Posts Tagged ‘Georges Doriot’

New Review: Venture Capitalist Brad Feld Gives Creative Capital Five Stars

March 25, 2009

Check out this review that Brad Feld, co-founder of the Colorado venture capital firm Foundry Group, recently posted on my Amazon page.

5.0 out of 5 stars
Fantastic History of the Venture Capital Business
March 16, 2009
By Bradley Feld (Eldorado Springs, CO USA)

Most people that have been involved in a VC-based tech startup have heard the parable of General Georges Doriot and his famous $70,000 investment in Digital Equipment Corporation. However, few people actually know the full (and very extensive) story of Doriot and the creation of the Venture Capital business.

Spencer Ante does an awesome job of telling this incredible history. As a former entrepreneur and now VC, I’ve read many books that touch on parts of the history and have heard many anecdotes. Spencer brings them all together in one concise, well-written, fast paced book.

Every entrepreneur and VC should, along with anyone that is involved in creating companies, should read this book.

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In Entrepreneurs We Trust

February 11, 2009

Trust may be the most scarce commodity around right now.

Wall Street can’t be trusted much these days, thanks to the financial crisis and a guy named Madoff. A lot of corporate executives haven’t done much to inspire trust. People have never much trusted their politicians. And even seemingly harmless athletes are finding ways to lose the trust of the public.

So who can you trust these days? Friends and family, of course. But beyond that close circle I would say that in the public sphere entrepreneurs still deserve to be trusted. Entrepreneurs represent the very best of America: They work very hard, they often develop products and services that improve our lives, and they create jobs that help our communities and the nation at large.

So as we continue to try to dig ourselves out of this deep hole, let’s try to keep finding ways to help entrepreneurs and small businessmen and businesswomen. Entrepreneurship flourishes in a climate of economic freedom, with low taxes and little regulation. You don’t hear too much about entrepreneurs in the discussion about the stimulus package and in talk about the economy. Wall Street firms and banks and Detroit seem to hog most of the attention.

But it’s the entrepreneurs and small businesses that will likely play a key role in reviving our animal spirits and lifting us out of this recession. Thomas Friedman of the New York Times wrote a great and timely column today related to this issue when he slammed the Senate’s version of the stimulus, which banned banks and other financial institutions that receive taxpayer bailout money from hiring high-skilled immigrants on temporary work permits known as H1-B visas. More than half of Silicon Valley startups were founded by immigrants over the last decade. It is dumb and shortsighted to keep these industrious and smart folks out of our country–a subject I’ve written about before at BusinessWeek.

General Doriot, the focus of my book, was all about supporting entrepreneurs–from across the globe. The Doriot bucks above inspired me to write this post. Doriot used to give out this fake money at the annual meetings of his venture capital firm American Research & Development. last year, Scott Kirsner of the Boston Globe was kind enough to send me a few of them. And now I am happy to share them with you.

Part 8: Slouching Through the Great Depression

December 4, 2008



Chapter Five
“Slouching Through the Depression”
(1930—1940)

Read Part 1, Read Part 2, Read Part 3, Read Part 4, Read Part 5, Read Part 6, Read Part 7

Over the course of his long career, Doriot participated in many committees. And he usually despised them. “A committee is an invitation to do nothing,” was one of his famous maxims. But perhaps no committee was as important as the New Products Committee. It wasn’t so much the work of the Committee that mattered, though they did undertake a series of important studies. More so it was the fact that it assembled the brain trust of individuals who would eventually pioneer the venture capital industry.

On November 8, 1940, the New Products Committee convened its first annual meeting to discuss the results of its research. One subcommittee concluded that although capital existed for new ventures, there was a need for an “organization and technique to appraise opportunities for specific enterprises.” Doriot’s subcommittee concurred that “the great need is for qualified technical analysis of situations, in order that venture capital investors may proceed with a reasonable degree of assurance.”

The outcome of the Committee was the creation of the New England Industrial Foundation. The Foundation’s goal was not to invest in new enterprises but to create a sort of industrial research organization to “appraise opportunities for scientific enterprises in the New England area.” After spotting those opportunities, the Foundation hoped existing New England businesses would then invest in and nurture them.

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Around the same time, Doriot joined forces with another group of elite New Englanders working on the same problem: Enterprise Associates. Led by William Coolidge, an American physicist who in 1916 invented the prototype of modern X-ray technology, Enterprise Associates took a more direct approach than the Foundation, raising $300,000 from twenty stockholders to finance the final stages of promising research projects.

William D. Coolidge
[William D. Coolidge examining his hot cathode, high vacuum X-ray tube, 1913.]

Doriot joined the board of Enterprise, along with his Business School assistant William H. McLean, and a few others. Throughout 1938 and early 1939, the stockholders and officers of Enterprise met with various entrepreneurs, looking for ideas to finance. On May 7, 1940, they held a dinner where they learned about a young chemical company called National Research. They liked the idea and backed the firm.

Then history threw a wrench in their plans. On May 10, Germany invaded Luxembourg, Belgium, the Netherlands, and France, ending the so-called Phony War. Right after Germany unleashed its blitzkrieg on the rest of Europe, most of the people who attended the Enterprise dinner called up William Coolidge and told him they wished to withdraw from their participation in the financing of National Research. Coolidge refused to withdraw. Since he had made a commitment, he would follow through with it. Doriot, feeling bad, loaned them an assistant to help, and later joined National Research’s board.

But it made little difference. The United States was facing a far graver risk—global fascism—and she needed to devote all of her energies and resources to fighting this dangerous and growing scourge. Enterprise Associates and pretty much everything else unrelated to the war were put on the back burner.

Still, the experience of Enterprise Associates taught the venture industry’s pioneers an important lesson. “[The Enterprise] experience made Merrill Griswold and Karl Compton realize that it might not be a good idea to have a company with only enough money to find and study projects, then ‘to pass the hat’ for capital to start the new company,” explained Doriot. A company should have its own capital, they concluded. That way, it would be insulated from events outside of its control.

For the time being, though, the war had snuffed out the formation of the nation’s venture capital industry just as it was getting off the ground. Six years later, Compton, Doriot, and other members of the New England brain trust would revive their plans to create a regional venture movement. But first, they all had a war to fight.

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Part 7: Slouching Through the Great Depression

December 2, 2008



Chapter Five
“Slouching Through the Depression”
(1930—1940)

Read Part 1, Read Part 2, Read Part 3, Read Part 4, Read Part 5, Read Part 6

In 1938 and 1939, various groups of New England industrialists and financiers became obsessed with fixing the nation’s risk-less economy. One of the most prominent organizations was the New England Council, a group of politicians, businessmen, and educators, which formed in 1925 to “improve economic conditions for New England.”

Within this group, there was a growing awareness that New England’s universities and industrial research labs were a valuable asset distinguishing the region from the rest of the nation. The most impressive asset in the region was MIT.

Karl Compton
[MIT President Karl Compton]

In 1930, Karl Compton, then the head of the physics department of Princeton University, accepted an invitation to become the president of MIT. Under Compton, MIT redefined the relationship between science and society. When Compton took office during the Great Depression, science was attacked as a source of social ills.

Over the next twenty-four years, Compton worked tirelessly to strengthen basic scientific research at MIT and to promote the importance of science to a skeptical and hostile public. Compton advocated a broad education for scientists, one that responded to the needs of the time.

In 1934, Compton proposed an ambitious program he called “Put Science to Work.” The campaign called for the public financing of “scientific and engineering research looking toward better public works for the future.” Instead of blaming labor-saving technology for society’s ills, Compton proposed the bold idea that science gave birth to great new industries.

“New industries are like babies: they need shelter and nourishment, which they take in the form of patent protection, financing, and the chance of reasonable profits,” wrote Comptom in a long essay promoting his campaign. “But, before all, they need need to be born, and their parents are science and invention.”

The egalitarian ethos of the New Deal stymied Compton’s campaign to finance research at elite universities like MIT. So Compton turned his attention to the regional level. In 1939, responding to a suggestion by Compton, the New England Council formed a committee to examine how new products might help reverse the terminal decline of the region’s textile and garment industries.

The New Products Committee brought together eight of the most progressive minds in America, including Compton, Doriot, Ralph Flanders, a mechanical engineer who rose to become head of Vermont’s Jones & Lamson Machine Company, and Merrill Griswold, president of Massachusetts Investors Trust. Doriot was charged with heading up one of several subcommittees; his was called “Development Procedures and Venture Capital.”

Was this his new impossible mission?

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Part 1: Slouching Through the Great Depression

November 21, 2008

It’s experimentation time at the Creative Capital blog! With the U.S. economy facing its worst economic crisis since the Great Depression, my thoughts have returned to the chapter I wrote on my book about that dark period in our nation’s history, “Slouching Through the Depression.”

There are many lessons to be learned from this time. And now that we’ve all suddenly become students of history, I want to share some of the ones I’ve learned. So, with the blessing of my publisher Harvard Business Press, over the next week or so I am going to serialize Chapter 5 and publish it on this blog.

My hope is that the experiment sparks a conversation about that period and gets us thinking about how we can avoid slipping into a deeper economic funk and lead the country back onto a path of prosperity.

As we pick up the story, Georges Doriot, is a 30-year-old native of France who transformed himself over the course of the last 10 years in America from a young immigrant into a distinguished professor at Harvard Business School.

Chapter Five
“Slouching Through the Depression”
(1930—1940)

When Doriot returned to Harvard in the fall of 1931, he could look back on the past decade and smile with pride. In the relatively brief span of ten years, the young immigrant had conquered a new country.

Not only had he found a profession that brought him satisfaction and security, he had earned a reputation as one of the leading lights of the most important business school in the country; he had spearheaded the creation of a successful new business school in Paris; and he had found the love of his life and convinced her to marry him. And yet there was still a fire that burned in Doriot, a passion that kept him searching for his next mission impossible.

Doriot aboard the Ile de France, 1931
[Above: Doriot, the doctor of “sick businesses,” aboard the Ile de France in 1931.]

Perhaps that is why the 1930s—a time of diminished expectations for the entire nation—were probably the most frustrating period of Doriot’s life. He was always at his best when tackling an impossible job, but during the Great Depression, despite several attempts, Doriot never found a grandiose task to throw himself into as he had done so many times during the previous decade.

At times, a similar mood of discontent permeated the home of the Doriots. The 1930s would have been the ideal time for Georges and Edna to start their own family. But the Doriots never did have a child.

No doubt, Doriot’s lack of children profoundly shaped his character. Over the next forty years, he compensated for this absence by nurturing countless students and younger colleagues as if they were his own offspring. “He often said the only advantage of not having children is you choose them,” says Claude Janssen, who studied under Doriot in the 1950s. “He chose three: Arnaud de Vitry, Robert McCabe and myself. We were really his three sons.”

Nevertheless, the 1930s were hardly a lost decade. In retrospect, for the Doriots and the rest of the nation, it was a time for hunkering down, for planting seeds that could be harvested in the future. Indeed, the years of the Great Depression hold the answer to another great mystery of Doriot’s life: How did a man with hardly any experience running a business come to be such a world-class businessman?

The answer is that during those years, dozens of companies hired the professor to help guide them through the worst disaster that had ever hit the American economy. In that dark decade, Doriot gained a lifetime of experience as an officer, director, and consultant.

Between 1932 and 1941, when he was called up to join the military, Doriot served on the boards of twenty companies, while taking on executive-level positions in ten other firms. It was an astonishing volume of outside work that would never be allowed in today’s age of vigilant corporate governance.

In addition, in 1940 Doriot was elected to take over the presidency of the struggling McKeesport Tin Plate Corporation, where he promptly put the company on firmer footing by negotiating the sale of its tin plate division to steelmaker Jones & Laughlin. Tending to all these companies, Doriot was like a circus artist juggling a dozen balls while walking a tightrope. Would he pull off the balancing act or would he lose his balance and come crashing back to earth? (more…)

Fostering Creative Workplaces: Lessons from Georges Doriot

October 14, 2008

Today, The Creative Group, a professional staffing company that specializes in placing skilled folks in advertising, marketing, web and public relations industries, ran an interview with me about Creative Capital in their online pub eZine.

In the Q&A, we talked about a number of relevant issues for today’s creative class, such as what traits make a person successful, and how organizations can promote creativity and risk-taking.

Here’s the intro and first question and answer. Check out the rest of the interview here.

In Creative Capital: Georges Doriot and the Birth of Venture Capital, Spencer E. Ante tells the compelling story of the quirky and charismatic man – Georges Doriot – who created the venture capital industry. Through tracing the pivotal events in Doriot’s life, Ante paints the picture of a man who overturned conventional wisdom and achieved extraordinary success by relentlessly pursing what-if possibilities. The book has received positive reviews in the Financial Times, The Wall Street Journal, The New York Times and other places.

We sat down with Ante to talk about his book and what today’s entrepreneurs, managers and creative professionals can learn from Doriot:

The Creative Group: “In the introduction to Creative Capital, you say Georges Doriot ‘exuded a magnetic aura’ and was ‘one of the most charismatic characters I had ever come across.’ Do you believe it takes a certain kind of person to successfully dream up and execute good ideas? In other words, what defining traits or skills did Doriot possess that helped him to achieve such great success?”

Spencer Ante: “For one, Doriot was incredibly ambitious from a very young age. He was inspired by his family and friends to achieve the best. My book opens with a story where Doriot runs home to show his parents a certificate he got for placing second in his class. While his mother congratulates him, his dad asks, ‘Why not first?’ – the moral being that it wasn’t important that his son come in first, but that he shouldn’t settle for less than the best. Doriot was influenced by this event for the rest of his life.

“Doriot was also an incredibly hard worker. He grew up during World War I and his family was quite devastated. This gave him a sense of hard work and the understanding that you don’t get something for nothing.

“Finally, he had a sense of creativity and was one of the first people in the industry to recognize the value of creativity – trying to do something different. He was a big believer in the power of design in life and business, and recognized, well ahead of his time, the role design plays in how people interpret and value the world.

“In fact, early in his career, he became friends with Henry Dreyfuss, a famous industrial designer. When Doriot was a professor at Harvard Business School, he invited Dreyfuss to talk to his class about the value of design. Later, he even asked Dreyfuss to create the annual reports for his venture capital company.”

Creative Capital Book Party Pics

October 6, 2008

As promised, here are a few pics from the party. I will probably throw up a few more when they come in over the transom.

Book



Guests







A Reader Has Spoken: Four Stars, Says Serge J. Van Steenkiste

August 5, 2008

Just got a nice and new review today on Amazon.com from a prolific reviewer named Serge J. Van Steenkiste.

The Unexpected Father of Venture Capitalism , August 4, 2008
By Serge J. Van Steenkiste (Atlanta, GA) – See all my reviews

Spencer Ante sheds a powerful light on the life and accomplishments of a foreigner who came alone to the U.S. in 1921 C.E. That man had neither family nor friends at his arrival. Furthermore, he never graduated from college in his native country. On top of that, that man was not rolling in money. The WWI had wiped out his father financially.

However, that foreigner had some assets: a strong Protestant work ethic, a passion for technology and the future, a confident yet humble personality that was at ease with people of all stations in life, a strong volubility, a sense of compassion, and a deep understanding of the importance of education. Furthermore, that same foreigner wanted to run one day his own company after the example of his father.

Who would have bet in 1921 that such a foreigner would one day become:

1) Arguably the most influential and popular professor at Harvard University’s Graduate School of Business;
2) The driver behind the foundation of INSEAD, one of the leading business schools in the world;
3) The man who played a key role in the well-being of the American soldiers during WWII by spearheading to their benefit a quite revolution in engineering;
4) And last but not least, the father of the venture financing industry as we know it today around the world.

That foreigner was a Frenchman and his name was Georges Doriot. As it is often the case, an extraordinary woman, who remained mostly in the background, was part of that story. Her name was Edna Allen and she was American.

To summarize, Ante succeeds in bringing back to light a man whose contributions deserve to be better known, especially, in business circles.

THANKS SERGE!!!!

Caveat Author: Two Readers Have Spoken

July 10, 2008

One of the great (and potentially humiliating) things about Amazon.com is that its Web site enables absolute strangers to publish reviews of your book. Caveat author.

In April, one of my friends wrote the first review of my book on Amazon. I was thrilled–especially because she liked it and made me see the book in a new light. The funny thing is I didn’t ask her too. She did it completely on her own volition, without any bidding from me.

Well, after reading her post, I started to get ancy about those darn reviews. I wanted more of them. I began to compare the number of reviews my book had generated with other books I’d been following. Amazon has a knack for exposing your insecurities as an author–writers’ obsession with the Amazon’s sales rankings is only the most obvious illustration of the site’s quasi-evil ability to inspire high anxiety.

So I began asking a few other family members to pen an Amazon customer review. I pitched the task as a sort of family obligation. The result: deafening silence and inaction. As I checked my sales ranking in April and May, that lonely review became a thorn in my side. In June, though, I started to kick my daily addiction to the Amazon author page. Now, I only check my site once or twice a week.

Here’s the happy ending: While I regained some balance in my life, two people published reviews of my book on Amazon like little elves in the night spreading happiness and joy. The first review from Harvard Business School student Franklin J. Seker came on July 7; and the second, from HBS student B. Beatty, popped up July 9. Thankfully, my patience was rewarded: both gave Creative Capital five stars. See the two reviews below:

An inspirational mentor — General Doriot, July 9, 2008
By B. Beatty “cirencester” (Winston-Salem, NC United States) – See all my reviews

I was in the General’s class at HBS in 1961. When he discovered that I was an active duty military officer, he took an obvious personal interest in me (although he did not call me “Bernie”, as he called Samuel Bodman “Sammy”). Nevertheless, I will never forget the inspiring interactions with him and his varied guests from many walks in life, including Jackie Cochran, pioneer aviator. The author has done a first-rate job of pulling together details that shed light on a great man, as well as his wife. I finished the book in record time.

HARVARD BUSINESS SCHOOL’S BEST, July 7, 2008
By Franklin J. Sekera – See all my reviews

I was General Doriot’s student at Harvard in 1960. He and his views had a profound impact on my life, both in business and personally. His emphasis on ethics, patience, creativity and freedom led me, in my various roles in life, to pass on these same qualities to all my associates.
The book is well written and provides a useful insight on the private man. It’s too bad that this information was not available in 1960.

Hallelujah: Boston NPR Affiliate WBUR Broadcasts Interview

June 6, 2008

At long last, WBUR broadcast the interview I did with Bob Oakes. It’s about five minutes long. Here’s the Web version of the segment. The great thing about NPR is that they allow people tell stories, not soundbites. So my whole approach to the interview was to treat it more like a conversation than a traditional interview.

Lookee here: WBUR blogger Ken George, who mans the ConverStation, even makes fun of me!