There’s a time-honored disaster administration technique, whereby one says nothing and waits for the outrage to move. 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 shortly. 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 stream” — controversy as aggressive benefit.
Sequoia’s calculated gamble carries actual threat, although. One other provocative put up from Maguire that hits the flawed nerve, a shift in political winds, or escalating penalties might shortly rework their unflappable companion from an asset right into a legal responsibility the agency can not afford to disregard.
A disaster communications skilled who has managed fame disasters for dozens of main manufacturers tells this editor, “Companies like Sequoia are bulletproof till they aren’t.”
What occurred
Sequoia’s hands-off strategy 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 known as him an “Islamist” who “comes from a tradition that lies about every little thing” in a July 4th tweet on X that has since been seen greater than 5 million occasions. Multiple thousand signatures have poured in relating to a petition demanding that Sequoia condemn the remarks, examine Maguire’s conduct, and apologize.
There’s been a whole lot of speak about why Sequoia hasn’t carried out 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 line with 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 invaluable 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 advisable 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 world chief, 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 all the time seen eye to eye. Botha was extremely important of Musk’s administration type 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 feel 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 have been amplifying the chance 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 fame rests on backing winners like Google, Stripe, and Nvidia, you don’t simply solid apart a rainmaker.
In the meantime, Maguire’s habits suggests he’s not backing down. After issuing a 30-minute video on X final weekend wherein 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 strategy to this case. The agency has traditionally given its companions area 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 price 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 have been authorized and private, not ideological. On the similar time, Sequoia has proven it isn’t keen to circle the wagons at any value, not if its fame is at stake.
Presumably, a number of components inform Sequoia’s do-nothing PR technique, together with how shortly folks, 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 may not like or agree with Maguire, however when Sequoia comes calling with its observe report and virtually bottomless pockets, most founders are going to welcome the agency with open arms.
In fact, 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 consists of the names of some distinguished Center Jap executives and founders who’ve attested to signing it, and so they characterize the form of numerous, world 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 approach, 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 world market the place alienating whole areas and communities carries actual enterprise penalties.
Whether or not that guess pays off will rely on 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 stated he doesn’t put up something that hasn’t been “excrutiatingly thought out.”)
Historical past means that established monetary companies with robust observe data are inclined to outlive their scandals, even severe ones. When Apollo International 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 below new management.
Equally, Kleiner Perkins survived Ellen Pao’s high-profile gender discrimination lawsuit in 2015. But it surely took years and primarily an totally 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 might be endured, the restoration timelines can differ 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 printed within the aftermath of his preliminary feedback, the skilled stated, “I did assume that apology addressed the ambiguities in [Maguire’s] put up. But it surely’s a 30-minute video — you must be actually to look at this.”
If there’s a subsequent time, the skilled stated, Maguire ought to “do two movies — one for 3 minutes” and one other, longer video, for anybody who needs to maintain watching.
Typically, the skilled added, “much less is extra.”