There is an old-fashioned crisis management strategy where you say nothing and wait for your anger to pass. For Sequoia Capital, this strategy worked pretty well this week. Partner Sean Maguire initially weathered criticism of inflammatory social media posts, but that first digging quickly cooled. Now, some seem to think that Maguire's rebellious attitude may strengthen his position. Business Insider actually called it “good for trading flow.” It is a controversy as a competitive advantage.
However, there are real risks to Sequoia's calculated gambling. Another provocative post from Maguire, colliding with the wrong nerve, political wind change, or escalating outcomes, can quickly turn non-flapping partners from assets.
A crisis communications expert who managed reputation disasters for many major brands told the editor:
what happened
Sequoia's handoff approach was tested earlier this week when he realized that the well-known venture company was in the storm over Maguire's comments about New York City mayoral candidate Zohran Mamdani. Maguire called him a “Muslim.” He called him “Muslims” and “derived from all cultures.” More than 1,000 signatures have been poured into petitions that demand that Sequoia denounce her remarks and investigate Maguire's actions and apologize.
There's been a lot of talk about why Sequoia isn't doing this, and many outlets are paying attention to Maguire not just a partner. This status is partly owed to his friendship with Stripe co-founder Patrick Collison. Reports say at the 2015 Founders Fund event, Maguire (the then-Funded Entrepreneur) won Collison's friendship and defended Collison during his discussion with Andrill's Palmer Lucky. When Maguire joined Google Ventures in 2016, the connection proved worth it. He helped secured a $20 million stripe investment in the first week. When Maguire left Google Ventures in 2019, Collison personally recommended him to Sequoia's partner. (Stripe has been in Sequoia's portfolio since 2010, investing more than $500 million over 15 years.)
Maguire also led Sequoia's investment at Bridge. This is the Stablecoin platform that Stripe acquired for $1.1 billion, and is reportedly a Sequoia link to Elon Musk, which is probably somewhat exaggerated. Musk and Sequoia global leader Roelofbota are both South Africans and have known each other for over 25 years.
Despite their long relationship, the two haven't always seen their eyes. When Musk was CEO of X.com/Paypal Company, where he merged, Botha was CFO, Botha was extremely critical of Musk's management style. Bosa told Ebbe Domisze, a former veteran journalist. “I think if Elon had stayed as CEO for another six months, he would have killed the company. The mistakes Elon had made at the time amplified the risks of the business.” However, Musk was largely inconsistent with the entire crew at the time, and those tensions have been resolved ever since.
The bigger point here: If you manage hundreds of billions of dollars of assets and your company's reputation depends on supporters like Google, Stripe, Nvidia, etc., you can't easily throw away Rainmaker.
Maguire's actions, meanwhile, suggest that he has not retreated. After publishing a 30-minute video for X last weekend, he apologised for angering so many people – he doubled with increasingly offensive posts this week, saying he claims not about religion but about political ideology. He claimed he “reverse engineered” his critics' “command structure” and “embarrassing” threatening anyone escalating against him. He added that this is him at “1% throttle”, warning people to “fuck the kids on the internet.”
Silent treatment
Sequoia has a precedent for approaching this situation. Historically, the company has given its partners a space to publicly express itself. People like Doug Leone and Michael Moritz (who left the company in 2023) represent a variety of political perspectives.
However, there is a significant difference between political diversity and inflammatory rhetoric, and for some, Maguire's comments extend beyond partisan politics to territories that alienate both political enemies and potential business partners.
It is also worth remembering that even Sequoias have bright lines. Michael Gorgen, another early rainmaker for the company, was immediately shown the door when Sequoia learned of the sexual abuse lawsuit filed against him. The situation is hardly comparable. The Goguen issues were legal and personal, not ideological. At the same time, Sequoia is not about whether its reputation is at stake, but rather about being willing to circle the wagon at any cost.
Perhaps some factors convey Sequoia's Do-Nothing PR strategy, including how quickly people who face constant news move from the scandal. The company is also currently operating in a different political landscape in the United States, along with Donald Trump's victory and rollback of the DEI initiative. What was previously a career-ending process is now more easily weathered.
Beyond the changing political winds, the company is likely based on the fact that its founders want partners that fit traditional, elegant VC-types, but want more successful, but more successful. Startups courted by multiple top-tier companies may like or agree with Maguire, but when Sequoia calls its track record and almost bottomless pocket, most founders will open their arms and welcome the company.
Of course, there is also a very realistic possibility that Sequoia is working on a contingency plan. (Sequoia declined to comment on Maguire's post when TechCrunch reached earlier this week.)
Still, there is a risk to Sequoia's silence. Although not all signatories have been confirmed, the petition against Maguire includes the names of prominent Middle Eastern executives and founders who have proven their signature, representing the diverse, global talent pool on which Sequoia's future depends. By not dealing with the controversy, Sequoia runs the risk of being seen as implicitly supporting Maguire's views.
Put another way, the venture capital world has significantly forgiven controversial figures with historically extraordinary trading flows, but the company gambles with its reputation in an increasingly connected global market that marginalizes the entire region and the entire community.
Whether that bet will pay off depends on how long the controversy will last, whether it actually costs Sequoia, and whether Maguire can resist the impulse to drive things past Sequoia's own tolerance threshold. (He says he's not posting anything that's “not explosively thought up.”
History suggests that well-established financial companies with strong track record tend to live longer in scandals, and even serious ones. When Apollo Global Management's Leon Black resigned from paying $158 million to Jeffrey Epstein in 2021, the company's shares were barely moving and shareholders appeared to be infringed. Apollo continued to do aggressive trading under new leadership.
Similarly, Kleiner Perkins survived Ellen Pao's famous gender discrimination lawsuit in 2015. But it took many years to regain footing in the Silicon Valley hierarchy, essentially a whole new team. The lesson here may be that while controversial partners can withstand, recovery timelines can vary widely depending on how businesses handle the crisis.
For now, crisis communications experts who asked not to name them have been advised to Maguire and, by extension, Sequoia. Regarding the video about Maguire, which was featured in the aftermath of his initial comments, the experts said: [Maguire’s] post. But it's a 30 minute video. You should really be interested in seeing this. ”
If there's a next time, Maguire said he'll need to “run two videos for three minutes.” The other is a long video for those who want to keep watching.
Sometimes experts added that it was “less.”