Posts Tagged ‘Digital Equipment Corp’

New Memoir from Computer Visionary and DEC Cofounder Harlan Anderson

October 23, 2009

Digital Equipment Corp. cofounder Harlan Anderson, who just turned 80 this month, is publishing his memoirs next month, reports Scott Kirsner in this column.

The book is called Learn, Earn & Return: My Life as a Computer Pioneer, and is being published by Locust Press. And Anderson has also started blogging recently.

(The photo above is of Anderson’s “Employee #2” badge from DEC, which appears on the book’s cover.)

In the book, Anderson writes for the first time about his experiences at DEC during the company’s initial decade, and the events that led to his leaving in 1966 — the same year that DEC became one of the most profitable initial public offerings in Wall Street’s history. Anderson is candid about his relationship with DEC co-founder Ken Olsen: and later, how Olsen’s autocratic leadership style alienated some of the company’s most talented engineers, and ultimately contributed to Anderson’s departure.

He also discusses how American Research and Development, the venture capital firm run by Georges Doriot, financed this groundbreaking startup.

When Digital first took money from American Research & Development, Anderson writes that ARD invested $70,000 for seventy percent of the company. “This deal seems ridiculous and unfair by today’s standards; however, we never contacted an alternative source of capital,” Anderson writes. “We were very naïve and there was very little venture capital money available then. We accepted the offer without any negotiation.” (In the photo is Anderson, sitting in front of Digital’s PDP-6 computer, with Georges Doriot, the founder of ARD.)

Congrats Harlan!

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Why the Demise of Lehman Brothers (& Merrill Lynch) Is a Big Blow to the Tech Industry

September 15, 2008

This Friday, as I sat in my office on the 43rd floor of 1221 6th ave., just around the corner from the fancy new headquarters of Lehman Brothers, I was hit by a combination of shock and sadness.

I know some observers have been suggesting for several months that Lehman Brothers was in big trouble, and that CEO Richard Fuld has always been one step behind the curve of the unraveling credit crisis. But it’s just mind-blowing that the bank appears headed for oblivion.

And then, the unbelievable news came Sunday night that Bank of America reached a deal to buy Merrill Lynch for about $50 billion–about two-thirds of its value of one year ago, and half its all-time peak value of early 2007.

Lehman and Merrill survived the Great Depression and several world wars. But they could not survive the credit crunch of 2008. This is a historic, tragic and disturbing day, as former Deputy Treasury Sec. Roger Altman said on CNBC tonight.

The fall of Lehman and Merrill is horrible news for many reasons. First, losing two of the nation’s largest investment banks overnight is gigantic and historic blow to the U.S. financial industry that will undoubtedly reverberate for months if not years–even if bankers are already saying on CNBC that this is “good for the market.” Credit will tighten further.

If Lehman can fall, and Merrill can be bought for a song, who else could be next when fear and panic rule day? Insurance giant AIG looks like it could the next domino to fall. Where does this leave the two surviving banks–Goldman Sachs and Morgan Stanley?

Second, it’s awful news for the nearly 100,000 people who work for these two giants. It’s the worst-case scenario for Lehman’s 25,000 employees, many of whom had a lot of their net worth tied up in the company stock. Who knows how many of Merrill’s 60,000 employees will survive a merger with Bank of America. Third, the fall of these two American icons is an enormous loss for New York City, and the Big Apple’s reputation, wealth and tax base.

And finally, it’s a big blow to the U.S. technology industry, when you think about it. Besides being one of the oldest investment banks, Lehman was one of the most innovative banks of the last 150 years. Under chairman Robert Lehman in the 1950s and 1960s, it played a critical role in bankrolling many businesses in new industries, including high technology companies.

In 1960, Lehman underwrote a stock offering for American Research & Development, the first venture capital firm to sell stock on the public market (and the subject of my book Creative Capital).

Then, in perhaps the most important story I tell in my book, I show how Lehman Brothers had the courage and foresight in 1966 to take public a little technology company, Digital Equipment Corporation. That IPO, I argue, showed for the first time that people could make a lot of money by investing in and nurturing the growth of a tech startup. It was the first home run of the venture capital industry and the innovation-led economy of the U.S.

Since the 1960s, Lehman helped hundreds of other tech companies raise money. And its success has inspired other banks to follow suit.

Now, with three of Wall Street’s biggest banks either bankrupt or subsumed by a larger entity, that means there are three fewer outlets that can help tech companies raise capital. That means innovation and new business are going to take a hit.

The capital markets crisis in the U.S. tech industry just got a lot worse. And we probably haven’t seen the end of this horror show, based on the velocity of this weekend’s historic events. Fasten your seatbelts, people.

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

Newsflash: BusinessWeek To Excerpt Creative Capital

March 20, 2008

Some really good news to report. BusinessWeek has agreed to run a three-page feature excerpt of Creative Capital in either next week’s issue, or the issue after that. We have chosen to excerpt one of my favorite passages from the book: the story of the technology industry’s first blockbuster IPO–the 1966 offering of Digital Equipment Corp. Digital’s IPO forms the heart of Chapter 10 in the book, which is called “The First Home Run.” When Digital went public, American Research and Development’s $70,000 investment had skyrocketed in value to several hundred million dollars.

As I conclude in the book, the Digital IPO was the equivalent of a financial revolution, signaling the power of startups in the American economy. “Digital blew open the restrictions that anyone had ever applied to entrepreneurial ventures,” said James F. Morgan, a former ARD executive. “It was really mind-blowing that you could take such a small amount of seed capital and get ownership of a company that was worth more than IBM in a fairly short period of time.”