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 2010with 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 billionand 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.
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.
Meanwhile, Maguire’s behavior suggests he’s not backing down. After issuing a 30-minute video on X last weekend in which he apologized for offending so many — saying he was making a point about a political ideology and not one about a religion — he has doubled down with increasingly aggressive posts this week. He claimed he has “reverse engineered” his critics’ “command structure” and threatened to “embarrass” anyone who escalates against him. He added that this is him at “1% throttle” and warned people not to “fuck w children of the internet.”
The silent treatment
Sequoia has precedent for its approach to this situation. The firm has historically given its partners space to express themselves publicly, with figures like Doug Leone and Michael Moritz (who left the firm in 2023) representing different political perspectives.
But there’s a crucial difference between political diversity and incendiary rhetoric and clearly to some, Maguire’s comments extend beyond partisan politics into territory that alienates both political opponents and potential business partners.
It’s also worth remembering that even for Sequoia, there is a bright line. Michael Goguen, another, earlier rainmaker with the firm, was promptly shown the door when Sequoia learned of a sexual abuse lawsuit filed against him. The situations aren’t exactly comparable; Goguen’s issues were legal and personal, not ideological. At the same time, Sequoia has shown it isn’t willing to circle the wagons at any cost, not if its reputation is at stake.
Presumably, several factors inform Sequoia’s do-nothing PR strategy, including how quickly people, faced with a constant flurry of news, move on from a scandal. The firm is also operating in a different political landscape right now in the U.S. Along with Donald Trump’s victory and the rollback of DEI initiatives has come new tolerance for controversial speech. What might have been career-ending at an earlier point in time is now weathered more easily.
Beyond the shifting political winds, the firm is likely banking on the fact that while founders want partners who fit the traditional, more genteel VC mold, they want successful ones even more. Startups being courted by multiple top-tier firms might not like or agree with Maguire, but when Sequoia comes calling with its track record and almost bottomless pockets, most founders are going to welcome the firm with open arms.
Of course, there’s the very real possibility, too, that Sequoia is working on a contingency plan. (Sequoia declined to comment on Maguire’s posts when reached by TechCrunch earlier this week.)
Still, Sequoia’s silence carries risks. Not all the signers have been confirmed, but the petition against Maguire includes the names of some prominent Middle Eastern executives and founders who have attested to signing it, and they represent the kind of diverse, global talent pool on which Sequoia’s future depends. By not addressing the controversy, Sequoia risks being seen as tacitly endorsing Maguire’s views.
Put another way, though the venture capital world has historically been remarkably forgiving of controversial figures with exceptional deal flow, the firm is gambling with its reputation in an increasingly connected global market where alienating entire regions and communities carries real business consequences.
Whether that bet pays off will depend on how long the controversy lingers, how much business it actually costs Sequoia, and whether Maguire can resist the urge to push things past Sequoia’s own tolerance threshold. (He has said he doesn’t post anything that hasn’t been “excrutiatingly thought out.”)
History suggests that established financial firms with strong track records tend to outlive their scandals, even serious ones. When Apollo Global Management’s Leon Black resigned in 2021 over his $158 million payments to Jeffrey Epstein, the firm’s stock barely moved and shareholders seemed largely unfazed. Apollo just continued its aggressive deal-making under new leadership.
Similarly, Kleiner Perkins survived Ellen Pao’s high-profile gender discrimination lawsuit in 2015. But it took years and essentially an entirely new team for the storied venture firm to regain its footing in Silicon Valley’s hierarchy. The lesson here may be that while controversial partners can be endured, the recovery timelines can vary significantly depending on how firms handle the crisis.
For now, the crisis communications professional, who asked not to be named, has some advice for Maguire and, by extension, Sequoia. Regarding the video Maguire published in the aftermath of his initial comments, the expert said, “I did think that apology addressed the ambiguities in [Maguire’s] post. But it’s a 30-minute video — you have to be really interested to watch this.”
If there’s a next time, the professional said, Maguire should “do two videos — one for three minutes” and another, longer video, for anyone who wants to keep watching.
Sometimes, the expert added, “less is more.”
