We’re all watching Ellen Pao now. In a San Francisco court, the former Silicon Valley venture capitalist has faced fierce cross-examination on the stand this week in her case against ex-employer Kleiner Perkins — sketching herself as a Harvard-educated woman shunned from the boy’s club of top investors, while Kleiner’s attorney tries to paint her as an untrustworthy and calculating also-ran of the VC world, cruising for a lawsuit.
Pao is suing for $16 million over claims she was retaliated against by men at the firm after a brief affair, passed over while male colleagues advanced. But she said she has a loftier goal than just bagging the benjamins — to open the door for other women looking for a career in the VC industry. She’s right to say it’s tough out there: The number of women partners in venture capital firms has dropped from 10 to six percent since the dotcom boom. And Pao has sketched a dismal conditions for the women still there — including absentee HR policies, and men excluding her from meetings, client dinners, and ski trips.
But even if Ellen Pao wins her case, will it actually improve working conditions for small number of women working on Sand Hill Road? Unlikely.
Why? First, it’s a lawsuit brought by just one woman who has been fired from the company. Usually only class action lawsuits —with classes often numbering in the thousands — are able to create sweeping, substantive, industry-wide changes. And because VC firms are small to begin with, with even smaller numbers of women among their ranks, venture capital may never get its class action treatment: Cases like that usually need a class of at least 40 people.
While the Pao case is one of the first in the VC world, Wall Street is already 20 years into the gender bias blowback. Women flocked to the finance industry in the go-go 80’s, only to run into a glass wall and file a series of discrimination lawsuits a decade later that have continued up until the present day. (The comparison between the two worlds of finance has already come up in the Pao trial: Kleiner Perkins partner and Wall Street veteran Mary Meeker told an investigator “This ain’t Wall Street” — calling Kleiner Perkins the “nicest, sweetest, tamest place I could ever imagine working.”)
Some of the early Wall Street cases featured almost cartoonish levels of sexism — like the infamous “Boom-Boom Room” case of the mid-90’s, when Smith Barney was sued after a branch manager in Long Island meted out gems to female financial advisors like “there must be a lot of pressure on you to spread your legs.” The manager reigned over a frat house-decorated basement — toilet bowl seat on the ceiling — and would summon male brokers over a PA system to come drink Bloody Marys served from a trash can. Those cases settled big — $150 million here, $250 million there —and led to the creation of diversity funds and some hiring and promotion quotas.
But as the years went on, bias has simply become more sophisticated and insidious. The cases became less boom-boom room and more about the day-to-day decisions that affect earnings, promotion, advancement. The resulting settlements equalize signing bonuses, ban expenses from strip clubs, and regulate how advisors are doled new accounts.“You’re talking about industries that are very entrenched, so the full benefit of these settlements hasn’t been recognized yet, they’re still a work in progress,” explains attorney Cyrus Mehri, who currently represents women in class action settlements with Morgan Stanley and Citigroup. “Built into these agreements is the hope is we really start to turn this industry around.”
Now nearly two decades after the Boom-Boom Room, gender discrimination lawsuits continue, and women are still the exception in an uber-macho culture. There is one tangible way the Pao case may change VC-land: the sheer amount of eyes on the case, live tweeting and live blogging it at every turn may make scare companies into self-policing and spot-checking themselves to avoid another public relations trainwreck in the future.
Whatever happens, Pao won’t be there to experience it. After getting fired from Kleiner Perkins, she signed on as CEO of Reddit, and it’s hard to imagine she’ll ever be back in venture capital again.