Ellen Pao's blockbuster lawsuit against venture capital firm Kleiner Perkins Caulfield & Byers has been described as "exposing Silicon Valley secrets" and putting the usually secretive world of tech-industry VCs "under a microscope."
On the surface, it's a case about whether Pao was denied a promotion and a huge amount of money because of her gender. But depending on who you ask, it's either an entire sexist industry or one woman's sex life that is really on trial this month.
Who is Ellen Pao?
She's a former junior partner at legendary Silicon Valley venture capital firm Kleiner Perkins Caufield & Byers, known for its very profitable early investments in tech giants like Google and Amazon.com. She's currently the interim CEO of Reddit.
Pao started at Kleiner Perkins in 2005 as the chief of staff to billionaire senior partner and investor John Doerr, a job that Fortune reports required "an engineering degree from a prestigious university, degrees in law and business, and a background in enterprise software."
As a corporate attorney with an engineering degree from Princeton and a J.D. and MBA from Harvard, she "met everything in the spec," she told Fortune in 2008.
She filed a sexual discrimination suit against Kleiner Perkins in 2012, after which she was fired. The case is now finally at trial in San Francisco.
Why is she suing?
Pao claims gender discrimination kept her from advancing to Kleiner's inner circle, where she would have made millions.
Specifically, she alleges that the firm retaliated against her for blowing the whistle on a fellow junior partner who coerced her into sex and then made her working life miserable when she broke things off.
According to Pao's lawsuit, Ajit Nazre—a married junior partner who had been with the company two years longer than she and had substantial influence through his mentor, managing partner Ray Lane—started hitting on her during a business trip in early 2006, and became "distant" toward her when she turned him down.
She admits she eventually "succumbed" to sex with Nazre "on two or three occasions," but broke off the affair in October of that year.
Pao claims her attempts to resolve the Nazre situation with their mutual higher-ups resulted in being ignored, being told she should marry him, being forced to have dinner with him outside of work, and eventually being asked to change offices and even transfer to China. (She declined to do so.)
During all of this, she says, Nazre was promoted to senior partner in the greentech division where Pao worked, leaving her with even less power to resolve the situation. She says she was denied a promotion—and in 2008, didn't even get a performance review—as retaliation for speaking up.
(Ultimately, Nazre was fired after another female partner, Trae Vassallo, alleged he sexually harassed her, tricking her into a dinner for two and then showing up at her hotel room in a bathrobe. Vassallo testified about this on day one of the trial.)
[Pao's 2012 complaint] said that a Kleiner partner did not invite her or any other women to an important dinner because "women kill the buzz"; that another Kleiner partner inappropriately gave her Leonard Cohen's sex-drenched "Book of Longing"; and that this same partner told her "the personalities of women" did not lead to success at Kleiner "because women are quiet."
She's seeking $16 million in damages, an estimate of the earnings she feels she was unfairly denied by the KPCB boys' club.
Sounds pretty shady. What's Kleiner's defense?
In what the NYT calls a "scorched-earth" civil court filing, KPCB argued last week that Pao's sexual relationship with Nazre was consensual, and that it was her personality, not her gender, that kept her from senior partnership.
She "lacked the ability to lead others, build consensus and be a team player, which is crucial to a successful career as a venture capital senior investing partner," KPCB's brief contends.
Their brief also hand-waves Pao's concerns about the company culture, implying they're petty and don't amount to a discriminatory workplace:
"Pao's complaints that she did not sit in the front row at a meeting, was not sitting at a table during an event, her office was not in 'the power corridor' (whatever that means), she was not included on someone's interview schedule, she was asked to take notes during a meeting — among many, many others — are simply not even close to being adverse employment actions sufficient to constitute retaliation."
The company says what Pao described as repeated complaints about retaliation from Nazre and others never happened, and the first they heard of it was a 2012 letter from her lawyer. They also claim that the Book of Longing was a gift from a partner's wife, not the partner himself, and it had to do with ... I don't know, Leonard Cohen's Buddhism or something?
If Pao really hadn't come forward with her complaints in the years leading up to 2012, why did she pick that moment to file a lawsuit? Kleiner's brief suggests Pao sued (and now refuses to settle) because her family needs the money after her husband's hedge fund went bankrupt and he was accused of fraud.
Who's her husband? What does he have to do with all of this?
Pao married "flashy Wall Street financier" and hedge-fund manager Alphonse "Buddy" Fletcher Jr. in 2007, after cutting off her contentious relationship with Nazre. The two were introduced at an Aspen Crown Fellows retreat just four months earlier, Fortune reports. Pao had been recommended for the fellowship by her mentor and father figure, John Doerr.
Fletcher, a Harvard grad whose remarkable rise on Wall Street landed him on Forbes' list of wealthiest Black Americans, surprised some who knew him by marrying Pao so quickly—his 12-year relationship with a man, Bo Fowlkes, had come to an end in 2005.
Friends told Vanity Fair that they found Pao "not very warm," "really intense," and "an achievement machine," but that those were all qualities that Fletcher "really dug." The two apparently had a lot in common, and both wanted kids. Their daughter, Matilda, was born in 2008.
Here's where all of this starts to matter to the Pao lawsuit: In 2010, Fletcher, who owned four apartments in The Dakota, the storied New York apartment complex where John Lennon was fatally shot in 1980, wanted to buy a fifth unit to accommodate the couple's daughter as she grew up.
His application was denied by the Dakota board, who alleged his firm's finances were not as they appeared. Here's the New York Times from 2011:
His investment firm's "apparent lack of profitability," as well as other evidence, the board wrote, "suggested that it may be seriously troubled and a source of potential future costs or liabilities."
Fletcher sued in response, which resulted in his financial records becoming public and caused his investors—notably the pension funds that made up a substantial chunk of his assets—to withdraw their money. With his fund unable to pay them back, Fletcher officially put it into Chapter 11 bankruptcy in June 2012—the same month that Pao filed her complaint against Kleiner Perkins.
In 2013, pension funds for Louisiana firefighters and municipal employees sued Fletcher, claiming they had invested $100 million in one of his funds that eventually went bankrupt and was "described by a court-appointed bankruptcy trustee as having elements of a Ponzi scheme," the New York Times reported.
"I have never supervised anything even remotely resembling a Ponzi. I am not the black [Bernie] Madoff," he said during a 2013 bankruptcy hearing.
But Silicon Valley sexism is a real phenomenon, right?
Hell yes. From startups using "culture fit" as an excuse to hire all-male dev teams to VCs treating meetings with female founders like dates, there's a big-ass heap of evidence that the system women are being told to Lean In-to is heavily biased against them.
But what about Kleiner Perkins in particular? In his testimony at the trial Wednesday, John Doerr admitted that "the number of women in venture capital is pathetic."
— Ellen Pao (@ekp) February 22, 2015
Kleiner insists that her gender isn't what kept Pao from getting the promotion, though. They say she wasn't a "team player" or a "thought leader," and that she was hired to "assist" and do what she was told "as directed."
"She did not have the presence, she did not have the sales skill, she was not a self-starter … She wasn't in the ballpark, she wasn't even close. She wanted the opportunities to come to her," Kleiner attorney Lynne Hermle said in opening arguments.
What's a "thought leader?"
A member of the jury asked for clarification on this, and was told it basically means "expert."
Why not just say "expert?"
What's happened at trial so far?
Ellen Pao wasn't the only Kleiner partner to make sexual harassment allegations against Ajit Nazre. Trae Vassallo, another former partner, filed a complaint in 2011.
Stephen Hirschfeld, the private investigator Kleiner Perkins hired to look into the two women's allegations, testified that "Nazre pursued Vassallo twice while at Kleiner and that Nazre had repeatedly lied to him," Business Insider reported. Nazre was fired in January 2012.
Hirschfeld also recalled Pao telling him about a plane trip with Dan Rosensweig, CEO of Kleiner-funded company Chegg, and senior KPCB partners. He said Pao described Rosensweig discussing the Playboy mansion, porn stars, and Victoria's Secret, and asking if they could get Yahoo CEO Marissa Mayer (then an executive with Google) on the Chegg board because she's "really hot."
Managing partner Ted Schlein, who also testified, said he didn't recall asking Pao about porn stars and "noted that Pao did not complain about anything that was discussed on the plane ride at the time or the next day, only bringing it up much later," USA Today reported.
In what has been the most-quoted moment of the trial so far, Hirschfeld claimed John Doerr, Pao's biggest advocate at the company, had told him Pao "had a female chip on her shoulder."
The jury has also seen the wildly divergent drafts of the 2011 performance review that led to Pao's firing—Ajit Nazre was apparently allowed to contribute, although his name was removed from the final document—and learned that she could have made $2.6 million per year if she'd been promoted. She made over $500,000 in 2011.
Pao herself is expected to take the stand this week.
What does Reddit have to do with this?
The Pao trial seems to have brought out the worst misogynist trolls from the internet's massive, troll-infested undercroft, Reddit, where Pao is currently serving as CEO. A Re/code piece published last month rounds up some of the most popular comments on the case, including this heavily upvoted achievement in victim-blaming:
"Two degrees from Harvard and one from Princeton and she's still dumb enough to get 'pressured' into sleeping with a married co-worker to get ahead in her career."
And this sympathetic read on the situation from someone who definitely has all the facts and knows what he's talking about:
"Of course she claims that she 'was pressured into having sex'. That alone tells me she is lying."
One of Pao's coworkers at Reddit—or someone claiming to be one—has also been less than supportive. The New York Times reported that "an anonymous Reddit employee sent a letter to Kleiner's legal team, asking them to subpoena Reddit employees 'for information regarding conflicts with Ellen Pao,'" presumably as evidence that her personality was holding back her advancement at KPCB.
Reddit's valuation, and Pao's stake in it, are also being raised by the defense as evidence that being passed over for a promotion didn't ultimately destroy her career. She's now the CEO of what might be a $500 million company—her salary and the value of her equity will no doubt be debated at trial.
What does this case mean?
Whether she can prove gender discrimination in court or not, Pao was trying to break into an unquestionably male-dominated area of business: Only 4% of senior venture capitalists are women, according to a 2014 Fortune report.
KPCB argues that Pao wasn't promoted because her personality was too "entitled" and her worldview too "black and white" to make a good investor. Even if Kleiner establishes that this particular woman wasn't qualified for its inner circle, Pao's suit has forced the firm to open up its inner workings and company culture to the public over months of testimony.
[Photo: AP Images]