Ray Lane Under Oath

Ray LaneRay Lane, an emeritus partner at Kleiner Perkins Caufield & Byers, came across as a good guy yesterday during his testimony in the trial of former partner Ellen Pao, who is suing Kleiner for gender discrimination. But he didn’t do Kleiner any favors, at times seeming to blame himself for mistakes and, at others, undermining Kleiner attorney Lynn Hermle as she tried painting a picture of Pao as too inexperienced for a promotion.

Much of Lane’s testimony centered on his handling of the complaints of both Pao and Kleiner partner Trae Vassallo, both of whom turned to Lane before anyone else at the firm to discuss former partner Ajit Nazre.

Pao had a short-lived but intimate relationship with Nazre, which she confided in Lane in 2007 after hearing Lane remark to Nazre in her presence that it was nice to see him with his wife and children at the Ritz Carlton in Half Moon Bay. (Nazre, Pao told Lane, led her to believe that he had split up with his wife.)

Roughly four years after that exchange, Nazre showed up in Vassallo’s hotel doorway during a work trip wearing a bathrobe and slippers. Vassallo – married with children — also went to Lane before talking with anyone else at the firm.

In Lane’s testimony about both situations — which he said he viewed as “two very different incidents” — Lane came across as a well-meaning mentor who wasn’t necessarily equipped to handle the information he was being given.

In one 2007 exchange with Lane, for example, Pao wrote, “Thank you for your help in working through a difficult issue. It’s a really awkward situation. In the interest of moving forward and avoiding more unpleasantness, I’m willing to live with some disagreement over what happened if Ajit can be professional and collegial . . . I’m relieved to able able to put it behind me, glad that you were listening.”

Lane wrote back that, “I really believe ‘stuff happens’ and both of you are terrific people. . . . this should not be offset by common human behavior. No bridges were burned, mistakes were made, apologies offered, and it’s up to us to move forward, and not shoot ourselves in both feet.” He also encouraged Pao and Nazre to “talk about working together [and moving] forward . . . you both have enormous mutual respect, despite any personal liabilities.”

Lane’s initial advice to Vassallo similarly seemed to reflect the culture of a small firm unaccustomed to dealing with thorny personal issues. The day Vassallo told him about Nazre’s unwanted advances, said Lane, he suggested that she discuss the matter with the husband so that the couple could decide on a course of action together.

Lane explained that he thought whatever followed should be up to Vassallo and not Kleiner. Still, said Lane, he worried at the time about Vassallo’s safety – noting that “things could have gone another way, [Nazre] could have pushed his way in” to her hotel room – and expressed regret yesterday at not starting an investigation straightaway.

“It was my mistake,” he said of waiting until Vassallo wrote a formal complaint about Nazre to Lane and other Kleiner partners roughly one week after coming to Lane.

It wasn’t the only mistake Lane appeared to acknowledge making.

Asked by Pao’s attorney why Nazre was promoted to senior partner in 2008, despite Nazre’s relationship with Pao and, crucially, though Nazre lied to Lane when first confronted about it, Lane answered, “Good question.” He went on to explain that Nazre “quickly” confessed to his relationship with Pao, and that Nazre, in Lane’s view, was very knowledgeable about green tech and “an important part” of the firm’s team.

Perhaps unsurprisingly, Kleiner’s attorney, Hermle, tried steering Lane to the larger point of whether or not Pao should have received the promotion that Pao is arguing she deserved. Toward that end, Hermle pulled up two emails relating to different CEOs who expressed displeasure in working with Pao.

One CEO had apparently resorted to ignoring Pao, who recognized she’d have to find another way to win him over and wrote to Lane of the executive: “Frank is hierarchy focused and not as comfortable dealing with me directly so I need to be more ‘velvet-gloved’ (note the number of times it took to get him to copy me on emails).”

Asked about the exchange, Lane described the CEO as a “difficult character” who is “more than 60 years of age” and “very set in his ways.”

Hermle also produced an email exchange involving Workday cofounder and co-CEO Aneel Bhusri, who’d been talking with Kleiner about a late-stage investment before Workday went public in 2012.

Wrote Bhusri to Lane, who forwarded his note to partner Ted Schlein: “Frankly, Ellen seems pretty clueless, can someone else take the lead?” Wrote Lane to Schlein, under Bhusri’s comment, “I kind of agree with him.” Schlein then responded: “She ran the names of folks by me, for diligence. I can’t say I paid too close attention so could be my fault.” Lane then responded to Schlein, “I will talk to [Bhusri] live tomorrow, but we have to put somebody else in or I will handle personally. I did the same as you, allowed Ellen to work it alone.”

Was this a “major problem?” Hermle asked Lane on the stand. “No,” said Lane. “I don’t think it was a major problem.” Added Lane, “I thought [Pao] wasn’t being sensitive that this was a company that was already valued at more than a billion dollars.” But the bigger issue, Lane suggested, was that Bhusri didn’t like Kleiner’s technical review of Workday, which involved talking with “just a few customers.”

Said Lane, “Mr. Bhusri disagreed with the approach. I thought the approach was fine.”

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