There’s a time-honored disaster administration technique, whereby one says nothing and waits for the outrage to go. For Sequoia Capital, the technique labored fairly nicely this week. Whereas companion Shaun Maguire initially weathered criticism over an inflammatory social media put up, that preliminary indignation cooled rapidly. Now, some appear to assume that Maguire’s defiant stance might even be strengthening his place. Enterprise Insider truly known as it “good for deal circulation” — controversy as aggressive benefit.
Sequoia’s calculated gamble carries actual danger, although. One other provocative put up from Maguire that hits the mistaken nerve, a shift in political winds, or escalating penalties may rapidly remodel their unflappable companion from an asset right into a legal responsibility the agency can now not afford to disregard.
A disaster communications skilled who has managed status disasters for dozens of main manufacturers tells this editor, “Corporations like Sequoia are bulletproof till they aren’t.”
What occurred
Sequoia’s hands-off method was put to the check earlier this week when the storied enterprise agency discovered itself within the eye of a storm over Maguire’s feedback about New York Metropolis mayoral candidate Zohran Mamdani. Maguire known as him an “Islamist” who “comes from a tradition that lies about the whole lot” in a July 4th tweet on X that has since been seen greater than 5 million instances. A couple of thousand signatures have poured in since on a petition demanding that Sequoia condemn the remarks, examine Maguire’s conduct, and apologize.
There’s been a variety of discuss why Sequoia hasn’t carried out this, with many shops noting that Maguire isn’t simply any companion. This standing owes partly to his friendship with Stripe co-founder Patrick Collison. Based on experiences, at a 2015 Founders Fund occasion, Maguire—then a Founders Fund-backed entrepreneur—defended Collison throughout an argument with Anduril’s Palmer Luckey about quantum computing, incomes Collison’s friendship. The connection proved worthwhile when Maguire joined Google Ventures in 2016; he helped safe a $20 million Stripe funding throughout his first week. When Maguire left Google Ventures in 2019, Collison personally beneficial him to Sequoia’s companions. (Stripe has been in Sequoia’s portfolio since 2010, with the agency investing greater than $500 million over 15 years.)
Maguire additionally led Sequoia’s funding in Bridge, a stablecoin platform that Stripe acquired for $1.1 billion, and is reportedly Sequoia’s hyperlink to Elon Musk, although that is in all probability considerably overstated. Musk and Sequoia’s world managing director, Roelof Botha, are each native South Africans and have identified one another for greater than 25 years, courting again to their time collectively on the then-nascent PayPal, the place Botha was recruited personally by Musk.
Regardless of that lengthy relationship, the 2 haven’t at all times seen eye to eye. Botha was extremely vital of Musk’s administration model when Musk was CEO of the merged X.com/PayPal firm, the place Botha was CFO. Botha as soon as informed veteran journalist Ebbe Dommisse, “I believe it will have killed the corporate if Elon had stayed on as CEO for six extra months. The errors Elon was making on the time had been amplifying the danger of the enterprise.” However Musk was at odds with just about that whole crew on the time, and people tensions have lengthy since been resolved.
The larger level right here: whenever you’re managing tens of billions of {dollars} in belongings and your agency’s status rests on backing winners like Google, Stripe, and Nvidia, you don’t simply forged apart a rainmaker.
In the meantime, Maguire’s conduct suggests he’s not backing down. After issuing a 30-minute video on X final weekend by which he apologized for offending so many — saying he was making some extent a few political ideology and never one a few faith — he has doubled down with more and more aggressive posts this week. He claimed he has “reverse engineered” his critics’ “command construction” and threatened to “embarrass” anybody who escalates in opposition to him. He added that that is him at “1% throttle” and warned folks to not “fuck w youngsters of the web.”
The silent therapy
Sequoia has precedent for its method to this case. The agency has traditionally given its companions house to precise themselves publicly, with figures like Doug Leone and Michael Moritz (who left the agency in 2023) representing completely different political views.
However there’s a vital distinction between political range and incendiary rhetoric and clearly to some, Maguire’s feedback prolong past partisan politics into territory that alienates each political opponents and potential enterprise companions.
It’s additionally value remembering that even for Sequoia, there’s a vibrant line. Michael Goguen, one other, earlier rainmaker with the agency, was promptly proven the door when Sequoia discovered of a sexual abuse lawsuit filed in opposition to him. The conditions are hardly comparable; Goguen’s points had been authorized and private, not ideological. On the similar time, Sequoia has proven it isn’t prepared to circle the wagons at any value, not if its status is at stake.
Presumably, a number of elements inform Sequoia’s do-nothing PR technique, together with how rapidly folks, confronted with a continuing flurry of stories, transfer on from a scandal. The agency can be working in a distinct political panorama proper now within the U.S. Together with Donald Trump’s victory and the rollback of DEI initiatives has come new tolerance for controversial speech. What may need been career-ending at an earlier cut-off date is now weathered extra simply.
The agency can be probably banking on the truth that whereas founders need companions who match the normal, extra genteel VC mildew, they need profitable ones much more. Startups being courted by a number of top-tier companies may not like or agree with Maguire, however when Sequoia comes calling with its monitor document and virtually bottomless pockets, most founders are going to welcome the agency with open arms.
There’s additionally the very actual risk that Sequoia is engaged on a contingency plan. (Sequoia declined to touch upon Maguire’s posts when reached by TechCrunch earlier this week.)
Nonetheless, Sequoia’s silence carries dangers. Not all of the signers have been confirmed, however the petition in opposition to Maguire consists of the names of some outstanding Center Jap executives and founders who’ve attested to signing it, and so they signify the sort of numerous, world expertise pool that drives innovation. By not addressing the controversy, Sequoia dangers being seen as tacitly endorsing Maguire’s views.
Put one other approach, although the enterprise capital world has traditionally been remarkably forgiving of controversial figures with distinctive deal circulation, the agency is playing with its status in an more and more related world market the place alienating whole areas and communities carries actual enterprise penalties.
Whether or not that wager pays off will depend upon how lengthy the controversy lingers, how a lot enterprise it truly prices Sequoia, and whether or not Maguire can resist the urge to push issues previous Sequoia’s personal tolerance threshold. (He has mentioned he doesn’t put up something that hasn’t been “excrutiatingly thought out.”)
Historical past means that established monetary companies with robust monitor information are inclined to outlive their scandals, even severe ones. When Apollo World Administration’s Leon Black resigned in 2021 over his $158 million funds to Jeffrey Epstein, the agency’s inventory barely moved and shareholders appeared largely unfazed. Apollo simply continued its aggressive deal-making beneath new management.
Equally, Kleiner Perkins survived Ellen Pao’s high-profile gender discrimination lawsuit in 2015. However it took years and basically an completely new group for the storied enterprise agency to regain its footing in Silicon Valley’s hierarchy. The lesson right here could also be that whereas controversial companions may be endured, the restoration timelines can range considerably relying on how companies deal with the disaster.
For now, the disaster communications skilled, who requested to not be named, has some recommendation for Maguire and, by extension, Sequoia. Concerning the video Maguire revealed within the aftermath of his preliminary feedback, the professional mentioned, “I did assume that apology addressed the ambiguities in [Maguire’s] put up. However it’s a 30-minute video — it’s important to be actually to observe this.”
If there’s a subsequent time, the skilled mentioned, Maguire ought to “do two movies — one for 3 minutes” and one other, longer video, for anybody who desires to maintain watching.
Generally, the professional added, “much less is extra.”
