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Recent Turmoil at Sequoia Capital Raises Concerns Over Corporate Culture and Leadership: Source

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Jun. 3 2024, Published 5:45 a.m. ET

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Sequoia Capital, a renowned Venture Capital firm established in 1972 during the nascent days of Silicon Valley, boasts a prestigious portfolio including early investments in tech giants like Apple and Atari. With globally recognized investments in companies like PayPal, Airbnb, Google and YouTube, Sequoia solidified its position in the industry.

However, recent reports on one of Sequoia’s largest investments, the by-now-pay-later FinTech Klarna, brought to light apparent internal challenges at the venerated firm. An attempted ousting of a long-serving Klarna board member and current board Chairman, Mike Moritz, by Sequoia partner Matt Miller, supported by Sequoia Chief Roelof Botha, unfolded at Klarna earlier this year. The episode ended with a seemingly embarrassing volte-face leading to Miller's removal from the board and replacement with Moritz’s Sequoia ally Andrew Reed, prompting questions from some insiders about Klarna and Sequoia's governance.

“The choice to back Matt Miller's bid to remove Mike Moritz raised questions about potential personal motives among Klarna's board members and the higher-ups at Sequoia,” a source claimed. “These actions are believed to have prompted concerns as to the individual objectives and the overall well-being of the company and its investors., Miller seems to have “continued his role in Sequoia's London/EU office without apparent repercussions."

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The source continued: “Such inaction has led to critics raising concerns about a potential conflict of interest among Sequoia partners and the need for a sharper focus on shareholder interests.” The handling of the Klarna incident drew industry criticism, with financial news reports calling it a 'complete fiasco' that is said to reflect poorly on Sequoia's leadership.

Amidst the unrest, doubts have emerged about the current leadership's ability to drive growth for shareholders and portfolio companies, according to the source. “The reputation and leadership ability of Sequoia’s Roelof Botha came under scrutiny, especially following awkward public apologies related to the Klarna controversy as well as widely reported gross missteps with Sequoia’s investment in crypto exchange FTX, the spinoff of its Chinese arm and its investment in Elon Musk’s acquisition of Twitter (now X)—all under Botha’s stewardship,” the source claimed.

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Further allegations about Sequoia's workplace environment appear to have surfaced, according to several Glassdoor reviews accusing the firm, and more specifically Botha, of alleged discriminatory practices. “The reviews paint a grim picture of a toxic work culture, raising questions about diversity and inclusion within the organization,” the source insisted

One recent Glassdoor review from an apparent current employee was titled “Sequoia Capital Hates Women” and made allegations toward one Managing Partner for maliciously targeting female staff, claiming the work environment makes the Hollywood movie Wolf of Wall Street “look tame,” contending that “you probably don’t want to work here if you’re not a white male.”

The industry source alleged: “Given the above and recent developments happening behind closed doors, it's likely disheartening for dedicated Sequoia employees and stakeholders to see executives like Botha and Miller causing disruption and negative publicity with what appears to be a lack of consequences. Their actions, perhaps driven by personal gain and nepotism, may have jeopardized Klarna, a prized asset in Sequoia's portfolio.”

A second insider concluded: “As Sequoia navigates through these challenges, stakeholders are watching closely to see how the firm addresses internal issues and upholds its reputation as a leading venture capital player in the tech industry.”

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