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What's at Stake in the Ellen Pao Case

A lot has changed in the three years since the first filing.

The most surprising thing about Ellen Pao’s gender discrimination lawsuit against her former employer, powerhouse venture capital firm Kleiner Perkins Caufield and Byers, is how far it’s gone.

A judge has been assigned and jury selection will get under way in San Francisco this week in a case that could reverberate through the clubby world of venture capital, a male-dominated culture that has often been criticized as an insular fraternity of privileged white men despite its veneer of being a meritocracy.

For a bit of background, Pao sued Kleiner Perkins for gender discrimination and retaliation in May of 2012, and was fired from the firm five months later.

Opening arguments are expected next week; here’s what you need to know:

The case could yet be settled before or during the trial, but the very public affair has hurt Kleiner Perkins’ reputation and exposed details and invited scrutiny of Pao’s sex life. The two sides can’t agree on anything.

While gender inequality has always been an issue in Silicon Valley, it has now come to dominate more of the conversation in the industry. Venture capital firms in particular have appallingly few female partners.

Pao has also changed in the interim. Three years ago, she was a junior partner with no public profile at a prestigious firm. Now, she and her hedge-fund-manager husband, Alphonse “Buddy” Fletcher Jr., have been profiled unfavorably in Vanity Fair and Fortune. These articles detail a history of discrimination claims by Fletcher and harassment claims against him.

And unlike many who find themselves in a similar position, Pao has not disappeared from public view — far from it. Her professional profile has only ascended since 2012. She took over as interim CEO of the online-discussion-board startup Reddit last November when CEO Yishan Wong suddenly quit after a dispute with the company’s board over where to locate its office.

Kleiner Perkins sees this as an advantage, because Pao is asking for $16 million in damages. Re/code has reported that Reddit is valued by investors at $500 million, and Pao’s stake could be significant. Pao’s team says the valuation is closer to half of that. The court has agreed to give Kleiner Perkins some visibility into how much her salary and equity stakes are worth, which could help it argue that whatever harm Pao says she experienced at her old job did not hurt her career.

But Kleiner Perkins still has more to lose. Though it is an icon of Silicon Valley, having provided funding for historic winners like Netscape, AOL, Amazon, Sun and Google, it has, in recent years, been upstaged by younger and flashier firms. Being cast as a bastion of old-world discrimination does little to improve the image.

Every day the case goes on is another day the VC firm is held up as the enemy of women, the bad old guard, the icon of what’s wrong with one of the most powerful industries in the world. The firm’s defense won’t focus on the gender issues, but rather on portraying Pao as a bad employee (Pao’s first job at the firm was as chief of staff for its most famous partner, John Doerr).

“This suit is completely without merit and has no basis in the law. KPCB has a well-established record of championing women in our firm, our portfolio companies and the overall industry. We look forward to clearing our name in court,” said Kleiner Perkins spokeswoman Christina Lee.

Pao declined comment.

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