Chien is still credited for sourcing Accel’s windfall investment in Facebook.

This hypothetical would not change Pao’s odds of getting terminated in 2012. Pao’s complaint mentioned that three men were promoted instead of her. During Kleiner’s downsizing, brought about in part because the firm hadn't seen the consumer internet / social networking revolution coming, two of those men were "transitioned out," including Chien. I think if Pao were a man, Kleiner might not have been as dismissive when she brought up Twitter. I think if she were a man, she would still have been fired as part of Kleiner's cutbacks.

The verdict was fair and unjust

We always knew this jury would be fastidious, especially under the supervision of Judge Harold Kahn, a legal history buff who got the entire courtroom amped about the 800th anniversary of the Magna Carta. Judge Kahn is the kind of Atticus Finch character whose ideals you want to live up to. He allowed the jury to ask questions after every witness, and they cut through all the testimony with a scalpel. In interviews after the verdict was recorded, the few jurors who would speak publicly about the tense month-long trial said deliberations hung on the evidence, describing a small room papered in performance reviews and old emails. They asked perceptive questions.

Minutes after the verdict was read, the youngest of the 12 called it "one of the most difficult decisions I have ever made." He had voted no on all claims. "Like I said, it was based on the evidence that was admitted, the testimony, almost irrespective of the lawyers argument."

"It was based on the evidence that was admitted, the testimony, almost irrespective of the lawyers argument."

And yet even those who sided with Kleiner wanted to see the firm "punished," believed Kleiner’s culture was lawless, and agreed that venture capital's gender imbalance was "appalling." The discrepancy between jurors’ beliefs and their verdict emerged not just because subtle sexism is hard to prove, but because it wasn’t even on their menu. Jurors were not asked if saying women "kill the buzz" created an uneven playing field; they weren’t even asked about the field. Questions on the jury form centered on why Pao was not promoted, after years of strife between her and senior management. The jury was not voting on whether the financiers of the future should only be 6 percent female.

Juror Steve Sammut, who works in sales for the Godfrey Group, spoke in front of the TV cameras in the ad-hoc briefing room. Someone asked if there was "much talk of the broader significance of what you were deciding in there." Before the reporter could finish his sentence, Sammut shook his head no. "Not at all, we never discussed that," he said. The jury "never talked about" how the decision might affect "the venture capital world or Silicon Valley in general."

The trial's symbolism was overstated

While the jury pushed the larger context out of their minds, observers inflated the trial’s symbolism. Pao, the interim CEO of Reddit with an MBA and JD from Harvard, came to represent all women in tech. Venture capitalists came to symbolize the tech companies they invest in. Kleiner Perkins — a firm where apprentices need two graduate degrees — became synonymous with the venture capital industry, even though nowadays VCs are more likely to tweetstorm for deal flow, and blogging is an acceptable resume for the job.

In the retelling, Kleiner was depicted as one more tech office besieged by brogrammer culture, instead of the old boys' club that it is, with the "throwback sexism" to prove it. In reality, John Doerr is the guy who has President Obama over for dinner — he’s not the brogrammer in a hoodie pricing you out of the Mission.

John Doerr is not the brogrammer in a hoodie pricing you out of the Mission

"I think no one really gets it. There are very few people who get to ascend and make the real dollars," said one tech investor, who requested anonymity. "VC at the big shops is country club shit." At larger firms like Kleiner, "success is really about who is allowed to capture the moment," the investor added, "And the VC firms just choose who gets these opportunities to be lucky and part of the cycle."

"You get chosen based on personality and investing, but it’s just so murky," the investor said. "People do better and better when put in good circumstances." The flip side is that junior partners perform worse as their opportunities are constricted. That’s what seems to have happened to Ellen Pao. The more they shut her out, the more she complained, breaking rule one for female venture capitalists.

By making the trial so emblematic, some observers started to distract from the facts of the case, which showed just how backwards these money men can be. Kleiner has invested in Uber, Nest, Dropcam, Waze, and Snapchat, but I was shocked with all this clubbiness that no one mentioned golf. Instead we heard about private planes, dinners at Al Gore’s house, and multi-million-dollar salaries. It’s not just that they look for "white, male nerds who've dropped out of Harvard or Stanford," to use Doerr’s words; it’s also the type of suits that are looking (mostly in their own backyard). What a strange dynamic to have mostly middle-aged white males investing in mostly 20-something white males, like a patronage system.

Kleiner Perkins has a powerful PR machine

Once the dust settled on all those "not liables," Kleiner attorney Lynne Hermle took a victory lap in the press. Hermle is a charmer, but she knows where the bodies are buried (including some she may have buried herself). "This is the right issue and the right time, but the wrong case," Hermle told The Recorder.

There were typically three women pushing that playbook

She could have stolen that line from the Kleiner Perkins playbook. There were typically three women pushing that playbook in and around the San Francisco Superior Court at all times: the firm’s marketing partner and two outside reps from the Brunswick PR agency, who could often be seen flanking reporters in the hallways and were quick with an angry phone call after hours.

The highly coordinated PR campaign, which Pao didn't even attempt to match, likely shaded some trial coverage in Kleiner's favor.

Kleiner’s financial advantage could be seen in other ways as well. One of the sadder moments of the trial was when Pao’s attorney Therese Lawless said she couldn’t afford transcripts of her own case. "In the old days," the court reporter’s fees would be taken care of by the court, Lawless told me hours before the verdict. For the trial, the plaintiff and the defense split the cost of the court reporter, but each side still has to pay for transcripts. "That's why you see us taking furious notes," said Lawless. "Then I went on blogs and read some stuff. They're taking better notes than me!"

The real money is still controlled by men

Pao’s lawyers, Lawless and Alan Exelrod, had a few bits of damning data that they weren’t able to pin on Kleiner, often because of some very convenient "could not recall’s". The plaintiff wanted to show that there was a concrete ceiling at the firm, even for uber-qualified women. They were hoping to do this by pointing out that neither Mary Meeker nor Beth Seidenberg — both brand names in their field — were partners in the management LLC that sits on top of Kleiner. On the witness stand, however, both Meeker and Seidenberg both convincingly testified that they had no interest in being part of that core group of decision makers.

Since the trial, a number of women who work in venture capital have spoken out about the issues Pao raised. The New York Times profiled "female-run venture capital funds," though some of the firms mentioned function more like angel investors, who have less capital to work with.

Female investors who strike out on their own have access to less capital

Angels put up their own money, whereas venture capitalists are funded by limited partners, typically institutional investors like universities or pension funds. Angels invest in the early stages, whereas VCs can plunk hundreds of millions of dollars into companies that are more established. When Doerr’s partners argued that Ellen Pao should be pushed into an operating role because she didn’t have what it took to be an investor, he offered to invest if she started her own fund. Kleiner invested in former partner Aileen Lee’s firm, Cowboy Ventures, as well, to give you some sense of the relative size.

Relegating women to smaller-scale investing roles appears to be less of a threat to the status quo. A common response to dismissing complaints about bias is that there’s no way the powers that be would operate against their own financial interests. But they do this all the time! While Snapchat touts its female users and Uber expands into India, they still don’t understand how having different perspectives could help them get another private plane. I can’t wait to see what these women do while the club busies itself with Meerkat and month-old startups with $40 million valuations.

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