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There is a time-honored disaster administration technique, whereby one says nothing and waits for the outrage to go. For Sequoia Capital, the technique labored fairly effectively this week. While companion 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. Business Insider truly known as it “good for deal flow” — controversy as aggressive benefit.
Sequoia’s calculated gamble carries actual threat, although. Another provocative publish from Maguire that hits the unsuitable nerve, a shift in political winds, or escalating penalties might 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 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 check earlier this week when the storied enterprise agency discovered itself within the eye of a storm over Maguire’s feedback about New York City 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 instances. More than one 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 number of discuss why Sequoia hasn’t finished 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. According to 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 precious 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 helpful 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 international chief, 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.
Despite that lengthy relationship, the 2 haven’t all the time seen eye to eye. Botha was extremely important 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 instructed 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.” But 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: if you’re managing tens of billions of {dollars} in belongings and your agency’s popularity rests on backing winners like Google, Stripe, and Nvidia, you don’t simply forged apart a rainmaker.
Meanwhile, Maguire’s conduct 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 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 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 example. 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 completely different political views.
But 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 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. At the identical time, Sequoia has proven it isn’t keen to circle the wagons at any price, 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 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. Along 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.
Beyond 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 mould, 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 document and nearly bottomless pockets, most founders are going to welcome the agency with open arms.
Of course, 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.)
Still, 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 Middle Eastern executives and founders who’ve attested to signing it, and so they symbolize the type of various, 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 circulation, the agency is playing with its popularity in an more and more related international market the place alienating whole areas and communities carries actual enterprise penalties.
Whether 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 mentioned he doesn’t publish something that hasn’t been “excrutiatingly thought out.”)
History means that established monetary companies with sturdy observe information are likely to outlive their scandals, even critical ones. When Apollo Global Management’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.
Similarly, Kleiner Perkins survived Ellen Pao’s high-profile gender discrimination lawsuit in 2015. But it took years and basically an fully 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 could 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. Regarding the video Maguire printed within the aftermath of his preliminary feedback, the professional mentioned, “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 mentioned, Maguire ought to “do two videos — one for three minutes” and one other, longer video, for anybody who desires to maintain watching.
Sometimes, the professional added, “less is more.”