"I am incredibly optimistic about Israel's tech economy and the broader economy," says Shaun Maguire, a partner at Sequoia Capital, one of the world’s largest venture capital funds, which returned to Israel this year, after an absence of a decade in the local market. "I believe strongly in Israel's tech ecosystem, and in my opinion, Tel Aviv is number two in the sector, after New York and California.
"The next ten years are going to be amazing. Defense exports from Israel are going to be next-level, and it will eventually become one of the largest defense exporters in the world.
"Founders in Israel today are among the most ambitious in the world, and we believe that the country will produce companies big enough for Sequoia. This is especially true after October 7, which filled the entire country with a sense of determination."
Maguire undoubtedly believes in the Israeli tech market. As proof: Sequoia, one of the largest funds in Silicon Valley, has invested in more than ten funding rounds in Israeli companies since the beginning of the war (according to Startup Nation Central data), and Maguire is one of the partners leading this initiative.
His love for Israel is not limited to business only. Since October 7, this Jewish investor -- who is married to an American-Israeli woman of Iranian descent - has come to Israel’s defense at every opportunity, and has become a particularly prominent voice on social media in this regard. "It's hard for me to explain how much I love Israel; how important it is to me. I recently bought a house here, and last year I stayed here for three months."
Besides his distinctly Zionist views, Maguire recently found himself more than once in the eye of the storm in the US. This, after making publicly controversial statements indicating his political identification with Donald Trump as well as his devout support for Elon Musk. Maguire manages Sequoia's investments in Musk’s companies, including the billionaire’s purchase of Twitter.
In an exclusive interview with "Globes," Maguire addresses the criticism directed at him and Israel's global standing, explaining why Sequoia, which had maintained a local presence since 1999, closed its operations in 2016 - and what shift in Israeli tech persuaded them to return now, precisely during the war.
"I wasn't surprised by October 7"
We open the interview with the events of October 7 and with the reaction in the US. "First of all, it's important for me to clarify: I wasn’t surprised by the attack, and in fact nothing major has happened since then that’s managed to surprise me. I know it sounds crazy, maybe stupid, arrogant, but I really mean it. And anyone who doesn't believe me can go look at what I tweeted an hour after the attack began."
"The reason is that I worked in intelligence myself," says Maguire. As a young man, he was deployed to Afghanistan with the Defense Advanced Research Projects Agency (DARPA). "I followed Iran from up close. One of the lessons I learned was to listen for very small signals. For me, there were several signals that said this or something else big against Israel, was going to happen."
On October 7, Maguire wrote on X (formerly Twitter), "Just so you understand why Israelis have been so vigilant in the past… it was living with knowledge that there were barbarians at the gates." Ten days later he was one of the first to criticize the "New York Times" which accused Israel of bombing a hospital in Gaza, reports that later turned out to be false.
Were you attacked on a personal level because of your opinions?
"Yes, the opinions I expressed provoked a lot of anger towards me from the public. Almost immediately after October 7th I began to voice pro-Israel positions shamelessly. Part of my motivation to be so open, so early, was the hope of helping to pave the way for other people to do it, too.
"And really, in the last two or three months I've been concentrating on issues other than Israel because I feel that now there are amazing people who are carrying the load, and working on the issue. But in the early days, I knew it would make it easier for others.
"People tried to threaten me, I received a lot of death threats, a few dozen that turned out to be credible. I lost many friends, many people say bad things about me behind my back, but I'm fine with that. It was the right thing to do morally, and I'm proud of myself for being willing to sacrifice financial gain and taking a personal risk".
Contributed $300,000 to Trump
Another issue that made enemies for Maguire is a change in his political stance. "I used to be a Democrat. In 2016, I contributed money to Hillary Clinton. I voted for her. At that time, I was very afraid of Donald Trump. I really believed the propaganda that said the world would end if he was elected, and how he was a Russian asset, and other things. Now, I believe that those are fictions, and I came out with my support Trump, publicly."
Maguire, as mentioned, wrote at length in X (3,500 words) about why he contributed $300,000 to Trump's campaign, adding: "I know that I’ll lose friends for this. Some will refuse to do business with me. The media will probably demonize me, as they have so many others before me. But despite this, I still believe it’s the right thing to do."
He supported Hillary Clinton, he wrote, because he "had drunk the media Kool-Aid" and was "scared out of my mind about Trump." He did believe, "the 2016 election was manipulated to hurt Hilary Clinton and to help Donald Trump," and that, "as someone that used to work in National Security, Russia’s implicit support for Trump made me deathly afraid of him getting elected as President." Nonetheless, he stated, "I was wrong, and Russia miscalculated. President Trump turned out to be a master of foreign policy and particularly strong towards Russia," before going to write critically about the Biden administration’s foreign policy.
Maguire claimed that Trump has been treated hypocritically, noting that allegations against him are similar to actions committed by other senior officials. For instance, he pointed to the denial of election results, and the fact that Clinton, Biden, and Mike Pence "were all caught with classified documents, yet only Trump was indicted." Another key point, he writes, "The Democrats have been trying to regulate technology -- especially open-source AI and crypto in ways that incentivize the best builders to build outside of America."
He wrote, "25 years ago I believe the Far Right was vastly more dangerous than the Far Left. But today I believe the Far Left, and especially Antifa, is more dangerous." He then stated, "There's a real chance President Trump is convicted of felony charges and sentenced to prison. Bluntly, that's part of why I'm supporting him. I believe our justice system is being weaponized against him."
Maguire summed up his post with the statement: "Given the two choices, I believe President Trump is overwhelmingly the stronger candidate… Speak up. Don't be silenced. Freedom of speech is worth nothing if you're afraid to use it. We can't let cancel culture win."
In this election, there are more people in high-tech and business who are going to support Trump. How do you explain that?
"Yes. Look, the extreme left has become an ally of the Muslim Brotherhood. This is something I would have had trouble predicting 20 years ago. And this faction has become deeply influential within the Democratic establishment. This is where we are, and this is not my party."
"I was a Democrat," he adds. "And now I’m really not. The views of the Democratic Party today do not reflect the views of the party 20 years ago."
What about Israel? How do you see it in this story?
"First of all, the terrible policy towards Iran is a disaster for Israel. A weak America is a disaster for Israel, because a weak America makes its enemies and Israel's enemies more daring. I think this is happening because the Democrats tried to come towards the extreme left. People on the extreme left are currently considering not voting at all or to vote for third-party candidates, and the Democrats need their votes. That's why, among other things, they tried to follow this line, where they appear tough against Israel - Prevent arms shipments, prevent funding, avoid votes in the UN, etc. And this only strengthens Israel's enemies.
"The general public does not understand how dependent America is on Israel. Israel is the best cybersecurity power in the world today, and there is a lot of cooperation. There is a lot of military technology that America relies on Israel for. There are all kinds of intelligence operations that the US relies on Israel for and more. But the Biden administration is a captive of this minority within the base that simply hates Jews. It's not even just Israel, they just hate Jews, and the Democratic establishment is trying to appease this group. It will only get worse."
Should we worry about this in the future?
"I think Israelis should be optimistic. I know that's a complex statement these days and it's hard for people to hold onto. But I think we need to look at the longer arc of history and think about what Israel has achieved in 75 years and where it was in the past. 20 years ago, it relied on the outside world for energy. Now Israel is not only energy independent, it's an exporter of energy. Israel relied on the outside world for water, or at least the water reserves were getting depleted, the Sea of Galilee was shrinking. Now it's an exporter of water. It's unimaginable, and it's an incredibly strategic asset.
"Israel today is one of the best ecosystems in the world for technology companies. And I know that this does not apply to everyone and there are so many people in Israel who are struggling financially at the moment, especially young people, but these are things that can be fixed. That is why I am actually optimistic, and think that from a broad perspective things in the region are trending quite well for Israel We just have to get through this war, and then kind of rebuild the economy, and get even stronger."
What about the Jews around the world? Should they be worried?
"Regarding the Jews of Europe, I am quite pessimistic. You can just see the writing on the wall, it’s already becoming inhospitable for them there. In America, it depends on the elections. I believe that if Trump wins, it will allow the Jews to live as they have lived until now for at least another decade. Yes, those voices in the Democratic base will still be there, etc., the protestors we saw in the streets will still be there, but when things don't work politically, and when candidates lose elections or lose seats in the House of Representatives because of being antisemitic, so the Democratic Party will want to be more proactive about this enemy from within. If Trump loses, I am very pessimistic about the future of Jews in America."
"Maguire has also voiced his opinion online about election security, even though he calls it 'the most controversial' issue. "I think America should have secure presidential elections. In California, where I live, the government has made it illegal to require ID from people who want to vote. We just rely on our trust in the people. It's scary how easy it is for foreign adversaries to abuse what's happening here."
So why are these laws being passed? Is this because they want to cheat?
"Perhaps that’s even more controversial, but yes. I believe that the only reason to pass a law in which identification cannot be required for voting is to cheat. That is the only realistic explanation."
Supporters of these laws will say that minorities, especially African-Americans, do not have the means to obtain an ID.
"African-Americans need ID for everything else: drive cars, buy alcohol, get welfare. It's not really a problem. Basically, anyone in America who wants one, can get one. It's racist to say African-Americans struggle to get one. I don't I think this is the real reason."
"Google lying through their teeth"
Maguire has a PhD in physics from the California Institute of Technology (Caltech) where he studied quantum aspects of black holes, ("It helped me a lot to build frameworks for understanding complex systems and helps me directly with due diligence of certain companies"). He is one of the founders of Expanse, a cybersecurity company that was acquired in 2020 by Nir Zuk's Palo Alto Networks in a deal valued at over a billion dollars. Between 2016 and 2019, Maguire worked at Google Ventures, about which he claimed on X (Twitter) that he was told that he could not be promoted because he was a white man. "I have a quota. My hands are tied," his boss said to him at the time (according to Maguire's tweet on February 23, 2024). A spokesperson for Google denied the matter to the "New York Post", and Maguire responded that Google was "lying through their teeth." This month, he tweeted that DEI (diversity, equity, and inclusion), "was the most effective KGB operation of all time."
He began his journey at Sequoia in 2019 as a partner, where he focuses mainly on investments in hardware, AI, cryptocurrencies, defense technologies, and Israeli companies. The fund, founded in 1972, is associated with investments in some of the most successful companies in the history of technology, including Apple, Google, Nvidia, Dropbox, Instagram, WhatsApp, Oracle, PayPal, Zoom and LinkedIn. The fund is an integral part of the culture of Silicon Valley, and greatly influences the world of startups and innovation.
Among the companies Sequoia invests in are also those belonging to Elon Musk. Sequoia and Musk have a long history and the fund was one of the first investors in X.com, which Musk cofounded in 1999, and was later merged with PayPal.
However, in the five years since Maguire joined Sequoia, the fund has made several large investments in Musk's companies. According to various US media reports, the two men are very close. Thus, in addition to the $800 million to finance the acquisition of Twitter in 2022, that same year the fund led a $675 million investment in Musk's tunnel mining venture, The Boring Company, at $5 billion valuation. Sequoia invested a total of about $800 million in SpaceX in three rounds at increasing valuations in 2019, 2020, and again in 2021. This year, the fund invested an undisclosed amount in the B round of Musk's artificial intelligence company XAI, which raised $6 billion, according to Musk, at a $18 billion value before money. Other investors in the round included Andreessen Horowitz, and Saudi prince Al Waleed bin Talal Al Saud.
You’ve invested in many of Musk's companies, including a significant amount so that he could afford to acquire Twitter. His approach to freedom of speech is very Libertarian. Since he implemented his policy there has been an increase in blatant antisemitic content. How do you relate to the matter?
"No one is right 100% of the time, no one is completely right. But I think that Elon is as right as you can be on the subject. Some of these antisemites came to attack me personally. For example, [US white supremacist leader] Nick Fuentes has come at me several times and it's scary. He has an army of fans and literally thousands of people have responded, and they're real people and they just hate Jews, so I don't want to downplay it.
"But the other side is that if you look at TikTok, for example, there is much less overtly antisemitic content, but TikTok controls the content and definitely promotes anti-Israeli, anti-Jewish and anti-American content and pushes content in our favor down to a much less viewed place.
"In other words, the app is trying to push a narrative of what's right and what's wrong on you without you being aware of it. So, I just don't think you can ever trust any authority to know what is misinformation, disinformation, etc. So yes, it's scary when you come face to face with evil, it's very scary. But the libertarian approach allows good to actually fight evil."
Musk is involved in several groundbreaking companies. How do you see his impact on the future?
"I personally believe that Elon is the most important person alive today, and if government regulation doesn't stop him, his companies will turn an optimistic version of science fiction into reality."
Is space the next economic frontier?
"[Musk’s] Starlink is one of the best companies of all time. It is one of the fastest products to reach about $10 billion in revenue. I don't think it will be the only successful company to be built in space. We will move from communication to transportation, energy and other technological fields that are hard to predict. Israel can play a significant role in this field."
"The best R&D is in Israel"
Last February, four months into the outbreak of the war, Sequoia, as mentioned, resumed operating in Israel. Maguire, with the fund's partner in Israel, Dean Meyer, shares behind-the-scenes developments. "Sequoia has a long history of investments in Israel [including Mobileye and Taboola],and it had an office in Israel, which was closed for a few years. But in the last five years since I joined, we’ve really taken it to another level, and over the last year we’ve invested in Wiz, a company called Eon, a company called Cyera, a defense technology company called Kela Systems, and many more. We’ve supported some of the fastest growing tech companies in Israel."
All this after October 7?
"All this after October 7."
Sequoia already had a branch in Israel. Why was it closed?
"Sequoia funded more than 30% of the companies on the Nasdaq according to market cap. It was one of the first investors in Nvidia, Google, Apple, Oracle, Palo Alto and more. That's a polite way of saying that Sequoia looks for companies that could be worth $50 billion or more. For a decade or so founders in Israel sold early, in the hundreds of millions of dollars. That has changed. The founders here today are among the most ambitious in the world, and we believe that the country will produce companies large enough to suit the fund."
A lot of people in the local tech sector say they will leave Israel. It's very easy to relocate in these jobs. Do you think this is really a danger?
"Listen, I just bought a house in Israel. I believe in voting with your feet, voting with your money. I know a family that left Israel since October 7th because they have small children, and they felt they had a job opportunity in America. I understand their decision but it makes me a little sad.
"On the other hand, I know quite a few people who moved to Israel since October 7. So, I think it goes both ways. I think the best R&D is in Israel, your R&D is better than anywhere else. Those who leave will eventually return."
Published by Globes, Israel business news - en.globes.co.il - on November 18, 2024.
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