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 nicely this week. Whereas accomplice Shaun Maguire initially weathered criticism over an inflammatory social media publish, that preliminary indignation cooled rapidly. Now, some appear to assume that Maguire’s defiant stance could even be strengthening his place. Enterprise Insider truly referred to as it “good for deal stream” — controversy as aggressive benefit.
Sequoia’s calculated gamble carries actual threat, although. One other provocative publish from Maguire that hits the flawed nerve, a shift in political winds, or escalating penalties might rapidly rework their unflappable accomplice 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, “Companies 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 every little thing” in a July 4th tweet on X that has since been considered greater than 5 million occasions. 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 lots of speak about why Sequoia hasn’t finished this, with many shops noting that Maguire isn’t simply any accomplice. This standing owes partly to his friendship with Stripe co-founder Patrick Collison. In accordance with studies, 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 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 that is in all probability considerably overstated. Musk and Sequoia’s world managing director, Roelof Botha, are each native South Africans and have recognized 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 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 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 chance 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: once you’re managing tens of billions of {dollars} in property and your agency’s status rests on backing winners like Google, Stripe, and Nvidia, you don’t simply solid 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 during which he apologized for offending so many — saying he was making a degree 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 towards him. He added that that is him at “1% throttle” and warned individuals to not “fuck w kids of the web.”
The silent remedy
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 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 vivid line. Michael Goguen, one other, earlier rainmaker with the agency, was promptly proven the door when Sequoia realized of a sexual abuse lawsuit filed towards 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 keen to circle the wagons at any value, not if its status is at stake.
Presumably, a number of components inform Sequoia’s do-nothing PR technique, together with how rapidly individuals, confronted with a relentless flurry of reports, transfer on from a scandal. The agency can also be working in a special 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 might 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 observe file and virtually bottomless pockets, most founders are going to welcome the agency with open arms.
In fact, there’s the very actual chance, 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 towards Maguire consists of the names of some outstanding Center Jap executives and founders who’ve attested to signing it, and so they symbolize the type of various, 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 manner, although the enterprise capital world has traditionally been remarkably forgiving of controversial figures with distinctive deal stream, the agency is playing with its status in an more and more linked world market the place alienating total areas and communities carries actual enterprise penalties.
Whether or not that guess pays off will rely 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 stated he doesn’t publish something that hasn’t been “excrutiatingly thought out.”)
Historical past means that established monetary companies with sturdy observe information are likely to outlive their scandals, even critical 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 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 workforce 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 will 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. Relating to the video Maguire revealed within the aftermath of his preliminary feedback, the knowledgeable stated, “I did assume that apology addressed the ambiguities in [Maguire’s] publish. But it surely’s a 30-minute video — it’s a must to 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 desires to maintain watching.
Generally, the knowledgeable added, “much less is extra.”
