Why Do Venture Firms Decay?

Matt Murphy says venture firms decay through poor handling of generational transition. In the bad version, people hang around too long and younger talented partners leave. The partner who would have brought in the new founder starts his own firm or goes somewhere else, and the old firm does not even see him. The firm loses its younger generation, or the partners simply do not share as much alignment.

Some of the best decisions at his firm came from incredibly high alignment to do something that felt a little off-spec at the time, the sort of move that made people ask why they were doing it. A high-trust organization is what makes that alignment possible. When people are fractured, they do their own thing.