I used to work at a company like this. Only hired new grads, and promoted mostly from within. It was great in some ways but you would definitely have "blind leading the blind" moments and it was very frustrating. I came to see the value in hiring externally for some roles. If you're in a startup or even a small business, really great to have at least a few people around with deep, external experience in the industry to help build context and point out solved problems.
We had the same experience when starting to use AWS/Azure. Our in-house team was all experienced with using VMware on-prem, with some mainframe and a few legacy physical servers. So we had a broad depth of knowledge for running our own datacenter.
So when we started using AWS, we really made a lot of mistakes by trying to replicate how we did things on-prem. And there was a lot of resistance to using cloud services; some people viewed it as a threat to job security. Others simply had a difficult time adjusting to the change in operations/procedures and philosophy.
This held us back quite a bit until we hired a few contractors who helped us better understand where we needed to change, which features worked well in the cloud (and which sucked). We brought the best contractors onboard as FTEs, and it's been a much better experience.
The "we've never seen it done any other way" problem is 100% a real thing.
One of my employers 60% of the company had spent all or most of their professional career there - and things were scrolerotic at times - because there was a huge amount of group think, and a strong NIH/"the way we do it is fine" problem - simply because of a lack of indexing to how other players did it.
You ideally want around 50/50, 50% lifers, and 50% new blood, its even helpful to encourage employees to leave go get knowledge elsewhere and then come back later if they desire.
I think one would want a mix of both. You want to promote internally so you have some people higher up who understand the business deeply in ways that an external hire would not as well as promote retention and reward going above and beyond by having career growth opportunities available, but you also want to hire externally to ensure you are getting an influx of new ideas that have been working at other companies.
