There is a time-honored crisis management strategy, wherein one says nothing and waits for the outrage to pass. For Sequoia Capital, the strategy worked pretty well this week. While partner Shaun Maguire initially weathered criticism over an inflammatory social media post, that initial indignation cooled quickly. Now, some seem to think that Maguire’s defiant stance may even be strengthening his position. Business Insider actually called it “good for deal flow” — controversy as competitive advantage.
Sequoia’s calculated gamble carries real risk, though. Another provocative post from Maguire that hits the wrong nerve, a shift in political winds, or escalating consequences could quickly transform their unflappable partner from an asset into a liability the firm can no longer afford to ignore.
A crisis communications professional who has managed reputation disasters for dozens of major brands tells this editor, “Firms like Sequoia are bulletproof until they aren’t.”
What happened
Sequoia’s hands-off approach was put to the test earlier this week when the storied venture firm found itself in the eye of a storm over Maguire’s comments about New York City mayoral candidate Zohran Mamdani. Maguire called him an “Islamist” who “comes from a culture that lies about everything” in a July 4th tweet on X that has since been viewed more than five million times. More than one thousand signatures have poured in regarding a petition demanding that Sequoia condemn the remarks, investigate Maguire’s conduct, and apologize.
There’s been a lot of talk about why Sequoia hasn’t done this, with many outlets noting that Maguire isn’t just any partner. This status owes partly to his friendship with Stripe co-founder Patrick Collison. According to reports, at a 2015 Founders Fund event, Maguire — then a Founders Fund-backed entrepreneur — defended Collison during an argument with Anduril’s Palmer Luckey about quantum computing, earning Collison’s friendship. The connection proved valuable when Maguire joined Google Ventures in 2016; he helped secure a $20 million Stripe investment during his first week. When Maguire left Google Ventures in 2019, Collison personally recommended him to Sequoia’s partners. (Stripe has been in Sequoia’s portfolio since 2010, with the firm investing more than $500 million over 15 years.)
Maguire also led Sequoia’s investment in Bridge, a stablecoin platform that Stripe acquired for $1.1 billion, and is reportedly Sequoia’s link to Elon Musk, though he’s hardly its only link. Musk and Sequoia’s global leader, Roelof Botha, are both native South Africans and have known each other for more than 25 years, dating back to their time together at the then-nascent PayPal, where Botha was recruited personally by Musk.
Techcrunch event Save up to $475 on your TechCrunch All Stage pass Build smarter. Scale faster. Connect deeper. Join visionaries from Precursor Ventures, NEA, Index Ventures, Underscore VC, and beyond for a day packed with strategies, workshops, and meaningful connections. Save $450 on your TechCrunch All Stage pass Build smarter. Scale faster. Connect deeper. Join visionaries from Precursor Ventures, NEA, Index Ventures, Underscore VC, and beyond for a day packed with strategies, workshops, and meaningful connections. Boston, MA | REGISTER NOW
Despite that long relationship, the two haven’t always seen eye to eye. Botha was highly critical of Musk’s management style when Musk was CEO of the merged X.com/PayPal company, where Botha was CFO. Botha once told veteran journalist Ebbe Dommisse, “I think it would have killed the company if Elon had stayed on as CEO for six more months. The mistakes Elon was making at the time were amplifying the risk of the business.” But Musk was at odds with pretty much that entire crew at the time, and those tensions have long since been resolved.
The bigger point here: when you’re managing tens of billions of dollars in assets and your firm’s reputation rests on backing winners like Google, Stripe, and Nvidia, you don’t easily cast aside a rainmaker.
... continue reading