Sequoia Bets On Silence

There is simply a time-honored situation guidance strategy, wherein 1 says thing and waits for nan outrage to pass. For Sequoia Capital, nan strategy worked beautiful good this week. While partner Shaun Maguire initially weathered criticism complete an inflammatory societal media post, that first indignation cooled quickly. Now, immoderate look to deliberation that Maguire’s defiant stance whitethorn moreover beryllium strengthening his position. Business Insider really called it “good for woody flow” — contention arsenic competitory advantage.

Sequoia’s calculated bet carries existent risk, though. Another provocative station from Maguire that hits nan incorrect nerve, a displacement successful governmental winds, aliases escalating consequences could quickly toggle shape their unflappable partner from an plus into a liability nan patient tin nary longer spend to ignore. A situation communications master who has managed estimation disasters for dozens of awesome brands tells this editor, “Firms for illustration Sequoia are bulletproof until they aren’t.”

What happened

Sequoia’s hands-off attack was put to nan trial earlier this week erstwhile nan storied task patient recovered itself successful nan oculus of a large wind complete Maguire’s inflammatory comments astir New York City mayoral campaigner Zohran Mamdani. Maguire called him an “Islamist” who “comes from a civilization that lies astir everything” successful a July 4th tweet on X that has since been viewed much than 5 cardinal times. More than 1 1000 signatures person poured successful since connected a petition demanding that Sequoia condemn nan remarks, analyse Maguire’s conduct, and apologize.

There’s been a batch of talk astir why Sequoia hasn’t done this, pinch galore outlets noting that Maguire isn’t conscionable immoderate partner. This position owes partially to his relationship pinch Stripe’s co-founder. According to reports, astatine a 2015 Founders Fund event, Maguire—then a Founders Fund-backed entrepreneur—defended Collison during an statement pinch Anduril’s Palmer Luckey astir quantum computing, earning Collison’s friendship. The relationship proved valuable erstwhile Maguire joined Google Ventures successful 2016; he helped unafraid a $20 cardinal Stripe finance during his first week. When Maguire near Google Ventures successful 2019, Collison personally recommended him to Sequoia’s partners. (Stripe has been successful Sequoia’s portfolio since 2010, pinch nan patient investing more than $500 million complete 15 years.)

Maguire besides led Sequoia’s finance successful Bridge, a stablecoin level that Stripe acquired for $1.1 billion, and is reportedly Sequoia’s nexus to Elon Musk, though this is astir apt somewhat overstated. Musk and Sequoia’s world managing director, Roelof Botha, are some autochthonal South Africans and person known each different for much than 25 years, making love backmost to their clip together astatine nan then-nascent PayPal, wherever Botha was recruited personally by Musk.

Despite that agelong relationship, nan 2 haven’t ever seen oculus to eye. Botha was highly captious of Musk’s guidance style erstwhile Musk was CEO of nan merged X.com/PayPal company, wherever Botha was CFO. Botha once told seasoned journalist Ebbe Dommisse, “I deliberation it would person killed nan institution if Elon had stayed connected arsenic CEO for six much months. The mistakes Elon was making astatine nan clip were amplifying nan consequence of nan business.” But Musk was astatine likelihood pinch beautiful overmuch that full unit astatine nan time, and those tensions person agelong since been resolved.

The bigger constituent here: erstwhile you’re managing tens of billions of dollars successful assets and your firm’s estimation rests connected backing winners for illustration Google, Stripe, and Nvidia, you don’t easy formed speech a rainmaker.

Meanwhile, Maguire’s behaviour suggests he’s not backing down. After issuing a 30-minute video connected X past play successful which he apologized for offending truthful galore — saying he was making a constituent astir a governmental ideology and not 1 astir a belief — he has doubled down pinch progressively fierce posts this week. He has claimed he has “reverse engineered” his critics’ “command structure” and threatened to “embarrass” anyone who escalates against him. He added that this is him astatine “1% throttle” and warned group not to “fuck w children of nan internet.”

The silent treatment

Sequoia has precedent for its attack to this situation. The patient has historically fixed its partners abstraction to definitive themselves publicly, pinch figures for illustration Doug Leone and Michael Moritz (who left nan firm successful 2023) representing different governmental perspectives.

But there’s a important quality betwixt governmental diverseness and inflammatory rhetoric and intelligibly to some, Maguire’s comments widen beyond partisan authorities into territory that alienates some governmental opponents and imaginable business partners.

It’s besides worthy remembering that moreover for Sequoia, location is simply a agleam line. Michael Goguen, another, earlier rainmaker pinch nan firm, was promptly shown nan door erstwhile Sequoia learned of a intersexual maltreatment suit revenge against him. The situations are hardly comparable; Goguen’s issues were ineligible and personal, not ideological. At nan aforesaid time, Sequoia has shown it isn’t consenting to circle nan wagons astatine immoderate cost, not if its estimation is astatine stake.

Presumably, respective factors pass Sequoia’s do-nothing PR strategy, including really quickly people, faced pinch a changeless flurry of news, move connected from a scandal. The patient is besides operating successful a different governmental scenery correct now successful nan U.S. Along pinch Donald Trump’s triumph and nan rollback of DEI initiatives has travel caller tolerance for arguable speech. What mightiness person been career-ending astatine an earlier constituent successful clip is now weathered much easily.

The patient is besides apt banking connected nan truth that while founders want partners who fresh nan traditional, much genteel VC mold, they want successful ones moreover more. Startups being courted by aggregate top-tier firms mightiness not for illustration aliases work together pinch Maguire, but erstwhile Sequoia comes calling pinch its way grounds and almost bottomless pockets, astir founders are going to invited nan patient pinch unfastened arms.

There’s besides nan very existent anticipation that Sequoia is moving connected a contingency plan. (Sequoia declined to remark connected Maguire’s posts erstwhile reached by TechCrunch earlier this week.)

Still, Sequoia’s soundlessness carries risks. Not each nan signers person been confirmed, but nan petition against Maguire includes nan names of immoderate salient Middle Eastern executives and founders who person attested to signing it, and they correspond nan benignant of diverse, world talent excavation that drives innovation. By not addressing nan controversy, Sequoia risks being seen arsenic tacitly endorsing Maguire’s views.

Put different way, though nan task superior world has historically been remarkably forgiving of controversial figures pinch exceptional woody flow, nan patient is gambling pinch its estimation successful an progressively connected world marketplace wherever alienating full regions and communities carries existent business consequences.

Whether that stake pays disconnected will dangle connected really agelong nan contention lingers, really overmuch business it really costs Sequoia, and whether Maguire tin defy nan impulse to push things past Sequoia’s ain tolerance threshold. (He has said he doesn’t station thing that hasn’t been “excrutiatingly thought out.”)

History suggests that established financial firms pinch beardown way records thin to outlive their scandals, moreover superior ones. When Apollo Global Management’s Leon Black resigned successful 2021 complete his $158 cardinal payments to Jeffrey Epstein, nan firm’s banal hardly moved and shareholders seemed mostly unfazed. Apollo conscionable continued its fierce deal-making nether caller leadership.

Similarly, Kleiner Perkins survived Ellen Pao’s high-profile gender discrimination suit successful 2015. But it took years and fundamentally an entirely caller team for nan storied task patient to regain its footing successful Silicon Valley’s hierarchy. The instruction present whitethorn beryllium that while arguable partners tin beryllium endured, nan betterment timelines tin alteration importantly depending connected really firms grip nan crisis.

For now, nan situation communications professional, who asked not to beryllium named, has immoderate proposal for Maguire and, by extension, Sequoia. Regarding nan video Maguire published successful nan aftermath of his first comments, nan master said, “I did deliberation that apology addressed nan ambiguities successful [Maguire’s] post. But it’s a 30-minute video — you person to beryllium really willing to watch this.”

If there’s a adjacent time, nan master said, Maguire should “do 2 videos — 1 for 3 minutes” and another, longer video, for anyone who wants to support watching.

Sometimes, nan master added, “less is more.”