Sex, Lies, and Venture Capital

I don’t typically write about sex scandals, but here goes.

This man, by all measures of IQ, is a genius:

I mean, come on. This is straight out of a brochure.

This is Michael Goguen, a former Sequoia Capital VC. He has a Master’s Degree in Electrical Engineering from Stanford. That’s no joke.

This man is also tremendously stupid:

Two words you never want together as a partner at Sequoia: your partner’s name and “sex slave.”

It’s been reported that charges were filed against Goguen for abusing a woman “sexually, physically and emotionally for over 13 years.” It’s also been reported that the charges are false, and that this is merely an attempt at extortion. We honestly have no idea at this point.

All that is clear is that Goguen had an ongoing sexual relationship with a stripper for a decade, despite being married three times. I am not a judge or jury, but it is safe to say that he should have never been involved with Baptiste in the first place. It’s also safe to say it is a horrible idea to pay anyone to have sex with you in this country, with or without their consent.

This isn’t a witch hunt here. I’m not asking for Goguen to be burned at the stake. Basic game theory teaches us that this was a stupid play. Baptiste had nothing to lose by pursuing more money — nothing. She was a stripper, and he had hundreds of millions of dollars. If she was a sex slave, that makes him a psychopath. If she wasn’t, that means she was a prostitute, because he paid her to keep quiet. There are no two ways around these options.

This is very smart man, with no common sense, and quite possibly no scruples.

I am tired of seeing powerful, smart men in my industry abuse their power. At this point it’s not even just about the victims here — these scandals are a stupid waste of everyone’s time.

This is not about shame — it is about risk. Hitting on a co-worker without solicitation or paying a stripper for sex (consenting or otherwise) are both examples of high-risk behavior. They are both illegal for a reason. A venture capital firm’s entire job is to mitigate risk and pick smart investments. If investors can’t even trust your partners to uphold the law, how can they trust you with their hard earned money?

It is not much to assume that your employees should not be doing things like paying women for sex or sexually harassing coworkers. It does not matter how intelligent they are — this kind of behavior puts all reasonable stakeholders at risk. I am glad Sequoia asked Goguen to leave, and hope a more sensible person takes his place.

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