The legal battle between Ellen Pao and the legendary Silicon Valley Venture Capital firm Kleiner Perkins Caufield & Byers has sparked a media frenzy over the prevalence of gender discrimination in California's technology entrepreneurship gold rush. We worry that the outcome of all this attention may actually be less than positive for women and minorities in the technology sector.
The trail riveted the media with tales of questionable dinner invitations, suggestive books and inappropriate conversations on private jets. That's pretty mild fare by the standard of modern scandals, but apparently it's racy stuff for the Valley's techno-nerds. While we agree the tech world has a significant diversity problem, we leave the merits of this particular case to the jury, which exonerated the VC firm and ruled against all of Pao's claims. The bigger question is whether the courtroom is a constructive venue for change and what should be done to improve the lot of women and minorities in tech.
Pundits and bloggers have rushed to assert that this ugly trail has aired out the Valley's dirty laundry and will induce positive self-reflection and insure better opportunities. A USA Today headline enthuses, "Pao Case Shows Need to Change Investing Culture". Even the ostensibly neutral Wikipedia entry says the case has, "resulted in major advances in consciousness of gender discrimination on the part of venture capital and technology firms and their women employees." An outsider might think nobody in the tech was aware of this problem or that it wasn't a topic of routine discussion in entrepreneurship.
Presuming California's top technology investors are rational actors seeking to avoid future lawsuits, what would be their best course of action? The obvious solution is increasing the number of female and minority candidates for junior positions in hopes of filling the ranks for future promotions. Considering that KPCB dismisses 80% of these folks, such a move could simply multiple possible lawsuits. The path of least resistance for these firms and their partners is actually to not increase their exposure. Maybe white guys can't jump but they do have a proven history of founding profitable tech companies. Women or minorities that you never hire, don't invite to dinners, and don't take on private plane rides don't sue you. For this reason we don't see lawsuits, particularly losing ones, as progress.
Tech is the engine of innovation and growth in California's economy and VCs do a lot of things right. Consider Randy Komisar, the KPCB partner who reluctantly took center stage in this trail. Like most of his Valley peers, he's hyper-intelligent, socially liberal and gregarious. Komisar is a new-age model of open-mindedness and cultural outreach; the kind of guy who studies Buddhism and rides a bike around the back roads of distant lands looking to hang with people he doesn't know. We've worked with Randy and in our classroom conversations he often turns to the topic of creating better opportunities for the disenfranchised. Casting him and his firm, which ironically is the most diverse in the Valley, as archetypical villains and commanding them to shapeup after being acquitted is farcical.
A discussion about how to provide the tech industry with the successful female and minority candidates that can storm the C-Suites would be more productive. Thankfully, our classrooms are filling with a diverse group of promising young engineers and business majors. They need more than scientific, mathematical and financial skills. Often, what holds under-represented groups back is their ability to navigate the social politics of high-powered business. A 2013 study (Huang, et al) concluded that investor's perception of political skill was amongst the most salient considerations in venture capital financing.
Aspiring VC partners need early and intense socialization and the ability to deal constructively with conflict and failure. These experiences are absent from the protective "tiger mom" syllabus. The modern "everyone is a winner" confidence building mantra in today's elementary school and junior sports leagues is also less than helpful. Finally, the excessive focus on grades at the secondary and undergraduate levels isolates our best students and dissuades them from attempting anything they aren't certain they will excel in. We need a social curriculum that builds real leaders.
The gender and minority gap in tech is very real, openly acknowledged and entirely solvable. The solution is to engage those most able to address the problem in a constructive conversation rather than backing them into a defensive legal posture or exposing them to double jeopardy via trial by media.
This piece was written with Laura Huang, Assistant Professor of Entrepreneurship at the Wharton School, where she researches influences in funding decisions. Greg Autry is an Assistant Professor of Clinical Entrepreneurship with the Lloyd Greif Center at the University of Southern California, where he teaches Technology Entrepreneurship.