Greylock closes $1.5B Fund XVIII, backs ex-Palo Alto Networks founder's new cybersecurity startup SciLake with $36M opening check

one from the Mars base.

Fantastic. We'll talk to you soon. Have a good one.

See you.

Let me tell you about CrowdStrike. Your business is AI. Their business is securing it. Crowdstrike secures AI and stops breaches. Our next guest is returning to the show. We have S from Greylock Partners. He is a partner there. S, welcome back to the show. How you doing?

I'm doing great. Great to see you guys. Thanks for having me back.

Thanks for hopping on. Uh, let's kick it off with another gong hit since it's warmed up. Tell us what happened. Give us the news. What's new in Greylock World?

We've uh we've got some big news today. We're announcing Greylock 18, our 18th venture fund. It's a billion and a half billion.

Go for stage founders.

Early stage founders specifically. Uh I want to know uh uh opportunities created in AI. I'm interested in the next generation of AI companies. Obviously there's so many huge private now SpaceX is public. So like there's a number deep mind. There's a number of like firstgen AI companies that are huge. Uh but there still is a lot of opportunity. Where are you seeing the opportunity? There's there's early stage companies that are going deeper in the stack selling to the the the big labs. There's also uh niche players. Like how are you viewing the market? How are you mapping things out?

Yeah, I I'd say overall is we're very early in this wave and we think there's going to be winners up and down the stack and I think the only mistake you can make in AI is underestimate the size of the wave and think it's binary and outcome. So, you know, we've invested up and down the stack at the foundation model layer. You know, we're investors in anthropic and open AI in infrastructure. You know, we invested in base 10 back in 2019 before generative AI was a thing. Today, they're the leaders in influence, right?

Brain trust. I remember in 2023, no one was using the word evals, right? Notion was using their product and today fast forward evals are the core IP of AI and most of the valley is using brain trust for it. Right? So, we've done a lot in infra and then of course a lot in applications. Um, I we're going to see new opportunities up and down the stack. So on the infra side, I think you know you guys are talking about agents every single day. There's going to be a new set of abstractions around infrastructure to actually power agents. Of course, inference and observability is going to play a big part of that, but there's more to do there. There's new things in data structures, databases, runtimes, etc. On the application side, I think we're just getting started. It wasn't until um you know the model set of model releases in December of 25 that you actually had robust agents. And now like and I seen our portfolio like we led the initial round in resolve which is an agentic software reliability engineering. Today at companies like Coinbase it completely automates on call. So engineers are no longer getting woken up because there's an incident because the resolve agent fully handles it autonomously or you know we're in 7AI which does the same thing for security teams. Those products are like coming to life because the underlying models are finally there to really support these long running agent workflows. And so you're going to go into different application categories and be able to build new agent offerings. So I think that that's going to be really big. And then of course things outside of software like we you know we were some of the early investors in autonomy like Aurora which is I think the largest standalone public company in self-driving. You know we've led the initial round in neuro others. We're now going to see a whole new wave of things happening in robotics and I think the underlying model capabilities and the data sets that we're building are finally going to get us there where we're going to see a like proliferation in the real world economy as well. And we've made some new investments are still in stealth we're excited to talk about soon. Yeah, we talked about Aurora yesterday because they bought ATG from Uber, the advanced the autonomy group. I'm I'm interested in hearing. Are you noticing any categories of company that have shifted from venturebackable to more likely to be successful as a lifestyle business because they are so capital light in the AI era that you if you have a friend that comes to you and says like I want to start a video game company or I want to start a a niche SAS company you're like yeah 20 years ago you'd need to raise $10 million to rack a bunch of servers a couple years ago you'd have to go through YC or raise a million bucks to hire some software engineers, but this you can just build it this weekend and go get customers and be profitable tomorrow. Uh, and so are you noticing that trend? Uh, how is that how is that changing your investing philosophy or is that just a ruse?

I think the lens on whether or not something should raise venture capital is more about the ceiling, not the floor. So, I think it's absolutely correct that you can get a lot more done with less capital. But what's also correct is that the size of the prizes that are available, our whole brand around the new found is the map is blank again because we think AI just resets the entire map.

The size of what's possible now, the size of these categories is so enormous. Yeah.

That venture capital dramatic even if you can be capitalally efficient and get a lot done on a given dollar, if you can uh uh increase the size of your capital base, the aggression and speed with which you can move is just much faster. And I think like I I think it's an interesting kind of observation. You take the last 3 years, there's a lot of discussion around what you can get done with AI, etc. At the same time, the capital velocity in companies is faster and at a larger order of magnitude than it's ever been. Like we look at this in our portfolio, you know, we're primarily doing the first rounds and the speed at which companies we raise their series A, series B, series C, and you know, the size of these rounds, which often are in the hundreds of millions, you know, very, very quickly. Uh, like that's an interesting observation. You ask why is that? And I think it's because we're operating in such big like in such big new categories and opportunities that the prize to be the number one player is so significant that you need to do everything you can as a company. And so if you can be more efficient, the real lens is like what else can you go do and how quickly? And that's why we're seeing companies have much faster product velocity, have much faster revenue growth. They're spending, they're getting more out of that spend, but they're spending. And in fact, I would say they're spending more in this last three years than in the prior decade.

The map is blank. I love that as a rallying cry. At the same time, I see a new market map in every category and it's stuffed full with AI startups and it feels like it's more competitive than ever. I'm interested to know uh are there categories that are now more oligopolistic, more like like less monopolistic? It feels like the software 2.0 no era was very much, oh, there's a runaway leader in this particular niche and it's winner take all and they're just compounding. But now I've been so surprised when I check in with the the third biggest or third most well-funded company in a particular area and they're accelerating revenue and they like tripled revenue last year and it's a great company by historical standards even though it's like a lagard in the modern era.

Yeah, it's a great question. Um, and yeah, it's interesting by the way like we there's all these market maps. People crown these companies as winners and I think we forget that like the game's just beginning. I mean, you rewind the clock just 18 months and you look at what the foundation model landscape looked at at that time and then you fast forward to today and you know, we fast forward another 18 months and there's going to be more evolution. So, I think we we all live in on Twitter where we're trying to clear everything over like every single minute like we we should zoom out and remember these things are very nebulous. Yeah.

Yeah. I think you know the difference with AI is the size of the prize especially when you're automating labor and you're shifting these labor dollars to software and technology dollars is so dwarfed like rel or so dwarfs relative uh prior software categories that I think you can have more winners that can get larger much faster. And I'll give you just two examples in the customer support category. We you know led the initial round in Cresta. Cresta is north of 100 million in AR. you know growing very quickly doing customer support AI there are likely there's at least two other significant companies in that category maybe more you know at similar revenue scale and I think multiple companies in that category will get to a billion of a in the coming years and the reason for that is just AT&T alone spends a billion dollars a year in contact center spend and you extrapolate that across all enterprises you think about what's addressable

yeah it's way different than IT spend right uh like because there was a war for Zenesk and and and Salesforce had a solution and there's a number of previous era, you know, software products, but it's a very different pool of pool of spending to pull from.

That's right. That's right.

What are what are your first checks? What have your first checks been looking like? It's a $1.5 billion fund. You're investing. You You want to be uh doing the first

two early stage deals.

Yeah. Just 750. Um No, but uh Yeah. So, so how are you thinking about it? What what percentage of the new fund is going to be reserves follow on capital versus like you know net new investments?

So you know for us the the northstars we want to back the most important companies of this era and we think some of those companies require much more significant checks when they get started because of the people who are starting them the ambitions the opportunity. So, as one example, you know, we uh uh 21 years ago, we backed Palto Networks when it got started. It got started in our offices. Uh I think that company today is almost a 300 billion in market cap.

When we wrote the initial check, uh uh I think it was a $250,000 initial check. Fast forward, the founder of that company near Zuk left Palo Alto last year.

He started a new company with Greylock. Yep.

Right. That company is called Silake, right? It's building a really new important cyber security platform. Our initial check there is $36 million.

That's what I think. That's

we want to back the largest company in cyber security in history, a $300 million company. We want to back him to go build something, you know, of of consequence and that has a different capital requirement. And so we we have a larger firm, not because we just got a goal. Sorry. World comes on.

Who scored? Who scored?

Spain.

Spain just scored.

There we go. There we go. Here you go.

Sorry, we had to cut to the fan cam.

I I I I respect it.

Anyway,

uh who you got? Who you got in the game?

Who's playing?

So, Spain's up one zero. I thought France was going to win this easily.

Oh, well, Spain's on here, I guess. Uh but you are too. And thank you so much for coming on the show, breaking it down for us, and congratulations on the new fund.

Stoked for you guys.

Stoked for you.

And uh looking forward to talking to all the new founders out of the new fund. Yeah, we'll talk to you soon. Have a good one. Goodbye.

Let me tell you about Cisco.

Critical infrastructure for the AI era. Unlock seamless realtime experiences and new value with Cisco. So, yeah. Uh what what actually happened there? I have not been watching the game, but

yeah, there was a Spain goal. 22 minutes left. Oel

10 Spain.

Was uh you thought the PK was fair.

Yeah. Yeah.

Very nice shot.

I don't know. He like kicked Lamin on the on his like side. It's kind of like