by Emily Chang
While Medina was in the hospital, Recode published an email Kalanick had sent to employees ahead of an Uber employee party in Miami in 2013. The email began, “You better read this or I’ll kick your ass.” Kalanick went on to share these guidelines for interoffice hookups: “Do not have sex with another employee UNLESS a) you have asked that person for that privilege and they have responded with an emphatic ‘YES! I will have sex with you’ AND b) the two (or more) of you do not work in the same chain of command. Yes, that means that Travis will be celibate on this trip. #CEOLife #FML.” (Translation: “Fuck My Life.”)
My Bloomberg colleague Eric Newcomer also reported the questionable handling of a rape case involving an Uber driver accused of sexually assaulting his passenger in India. According to the report, Kalanick and his top deputy, Emil Michael, discussed their belief that the case was a conspiracy, engineered by Uber’s local rival, Ola. An Uber employee who oversaw operations in India obtained a copy of the victim’s medical report and told co-workers that the records revealed no physical harm, though Recode reported sources said it appeared she had been sodomized. Even after the driver was convicted, Kalanick questioned whether the woman had actually been raped.
That same month, Uber finally revealed the results of its external investigation. The law firm Perkins Coie investigated 215 claims, including 47 cases of sexual harassment, 54 of discrimination, and 45 of unprofessional behavior. As a result, 20 employees were fired. The company also released findings from Holder’s report into the broader culture. Uber’s board adopted the report’s long list of recommendations, which included providing additional training for managers, revising the company’s values, limiting alcohol in the workplace, banning relationships between employees and managers, and requiring the company to interview women and minority candidates for open jobs. Emil Michael left the company. Kalanick held on to his job but announced he would take an indefinite leave of absence. Just days later, Uber investors delivered a letter to Kalanick in person, asking him to formally step down. After a few hours of deliberation, Kalanick resigned. Later Kalanick was sued by one of his earliest backers, Benchmark, for board control. The firm claimed that Kalanick was consumed by his own “selfish ends.” A Kalanick spokesperson said the suit had no merit. After a tumultuous search process, Uber’s board of directors hired Expedia’s CEO, Dara Khosrowshahi, as the ride hailer’s new chief executive.
“Susan Fowler’s story has been a catalyst for meaningful, positive change at Uber,” a company spokesperson told me. “We’re grateful for her courage to speak out, which has led to major cultural shifts across the company. These improvements—which include an equal-pay review, a revamped performance review system, a more robust HR team, and expanded diversity and inclusion resources—are all part of our efforts to create an environment where everyone feels safe and respected.”
• • •
LOOKING BACK OVER THE controversy she kicked off, Fowler told me she never once fathomed that her blog post could take down Travis Kalanick, but she felt it was the only way that Uber’s culture could ever improve. “Thinking they are above any sort of moral decency, that comes from the top,” Fowler told me.
Fowler was still trying to figure out how to use the platform she now finds herself thrust upon. She was chosen by the Financial Times as Person of the Year, appeared on the cover of Time magazine and was named to Vanity Fair’s New Establishment list and Fortune’s 40 Under 40. “People are listening and people want to hear what I have to say and I don’t want to squander that. I want to use it for good,” Fowler told me. “What does that look like? How do I use this to make change?” After Uber, she accepted a job at the payments tech company Stripe, was writing another book, and had sold the rights to a movie based on her life that would be written by Allison Schroeder, the screenwriter behind Hidden Figures.
Fowler, with the help of her lawyers, also filed an amicus brief in three Supreme Court cases (none involving Uber) arguing that employment contracts that set up roadblocks to class-action suits and force disputes to be resolved in private violate federal labor laws. “There’s a legal way to cover up illegal behavior,” Fowler told me. “We need to make sure the legal system can be the advocate for women. It’s not fair to expect women to have to come forward and take all the risks themselves.”
She also revealed that she was having a baby girl. “I don’t want her to have to deal with the same crap. She shouldn’t ever have to work at an Uber, or ever have to worry about being retaliated against or discrimination.”
WHAT THEY DO FOR LOVE
At the time I held my dinner for women engineers in the spring of 2017, none of us knew for certain that we were at a cultural turning point. We couldn’t have guessed that Fowler’s post had begun a chain of events that would lead to the dethroning of one of tech’s most powerful CEOs. Such radical change seemed impossible. As the discussion started to wind down, the mood was distinctly somber, and I could tell the women were emotionally exhausted by sharing so many depressing stories. But I had one last question.
These women had stayed in the game, but there are countless others who quietly leave the industry every day. In fact, women exit the tech industry at a rate 45 percent higher than men. Had any of the women in the room ever considered leaving technology altogether? The answer was a resounding yes. And yet they were still here.
Ana Medina had barely survived an extreme case of burnout, and now she had another job offer. Yet she was hesitant to give up on Uber. “I’m not a quitter. I don’t want to let go. Part of it is, being a minority in tech at such a strong company inspires other people to think if [she] can end up at a top ten company, so can I.” A few months later she made an even bigger statement and sued Uber (while she was still employed but on medical leave), along with two other Latina engineers, for gender and racial discrimination.
Tracy Chou had a different reason for staying in tech. “When I was a year into working at my first job, there was a period where I was crying myself to sleep every night,” she said. “I just didn’t think I belonged. That experience of being ignored. One of my co-workers would just turn and look at the wall and not acknowledge I existed. But I loved being an engineer, having people use what I made all the time.”
“Why am I in this industry in spite of all of it?” said Uber’s Lydia Fernandez. “If I wanted an easy career, I would have gone and worked in high-frequency trading and not come out for another ten years. But I’m interested in . . . making things faster and more efficient, and working on what I’m doing looking like this.” Fernandez gestured at her skirt and long pink hair. “The rest of the world can go fuck themselves.”
5
SUPERHEROES AND SUPERJERKS: THE ROLE OF THE VENTURE CAPITALISTS
“MY NEMESIS!” SIR MICHAEL Moritz declared loudly, the moment he saw me. We were both guests at Vanity Fair’s 2016 New Establishment Summit, and I had successfully, if awkwardly, avoided eye contact with him during cocktails. When I discovered that we had been seated directly across from each other at dinner, I briefly contemplated moving the place cards. Now Moritz had arrived at our table and found himself opposite perhaps his least favorite journalist in Silicon Valley.
“Why is she your nemesis?” asked a CEO seated beside us.
“I’ll let her explain her way out of this one,” Moritz said as he grudgingly took his seat. In my defense, let me say this: It wasn’t what I had said about Moritz that had brought him headaches. It was what he’d said about himself.
A year earlier, I had conducted a wide-ranging TV interview with Moritz about his recently published book, Leading (which he co-wrote with the famed former Manchester United manager Alex Ferguson), and his near-legendary Silicon Valley career. He had arrived alone that day, a few minutes late, without the typical army of public relations handlers—surprising for a man who is, arguably, the most successful investor in Silicon Valley history. Moritz made his fortune investing early in companies
like Google and Yahoo; now his firm, Sequoia Capital, is among the most sought-after venture capital outfits in the world. Moritz stepped back from day-to-day duties at Sequoia in 2012 due to what he called a “rare, incurable medical condition” but remains very engaged in the firm to this day. In 2013, he was knighted—for his success in investing and generous charitable giving—yet on the TV set he displayed none of the airs you would expect from one of the world’s wealthiest men.
As soon as Moritz began to answer my questions on camera, I realized there was nothing casual about him. He speaks slowly, choosing his words carefully, like a painter selecting colors from a palette. Most of his answers to my questions were sharp and insightful. Which was why his comments about the absence of women partners at his venture capital firm were so jarring.
At the time of the interview, the number of Sequoia’s female investing partners in the United States was zero (though there were three in China and two in India). When I asked Moritz about Sequoia’s responsibility to hire women, he responded, “We think about it a lot. I like to think and genuinely believe that we are blind to somebody’s sex, to their religion, to their background.” He went on to give the typical Silicon Valley answer: that too few women elect to study the sciences, so therefore the pool of hirable women is much smaller than the pool of men.
To my ears, this explanation was too glib. Yes, women are underrepresented in the STEM pipeline. But Sequoia is a relatively small firm (with about a dozen U.S. investing partners at the time), and no one disputes the fact that there are thousands of exceptional women working in tech (though still not nearly enough). Sequoia couldn’t recruit just one? Perhaps, I suggested, Sequoia might not be looking hard enough.
“Oh, we look very hard,” Moritz said, bristling. He then noted that the firm had just hired a young woman from Stanford into a junior position. “And if there are more like her, we’ll hire them. What we’re not prepared to do is to lower our standards.”
This was the line that would haunt him for the foreseeable future. The Silicon Valley chattering classes exploded, as did the mainstream media. Vanity Fair proclaimed, “Here’s some news for all the many smart, driven, capable young women interested in working in technology: apparently, you don’t exist.” For the next several months, industry folks stopped me everywhere to express their horror at what Moritz had said. The idea that Sequoia had never hired a woman because the firm couldn’t find even one who met its high standards was just plain ridiculous. One female venture capitalist, Jennifer Fonstad of Aspect Ventures, told me Moritz’s words would be “his epitaph.” Bijan Sabet, a co-founder of Spark Capital, put it this way: “When you make a lot of money, you either become a superhero or a superjerk.”
The irony is Moritz himself didn’t study the sciences on his way to becoming one of the most powerful VCs in the Valley. Born in Wales, he earned a history degree at Oxford and an MBA at the University of Pennsylvania’s Wharton School. He then became a San Francisco–based correspondent for Time magazine, where in January 1983 he published a controversial piece on Steve Jobs. Then, in the mid-1980s, Don Valentine, founder of Sequoia, who was one of Apple’s original backers, offered Moritz a role as an investor at the firm. Despite his lack of a technical background, Moritz was promoted to full partner in short order.
“I’m a history major, knew nothing about technology, nothing about Silicon Valley,” Moritz told me in our TV interview. “Eventually, through a stroke of great luck, a fellow who had started Sequoia, Don Valentine, took a risk on me.” Later in the interview he added, “I think it’s very difficult to tell from somebody’s background whether or not they’ll be successful in the venture business.”
Moritz isn’t the only venture capitalist in Silicon Valley who didn’t need a computer science degree in order to succeed, among them Peter Thiel of Founders Fund (BA in philosophy, plus a JD, early investor in Facebook) and Peter Fenton of Benchmark (also a philosophy BA, plus an MBA, early investor in Twitter). What about all the others? On the heels of my interview with Moritz, the entrepreneur and angel investor Sukhinder Singh Cassidy took a close look at the Forbes Midas List of standout venture capitalists in 2015 and discovered that 61 percent of the top male investors had a STEM degree. All but one of the few women on the list had STEM backgrounds.
Putting those numbers a different way, Cassidy is telling us that the absence of a STEM degree is not the deal breaker Moritz (and many others) make it out to be, because almost 40 percent of the top male investors do not have that background. The excuse that VCs aren’t hiring women because there are not enough of them getting science and computer degrees just isn’t valid.
In the midst of the backlash to our interview, Moritz sent me an email with what he called a clarification. “I know there are many remarkable women who would flourish in the venture business,” he wrote. “We’re working hard to find them and would be ecstatic if more joined Sequoia or other firms.” Sequoia Capital followed up with a tweet from its official account: “We need to do better.”
A few months later, Moritz managed to give new life to the controversy while taking questions from journalists at the San Francisco Exploratorium, saying, “We’re not going to run an affirmative action [program]. And I happen to think it’s an insult to a woman we hire, a black we hire, or a Hispanic we hire, to feel like they’re coming to work at Sequoia because of their gender or their race. The people who want to come to work for us want to be the very best.” He again mentioned the “spectacular” female analyst Sequoia had recently hired: “If she had five sisters we’d hire them all!”
Moritz’s comments dogged him, illustrating the almost comical difficulties late-career VCs have in navigating this unfamiliar terrain. But even if you judge Sequoia only on its actions, Moritz and his colleagues would fail the loosest diversity tests. Sequoia didn’t hire a single female U.S. investor in the firm’s first forty-four years.
As part of a panel discussion just before our awkward dinner, Moritz was asked—again—to clarify his “lowering standards” remark. This time his answer was more polished: “It makes zero sense to exclude 50 percent of the human race who’ve got some of the smartest brains around . . . the more the merrier.”
Beth Comstock, vice-chair of General Electric, who shared the stage with him, was prepared to speak her mind. “Diversity fuels innovation,” she said emphatically. “It’s just that simple. And part of the challenge is people want to hire people like themselves.” She continued, “Who’s setting the standards? Are you working hard enough to make the standards wide and inclusive and have the right access? . . . You got to work really hard to hire people who don’t agree with you, who don’t look like you . . . You have to say, bring me enough women and diverse candidates . . . flood the zone with better candidates . . . There are no women in software who can do this? That’s absurd. Keep looking until you find them!”
After that public scolding, it was understandable that Moritz was less than delighted to find, only a few hours later, that I was his dinner companion. After I explained to our CEO tablemate why Moritz had branded me his nemesis, he politely offered that he felt he understood exactly what Moritz had been trying to say. “See?” Moritz said to me, as if his words had been validated. “We discriminate against all dummies equally.”
Moritz and his firm would soon receive another black eye. Sequoia’s partner Michael Goguen became the talk of Silicon Valley when a former stripper named Amber Laurel Baptiste slapped him with a $40 million lawsuit claiming he kept her as a sex slave for thirteen years. Although Goguen denied the allegations, claiming he was being extorted, Sequoia fired him as soon as the case went public. Insiders at the firm insist they knew nothing about his extracurricular affairs. While Goguen’s relationship with Baptiste wasn’t related to his job, the Valley’s intense interest in the scandal, I believe, came from the feeling that Goguen’s sexual behavior was emblematic of a cavalier attitude toward power and sex that existed i
nside many VC firms. There was a swirl of rumors about the behavior of venture capitalists across the industry, and I was often told off-the-record stories, but it would take another two years for many of those stories to break.
WHY FEMALE VCS ARE SO SCARCE
Though venture capitalists make their names by betting on massive technological innovation, their own business has changed little over time. The first VCs in America were the wealthy families of the late nineteenth century—the Vanderbilts, Rockefellers, and other dynasties who invested in high-return undertakings such as railroads, steel, and oil; they also funded some of the earliest tech entrepreneurs, including Alexander Graham Bell. The industry became more organized in the 1940s, when the first venture capital firms were formed. Then, in the 1970s, it became clear that there were great fortunes to be made in the emerging field of technology, and an entire subindustry of tech-focused venture capital firms was spawned. Sequoia Capital and Kleiner Perkins Caufield & Byers set up shop in 1972, just a year after the microprocessor was born. These firms were all-male—with many partners who were former employees of chip companies such as Intel and Fairchild Semiconductor—but as women became full participants in the post-1970s workforce, they started seeking a place for themselves at this rich table.
Few of them found one. By 1999, women accounted for just 10 percent of partners at venture capital firms, and that number actually declined over the next fifteen years, to 6 percent in 2014. VCs have had little incentive to change. Two of the top firms in Silicon Valley, Sequoia and Benchmark Capital, made billions of dollars before hiring any women partners at all. Why mess with a good thing? In other words, while investors expect the start-ups they fund to take extreme risks, VCs themselves have chosen to take very few chances in how they run their own firms. Unfortunately, one company that did make changes became something of a cautionary tale.