Sequoia bets on silence | Techcrunch

There is a secular crisis management strategy, where nothing is said and waits for indignation to pass. For Sequoia Capital, the strategy worked fairly well this week. While partner Shaun Maguire Criticism against alcohol During an inflammatory publication on social networks, this initial indignation quickly cooled. Now, some seem to think that the provocative position of Maguire could even strengthen its position. Business Insider really called it “Good for the transaction flow– Controversy as a competitive advantage.

The calculated bet of Sequoia, however, has a real risk. Another provocative Maguire position that strikes the wrong nerve, a change in political winds or increasing consequences could quickly transform their indisputable partner from an asset into a passive that the company can no longer afford to ignore.

A crisis communication professional who has managed reputation disasters for dozens of major brands said to this publisher: “Companies like Sequoia are the balloon until they are not.”

What happened

Sequoia’s without restraint approach was put to the test earlier this week when the venture capital company ended up in the eye of a storm on Maguire’s comments on the candidate for New York town hall, Zohran Mamdani. Maguire called him an “Islamist” who “comes from a culture that resides on everything” in a July 4 tweet On X which has since been seen more than five million times. More than a thousand signatures have flocked since a petition Require that Sequoia condemns the remarks, investigate Maguire’s conduct and apologize.

There have been a lot of discussions on the reasons why Sequoia did not do this, with many points of sale noting that Maguire is not just any partner. This status owes partly to his friendship with the co-founder of Stripe, Patrick Collison. According to reports, during a 2015 founders event, Maguire – then an entrepreneur supported by a founding fund – defined Collison during an argument with Palmer Luckey d’Andundil on quantum computer science, winning the friendship of Collison. The connection proved to be precious when Maguire joined Google Ventures in 2016; He helped obtain an investment of $ 20 million during his first week. When Maguire left Google Ventures in 2019, Collison personally recommended it to Sequoia partners. (Stripe has been in the Sequoia portfolio since 2010with the investing company more than $ 500 million more than 15 years.)

Maguire also directed Sequoia’s investment in Bridge, a stablecoin platform that acquired $ 1.1 billionAnd would be Sequoia’s link with Elon Musk, although it is probably somewhat overestimated. The world managing director of Musk and Sequoia, Roelof Botha, is both native South Africans and have known each other for over 25 years, going back to their stay together at the Paypal of the time, where Botha was recruited personally by Musk.

Despite this long relationship, the two have not always seen eyes. Botha was very critical of Musk’s management style when Musk was CEO of merged x.com/paypal, where Botha was CFO. Boot Once said The veteran journalist Ebbe Dommisse, “I think it would have killed the company if Elon had remained CEO for six more months. The errors that Elon made at the time amplifying the risk of the company.” But Musk disagreed with almost all this whole crew at the time, and these tensions have long been been resolved.

The biggest point here: when you manage tens of billions of dollars in assets and the reputation of your business is based on support winners like Google, Stripe and Nvidia, you do not easily reject a rain manufacturer.

Meanwhile, Maguire’s behavior suggests that he does not back down. After issuing a 30 -minute video Last weekend, he apologized for having offended so many people – saying that he made a point on a political ideology and not a religion – he doubled with increasingly aggressive messages this week. He said he had “retro-insufficient” of the “command structure” of his detractors and threatened to “embarrass” anyone who degenerates against him. He added that it was “1% of the accelerator” and warned people not to “kiss internet children”.

Silent treatment

Sequoia has a precedent for his approach to this situation. The company has historically given its space partners to speak publicly, with personalities like Doug Leone And Michael Moritz (WHO left the company in 2023) representing different political perspectives.

But there is a crucial difference between political diversity and incendiary rhetoric and clearly for some, Maguire’s comments extend beyond partisan policy in territory which alienates both political opponents and potential business partners.

It should also be remembered that even for Sequoia, there is a luminous line. Michael Goguen, another, earlier a rain leader with the company, was quickly shown the door When Sequoia learned legal action against sexual abuse against him. The situations are barely comparable; Goguen’s problems were legal and personal, not ideological. At the same time, Sequoia showed that he was not willing to surround the wagons at all costs, not if his reputation is at stake.

Presumably, several factors inform Sequoia’s public relations strategy, including the speed with which people, faced with a constant burst of news, go from a scandal. The company also operates in a different political landscape at the moment in the United States with the victory of Donald Trump and the decline in Dei’s initiatives has come to a new tolerance for controversial speech. What could have been the end of career at a previous time is now altered more easily.

The company is also probably placed on the fact that if the founders want partners who correspond to the traditional and more distinguished VC mold, they want even more. Startups courted by several high -level companies may not like or agree with Maguire, but when Sequoia comes with its history and almost bottomless pockets, most of the founders will accommodate the company with open arms.

There is also the very real possibility that Sequoia works on an emergency plan. (Sequoia refused to comment on Maguire’s publications when reached by Techcrunch earlier this week.)

However, Sequoia’s silence involves risks. Not all signatories have been confirmed, but the petition against Maguire includes the names of certain main leaders and founders of the Middle East who have attested to sign it, and they represent the type of diversified global talent swimming pool which stimulates innovation. By not addressing the controversy, Sequoia may be considered to tacitly approving Maguire views.

In other words, although the world of the venture capital capital has historically remarkably forgiven controversial figures With an exceptional transaction flow, the company plays with its reputation in an increasingly connected global market where the alienation of regions and entire communities has real commercial consequences.

The question of whether this bet will pay will depend on the duration of the controversy, the amount of business it really costs Sequoia and if Maguire can resist the urge to push things before the Sequoia tolerance threshold. (He said he does not publish anything that was not “excrutent thought. “)

History suggests that financial companies established with solid history tend to survive their scandals, even serious. When Leon Black by Apollo Global Management resigned in 2021 During his $ 158 million payments to Jeffrey Epstein, the company’s shares were barely moved and shareholders seemed largely imperturbable. Apollo has just continued its aggressive activities under a new leadership.

Likewise, Kleiner Perkins survived Discrimination founded trials in 2015. But it took years and essentially a Completely new team So that the venture capital company to regain its place in the hierarchy of Silicon Valley. The lesson here may be that if controversial partners can be endured, recovery times can vary considerably depending on the way companies manage the crisis.

For the moment, the crisis communication professional, who has asked not to be appointed, has advice for Maguire and, by extension, Sequoia. Regarding the Maguire video published following his first comments, the expert said: “I thought that the apologies addressed the ambiguities of the publication (Maguire). But it’s a 30 -minute video – you have to be really interested in watching this. ”

If it is next time, said the professional, Maguire should “make two videos – one for three minutes” and another longer video, for all those who want to continue watching.

Sometimes the expert added: “less that’s more”.