While the salacious details of a sexual discrimination lawsuit against Silicon Valley's most prestigious venture capital firm has sparked plenty of buzz, experts say the suit ultimately isn't about sex, but money.
Ellen Pao, the Kleiner Perkins partner who filed the suit, argues that female partners by design earned less than their male peers. And the firm will likely end up paying millions to settle her claim, say attorneys who've reviewed the filing.
On a broader level, the Pao lawsuit is reopening debate about venture capital's image as an old-boys' club. A survey of 600 venture professionals late last year by the National Venture Capital Association found that just 11 percent were women in investment roles.
Ironically, Kleiner Perkins has one of the industry's best records for putting women in high-level jobs. In Pao, a Harvard-educated lawyer with a track record at top tech companies, the firm may have met a formidable match.
Many in the valley's tight-knit startup community said they couldn't recall other sexual harassment suits in the venture industry. But the well-appointed offices of many Sand Hill Road firms are notable for their attractive administrative staffs and dearth of women in corner offices.
"It's certainly an industry that's still dominated by men," said Cindy Padnos, founder of Illuminate Ventures in Oakland. She
While she and others said things are slowly changing with the rise of a younger, more egalitarian generation, they cited several factors behind the current trend. Relatively few women study science and math or seek tech industry jobs. Men, in deciding whom to hire (and which startups to fund), tend unconsciously to select people like themselves. And the hard-charging venture world can force female partners to choose between career and family.
"There is no part-time model in the venture capital world," said Robin Richards Donohoe, who co-founded venture firm Draper Richards with VC pioneer Bill Draper. "You have to keep your network strong, stay up on technology, travel to conferences, and then there are the trips to India and China."
The latest Forbes Midas List, which runs down the 100 top-performing venture capitalists as measured by financial returns, includes just five women -- which is actually an improvement over prior years. None are in the top 40, and only one -- Mary Meeker, who joined Kleiner Perkins in 2010 -- is in the top 75.
Kleiner's website, in fact, shows that one in four partners is a woman.
Pao, who studied electrical engineering at Princeton before earning a Harvard law degree and MBA, seemed poised to climb the firm's ranks when she joined in 2005 after stints at Microsoft, Tellme Networks and BEA Systems.
"In my interactions with her, she strikes me as someone who just wants to be able to work hard and get a fair deal," Reddit CEO Yishan Wong wrote in a posting this week on the TechCrunch site. Wong declined via email to elaborate, citing the tech industry's close-knit nature.
But within a year on the job, Pao states in her lawsuit, she was pressured into sex by another junior partner, Ajit Nazre. After she broke things off, she claims, he retaliated by excluding her from meetings and email discussions. And when she complained to the firm's top executives -- including John Doerr, an outspoken advocate for the hiring of women -- she wasn't taken seriously, the suit says.
Kleiner Perkins, through a spokeswoman, declined to comment beyond a statement saying it had hoped to settle the matter with Pao -- who still works at the firm -- and "regrets that the situation is being litigated publicly." Kleiner also said it had conducted "a thorough independent investigation of the facts" and "believes the lawsuit is without merit."
Nazre, who left the firm in January after what Pao's suit says was an investigation into claims he'd harassed another Kleiner partner, did not return a call to his Los Altos home.
Pao's 19-page complaint alleges that while Nazre was promoted after she complained about him, the firm gave her a smaller share of its profits and tried to move her to a back office -- and then, to China.
The suit also claims Pao was propositioned by another Kleiner partner who subsequently participated in her performance reviews, in which she was cited for "clashes with her peers."
Pao said she and other women at the firm were excluded from male-only dinners and ski trips and that Kleiner Perkins was stingy with promotions, bonuses and "carried interest," the share of profits generated from its funds.
"She's trying to paint a picture that the company is indifferent to the plight of women," said David Kadue, an employment lawyer with Seyfarth Shaw in Los Angeles.
And like other legal experts, Kadue predicted the case will settle before reaching a jury.
Pao's attorney is Alan Exelrod, who did not return calls for comment. He gained fame for a landmark sexual harassment suit involving a secretary and a Palo Alto-based attorney at the global law firm Baker & McKenzie; the plaintiff won a $7 million verdict.
Kleiner Perkins has retained Lynne Hermle, a hard-hitting employment law expert with Orrick, Herrington & Sutcliffe.
Asked why Kleiner Perkins wouldn't just cut a check instead of risking damage to its reputation, Melinda Riechert, an employment lawyer with Morgan Lewis in Palo Alto, said companies "don't like to be blackmailed."
Indeed, some in the valley have questioned Pao's motives, noting that her husband -- financier Alphonse "Buddy" Fletcher -- has filed discrimination claims against his previous Wall Street firm and against the board of New York's famed Dakota Building, where he owns several apartments. According to the New York Times, Fletcher also has been sued at least twice for making unwanted sexual advances; both suits were settled.
But Kadue said Fletcher's legal history would have no bearing on Pao's case in the eyes of a judge. And Therese Lawless, an employment law expert who often represents women in discrimination suits, called the whisper campaign about Fletcher "outrageous."
"After Weeks vs. Baker & McKenzie, a lot of law firms wised up and realized they couldn't behave like little boys anymore," said Lawless. "This case could do the same for venture capital."
Staff writer John Boudreau contributed to this report.