The rest of us have “Game of Thrones” and “House of Cards,” but for those in Boston’s venture capital world, this season’s must-see drama played out in a Silicon Valley courtroom and ended Friday night in dramatic fashion.
Ellen Pao, a Harvard Business School graduate, lost her gender discrimination suit against Kleiner Perkins Caufield & Byers, the venture titan that backed Google and Amazon — and employed Pao as an aide and junior partner from 2005 to 2012.
As with any good script, there was an intriguing subplot to Pao’s case: The culture of the entire, testosterone-infused venture industry might as well have been on trial, too, as five weeks of salacious testimony about unwanted advances, erotic poetry, and boys-only meetings suggested an institutional inequality that may go far beyond one woman’s assertions.
Moments after a jury of six men and six women rendered its verdict late Friday, Maia Heymann, senior managing director of CommonAngels Ventures in Cambridge, sounded stunned as she absorbed the news over the phone with a reporter.
“Whatever the specifics of this case, sexism absolutely exists,” she said, collecting her thoughts. “Whether this case proved it or not, it’s absolutely real.”
Despite the outcome, Heymann maintained that the trial “got people talking and raised awareness.”
The decision felt like a bigger letdown to Jules Pieri, an entrepreneur in residence at Harvard Business School, who said she does not know Pao, but believed the decision to take legal action must have been a difficult one.
“No one would invite this much public scrutiny of her personal life and career unless she was either totally certifiable, or totally certain that she was deeply wronged,” Pieri said. “I was hoping for a verdict that could serve as a wake-up call to the segments of our tech economy who haven’t realized this is the 21st century. I fear business as usual has been solidly reinforced.”
Pao was seeking $16 million in lost wages plus punitive damages.
Local venture capitalists interviewed during the final week of testimony and jury deliberations said the trial had sparked conversations about gender diversity on the Massachusetts venture capital scene, where in the last six years there were more deals and dollars than anywhere in the nation, other than California.
“Everybody is paying very close attention because it’s riveting drama and also because it’s a moment to recognize we have a problem,” said Jeff Bussgang, a general partner at Flybridge Capital Partners in Boston who received funding from Kleiner Perkins as an entrepreneur in the early 2000s. “It’s a caricature of what’s wrong with the industry.”
A recent Babson College study helped quantify the gender imbalance: 94 percent of investment partners at US venture firms are male. But some question whether there is a problem to correct.
“There is definitely a slice of venture firms in town that aren’t terribly concerned about changing because they think they’re doing just fine,” said C.A. Webb, executive director of the New England Venture Capital Association.
She argued venture needs more women because the firms form a relatively small, super-exclusive club that plays an outsize role in the state and national economies. Culled largely from elite business schools, venture capitalists spend their days raising investment funds that sometimes exceed $1 billion and scouring high-tech hotbeds like Boston and the valley for the next startup that can turn massive profits with a life-saving drug therapy — or perhaps a mobile app that will become a millennial obsession.
Leaving women out of those early investment choices can limit female entrepreneurs’ access to early-stage funding. The Babson research also found 97 percent of venture-backed startups have male chief executives.
Sean Dalton, a partner at Highland Capital Partners in Cambridge, suggested the number of women in venture capital will rise naturally as firms hunt for top talent. At present, Highland has 23 men and one woman on investment teams in Cambridge, Palo Alto, Asia, and Europe.
Dalton noted venture capital firms are increasingly hiring former entrepreneurs instead of pure numbers crunchers — people who can hear a business pitch and offer not only the firm’s money but also sage advice from their own days leading a startup. For years, there were few women working in the startup trenches. As more women launch technology companies, however, Dalton said, they will become tomorrow’s success stories and be coveted by venture firms looking to add operational experience to their ranks.
“Change won’t happen overnight, but the opportunity is there,” he added.
Others believe diversity won’t happen without deliberate measures. Sheryl Marshall, founder of Capital W, an upcoming conference about women in Boston venture capital, contended that firms must be far more proactive in recruiting women.
“There’s a huge amount of women who are invisible to these guys,” she said. “They don’t know them. They don’t travel in the same circles.”
Candida Brush, who coauthored the Babson study and chairs the college’s entrepreneurship program, said many venture firms aren’t looking hard enough, or in the right places, for female talent. Last fall when she published her research just one firm reached out for advice on how to bring more women into the fold.
“I’ve heard the excuse that there aren’t enough women to choose from,” said Brush. “They’re out there in angel investor groups and places like Springboard” Enterprises, a network of investors and mentors for women-led technology companies.
Part of the challenge is there just are not many venture jobs to go around — only 5,891 in the whole country in 2013, down 60 percent in a decade, according to the National Venture Capital Association. Few openings and the potential for great wealth make venture one of the most sought-after, yet difficult to crack, professions in business.
Bussgang, also a senior lecturer at Harvard Business School, estimated that in a typical graduating class of about 900, a third would like a job in venture capital if they could get one. Maybe 10 succeed right out of school.
Bussgang’s firm has four general partners — two in Boston and two in New York, all men — and one principal, a woman.
With so many qualified candidates clamoring for a handful of positions, connections are critical.
“Guys were friends in business school, one gets a job at a venture firm and then gets his buddy a job,” said John Burns, chief investment officer at Breakaway in Boston. “Unfortunately I think that’s just the reality of how things work.”
A central theme of the Pao trial was that the few women who do break in to venture capital walk a fine line between being seen as assertive and overbearing. Pao, now interim chief executive of the online chat site Reddit, accused Kleiner Perkins of unfairly denying her promotions, while the firm said she failed to advance on merit.
Maria Cirino, cofounder of .406 Ventures in Boston, called the case “an opportunity to do some self reflection” but added that all venture capital firms should not be lumped together.
For Burns, the reflection began a few months ago. It was he who made the lone overture to Brush after reading her findings, and he followed the Pao trial with interest.
Since Burns reached out to Brush, Breakaway has hired two female interns from Babson’s MBA program and plans to invest $250,000 in whichever woman-led company wins a new startup contest called the Babson Breakaway Challenge.
“There’s some conscious effort required,” said Burns. “I’ve been in the venture business for about 15 years — I’m kind of an insider, if you will — and I didn’t have a full awareness or understanding of the issue. It wasn’t something I had spent a bunch of time thinking about, to be honest.”Callum Borchers can be reached at email@example.com. Follow him on Twitter @callumborchers.