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5/27/2009
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Greylock Headquarters Moving To California

The company's decision to shift its venture capital headquarters from Boston to Silicon Valley is calling into question the Boston/Cambridge area's entrepreneurial spirit.

Greylock Partners' decision to shift its venture capital headquarters from Boston to Silicon Valley is being viewed by many as a mini-death knell for the Boston/Cambridge entrepreneurial spirit.

"Is the Boston region losing its entrepreneurial edge?" The New York Times asked rhetorically. The newspaper answered the question itself: "It may be." Many others have chimed in with similar verdicts.

However, one computer entrepreneur who thinks Boston retains its innovative spirit is John Cullinane. Greylock made its first software investment in his Cullinane Corp., which was acquired many years later by Computer Associates. Greylock made a small fortune on its investment.

In an e-mail Wednesday, Cullinane recalled visiting the Greylock offices in Boston last year "and was surprised to find its office half empty so the handwriting was on the wall. ... My guess is that the real story is that the baton shifted to the West Coast office as the old-guard leadership in Boston got older and less involved, and the West Coast office became the dominant office."

Moreover, Boston has watched for decades as an exodus of successful entrepreneurs has left the Bay State for the West Coast. Microsoft's Bill Gates and Paul Allen wrote their first Basic program in Cambridge on a Digital Equipment machine, Apollo developed the first workstation, MIT put a reluctant IBM into the computer business, and before Google, there was Digital Equipment's AltaVista search engine. More recently, Facebook had its origins in Cambridge in a Harvard dormitory.

More interesting, perhaps, is the reverse of the one-way flow of innovation from Boston to the West Coast: Google has established its Android operation in Cambridge and Microsoft has set up an important research center there. The flow of venture capitalists from east to west could reverse itself.

Even Cullinane, whose company was the first independent software firm to issue an initial public offering, felt the gravitational pull of the West Coast when San Francisco's Hambrecht & Quist took his company public. One interesting side note to that deal is that Greylock invested funds from IBM's Thomas J. Watson Jr. in Cullinane's firm. IBM was a competitor at the time.

Cullinane, who has made some venture capital investments of his own, points to new opportunities, including green tech, emerging at innovation incubators like MIT. "As far as Boston's forward momentum is concerned," said Cullinane, "we are moving into a green economy and Boston is well positioned for it. One reason is that the Waxman-Markey bill was co-authored by Ed Markey, a very astute and very knowledgeable politician, with Massachusetts in mind." U.S. Reps. Henry Waxman and Edward Markey's bill, the American Clean Energy and Security Act of 2009, is intended to promote a clean-energy economy. Cullinane also noted that Markey was a key player in a recent MIT program promoting advanced green technologies.

In announcing it would shift its headquarters from suburban Waltham to Menlo Park, Greylock said it has no plans to trim the number of its partners in the Boston area, where it currently has two. It plans to beef up its West Coast operation. Founded in 1965, Greylock has funded many successful high-tech startups on both coasts.


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