Posts Tagged ‘Boston Globe’

Boston Globe Covers Creative Capital and Doriot

April 6, 2008

Scott Kirsner wrote a great story about Doriot and my book Creative Capital in today’s Boston Globe. He covers the launch of the book and the key arguments I make in it; he chronicles Doriot’s influence; and he even mentions that American Research and Development still exists! Click here to read the whole 1162-word piece in his Innovation Economy column.

I’m totally pumped since this is the first major newspaper to write about the book–and because the Boston Globe is the perfect paper to break the story. When Doriot was in his heyday during the 40s/50s/60s operating out of the John Hancock Building, the Globe wrote about him quite often.

Kirsner’s piece is called “Venture capital’s grandfather: Georges Doriot helped lay groundwork for 128 tech cluster.”

Here’s the beginning of the story:

“Without him, Digital Equipment Corp. might never have gotten started, and the electronics-testing company Teradyne Inc. might not have survived beyond infancy.

He backed an oil rig-manufacturing company run by George H.W. Bush. The current Secretary of Energy, Samuel Bodman, once worked for his Boston firm. And a half-century ago, he put $50,000 into a company called Ionics Inc. that was trying to find new ways to desalinate seawater; GE bought the company in 2004 for $1.1 billion.

Georges Doriot is the forgotten grandfather of the modern venture capital industry. His Boston firm, American Research and Development, or ARD, helped lay the foundation for the Route 128 technology cluster.

“After World War II, all the textile mills had gone away, and war time production was going away,” says Spencer Ante, a Business Week editor who has written a new book on Doriot, “Creative Capital,” that is hitting stores this week. “Doriot and ARD were really trying to revive the New England economy after the war.”

HOW TO BUY CREATIVE CAPITAL: To pre-order Creative Capital and get a 34% discount, click here and go to Amazon

Boston Globe Video on Doriot and ARD

April 5, 2008

In connection with his forthcoming story on Creative Capital in The Boston Globe’s Sunday’s Business section, Globe columnist Scott Kirsner produced a video about American Research and Development and one of the entrepreneurs ARD backed: Adage’s Tom Hagan. Adage was a Cambridge electronics company. Check out the video here.

It’s a pretty interesting interview in which Hagan praises Doriot and ARD for inventing modern venture capital. “His whole approach was finding people who wanted to build a business, rather than finding a quick road to riches,” said Hagan. “What ARD did was create a channnel for old line New England money into these new ventures, which were started in many cases by young technologists who otherwise had no entree to that money. It was a very signficant thing they did. A lot of people don’t realize how staid and stodgy Boston was at the time.”

But on the other hand, Hagan argues that ARD retarded the growth of the New England venture communtity. His thesis is that by only investing $70,000 into Digital Equipment Corp., ARD created the impression that startups did not need a lot of money to build a business.

“The venture capital community in Boston has acquired a reputation, which I attribute to ARD, for being less adventurous, less ready to put a pile of money on the table, than is true in Silicon Valley,” said Hagan. “They acquired the notion, and it spread in Boston, that was ‘how you did it.’ You started with a relatively modest amount of money and turn profitble very quickly. The notion of needing a reasonably substantial startup nut was just plain foreign to ARD and the companies they spawned.”

While it is true that Doriot was criticized by some people for not investing large amounts of money in a few companies, I have to respectfully disagree with Hagan’s main point that ARD helped to retard the growth of New England venture capital. It is just not true. Without ARD, venture capital in Boston might not have ever taken off. ARD pioneered the model, which inspired many, many people in New England to enter the venture capital business and invest in startups. And one of ARD’s spin-offs, Greylock Capital, is one of of the best VC firms operating in New England, if not the best.

Second, it is NOT TRUE that ARD only invested $70,000 in Digital. In 1958, ARD invested another $30,000 in Digital to provide working capital for Digital’s expanding operations. And in 1962 ARD invested another $300,000 in Digital. That comes to a total of $400,000–a pretty significant sum even for the early 1960s. ARD was not just an early stage VC–they often invested multiple times in the companies they backed.

Third, it’s absurd to say that ARD had anything to do with Boston’s rep for being less adventurous. ARD always thought in big and bold terms and took enormous risks. I say blame the generation of Boston-area VCs after Doriot for not being more adventurous–and for not focusing more of their energy and time in Northern California where the microprocessor and biotechnology revolutions exploded.

What do you think? I am really curious to hear from other New England folks on this topic.