Uncovering historical artifacts for the Kleiner Perkins trial
For a while now I’ve been encouraging people interested in the explosive gender discrimination trial being heard in San Francisco to read two articles I published years ago in Fortune Magazine. The first is a long look at how Kleiner Perkins got into “green” investing, as well as some of the generational succession issues the firm faced in 2008. Ellen Pao, Ajit Nazre, Randy Komisar, Trae Vassallo and others make appearances in this article. The second article is an investigation that Katie Benner and I conducted into Ellen Pao and her husband, Buddy Fletcher, at the time she filed suit against Kleiner. The topic of the Pao-Fletcher family finances became germane Thursday, as Fortune‘s Kia Kokalitcheva explained.
For whatever reason, it hadn’t occurred to me until now that I also wrote an earlier 2008 article with Marc Gunther about Kleiner and its market-based plans to save the world. The article was a Fortune exclusive, handed to us by Kleiner Perkins, about Al Gore joining the firm as an investing partner. We called the article, Al Gore’s next act: Planet-saving VC. I read it late Thursday and was surprised by a few of the nuggets I found.
People following the trial carefully will first want to read this paragraph [with emphasis added where appropriate]:
Doerr asked a younger Kleiner partner, Ellen Pao, who recently had been hired to make consumer Internet investments, to organize a meeting of 50 environmental thought leaders so that the partners could brainstorm with them about opportunities. They met in May 2006 at the San Francisco Four Seasons. R.K. Pachauri, whose UN Global International Panel on Climate Change later would share the Nobel with Gore, was there. So was Jose Goldemberg, a Brazilian scientist who spearheaded his country’s push into sugarcane-based ethanol.
The only reason Marc and I would have written that statement about Ellen Pao, whom I don’t think I met until later in 2008, was because John Doerr told us so. At trial, the issue of what Pao was hired to do has chewed up hours and hours of testimony. She says she always intended to be an investor; Kleiner says they always thought of her as someone destined for an operational role outside of Kleiner Perkins. The thought-leader conference Doerr referenced to Marc and me also came up at trial as an example of a praiseworthy but non-investing achievement of Pao’s. Whatever the documents say or whatever people recall, Doerr told Fortune more than seven years ago that Pao had been hired to make consumer Internet investments.
Some other tidbits in the story are merely interesting. Consider this:
In front of a group, Doerr’s style is part motivational speaker, part grad school seminar leader. At the end of one meeting FORTUNE attended, Doerr suggests that everyone brainstorm about the questions the partnership should consider at its December offsite. Doerr’s aide de camp, Wen Hsieh, who holds two technical Ph.D.s from Caltech, scribbles the questions on an easel with a magic marker as Doerr directs the conversation around a long conference table. Doerr himself wants to know how Kleiner’s green-tech initiative can have the most enduring long-term impact. Gore wonders how to serve Americans who want to live “off the grid,” a favorite topic. Kleiner partner Ted Schlein wonders how Kleiner will react if the price of oil falls dramatically. Partner–and biotech expert–Brook Byers brings up the most immediate concern: “Should we,” he asks, “be hiring more people with expertise in the energy field?” Looking around the room, it’s obvious that Kleiner employs a plethora of brainiacs and Ph.D.s, but not a single individual with a deep background in energy.
This is interesting merely to show that Marc and I witness a man, Wen Hsieh, taking notes during a meeting. Hsieh’s duties compared with Pao’s have been a big issue in the trial, as have Pao’s testimony that she and Trae Vassallo resented being asked to take notes during various meetings.
Another new twist: The capital requirements in the energy business are massive compared with what’s needed to start a software or Internet company. So while Kleiner’s cash can help companies get going, building power plants or cars requires complex financing that’s well beyond what it can offer.
Doerr understands the complexity of what’s ahead. Most venture capitalists are judged on return on investment alone. Asked how he’ll judge the success of the green initiative, he reels off five measures: “the company we keep, the quality of the companies we help grow, the quality of the partners we add, returns on the investments we make, and by the CO2 that’s taken out of the atmosphere.”
Looking back, it’s fascinating to see not only the obvious obstacles Kleiner faced, but also Doerr’s emphasis on the quality of the partners Kleiner would add through its “cleantech” explorations as being one of the best measures of firm success. That last one might well be considered a case closed.