Jury: Silicon Valley Venture Firm Not Guilty of Gender Bias

A jury soundly rejected Ellen Pao’s claims of gender discrimination by Kleiner Perkins Caufield & Byers, in a case that riveted Silicon Valley for weeks and exposed how women fare in the male-dominated world of venture capital.

The verdict followed testimony by two dozen witnesses who variously painted Kleiner as unfriendly to women and Pao as a difficult employee. The jury dismissed her claims that the firm where she worked for seven years valued and judged women and men according to different standards. Kleiner, which said 20 percent of its partners are women, stated it’s committed to diversity.

For some, the case placed on trial the world of venture capital firms that line Sand Hill Road in Menlo Park, California. Pao’s suit attracted attention not only for its sensational claims, but also because of Kleiner’s stature. And the trial took place as the technology industry wrestled with a gender imbalance that has drawn harsh criticism.

“If I’ve helped to level the playing field for women and minorities in venture capital, then the battle was worth it,” Pao said after Friday’s verdict in San Francisco state court.

‘Clear Message’

Kleiner said in an e-mailed statement that the verdict reaffirmed that Pao’s claims were without merit.

“There is no question gender diversity in the workplace is an important issue,” the firm said. “KPCB remains committed to supporting women in venture capital and technology both inside our firm and within our industry.”

The suit and revelations in court send “a clear message to the business community that they need to take these allegations more seriously,” said Deborah Rhode, a Stanford Law School professor. “I think it’s a real wake-up call to the Silicon Valley community in general and the venture capital industry in particular.”

Payroll statistics disclosed last year by major tech companies, including Google Inc. and Apple Inc., showed that about 30 percent of their employees were female, with white and Asian men holding the vast majority of technical jobs.

Some studies have found that the startup and investing community in Silicon Valley favors men. The number of female venture capital partners shrank to 6 percent last year from 10 percent in 1999, according to research by Babson College.

Kleiner says nine of its partners are women. Managing Partner John Doerr said earlier this year the firm is “outperforming the rest of the industry when it comes to diversity.”

One Count

After the verdict was read, the judge sent the jury back to revisit one claim because the 8-4 vote didn’t reach the required nine-vote majority. After further deliberations, jurors came back and affirmed their decision, this time with a 9-3 vote in favor of Kleiner on that claim.

The panel considered a timeline to guide its deliberations, said juror Steve Sammut, 62. The key factor was that Pao was unable to improve aspects of her job performance, he said.

“We looked at performance evaluations,” he said. “We tried to look for similarities through the history of events. We spread it out on paper and looked at it a long time.”

Marshalette Ramsey, a manager for a transit company, said she voted for Pao.

“The balance was very very close and it was difficult to split those hairs,” she said. “We hammered out on little things, big things. We nitpicked, to come up with fairest verdicts.”

Kleiner could ask the court to order Pao to pay the cost of its expert witnesses and court fees. Christina Lee, a Kleiner spokeswoman, declined to comment on legal fees and costs.

Charged Atmosphere

Pao, 45, sued in 2012, claiming she was subjected to a sexually charged atmosphere at Kleiner, preyed on by male colleagues, denied raises and promotions and fired because she’s female. Women at Kleiner were marginalized throughout her tenure, she said, excluded from outings on private jets to ski resorts, left out of important dinners with portfolio company executives and interrupted or ignored at meetings.

“Where is the level playing field?” her lawyer Alan Exelrod said during his closing argument. “Ellen Pao drove returns. The men received the promotions.”

According to Pao, partners retaliated after she complained about the inappropriate behavior of a male colleague she said pressured her into having an affair. At the trial, Kleiner partner Trae Vassallo testified that she was subjected to repeated sexual advances by the same man, recounting how on a 2011 business trip he showed up at her hotel room door wearing a bathrobe.

Blaming Others

Kleiner said Pao was fired because she bickered with partners, had no entrepreneurial experience and lacked deep expertise in technologies that would be ripe for investment. The allegations in her suit “are simply a continuation of Ellen Pao’s attempt to blame others for her own failings,” Kleiner attorney Lynne Hermle told jurors.

For almost every offensive episode Pao’s side described — male co-workers engaged in banter about porn stars on a plane trip, a male colleague’s explanation that women weren’t invited to a dinner with partner Al Gore because they would “kill the buzz,” her receipt from a senior partner of a book of erotic poetry as a Valentine’s Day gift — Kleiner called witnesses to testify that the alleged events didn’t occur or were taken out of context.

To counter Pao’s recollections of a sexist workplace, Kleiner called on partner Mary Meeker, who testified the firm is “the best place to be a woman” in the business. Jurors also heard Meeker’s description of Kleiner men as “almost choir boys” compared with what she experienced working at Morgan Stanley on Wall Street for almost two decades.

Pao’s Colleagues

In all, about a dozen current and former Kleiner partners testified, with most saying Pao was difficult to work with and depicting her as quiet, resentful and territorial.

Doerr, who was Pao’s boss, gave her good performance reviews as his chief of staff and wrote an e-mail in support of her when others were losing faith that she was worth keeping. He testified, though, that he thought she had “a female chip on her shoulder.”

Pao spent more than three days being questioned, telling jurors she had been taking a stand for women’s rights when she sought an “eight-figure” payout to leave the Kleiner and when she decided to sue.

“I think there should be equal opportunities for women and men to be venture capitalists,” she testified. “And I wanted to make sure my story was told.”

While Kleiner’s lawyers questioned Pao’s motivation for suing, they weren’t able to persuade the judge to let them put on evidence that she and her husband, Alphonse “Buddy” Fletcher Jr., had financial difficulties after the master fund for his hedge fund filed for bankruptcy in 2012.

Princeton, Harvard

Pao, the daughter of Chinese immigrants, came to Kleiner in 2005 with an engineering degree from Princeton University and law and business degrees from Harvard University, plus experience working for Microsoft Corp. and other tech companies. She traced her troubles at Kleiner to 2006, the year she had an affair with fellow junior partner Ajit Nazre. Pao testified that Nazre pursued her relentlessly and lied to her, saying he was separated from his wife.

She said that at the end of their six-month relationship, Nazre retaliated by cutting her out of e-mail threads and meetings and providing negative input for her performance reviews.

When Doerr learned of the affair a year later, he wanted Nazre fired, he testified. But Pao defended him. Nazre, who wasn’t a defendant in the case, was fired in 2012, after a Kleiner investigation found he’d harassed Vassallo.

The case is Pao v. Kleiner Perkins Caufield & Byers LLC, CGC-12-520719, California Superior Court (San Francisco).