A sketch of Ellen Pao, right, who claims the VC firm Kleiner Perkins Caufield & Byers has discriminated against her based on gender.
For a few weeks now, Silicon Valley has been “gripped” and “captivated” by a gender discrimination trial. The powerhouse venture capital firm Kleiner Perkins Caufield & Byers has been sued by a former employee, Ellen Pao, who contends that her career there was undermined by a profoundly sexist culture.
It’s been a rough trial, with both sides slinging around harsh allegations. Courtroom drama aside, the underlying issue is serious. The number of venture capital firms like Kleiner is small, but their influence is immense. A combination of money, connections, and brainpower makes the VC community a unique player on the global scene. It helps determine which startups blossom into massively “disruptive” businesses, thus shaping the broader economy and, sometimes, society in general.
So if one of this community’s marquee members effectively discriminates against women, what does that say about the state of our supposedly meritocratic culture in 2015?
This is particularly puzzling because — whatever one makes of Pao’s specific story — the trial has already raised issues about the VC crowd that are, at the very least, embarrassing. Research from Fortune, for instance, concluded that out of 542 “partner-level” VCs at major firms, a mere 23 (or 4.2 percent) were female. Separately, a report by the law firm Fenwick & West asserts that among a wider swath of Silicon Valley businesses, only 11 percent of management-level positions are held by women.
These numbers are outrageous. And while the tech press has covered the proceedings diligently, it’s not as if the story is leading the Sunday yak shows, or becoming a nationwide conversation-starter.
So: Where is the outrage?
One would think that the easiest way for Kleiner to parry the charge of gender discrimination would be to simply point out that there are lots of women in the firm’s top echelon. But, of course, there aren’t.
The testimony, in fact, has involved unflattering assertions — such as Kleiner partners allegedly yapping about porn stars and the Playboy mansion on a private plane ride, seeking to exclude women from a dinner where they might “kill the buzz,” and generally creating an atmosphere making it challenging for women to get ahead.
Many of these assertions have been flatly denied by the firm and its legal team. But nobody seems to dispute the male domination of the VC world.
And even in the rarefied air of venture-capital firms, Kleiner is a particularly legendary entity. Its chief, John Doerr, is probably the most celebrated venture capitalist alive, having been profiled and lauded by major media outlets from the old dotcom boom days up to the present. Under Doerr, Kleiner has backed buzzy and sometimes revolutionary companies from Google and Amazon to Uber and Snapchat — and reaped massive financial returns on its investments in the process.
From the witness stand, Doerr himself summarized the bigger picture: “The number of women in venture capital,” he observed, “is pathetic.”
John Doerr and Pao, in a file photo from the Associated Press.
And according to his testimony, at least, Doerr actually understands exactly why this is a problem. “I don’t advocate for women out of a sense of social justice, though I think that’s important,” he said. “I believe groups make better decisions when they are more diverse, in gender, age, and ethnicity.” (Doerr was a champion of Pao for some time, before others soured on her for alleged shortcomings in her leadership and interpersonal skills. That, according to Kleiner’s defense, is the gender-indifferent reason she failed to thrive at the firm.)
To put Doerr’s point more strongly: In a world of cutthroat competition, like the one that supposedly shapes some of the most influential (and richest) companies in the world, you would think that hyper-competitive entities like VC firms would be obsessed with acquiring and cultivating the absolute best talent. A system that the numbers suggest does a poor job finding that talent in roughly half the population is a system that’s not working.
Maybe the unimpressive track record of the VC world on this front hasn’t attracted wider attention because it seems like a small and obscure club. Or maybe it’s because VCs seem to be performing brilliantly anyway — helping launch superstar companies that ultimately benefit the economy.
But that’s sort of the point. These entities are supposed to be the cream of crop, leading and sparking change while the rest of society follows. It’s remarkable that on this matter, at least, they seem behind.
Who needs disrupting?
What makes that laggard status even more noteworthy is the degree to which the VC crowd positions itself as singularly engaged in the business of unleashing much-needed “disruption” on tired and stodgy sectors of the economy. It’s a business obsessed with its own status as an agent of change — with not just seeing the future, but practically inventing and inhabiting it.
And of course that idea extends to… workplace and management ideas. Just this week, none other than Doerr popped up in The New York Times, touting a firm in Kleiner’s portfolio called BetterWorks. This cool-sounding startup “makes office software that blends aspects of social media, fitness tracking, and video games into a system meant to keep employees more engaged with their work and one another,” according to The Times.
Doerr added that this change-making enterprise represented nothing less than the future of work: “I think we’re going to see more and more systems in this field of quantified work, or people science,” he said, “that are going to make the most valuable resource that we have — which is our team — more effective.”
Setting aside BetterWorks, this bold confidence just highlights another reason you might figure there’d be more outrage about venture capital’s apparently shabby record on gender.
By and large, the VC mentality is that there is simply no problem that the right combination of technology and smarts cannot crack. Redefine the nature of retail? Doable. Sweep aside a carefully regulated industry like the taxi business? Child’s play. Self-driving cars? No problem. Rewiring the way we interact with information, memory, and each other? Check, check, check. Artificial intelligence? Inevitable.
But boosting the number of women in venture capital? Gee, we’ve been trying for a while, and we know it’s a problem, but we just can’t figure out what to do about it.
Really? That’s not just a flabbergasting state of affairs, it’s one that deserves scrutiny. The Pao trial will end up making a determination about one woman’s experience. But whatever the jury decides in the case, the bigger issue will remain.
And after all, if even the head of Kleiner Perkins finds venture capital’s record of hiring and cultivating women “pathetic,” then maybe there’s something in its culture that would benefit from some very serious disruption. VCs are fond of announcing that the rest of us need to embrace, or at least deal with, whatever change they’re behind. Maybe it’s time we told them to do the exact same thing.