Tuesday, May 19, 2009

New HQ for Greylock Partners: Sand Hill Road...Menlo Park... Calif.

Just got off the phone with Bill Helman of Greylock Partners, who shed some light on the story everyone is talking (and Tweeting) about this morning: Greylock is moving its home office from Waltham to Menlo Park.

Sticking around in Waltham will be two partners: Helman and Bill Kaiser. (They also get occasional visits from Greylock chairman Henry McCance.)

Helman said the decision was made by the partners over the past month. "We looked at the data, looked at our returns, and looked at competitive data, to the extent that you can get it," he said. "Then, of course, we get paid to make judgments, so there's a judgment that gets made on top of that. We asked, is this cyclical or secular -- and we came down on the side that this is more of a secular shift than a cyclical one."

"This doesn't mean that Boston is a zero," he continued. "Boston is a terrific location, and there will continue to be success here. But the big change was moving the back office [to California, and deciding to add new partners there.] I have an emotional attachment to Boston. I live in Cambridge. I love Harvard, and I love MIT. But we have a responsibility to our limited partners."

Greylock only has a handful of current portfolio companies in the Boston area right now. They include Zipcar, Reveal Imaging, Concert Pharmaceuticals, AVEO, and Ounce Labs. I called Roger Tung, chief executive of Concert, this morning, and he hadn't yet heard about the news, though he'd had lunch with Helman (who serves on his board) a few weeks ago.

"They told me they're getting new space on Sand Hill Road, but I just assumed they were moving offices there," Tung said.

Helman said the plan was not to discuss the change until July, when Greylock holds its LP meeting. But apparently rumors were circulating around the grapevine that Greylock was closing its Waltham office and laying everyone off, so Helman needed to set the record straight. (The new space in Menlo Park will be big enough to add a few more partners -- and Greylock is unusual right now in that very few VC firms are growing.)

He said that Greylock raised its most recent fund in 2005 ($500 million), but hasn't been out trying to raise a new one -- though they're talking about when might be the right time.

Helman portrayed this geographical shift as something that has been taking place over the last eight or ten years for the firm, as the Greylock partnership and portfolio has expanded in the Bay Area. "Fifteen years ago, we were 75 percent Boston and 25 percent Silicon Valley," he said, "but more recently we've become much more focused on Silicon Valley." Portfolio companies out there include Facebook, LinkedIn, Cuil, and Revision3.

"Everybody has been asking me, do you think Boston is terrible and there's no opportunity here," Helman said. "That's not what we think. The issue is one of relativity. We get paid to deliver relative value add. For us, this is about the relative best geography."

My take: this is not such a big change for Greylock, where they've been focused predominantly on West Coast opportunities for a while... but the fact that the firm will be adding partners in the Valley and not in Massachusetts is a net negative for the entrepreneurial scene here.

Your thoughts?

(Update: Here's the official Greylock release on the move... and some data and reaction from Bijan Sabet at Spark Capital.)

Labels: , , , , , , , ,


Anonymous Matt said...

My first thought is that if I had to work in Waltham, I'd want to leave for California, too.

Can't imagine the tax climate out there is any better than Massachusetts, and they ding you six ways to Sunday for fees and higher cost of living generally, but I suppose most of the partners will be able to write most of that off anyway. As to the business case, of staying where your portfolio companies are-- that makes perfect sense to me.

May 19, 2009 11:59 AM  
Blogger Jamie Tedford said...

I'm less concerned about the "blow to the VC community" and more worried about what this says about the state of innovation and entrepreneurism in the Commonwealth. VC's will follow the money and go where the start ups are. Kind of ironic that they're following one of their investments, Facebook, to CA. Looking at the reasons why Facebook chose to uproot to the west coast is a more interesting exercise in my opinion. Disruptions in the food chain seem to be at the "algae" level. Diminishing shark population seems to be more cause and effect ;-)

May 19, 2009 12:47 PM  
Anonymous Jason Cianchette said...

I'm in the process of moving my company from Boston to Portland Maine. I asked a VC what he thought and his response was that there is Silicon Valley and everywhere else.

I've enjoyed living and working in Boston, but in hindsight I wish that I had moved out to the valley 10 years ago.

May 19, 2009 2:44 PM  
Anonymous Jeff Bussgang said...

This is not an indictment of Boston, it's simply the natural ebb and flow of firms. Greylock hasn't been active in the Boston market for many years. In the meantime, numerous new firms have emerged that didn't exist 10 years ago, including ourselves (Flybridge Capital Partners), General Catalyst, Spark and others. With $36 billion of capital under management (according to the National Venture Capital Association's 2008 Yearbook), Massachusetts is still a strong second market for VC and start-ups and will be for years to come, particularly in the emerging strong clusters of life sciences and energy technology, in addition to the more traditional software and Internet industries.

May 19, 2009 5:00 PM  
Anonymous Tom Summit said...

Seems to be an issue of the partners here vs. Silicon valley.
David Sze has been kicking butt making investments in Digg, Facebook and Linkedin, while the partners in the Boston office have recently invested in what...? The new partners haven't done any notable deals.
Since Chip and David left for Flybridge, they seem to have not adapted.

Too bad since they have a long history here in Boston.

May 21, 2009 12:54 AM  
Blogger Don said...

Greylock does not New England make! --- don mclagan

May 21, 2009 6:33 AM  
Blogger Jules said...

My point of view is--Boston can do all the b-to-b plays in the world, but creating meaningful mindspace as a center for innovation depends on building significantly important consumer-facing enterprises. At the end of the day, potential employees, investors, policy-makers, technologists, and students are all consumers. Their perceptions of Silicon Valley are formed by Facebook, Flickr, eBay, Twitter, Google, and smaller innovators like Mint.com and Kiva.org For recent consumer internet/tech innovation we have Zipcar, TripAdvisor and....some promising young businesses. Let''s make the list longer, together!

May 21, 2009 6:05 PM  

Post a Comment

Links to this post:

Create a Link

<< Home