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How Greylock Partners Has Thrived for 60 Years: Lessons in Long-Term Venture Capital Success
In the fast-moving world of venture capital, where firms rise and fall with each market cycle, Greylock Partners stands as a remarkable exception. Founded in 1965, this 60-year-old firm has not only survived but thrived through multiple technological revolutions, from the pre-internet era to today's AI boom. Their secret? A unique combination of unwavering core values and relentless reinvention.
Key Takeaways
- Greylock pioneered the modern venture capital model as the first multi-LP firm in 1965
- The firm has successfully navigated multiple technology eras while maintaining a service-first mentality
- Their "causal impact" approach to attribution creates better alignment than traditional sourcing models
- Company initiation and deep founder relationships drive their highest returns
- Small partnership size (around 10-12 partners) enables faster decision-making and stronger culture
- Portfolio services work when integrated into the firm's core strategy, not as marketing tools
The Foundation: Service Over Self-Promotion
At the heart of Greylock's longevity lies a fundamental philosophy that sets them apart from many modern venture firms. As one founding partner wrote in an internal letter, "the ambition of every Greylock partner should be to win the Oscar for the best supporting actor to the entrepreneur."
This is a firm that was founded on a service mindset. We're a service-oriented firm. We're a people-oriented firm. We don't we're not the stars of the show. We do very little press. We do very little marketing, but we want to be the person who is in the founder's corner and the first call when something's going wrong.
This service-first mentality manifests in tangible ways. When companies face critical moments - like navigating last-minute financings on Christmas Eve 2024 - Greylock partners are on Zoom calls providing support, regardless of their location or personal plans.
From Cable TV to AI: Six Decades of Strategic Evolution
Greylock's journey began in an era most modern investors can barely imagine. In 1965, there was no internet, no personal computers, and certainly no smartphones. Early partners would buy newspapers from different cities, scan classified job postings to identify growing companies, then fly out to meet entrepreneurs in person. Investment decisions that now happen in days took six months, for checks as small as $200,000.
The firm's early successes included Continental Cable Vision (which became part of AT&T and later Comcast), Neutrogena skincare products, and major healthcare companies like Millennium and Stryker. Each era brought new focus areas:
- 1960s-70s: Cable infrastructure and consumer products
- 1980s-90s: Healthcare and biotech companies
- 2000s: Open source software (Red Hat)
- 2010s: Social networks and marketplaces (Facebook, LinkedIn, Instagram, Airbnb)
- 2020s: Enterprise software and AI applications
The Power of Long-Term Relationships
One of Greylock's most powerful advantages is their ability to generate new opportunities from existing relationships - what they call their "network flywheel." A perfect example traces back to 2007, when they recruited Josh McFarland from Google. Though he declined to join as an investor, he started a company called Teleport in Greylock's offices, hiring engineer Sanjay as a founding team member.
Fast-forward 18 years: that initial connection has spawned multiple successful companies, including Abnormal Security (one of the fastest-growing security companies ever), and continues generating new startups today. This demonstrates how intimate, long-term relationships compound over time in ways that transactional interactions cannot.
Rethinking Attribution and Alignment
Unlike most venture firms that focus on who "sourced" an opportunity, Greylock uses the concept of "causal impact" to evaluate contributions. This could mean sourcing a deal, building prepared mind for quick decisions, helping win competitive situations, or providing ongoing board support.
Everyone strives to be causally impactful in successful investments. What that does is it creates the right set of incentives and orientation. When a senior partner intersects an opportunity, their first reflex is can I get one of my younger partners into this opportunity as the primary alongside me?
This approach creates better alignment within the partnership and enables more effective mentorship of junior team members.
The Art of Company Initiation
Greylock has an exceptional track record of starting companies from scratch, including Palo Alto Networks and Workday - both founded in the same Greylock office in 2005 and now worth $50-140 billion each. Their approach focuses on eliminating market risk while embracing execution risk.
The key principles for successful company initiation include:
- Founder-centric approach: The entrepreneur, not the VC firm, remains the core of the company
- Market-fair terms: Avoiding predatory pricing that creates negative selection in founder quality
- Zero market risk: Picking opportunities where demand is proven, focusing execution challenges on the team
- Deep operational support: Acting as "company builders" rather than passive investors
Performance Management in Venture Capital
Greylock has developed an innovative "inputs-based" performance management system with 18 specific metrics across four job dimensions: see, decide, win, and build, plus internal partnership contribution. Examples include:
- Seeing 75% of seed and Series A opportunities done by competitors in your sector
- Maintaining rapid responsiveness to entrepreneurs and internal partners
- Demonstrating domain leadership through accurate sector predictions
- Contributing to firm-building activities beyond personal investments
Importantly, they evaluate partners who have good outputs but poor inputs as poor fits, since results without process aren't reliably repeatable.
Portfolio Services That Actually Work
While many venture firms treat portfolio services as marketing tools, Greylock integrates their "specialist teams" as first-class partners who attend weekly partner meetings and drive measurable impact. For example, they've placed 19 engineers at portfolio company Resolve in just 14 months since investment.
Their "Iron Man suit" model provides intensive support to early-stage companies that don't yet have internal capabilities, then scales back as companies build their own teams.
Navigating the Current Venture Landscape
Looking ahead, Greylock sees alpha concentration in two main areas: very early-stage investing (where you can be a "market maker" rather than "market taker") and large late-stage rounds where few firms can compete. The middle-market "indexing" approach may generate decent returns but lacks the alpha potential of these bookends.
On the AI revolution specifically, they believe we're seeing the first paradigm shift since the cloud era that enables new horizontal software companies to challenge incumbents, thanks to new pricing models, abstractions for work, and data architectures.
The Durability Challenge
Despite Greylock's success, venture firm longevity remains rare. The default trend line is decay, as successful firms often become unwilling to reinvent themselves. Greylock combats this through continuous evolution - moving headquarters to San Francisco for AI proximity, hiring younger partners, and maintaining what one partner calls "deranged paranoia" despite objective success.
You have to be willing to change everything about how you work. If you interacted with us, you would feel like you're interacting with a brand new firm in the speed and velocity that we work, but it rests on the foundation of all the learning, experience, institutional knowledge, and network relationships of the companies we've been a part of.
As venture capital continues evolving at breakneck speed, Greylock's 60-year journey offers valuable lessons: maintain unwavering core values while embracing constant reinvention, prioritize deep relationships over transaction volume, and never stop being paranoid about staying relevant. In a business defined by a small set of decisions each vintage, this combination of consistency and adaptability may be the only sustainable competitive advantage.
