There’s a time-honored disaster administration technique, whereby one says nothing and waits for the outrage to cross. For Sequoia Capital, the technique labored fairly properly this week. Whereas companion Shaun Maguire initially weathered criticism over an inflammatory social media submit, that preliminary indignation cooled shortly. Now, some appear to suppose that Maguire’s defiant stance could even be strengthening his place. Enterprise Insider really referred to as it “good for deal stream” — controversy as aggressive benefit.
Sequoia’s calculated gamble carries actual danger, although. One other provocative submit from Maguire that hits the mistaken nerve, a shift in political winds, or escalating penalties may shortly rework 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 fame 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 take a look at 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 referred to as him an “Islamist” who “comes from a tradition that lies about all the pieces” in a July 4th tweet on X that has since been considered greater than 5 million instances. A couple of thousand signatures have poured in relating to a petition demanding that Sequoia condemn the remarks, examine Maguire’s conduct, and apologize.
There’s been quite a lot of speak about why Sequoia hasn’t achieved this, with many retailers noting that Maguire isn’t simply any companion. This standing owes partly to his friendship with Stripe co-founder Patrick Collison. In response to stories, 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 really useful 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 he’s hardly its solely hyperlink. Musk and Sequoia’s international chief, Roelof Botha, are each native South Africans and have recognized one another for greater than 25 years, relationship 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 essential of Musk’s administration fashion when Musk was CEO of the merged X.com/PayPal firm, the place Botha was CFO. Botha as soon as advised veteran journalist Ebbe Dommisse, “I believe it might 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 total crew on the time, and people tensions have lengthy since been resolved.
The larger level right here: if you’re managing tens of billions of {dollars} in belongings and your agency’s fame 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 a degree a couple of political ideology and never one a couple of 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 individuals to not “fuck w kids 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 variety and incendiary rhetoric and clearly to some, Maguire’s feedback lengthen 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 brilliant line. Michael Goguen, one other, earlier rainmaker with the agency, was promptly proven the door when Sequoia realized of a sexual abuse lawsuit filed in opposition to him. The conditions aren’t precisely 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 price, not if its fame is at stake.
Presumably, a number of elements inform Sequoia’s do-nothing PR technique, together with how shortly individuals, confronted with a continuing flurry of reports, transfer on from a scandal. The agency can also 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 time limit is now weathered extra simply.
Past the shifting political winds, the agency is probably going banking on the truth that whereas founders need companions who match the standard, extra genteel VC mildew, they need profitable ones much more. Startups being courted by a number of top-tier companies won’t 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.
After all, there’s the very actual risk, too, 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 contains the names of some distinguished Center Jap executives and founders who’ve attested to signing it, and so they symbolize the sort of numerous, international expertise pool on which Sequoia’s future relies upon. By not addressing the controversy, Sequoia dangers being seen as tacitly endorsing Maguire’s views.
Put one other manner, although the enterprise capital world has traditionally been remarkably forgiving of controversial figures with distinctive deal stream, the agency is playing with its fame in an more and more linked international market the place alienating total 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 really 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 submit something that hasn’t been “excrutiatingly thought out.”)
Historical past means that established monetary companies with sturdy monitor data 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 underneath new management.
Equally, Kleiner Perkins survived Ellen Pao’s high-profile gender discrimination lawsuit in 2015. However it took years and basically a completely new workforce for the enterprise agency to regain its footing in Silicon Valley’s hierarchy. The lesson right here could also be that whereas controversial companions will be endured, the restoration timelines can fluctuate 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. Relating to the video Maguire printed within the aftermath of his preliminary feedback, the knowledgeable mentioned, “I did suppose that apology addressed the ambiguities in [Maguire’s] submit. However it’s a 30-minute video — it’s important to be actually to look at 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 needs to maintain watching.
Generally, the knowledgeable added, “much less is extra.”
