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 properly this week. Whereas accomplice Shaun Maguire initially weathered criticism over an inflammatory social media publish, that preliminary indignation cooled rapidly. Now, some appear to suppose that Maguire’s defiant stance could even be strengthening his place. Enterprise Insider really known as it “good for deal flow” — controversy as aggressive benefit.
Sequoia’s calculated gamble carries actual danger, although. One other provocative publish from Maguire that hits the incorrect nerve, a shift in political winds, or escalating penalties might rapidly remodel their unflappable accomplice from an asset right into a legal responsibility the agency can not afford to disregard.
A disaster communications skilled who has managed popularity disasters for dozens of main manufacturers tells this editor, “Firms like Sequoia are bulletproof until 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 culture that lies about everything” 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 a whole lot of discuss why Sequoia hasn’t completed 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. Based on reviews, 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 that is most likely considerably overstated. Musk and Sequoia’s international managing director, 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 vital of Musk’s administration fashion when Musk was CEO of the merged X.com/PayPal firm, the place Botha was CFO. Botha once told veteran journalist Ebbe Dommisse, “I think it would have killed the company if Elon had stayed on as CEO for six more months. The mistakes Elon was making at the time were amplifying the risk of the business.” However Musk was at odds with just about that complete 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 popularity 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 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 structure” 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 children of the internet.”
The silent therapy
Sequoia has precedent for its strategy to this case. The agency has traditionally given its companions house to specific themselves publicly, with figures like Doug Leone and Michael Moritz (who left the agency in 2023) representing totally different political views.
However there’s an important 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 price 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 realized 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 popularity is at stake.
Presumably, a number of elements 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 unique 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 cut-off date is now weathered extra simply.
The agency can also be seemingly 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 corporations 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 contains the names of some distinguished Center Japanese executives and founders who’ve attested to signing it, and so they characterize the type of various, international expertise pool that drives innovation. 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 movement, the agency is playing with its popularity in an more and more related international market the place alienating complete areas and communities carries actual enterprise penalties.
Whether or not that wager pays off will rely on 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 stated he doesn’t publish something that hasn’t been “excrutiatingly thought out.”)
Historical past means that established monetary corporations with sturdy monitor data are likely 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 underneath new management.
Equally, Kleiner Perkins survived Ellen Pao’s high-profile gender discrimination lawsuit in 2015. But it surely took years and primarily a wholly 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 fluctuate considerably relying on how corporations 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 professional stated, “I did think that apology addressed the ambiguities in [Maguire’s] post. But it’s a 30-minute video — you have to be really interested to watch this.”
If there’s a subsequent time, the skilled stated, Maguire ought to “do two videos — one for three minutes” and one other, longer video, for anybody who desires to maintain watching.
Generally, the professional added, “less is more.”
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