StrictlyVC: March 20, 2015

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Top News in the A.M.

Details from an anti-trust investigation into Google have emerged and they suggest the company specifically worked to keep competitors out of its top search results.

Amazon just received permission from the FAA to start testing its delivery drones in the US.


In Kleiner Case, Question of Discrimination Moves Front and Center

Yesterday, Paul Gompers, a Harvard Business School professor, testified that Kleiner Perkins has one of the best records in venture capital when it comes to the number of female investors it employs. Gompers had taken the stand as an expert witness of behalf of Kleiner, which is currently fighting a suit brought against it by former junior partner Ellen Pao, who says she endured gender discrimination at the firm and was retaliated against when she complained about it.

While Gompers’s testimony cast Kleiner in a flattering light, it’s likely that his statements – and those of others – won’t prove nearly as important to the case as those of Matt Murphy, a general partner at Kleiner who finished his testimony yesterday shortly before Gompers was sworn in. The reason: retaliation claims are often easier to prove than discrimination claims, and several things surfaced in Murphy’s testimony that may give jurors pause. Among them, Murphy, who worked closely with Pao, said that he didn’t begin taking extensive notes about Pao’s performance until days after she filed her lawsuit against the firm in May 2012. Murphy also acknowledged that Pao was given 60 days to save her job in July 2012. (She was asked to leave at the end of that period.)

In two days on the stand, Murphy denied any hint that Kleiner retaliated against Pao after she filed her very public suit. Murphy said he’d experienced “various episodes of friction” with Pao over the years and had long viewed her as “overly opinionated.” Asked by jurors what he meant, he said that Pao sometimes drew conclusions about investments too quickly and without enough information. He added that it can be “common with junior partners, because you’re associated with whether an investment gets done” rather than “whether it should have been made.”

Murphy also suggested that Pao lasted as long as she did at Kleiner only because of general partner John Doerr, who Pao had served as chief of staff in her first years at the firm. “John was very protective of Ellen and she felt protected, and that was a dynamic that persisted for some time.”

Still, jurors had plenty of pointed questions for Murphy, including whether the 60-day performance plan that Pao was put on in July 2012 was “fair.” At the time, Pao was asked to improve on several fronts, including to be sought out as a team member, be a good networker, and to demonstrate so-called thought leadership.

“It’s not that we’d expect definitively that you’d see black and white [change] in 60 days [given that] she had all these issues for six years,” said Murphy. “But we wanted to give her very concrete feedback and see how she responded. Did she suddenly start sourcing more ventures, be collaborative, work more with [general partner] Mike Abbott, go down the list of things we talked about? Was there a real change and did you see — was it visible — that she was behaving differently, trying harder, being proactive – all those kinds of things? If we’d seen those things after 30, 45, 60 days, we obviously would have extended it, but we did not see meaningful change in her behavior.”

Murphy’s testimony seemingly led Kleiner into tricky terrain. For example, though Murphy described the objectives set forth in Pao’s performance plan as “concrete,” jurors might see them as subjective. “How do you prove you had a better attitude?” says Gary Phelan, an employment attorney with the East Coast firm Mitchell & Sheahan and the chair of the Connecticut Bar Association’s labor employment section.

In situations like Pao’s, says Phelan, “The employer is both the accused and the judge of whether you’re trying hard enough.”

Murphy also argued that Pao was difficult and didn’t understand her role as a junior partner, but her reviews leading into 2012 contained both positive and negative feedback, as did other partners’ reviews. More, her compensation remained stable. For example, in 2010, Pao earned $362,250, with an additional bonus of $150,624 (or roughly $513,000 altogether). In 2011, Pao was paid a base salary of $380,000 base salary, with a bonus of $136,800 (or roughly $517,000).

Speaking generally, notes Phelan, “If you were rated an exemplary employee, then you complain, and the next thing you know, you’re getting a poor review, that’s evidence of retaliation.”

The biggest problem for Kleiner could boil down to timing. Says Phelan: “When after somebody complains about something, and all of a sudden, there’s a paper trail where [the employer] is resurrecting things from the past, that in itself is enough to show retaliation — even if maybe the employer should have been [taking notes] before.”

Sometimes, he adds, employers “kind of tolerate things for a long time.”


New Fundings

Maple, a year-old, New York-based food delivery startup, has raised $22 million in Series A funding led by Greenoaks Capital, with participation from Thrive Capital, Primary Ventures, David Chang of the Momofuku empire, and Bonobos CEO and founder Andy Dunn. The company had previously raised $4 million in seed funding. Fortune has the story here.

Modernizing Medicine, a five-year-old, Boca Raton, Fl.-based company that makes a cloud-based, specialty-specific electronic medical record system with a library of built-in medical content that’s designed to save physicians time, has raised an undisclosed amount of funding from IBM. The company had previously raised $48.6 million from investors, includingSummit Partners, Pentland Group, and Sands Capital Ventures. More here.

ProtonMail, a 1.5-year-old, Geneva, Switzerland-based secure email service, has raised $2 million in funding from CRV and the Swiss startup accelerator Fongit. The company had previously raised $550,000 in a crowdfunding campaign. TechCrunch has more here.

Quid, a five-year-old, San Francisco-based company that uses semantic analysis to analyze and visually depict where its customers’ financial resources are being spent online, has raised $39 million in Series D funding led by Liberty Interactive Corporation, with participation from ARTIS Ventures, Buchanan Investments, Subtraction Capital, Tiger Partners, and Thomas H. Lee Limited Family Partnership II, along with company executives. The company as now raised $63 million altogether, shows Crunchbase., the four-year-old, Seattle-based pet-sitting marketplace, has raised $25 million in a new funding led by Technology Crossover Ventures, with participation from earlier backers Foundry GroupMadrona Venture Group, Menlo Ventures and Petco.

Svelte Medical Systems, an eight-year-old, New Providence, N.J.-based company that makes drug-eluting coronary stent systems, has raised $16 million in funding led by CNF Investments, with participation from Gary and Mary West Health Investment Fund and New Science Ventures.

Thirstie, a year-old, New York-based on-demand alcohol delivery startup, has raised $1.1 million in seed funding from numerous individuals. More here.



Clinical Ink, an eight-year-old, Winston Salem, N.C.-based company that automates data-gathering during clinical trials of new medical technologies, has merged in an all-stock transaction with CentrosHealth, which collects data on patients via a mobile application. Clinical Ink has raised at least $4.3 million from investors, including FCA Venture Partners, shows Crunchbase. CentroHealth was founded by the Boston-based venture firm MPM Capital. Xconomy has more here.

Deep Forest Media, a 2.5-year-old, Palo Alto, Ca.-based automated ad-buying platform, has been acquire by the Japanese ecommerce giant Rakuten to make use of Rakuten’s e-commerce data, reports Ad Age. Deep Forest had raised money from Handmade, a mobile-only seed fund, and the incubator and venture fund The Hive.

Giphy, the two-year-old platform that makes it easy to search and share GIFs and which raised $17 million in Series B funding in January, has acquired two-year-old Nutmeg, a GIF messaging app. The terms of the deal were not disclosed. TechCrunch has more here.

X01, a two-year-old, U.K.-based cardiovascular drug startup, has been acquired by Johnson & Johnson for an undisclosed amount. The company had been founded by and backed by Index Ventures and represents the first exit from its (debut) €150 million life sciences fund, closed in 2012. AltAssets has a bit more here.



Daniel Gulati has joined Comcast Ventures as principal, working out of its New York office. Gulati, who originally joined Comcast as an EIR last May, will focus on seed and early-stage investments in consumer internet companies. Gulati previously worked at the Boston Consulting Group and cofounded a venture-backed online marketplace for fashion designers called FashionStake that Fab acquired in early 2012.

Christopher Payne, most recently head of eBay North America and a former VP at both Microsoft and Amazon, is taking over as CEO of the popular dating app Tinder. Recode has more here.

David Recordon, who has worked as one of Facebook’s engineering directors since 2009, is joining the White House in a newly created role as its director of information technology.

Facebook COO Sheryl Sandberg and investor Marc Andreessen recently launched a pilot “boot camp” program for promising women and racially diverse candidates that helps teach them what it means to be on a board. Bloomberg has more here.


Essential Reads

A new Apple TV set-top box is reportedly coming to Apple stores this summer.



To the man who has been taking my Wall Street Journal.”

Classic pop songs: Where are they now?

Here’s why the International Space Station has that weird shape.


Retail Therapy

Tony Montana’s home is for sale.

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