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 associate Shaun Maguire initially weathered criticism over an inflammatory social media submit, that preliminary indignation cooled rapidly. Now, some appear to suppose that Maguire’s defiant stance might 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 threat, although. One other provocative submit from Maguire that hits the unsuitable nerve, a shift in political winds, or escalating penalties may rapidly remodel their unflappable associate 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, “Corporations like Sequoia are bulletproof till they aren’t.”
What occurred
Sequoia’s hands-off method 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 Metropolis mayoral candidate Zohran Mamdani. Maguire known 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. 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 plenty of speak about why Sequoia hasn’t accomplished this, with many shops noting that Maguire isn’t simply any associate. This standing owes partly to his friendship with Stripe co-founder Patrick Collison. In response to 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 really useful him to Sequoia’s companions. (Stripe has been in Sequoia’s portfolio since 2010, with the agency investing more 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 important 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 believe it could 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 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 belongings and your agency’s popularity rests on backing winners like Google, Stripe, and Nvidia, you don’t simply forged 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 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 folks to not “fuck w kids of the web.”
The silent remedy
Sequoia has precedent for its method 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 firm in 2023) representing totally different political views.
However there’s a vital distinction between political range 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 vivid line. Michael Goguen, one other, earlier rainmaker with the agency, was promptly shown the door when Sequoia discovered 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 identical time, Sequoia has proven it isn’t keen to circle the wagons at any value, not if its popularity is at stake.
Presumably, a number of components inform Sequoia’s do-nothing PR technique, together with how rapidly folks, 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. 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 cut-off date 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 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 file and nearly 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 consists of the names of some outstanding Center Jap executives and founders who’ve attested to signing it, and so they signify the form 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 approach, although the enterprise capital world has traditionally been remarkably forgiving of controversial figures with distinctive deal stream, 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 submit 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 beneath new management.
Equally, Kleiner Perkins survived Ellen Pao’s high-profile gender discrimination lawsuit in 2015. But it surely took years and basically an entirely new team 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 printed within the aftermath of his preliminary feedback, the knowledgeable stated, “I did suppose that apology addressed the ambiguities in [Maguire’s] submit. But it surely’s a 30-minute video — it’s important to be actually to observe 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 knowledgeable added, “much less is extra.”
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