Lessons from the Life of Pao

Mar 29, 2015

When the New York Times runs the verdict in a San Francisco sex discrimination suit as its lead story—above the fact that the Germanwings pilot suspected of deliberately killing 149 passengers concealed mental illness from his employer—you know that a case has struck a national chord.

What lessons, though, should we take away from Ellen Pao’s resounding loss in her case against famed Silicon Valley venture capital firm Kleiner Perkins Caulfield & Byers—the case that transfixed the nation’s business community for the past five weeks?

The narrowest and safest lesson—and I don’t mean to be coy—is that Pao’s failure to be promoted at KPCB, and her termination in 2012, happen not to have been gender-based, nor were they based on retaliation for her complaints about gender discrimination.

This is not to say, of course, that other women’s complaints of gender discrimination in Silicon Valley (or anywhere else) are not well founded. Nor is it even to say that KPCB was an enlightened, sensitive place for women to work during the years when Pao was there. On the contrary, Pao’s lawyers demonstrated pretty definitively that that was not the case.

Pao has, in fact, accomplished something lasting and beneficial for society in so publicly airing the humiliations, slights, and indignities to which she and other KPCB junior partners were subjected. (A lot of workplace males across the country are now quietly reassessing their own past conduct, praying that sleeping dogs are left to lie, and silently vowing to make course adjustments.)

At the same time, we must give KPCB its due. It was dragged through the mud, but won the suit decisively. The jury apparently believed, as KPCB argued, that Pao just didn’t happen to be one of the very rare few who warranted promotion to top investment-level positions there. Nor had she been terminated, the jury determined, in retaliation for raising sex discrimination claims. Rather, the jury apparently credited KPCB’s evidence that it had already told Pao in mid-2011, before she ever lodged formal discrimination complaints, that she was not cut out for the positions she sought, and that she should take steps toward moving to an operational, C-suite type position with one of the firm’s portfolio companies—a position very like the one she eventually found as interim CEO of Reddit, the influential online bulletin board.

It didn’t take very long for the jury to reach that decision—less than three days of deliberation after a nearly five week trial—and the decision was rendered by a racially diverse jury composed of six men and six women. Moreover, the judge’s evidentiary rulings throughout the trial seemed, if anything, more favorable to Pao than to KPCB, so she can’t really quarrel with the fairness of the trial. She had her day in court, and got a fair shake.

At times, in fact, some found the leeway that San Francisco Superior Court judge Harold Kahn permitted Pao in presenting evidence against KPCB a little puzzling. Evidence came in of alleged slights leveled toward many KPCB women other than Pao. At times it seemed almost as if this were a class-action sexual harassment suit, based on hostile work environment allegations. But it wasn’t a class action, and Pao's suit was not seeking damages for sexual harassment.

Though Kahn thought these allegations were fair game—a firm so rife with old-school gender insensitivity might easily discriminate in promotions, too—many other judges would have excluded them.

Likewise, Kahn allowed Pao to testify about her motivations for bringing her suits, without according KPCB the same privilege. She was permitted to tell the jurors that she nobly brought the suit to help the lot of American women, yet KPCB was largely precluded from offering its counter-evidence, which would have explored the personal financial crisis that was unfolding around Pao at the time that she aired her first formal complaints of gender discrimination in late 2011. (The hedge fund of her husband, Alphonse “Buddy” Fletcher, Jr., had descended into bankruptcy, pension fund clients were accusing him of fraud, and tax liens were being lodged against her KPCB assets.)

In looking for lessons from the suit, we should also remember that the fact that someone is wrongly subjected to sexually-charged misconduct at a firm—as it seems that several women, including Pao, were while at KPCB—does not necessarily mean that the firm itself acted improperly.

Consider, for instance, the now infamous incident in which a married, male junior partner at the firm came to the hotel room door of a female colleague with a glass of wine in his hand and dressed in nothing but a bathrobe.

Yes, that reflects poorly on the male junior partner, and maybe Silicon Valley culture. But what happened next? According to KPCB—and the jury appears to have credited KPCB’s evidence—the female colleague eventually lodged a formal complaint about the incident. Once she did, KPCB hired an outside investigator to look into it. When the investigation concluded, the male’s employment at KPCB promptly ended.

Now which way does that cut? Taken as a whole—at least as the jury apparently interpreted it—the bathrobe incident weighs in KPCB’s favor. The firm, upon receiving the formal complaint, did what it was supposed to do.

For those who feel that they know in their bones that Pao was discriminated against, I won’t try to argue you out of your convictions. But in defense of our system—or maybe just in an effort to explain what happens—I’d offer this.

Whistleblowers are often peculiar or unlikeable people. They almost have to be. Not many of us would dare sue a powerful organization in the first place, knowing the punishing blowback we would be certain to endure at the hands of the skilled lawyers the institution would hire; knowing that years worth of our emails would be culled through and presented in their worst conceivable light; knowing that litigation-averse prospective employers—which is to say all employers—will think long and hard before ever hiring us again.

The motives of whistleblowers are seldom pure as driven snow, either. They usually have a huge personal, pecuniary stake in persuading a court that the wrongdoing they claim to have endured or witnessed really occurred.

Ellen Pao fit that standard whistleblower profile to a T. She was a chronic complainer, KPCB’s evidence suggested, and a pill to work with. And even without specific evidence of the financial catastrophe her husband was enduring, it would have been clear to jurors that Pao had at least incentives to exaggerate and present revisionist histories. She had demanded an eight-figure severance package to go quietly, and had then been enraged when all KPCB offered her was six months—at $33,800 per month. In her suit she sought $16 million in compensatory damages, and up to $144 million in punitives.

Like most juries, the one that heard Pao’s case included some plain folks, who didn’t live in the super-ambitious, aggressive, astoundingly well-compensated world in which Pao’s remarkable accomplishments—a bachelors degree in electrical engineering from Princeton, law and business degrees from Harvard, a few years as a high-powered lawyer at Cravath, Swaine & Moore—entitled her to compete. The jury of Pao’s peers included a painter, a BART subway station manager, a physical therapist, a prison nurse, and a teachers aide, among others, according to my colleague Shalene Gupta.

Differences in social class between jurors and the parties to the suit throw an unpredictable wrench into the resolution of he-said, she-said disputes like this one. When I first heard Anita Hill tell her story, I thought she was one of the most credible witnesses I’d ever heard. A religious Baptist, African-American, born of humble beginnings, she was from central casting, I thought. Surely women across the country would rally to her cause.

Wrong! Women were sharply split over her credibility. Many felt that if she could ask Clarence Thomas for a job recommendation after her clerkship with him, he must not have really harassed her in the way she alleged. Or maybe they couldn’t forgive her for her temporary willingness to overlook the harassment for the sake of personal ambition.

Most business writers wouldn’t expect an aspiring managing director of a Silicon Valley venture capital firms to win any Miss Congeniality contests. But jurors care about fundamental decency and consideration for others. When they were given an opportunity to ask Pao questions, some were sharp. They included, according to the paraphrasings of my colleague Kia Kokalitcheva, who was present in the courtroom, “Was it appropriate to be involved with a married coworker? Why was she so adamant about him staying at the firm after she complained to senior partners that he had pressured her into sex and then retaliated against her after she broke off their relationship?” (Pao testified that the married coworker had misled her into believing that he was separated from his wife.)

So Pao came away empty. And given the evidence, there was no grave miscarriage of justice, either.

Yet I think the conventional wisdom—namby-pamby as it may sound—is right. The suit will likely have a lasting impact on society, and a positive one for the cause of equal treatment in the workplace.

For a list of other Fortune stories relating to the Ellen Pao case, see this guide.

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