For Kleiner Perkins, a win in court but the damage is done

SAN FRANCISCO -- The jury got it wrong.

Ellen Pao's resounding loss on her sexual-discrimination claims against former employer Kleiner Perkins Caulfield & Byers is another blow to women in tech, the tech industry and venture capital in particular.

But before Kleiner's legal team pops the champagne, they should step back and closely scrutinize what may amount to a Pyrrhic victory. In vanquishing their female foe, the venerable venture-capital firm took a PR thumping with countless embarrassing disclosures in court that buttress her argument and painted it in a chauvinistic light.

There was no winner in this painful, brutal court case. OK, maybe the lawyers made out fine.

But be clear about this: The verdict did nothing to dispel the reputation of the tech and VC industries' notorious exclusion of women at their highest ranks – a depressing trend underscored by a new study that shows the gender gap in technology is widening as women are being held back by stereotypes and biases.

A report released Thursday by the American Association of University Women (AAUW) highlights "not only are the numbers low, they are headed in the wrong direction," says Catherine Hill, AAUW's vice president for research.

Whether the trial – closely watched by the national press and a water cooler topic in non-tech workplaces – affects change in a predominately male bastion is debatable. Old, bad habits are hard to break, especially in an environment skewed to young white and Asian males.

This, however, is not open to debate: the image of venture-capital icon Kleiner Perkins is badly tarnished, and the damage is likely to linger for months, if not years. The powerhouse behind Google, Amazon.com, Genentech and others unintentionally proved part of Pao's case with its heavy-handed, bullying tactics toward her and anyone who supported her.

The smartest guys in the room – emphasis on guys -- eschewed a settlement and watched their firm's sterling name dragged through the courthouse slime.

"This firm will forever be known as standard-bearer for the boys club of the (private equity) world," says Solange Charas, president of Charas Consulting, a human resources consulting firm. "Regardless of the fact that they have other women in leadership positions, the reputation has now been set, and it will either take time (and a long time) or some proactive initiative on the part of the firm to erase public opinion."

Was it hubris that led these latter-day Masters of the Universe (with apologies to the arrogant investment bankers depicted in Tom Wolfe's book The Bonfire of the Vanities) to spurn a settlement? Or was it considered, given the firm's knack of getting its way?

Kleiner was convinced it would win all along, and did so in court this afternoon.

It remains to be seen if the trial will have any impact on sexual discrimination in Silicon Valley, or gender-discrimination suits recently filed by former female employees of Facebook and Twitter.

"I see (the verdict) having an impact really on everyone because then it potentially opens up the floodgates to more and more people feeling comfortable challenging the system and the status quo," says Janine Yancey, a former workplace lawyer and now CEO of Emtrain, which does workplace human resources training.

Given the cut-throat nature of the field, it wouldn't be a stretch to expect competing VCs to take advantage of the Pao trial -- just as rivals of Hewlett Packard did when that valley institution was snarled in its own scandal.

In late 2006, news reports revealed HP's general counsel, at the urging of then-chairwoman Patricia Dunn, contracted independent security experts to investigate board members and journalists to identify the source of a leak.

Kleiner Perkins faces a similar quandary: A tech icon's image sullied, its air of invincibility compromised.

The damage is done.