Posts Tagged ‘Lehman Brothers’

How Today’s Crisis Changes Our View of the Past: Plus Two New 5-Star Amazon Reviews

May 1, 2009

One of the things that I did not anticipate about the response to Creative Capital is the degree to which it has been resonating in a downturn. Timing, like in most endeavors, is a pretty crucial factor in book publishing. And I remember thinking before Creative Capital came out in the spring of 2008 that I was glad the U.S. economy still seemed to be doing well.

But then the economy began to lose steam over the summer. The housing market continued to deteriorate. And before you know it, it was September and Lehman Brothers had gone bankrupt and Merrill Lynch sold itself in a fire sale. The U.S. had plunged into a deep and scary recession.

Suddenly, America, a nation of future-oriented amnesiacs, became obsessed with history, and, in particular, with the history of economic crisis. The surprising thing, for me, was that the financial panic changed the way I thought and talked about the book, and the way people viewed it as well.

Virtually overnight, my chapters on the Great Depression, and World War II, and my chronicling of multiple recessions and their inter-relationship with the nation’s entrepreneurial economy in the post-war period took on a new significance. True, one of the key arguments I make in the book was that the venture capital industry itself was born in response to the Great Depression. And that Silicon Valley was created in the midst of the nasty recession of the mid-1970s.

But the more I thought about today’s troubled times, the more I came to see that the history of innovation and economic downturns were in some ways inextricably linked. I came to see that some of the most successful companies were hatched or developed during a downturn. I developed a somewhat contrarian perspective based on my study of the past. And those insights continues to shape my work as a journalist today.

All this is a way of saying I am gratified that readers of the book agree with me that the story of Georges Doriot and the instrumental role he played in building our nation’s entrepreneurial economy still has lessons to offer us in today’s turbulent times. On that note, please check out these two reviews from my Amazon page. Both reviewers gave Creative Capital five stars. One is written by Robert Ackerman, a successful venture capitalist who is managing director and co-founder of Allegis Capital. Their reviews must be having a positive impact. Amazon says there are only three copies of my book left in stock!

The Man of Great Vision!, April 30, 2009
By maryann davenport “Maryann D.” (Southern California) – See all my reviews
Spencer Ante’s biography of Georges Doriot left me cheering my head off! He would look at the mistakes of today’s politicians and bank leaders and tell them exactly what they had done wrong and why and it would not be double talk. This is a great read about a true genius of business who came here from France and tried to teach how to be effective capitalists instead of idiot pretenders. It’s too bad we didn’t learn when we could have. We wouldn’t be in this mess now.
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A Must Read – If you care about Innovation and Growth, April 29, 2009
By R. Ackerman “Entrepreneur” (San Francisco) – See all my reviews

In his book Creative Capital – Spencer Ante not only captures the amazing story of a French immigrant (Georges Doriot) and his profound contributions to the United States in business education, government service and launch of the systemic US venture capital industry, he also distills the essence of entrepreneurism and its pivotal role in innovation and the growth of the US technology industry. By embracing creative ideas and pro-actively managing the risk inherent in bringing new technologies to market, Doriot demonstrated that economic growth and wealth creation are at the heart of the venture capital model and two sides of the same coin.

At a time when the US economy is looking for direction and the keys to its future growth and sustainably, Ante’s book is a must read for every politician, business leader and investor who is genuinely looking for the levers through which we can grow and extend our competitive advantage in a global economy. After reading Creative Capital, the question that comes to mind is “how can we proactively encourage more of the innovation that Doriot helped bring to life”.

Ante’s style delivers a great story in an easily readable format punctuated with data and facts that draw clear comparisons to the economic challenges we face to day.

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.