As Kleiner Trial Plays On, VC’s Upper Echelon Is Laid Bare To The Real World

The world of venture capital has long been cloaked in understated reticence and secrecy. That’s especially been true for the traditional top tier Sand Hill Road firms, such as Kleiner Perkins Caulfield & Byers. After all, a big benefit of being in the private market is, well, the privacy. Deals can be done with handshakes. Salaries and bonuses can be confidential. Business strategies can be hashed out over drinks and dinners, and stay out of the spotlight forever. Off the record is the name of the game.

That is, unless you’re subpoenaed by court. Then everything is out in the open: your emails bashing coworkers and planning your all-male ski trips, your $500,000 salary as a junior employee.

And when viewed in the daylight for the judgment of 12 men and women meant to represent a cross section of society, the workings of elite VCs can seem to contrast especially starkly with the rest of the real world. When it comes to Ellen Pao v. Kleiner Perkins, it’s anyone’s guess whose side the jury will ultimately take.

What’s old, what’s new

Much of what’s transpired at San Francisco’s Superior Court this week has been public since the first legal complaint was filed by Ellen Pao nearly three years ago. Pao’s detailed allegations of sexual harassment, gender discrimination, and professional retaliation are not new, nor are Kleiner’s counter assertions that Pao’s failure to advance at the firm were instead due to her alleged failure to measure up as a competent and cooperative employee.

But what is being revealed for the first time in court this week are a number of details around the events in question, from the legal teams’ opening arguments to the testimony of witnesses taking the stand. Some highlights of the rarefied environment being shown here include:

  • On Tuesday and Thursday, Pao’s lawyer Alan Exelrod detailed a conversation that allegedly occurred during a work trip about exploits at the Playboy mansion and the Victoria’s Secret fashion show, led by “boisterous” tech executive Dan Rosensweig talking to Kleiner staffers. The conversation purportedly occurred over cocktails aboard a private jet from San Francisco to New York — which is, Exelrod said, a way Kleiner’s partners often travel.
  • Also on Wednesday, former Kleiner partner Chi-Hua Chien’s testimony included details of an expense account-funded ski trip and a posh dinner at the luxury San Francisco condo owned by former vice president Al Gore.
  • On Tuesday, former Kleiner partner Trae Vassallo discussed her investment experience, which included having “thought leadership in connected devices.” The judge, Harold Kahn, interjected to ask her to explain what exactly both of those terms mean. (On Wednesday, a juror asked for further clarity on what it means to be a “thought leader,” as the term has come up repeatedly during the proceedings.)
  • Pao herself made upwards of $500,000 per year in her role as a junior partner, it’s been revealed — significantly more than at least one of her peers at the firm — and pulled in a starting salary of $600 per hour consulting for Reddit after she left her role at the firm.
  • But six figures is just the beginning. Senior partners at Kleiner regularly earn salaries of four to five times more than junior partners, upwards of $2 million and beyond, Kleiner’s CFO Susan Biglieri testified on Thursday.
  • Former Kleiner partner Ajit Nazre allegedly aggressively pursued both Pao and Vassallo romantically during his tenure at the firm, to the point of showing up at Vassallo’s hotel room on a work trip wearing only a bathrobe, according to her testimony. Nazre was fired from the firm, but was not shunned by the tech industry: He was able to quietly leave Kleiner and secure another enviable job.

All of this is apparently part of a day’s work for those in the upper echelons of venture capital, if you take Kleiner to be a sample size.

A high end, high stakes world

It’s become clear throughout the testimony of the past few days that all of the people involved in the Pao vs. Kleiner case move in a high end, high stakes, and often eccentric place. The spoils are rich, but the competition is fierce and confusing. Venture capital has its own lingo and signals and status symbols, and it often takes years for anyone to become fluent enough to make it to the top.

That’s part of why it’s so shocking that this case has made it to public trial at all. This is not a slam-dunk case for either side. The legal teams for both Pao and Kleiner are tasked with first familiarizing the jury with all the particulars of how tech VCs work, and then with trying to sway the jurors to be sympathetic with their respective arguments.

It’s a case that’s on track to take weeks, racking up huge legal bills and exposing many flaws for everyone involved. Indeed, as many have pointed out, it seems like it would have been in most everyone’s best interests to have settled privately long ago (except, perhaps, those of us in tech journalism. And even that is debatable.)

But for now, only one thing is certain: It’s impossible to predict which side the jury will take. Three days in, it really seems like it’s anyone’s game. A high stakes game, of course.