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In nearly two days’ worth of testimony from longtime Kleiner Perkins Caufield & Byers partner Ted Schlein, the defense attempted to paint a conflicting picture of plaintiff Ellen Pao, the former partner who has sued the legendary venture capital firm in the closely watched gender discrimination trial.
Schlein was asked to address a variety of issues, most importantly the interpersonal friction that the suit claims led to the demise of Pao’s career at the firm. He was Pao’s superior when she was an investor on the Kleiner Perkins digital team, so he was involved in many discussions about her talents and performance. The courtroom got a peek into how differing opinions within the team were resolved over the course of many drafts of each performance review. The testimony also revealed that the men accused of harassing Pao at work were secretly allowed to contribute to the review that immediately preceded her firing.
Other events that Schlein was asked to weigh in on included a conversation on a private jet about the Playboy Mansion that offended Pao. The Kleiner Perkins defense team also used Schlein to illustrate the firm’s history — albeit limited, but that’s the case industry-wide — of investing in female entrepreneurs and recruiting female venture capitalists.
Schlein described Pao as “entitled,” incapable of seeing the “gray” versus black and white, and not a “thought leader.” He also went over the $400,000 severance package she was offered.
Schlein had two very different approaches to being questioned in court. When the plaintiff’s attorney, Alan Exelrod, was in front of him, his go-to responses were “I don’t remember” and “I don’t recall.” No doubt he was well coached, but it made for uncomfortable questioning, especially coupled with his raised eyebrow and frequent laughs during questions. When the defense’s attorney, Lynne Hermle, took the stand, Schlein was visibly more relaxed and serious and gave longer answers.
Convincing Pao Not to Take Other Jobs
At one point in mid-2007, Pao’s attorney said, Pao had interviewed for a job as one of the three early members of Google Ventures. Schlein chose her to join his digital growth fund, and she turned down the Google opportunity. But his endorsements of her were less than ringing. “I didn’t think being a venture capitalist was the right role for Ellen,” he said.
“She had the possibility of being one of the three original members of Google Ventures, so is your testimony that you took her into the digital group but only reluctantly?” Exelrod asked.
“I took her into the digital group with some hesitancy, but I took her in,” Schlein said.
It appears that a significant factor in keeping Pao at the firm was the ongoing support of key Kleiner Perkins partner John Doerr, her boss and mentor. At the time of the offer, he wrote to other Kleiner Perkins partners, “I hope in the end Ellen stays. I’d be disappointed if there are parts of our culture or workplace that cause her to leave.”
Performance Review That Ranges From “Congratulations” to “You Should Leave”
Then came the performance reviews, drafted many times. For her June 25, 2011, review, Ted Schlein and his team prepared at least three drafts and may have sought input from Pao’s former boyfriend and then alleged harasser, Ajit Nazre, and Chi-Hua Chien, who she has accused of excluding her from events for being a woman.
In the original review of Pao, the first bullet point is positive reinforcement about one of her investments that went public within three years, a remarkable feat: “Congratulations on RPX!” Followed by: “You continue to provide great value and service to the entrepreneurs you work with.”
In the second draft, that first bullet point is gone and the focus sits more squarely on criticism.
Then there’s a third draft. One section then read: “As of today you are not on track to become a senior partner at KPCB. We highly recommend that you find an operating role at one of the portfolio companies.”
But sometimes the revisions swung in Pao’s favor. When Doerr got involved, she got another chance. The recommendation that she look for other work was removed.
For Pao’s attorney, the revision for the negative was a pivotal moment. Exelrod, whose approach is usually professorial and quiet, swung into high gear, slightly raising his voice.
“Ajit Nazre gave input as well, didn’t he? Chi-Hua Chien gave input into this document as well, didn’t he?”
Schlein did not recall.
But it was not a slam dunk. During cross-examination, Hermle brought to light a handwritten note that she and Schlein took to indicate Nazre did not participate in the review.
The Defense
Hermle also asked Schlein about a company called Datameer, on which he had encouraged Pao to take a board seat, even though Datameer executives wanted Schlein.
Later, Datameer complained to Schlein about Pao — “He was not pleased with the choice of Ellen being on the board seat,” Schlein wrote in an email. He added: “EP (Ellen Pao) is a no-op. Does not say anything in board meetings.”
Hermle asked a lot of questions about what it takes to be a good venture capitalist.
“It’s very important you have very good people skills because at the root of everything is the ability to source, to make entrepreneurs want to work with you. … Next is honing that judgment and being able to figure out what makes a good investment,” Schlein said. “A lot of that is done in pattern matching.”
Conversation moved to Kleiner Perkins’ fund in China, where Schlein invested in a company run by Jane Yan.
“Was the fact that this was a woman-led company a negative in any way?” Hermle asked.
“No,” Schlein said.
China, Pao’s “Genetic Makeup” and Getting a Seat at the Table
Pao speaks Mandarin and began working closely with Schlein on the China Fund. They often had dinner together in Hong Kong, and he met her family. Schlein said he recommended Pao receive a “significant amount” of carried interest on the China fund. But their relationship wasn’t going well.
Schlein said: “She’s very black and white, and most of our business is quite gray” — large-scale, thematic thinking was “not part of Ellen’s genetic makeup.”
Pao had complained repeatedly about not being invited to sit at the table during meetings and being placed instead on the outer ring. One particular case was CIOSE (a biannual gathering of chief information officers), in which Pao had been seated on the outside ring and then later wrote to the organizer, Naomi Seligman: “I am confident that you understand how hard I’ve worked to become a partner in the venture capital industry and how hurtful it is to be treated like a second-class citizen.”
Schlein didn’t think seating was a big deal: “I really don’t think it was a very big deal to us in who sits at a table or does not.”
“Throughout Ellen’s tenure there’s been a feeling of entitlement,” Schlein said of the situation.
On the notes for one of her reviews, he hand-wrote: “Great support role player, territorial about herself.” At the top of the piece of paper, he had scrawled: “entitlement.”
Schlein and another partner gave Pao some advice, and she wrote back: “Your advice on getting comfortable with the ‘grays’ along with Kevin’s advice about not trying to change things that can’t be changed have really helped me understand the firm and relax a lot more.”
In a typed-up report, Schlein wrote: “She seems passive, reticent, waiting for orders in her relationships with CEOs. I wish she had more ego about what these companies could be accomplishing, but she seems more like a consultant than a partner.”
These two criticisms seem to be contradictory, but onward.
Playboy Bunnies and Eastern European Waitresses
Before the court closed early this Friday, with the clock ticking, the conversation went skidding to Playboy bunnies.
In an email complaint to the managing partners, Pao wrote: “In a more recent example, in October, I was excluded from business gatherings so a Kleiner managing partner could arrange to go to a ‘club’ with a portfolio CEO and co-investor, and I was subjected to discussions of porn stars and sexual partner preferences. And I am told I need to build stronger relationships with partners.”
Hermle asked about that plane ride and the reference to Christie Hefner and the Playboy Mansion. Schlein said Hefner’s the CEO of Playboy, and that Internet entrepreneur Dan Rosensweig had had a meeting with her.
“I remember Dan [Rosensweig] telling me he met with Christie Hefner at the Playboy Mansion, yes,” Schlein said.
“Was there any discussion about porn?” Hermle asked.
“Absolutely not,” Schlein said.
“Was there any discussion about sex?”
“No,” Schlein said.
Discussion about models and their bodies and Victoria’s Secret? No. Any discussion “of the breasts of Eastern European women?” No.
There was, he admitted, discussion of the attractiveness of European waitresses at a private club Rosensweig belonged to, but it was not a strip club.
Schlein said Pao did not complain about the plane ride then or the next day, only much later.
This article originally appeared on Recode.net.
