Sequoia bets on silence | TechCrunch
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 associate Shaun Maguire initially weathered criticism over an inflammatory social media submit, that preliminary indignation cooled rapidly. Now, some appear to assume that Maguire’s defiant stance could even be strengthening his place. Enterprise Insider really known as it “good for deal move” — controversy as aggressive benefit.
Sequoia’s calculated gamble carries actual threat, although. One other provocative submit from Maguire that hits the improper nerve, a shift in political winds, or escalating penalties might 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 repute 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 check earlier this week when the storied enterprise agency discovered itself within the eye of a storm over Maguire’s inflammatory feedback about New York Metropolis mayoral candidate Zohran Mamdani. Maguire known as him an “Islamist” who “comes from a tradition that lies about every part” in a July 4th tweet on X that has since been considered greater than 5 million instances. Multiple thousand signatures have poured in since on a petition demanding that Sequoia condemn the remarks, examine Maguire’s conduct, and apologize.
There’s been quite a lot of discuss why Sequoia hasn’t carried out this, with many shops noting that Maguire isn’t simply any associate. This standing owes partly to his friendship with Stripe’s co-founder. In keeping 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 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 in all probability considerably overstated. Musk and Sequoia’s world managing director, Roelof Botha, are each native South Africans and have identified 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 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 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 danger 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: while you’re managing tens of billions of {dollars} in property and your agency’s repute 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 by 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 has 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 folks to not “fuck w kids of the web.”
The silent therapy
Sequoia has precedent for its strategy to this example. 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 an important distinction between political variety and inflammatory 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 shiny 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 prepared to circle the wagons at any value, not if its repute is at stake.
Presumably, a number of components inform Sequoia’s do-nothing PR technique, together with how rapidly folks, confronted with a relentless flurry of stories, transfer on from a scandal. The agency can 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 may need been career-ending at an earlier time limit is now weathered extra simply.
The agency can be seemingly 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 corporations may not like or agree with Maguire, however when Sequoia comes calling with its monitor document and nearly 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 towards Maguire contains the names of some distinguished Center Jap executives and founders who’ve attested to signing it, and so they signify the form of various, world expertise pool that drives innovation. By not addressing the controversy, Sequoia dangers being seen as tacitly endorsing Maguire’s views.
Put one other method, although the enterprise capital world has traditionally been remarkably forgiving of controversial figures with distinctive deal move, the agency is playing with its repute in an more and more related world market the place alienating total 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 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 corporations with sturdy monitor information are likely to outlive their scandals, even severe 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 basically a completely 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 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 revealed within the aftermath of his preliminary feedback, the knowledgeable stated, “I did assume that apology addressed the ambiguities in [Maguire’s] submit. But it surely’s a 30-minute video — you need 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.
Typically, the knowledgeable added, “much less is extra.”