Mar 25, 2015

Silicon Valley parallels to Wolf of Wall Street

I really hope Ellen Pao's gender discrimination lawsuit against venture capital firm Kleiner Perkins Caulfield Byers, is the straw that breaks the camel's back. Pao's lawsuit against her former employer cited three causes of action: (1) employment discrimination based on gender, (2) workplace retailiation, and (3) failure to take reasonable steps to prevent gender discrimination.

There's a great liveblog of the arguments at Re/Code by Liz Gomez and Nellie Bowles, and Katie Benner's introduction to the case on Bloomberg (as well as her previous work in Fortune) are thorough and engaging. (Hint: Pao and husband, Buddy Fletcher, are very flawed protagonists.)

Some of the interesting commentary linked therein includes:

(1) One of KPCB's defense points was that Pao was hired "for administrative work only," and that's why she wasn't promoted alongside her male peers. Pao has a bachelor's degree in electrical engineering from Princeton, and she earned her MBA and JD at Harvard. She worked as a corporate attorney for Cravath, Swain & Moore, and at various startups before taking a job at KPCB.

(2) One player in the case, Trae Vassallo, was sexually harassed by partner Ajit Nazre, including an incident that occurred on a business meeting in which he showed up at Vassallo's hotel room door wearing only a bathrobe. Vassallo was one of the Stanford '94 graduates highlighted in Jodi Kantor's New York Times piece detailing how Stanford women were left behind in the dotcom boom.

(3) Defense attorney, Lynn Hermle, comes off as a bully. This is the first lawsuit I'm actively following, so I was surprised by her sarcastic remarks, "huffing", and general willingness to throw Pao under the bus. Everything I've read says Hermle is one of the best lawyers in the business, and that kind of behavior is hallmark of great defense lawyers. In this 2002 profile, Hermle says, "I had believed those lies about big law firms being stuffy, that you had to be a certain gender." Hermle seems like an old-school feminist, where just getting a chance to play the game was a win. I wonder if she agrees with women like Pao, who demand equal treatment, rather than a few "token" positions at every law/finance/tech firm.

I just finished reading "Liar's Poker", Michael Lewis' account of his bond trading career at Salomon Brothers in the 1980's. Today's Silicon Valley startup culture parallels the culture described at late '80's Salomon Brothers. In both cases, young, risk-averse college grads are drawn in by the possibility of making a fortune. (Venture capital funds invested $59 bn in American tech startups in 2014!) In both cases, insiders see their industry as a meritocracy. And, in both cases, racism, gender discrimination, and sexual harassment run rampant.

Ultimately, the 1987 stock market crash and the 1994 bond market crash, as well as, to a lesser extent, the 2000 dotcom bubble, deflated the egos of greedy bankers. Suddenly, risk-taking was out, and conservatism and HR departments were in. That precedent, along with the current flood of gender discrimination suits being filed against Silicon Valley firms (Facebook, Twitter, KPCB), has me optimistic that Silicon Valley will soon be forced to change its ways.