VC’s First Home Run: Digital Equipment Corp.

Before the blockbuster success of Google, Netscape and Apple, there was the first high-tech home run of Digital Equipment Corporation–a story that forms the heart of my book. Below I’ve posted two photos from the archives of Ken Olsen at Gordon College. I am the first person to gain access to these archives.

In 1957, ARD gave $70,000 to the two, young MIT engineers who co-founded Digital—Kenneth P. Olsen and Harlan Anderson—in exchange for 70% of the start-up’s equity. Olsen, who was Digital’s president and undisputed leader, wanted to build smaller, cheaper, and easier-to-use computers that would challenge the glass-encased mainframes of IBM, the dominant computer manufacturer and only one making money. In this sense, DEC was a pre-cursor to the user-friendly machines later pioneered by Apple.

Olsen at ARD
[Ken Olsen at the annual meeting of ARD, surrounded by promotional booths of the other ARD portfolio companies.]

It was a perfect match. In Olsen, Doriot found the archetypal engineer-cum-entrepreneur who was dedicated to making his company a success. “A creative man merely has ideas; a resourceful man makes them practical,” said Doriot. “I look for the resourceful man.” Olsen embodied that ideal. In Doriot, Olsen found a comforting father figure always ready to offer words of encouragement or some bit of wisdom. The fates of these two men would be forever intertwined.

When ARD liquidated its stake in Digital in 1972, the company was worth more than $400 million—yielding a return on their original investment of more than 70,000%! It was the young venture capital industry’s first home run, and it helped make the Route 128 area outside Boston a technological mecca

DEC Board
[The DEC board was stocked with ARD staffers: (left to right) Henry W. Hoagland VP, ARD; John Barnard Jr. general counsel, Massachusetts Investors Trust; Jay W. Forrester, professor, MIT and ARD advisor; William H. Congleton, VP, ARD; Harlan E. Anderson, VP, Co-founder DEC; Kenneth H. Olsen, President, Co-founder DEC; Ms. Dorothy E. Rowe treasurer, ARD; Vernon R. Alden president Ohio University; Arnaud de Vitry, European Enterprise Development; Wayne P. Brobeck, former ARD staffer who became director of consumer relations, Vitro Corp. of America]

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8 Responses to “VC’s First Home Run: Digital Equipment Corp.”

  1. Steve Resende Says:

    DEC was a once in a lifetime experience. KO was truly “The Ultimate Entrepreneur” as he was called late in the history of DEC. I think there are a lot of former DECcies still around that recall fondly the time spent there, working and learning the lessons we’ve carried to the companies that followed.

  2. spencerante Says:

    Thanks Steve. You are officially the first person to post a comment on my blog!!! Thanks for your thoughts.

    What did you do at DEC and when did you leave?

    I’m amazed at the continuing strength of the DEC alumni network and culture. If you can please, pass along the URL to my blog. I am hoping other DEC alums check it out as well.

  3. Steve Resende Says: is home for some of the DEC alumni.

    I was mostly in the field in the South (Alabama, Tennessee, Texas) in professional software services and software marketing, from 1980 to 1995.

  4. Robert Dowling Says:

    Hi Spencer:
    Congrats on the book and bog. That’s an interesting and unexpected angle on DEC, and the VC community. I wonder what behaviors, typical of VC-backed start-ups, did DEC exhibit in those early days? For example, did they hire a PR firm and run a competitive campaign for share of voice against IBM?

  5. spencerante Says:

    As far as I know, DEC was not a big user of PR firms. But the company was very savvy in its use of public relations–a lot of which came from General Doriot.

    Every spring, Doriot held an annual meeting for American Research & Development. At the meeting, Doriot always organized an exhibit of ARD’s portofolio companies, where they could show off their products to the public and the press. Doriot also encouraged entrepreneurs to use the annual meeting as an opportunity to make important announcements.

    The events were always well attended and often generated lots of ink and coverage. BusinessWeek, in fact, ran many stories that came out the event. It was sort of the first high-tech trade show in a sense. Very innovative for its time.

  6. Puttin’ on the Hits (Part 1): Has Venture Capital Become a Hit Factory? « Riptides: An ABS Ventures Blog Says:

    […] investment in Digital Equipment Corporation, a deal that at least one author has called “the first homerun in venture capital” – VC pioneers like Doriot believed they should be looked upon as happy events rather than the […]

  7. Anthony Pell Says:

    Trying to reconnect with A de Vitry and J Gueroult (P de Vendoeuvre?) if they are available…Knew them back in Doriot Days: EED ++.

    Much appreciate any current information.

    Tony Pell

    • Dave Goodwin Says:

      I too am trying to connect with Arnaud de Vitry. I am doing research for a PhD on DEC and would like to talk to him.

      Thanks in advance


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