There is a sanctified crisis management strategy in which nothing is said and not waiting for indignation. For Sequoia Capital, the strategy worked quite well this week. While partner Shaun Maguire initially Weathered criticism Due to inflammatory post in social media, the initial indignation quickly cooled. Now some appear to think that Maguire’s attitude may even strengthen his position. Business Insider actually called it “Good for the flow of transactions” – controversy as a competitive advantage.
However, the sequoia gambling has a real risk. Another provocative post from Maguire, which strikes the unsuitable nerve, change of political winds or escalating consequences, can quickly transform their unwavering partner from assets into a commitment that the company cannot afford to disregard.
Professional for crisis communication, who managed the disasters of repute for dozens of fundamental brands, tells this editor: “Companies such as Sequoia are bulletproof until they are.”
What happened
The Hands off-off sequoia approach was tested at the starting of this week, when the tongue company Venture was in the eye of the storm over the comments of Maguire about the candidate for the mayor in New York Zohran Mamdani. Maguire called him “Islamist”, which “comes from a culture that lies about everything” on July 4 tweet Since then, X has been viewed over five million times since. In spilling greater than a thousand signatures in relation to petition When demanding that sequoia condemns attention, examine Maguire’s behavior and apologized.
It said a lot about why Sequoia didn’t do it, and many points noticed that Maguire was not only a partner. This status is partly because of his friendship with the co -founder of Stripe Patrick Collison. According to reports at the Funders Fund 2015 event, Maguire-at that point, an entrepreneur supported by the Fund-Przybłił Collison during a quarrel with Palmer Luckey Andurila about quantum calculations, gaining Collison’s friendship. The connection turned out to be invaluable when Maguire joined Google Ventures in 2016; He helped secure the $ 20 million investment during the first week. When Maguire left Google Ventures in 2019, Collison personally advisable him to Sequoia’s partners. (Since then, Stripe is in the sequoia portfolio 2010with a company investing over $ 500 million in 15 years.)
Maguire also conducted the Sequoia investment in Bridge, the Stablecoin platform, which was purchased by Stripe $ 1.1 billionAnd it is supposedly a sequoia link with Elon Musk, although it is probably a bit inflated. The global leader of Musk and Sequoia, Roelof Both, are native residents of the inhabitants of South Africa and have known each other for over 25 years, coming from the time in PayPal at the time, where Botha was personally recruited by Musk.
Despite this long relationship, each of them didn’t all the time see eye to face. Botha was very critical of the Musk management style when Musk was the general director of the connected x.com/paypal company, in which Botha was the financial director. Botha he once said Veteran journalist Ebbe Dommisse: “I think he would kill the company if Elon remained as a general director for six months. The mistakes that Elon made at that time strengthened the risk of business.” But Musk was contrary to the whole crew at that point, and these tensions were a very long time ago have been dissolved.
A bigger point here: when you manage tens of billions of dollars of assets, and the repute of your organization depends on the winners comparable to Google, Stripe and Nvidia, you do not easily reject the rain.
Meanwhile, Maguire’s behavior suggests that he is not withdrawing. After release 30-minute video Last weekend he apologized for insulting so many – saying that he was considering about political ideology, not religion – this week he doubled with more aggressive posts. He claimed that “inversely modified” the “command structure” of his critics and threatened that he would “embarrass” anyone who intensified against him. He added that he was the “1% throttle” and warned people to not “fuck children on the internet.”
Quiet treatment
Sequoia has a precedent for its approach to this case. The company historically gave its partners’ space to publicly express themselves, with such characters Doug Leone AND Michael Moritz (who left the company in 2023) representing various political perspectives.
However, there is a key difference between political diversity and incendiary rhetoric, and for some, for some, Maguire comments go beyond partisan policy in the territory, which alienates each political opponents and potential business partners.
It is also value remembering that even in the case of sequoia there is a brilliant line. Michael Goguen, one other, earlier rain with the company, immediately showed the door when Sequoia learned about the lawsuit for sexual abuse composed of him. Situations are not comparable; Goguen’s issues were legal and personal, not ideological. At the same time, Sequoia showed that it is not willing to cover the wagons at all costs, and not if its repute is threatened.
Presumably, several aspects inform about the PR sequoia strategy, in how quickly people, in the face of a constant multitude of messages, leave the scandal. The company now also operates in one other political landscape in the USA with the victory of Donald Trump, and the withdrawal of Dei initiatives got here a recent tolerance for controversial speech. What could possibly be ending his profession at an earlier moment is easier.
In addition to changing political winds, the company probably deals with the proven fact that although the founders want partners who fit the traditional, more crazy type of VC, they need much more successful. Startups, which are intended by many firms at the highest level, may not like or agree with Maguire, but when Sequoia recall their achievements and almost bottomless pockets, most founders will welcome the company with open arms.
Of course, there is also a very real possibility that Sequoia is working on an emergency plan. (Sequoia refused to comment on Maguire posts when he reached Techcrunch at the starting of this week).
Still, Sequoia’s silence carries a risk. Not all signators were confirmed, but the petition against Maguire incorporates the names of some outstanding management and the Founders of the Middle East, who confirmed his signing, and represent a type of diverse, global talent pool, on which the way forward for the sequoia depends. Without controversial, Sequoia risks that it is seen as silent support of Maguire’s views.
In other words, although the world of Venture Capital has historically forgiven extremely Controversial characters Thanks to the exceptional flow of the transaction, the company is gambling on the increasingly connected global market, in which the alienation of entire regions and community has real business consequences.
Whether this plant pays off depends on how long the controversy stays, how much business actually costs sequoia and whether Maguire can resist the needs of moving its own sequoia tolerance threshold. (He said he didn’t publish anything that wasn’t “thoughtful excretion. “)
History suggests that established financial firms with strong achievements are inclined to experience their scandals, even serious. When Leon Black from Apollo Global Management resigned in 2021 Compared to its 158 million payments for Jeffrey Epstein, the company’s shares barely moved, and the shareholders gave the impression to be largely dissatisfied. Apollo has just continued the aggressive conclusion of contracts under recent leadership.
Similarly, Kleiner Perkins survived Ellen Pao loudly sex discrimination The lawsuit in 2015 but it was mainly a completely recent team for the company company to regain the position in the hierarchy of Silicon Valley. The lesson could also be that although you may survive controversial partners, the recovery schedule may vary significantly depending on how firms deal with crisis.
For now, a skilled communication skilled who asked for it, has advice for Maguire and, hence, sequoia. As for the video Maguire published after his first comments, the expert said: “I thought the apologies concerned ambiguity [Maguire’s] Post. But this is a 30-minute movie-you are interested to watch it. “
If the skilled said next time, Maguire should “make two films – one for three minutes” and the other a longer film for anyone who wants to look at.
Sometimes the expert added: “There is less.”