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By the time Doriot called it quits in 1972 by merging ARD with the conglomerate Textron, his firm had invested in 120 companies, most of which had proprietary, innovative technologies in areas including isotope conversion, water desalination, electronics, data processing, scientific instrumentation, and electrical generation. It’s an impressive list of investments, containing names to conjure with–if your taste runs to conjuring with Zapata Off-Shore, a company headed by George H. W. Bush that had a novel mobile oil-drilling rig, or Digital Equipment Corporation (DEC), which Doriot funded with an initial $70,000 in 1957 and which returned more than $400 million when ARD liquidated its stake in 1972.

With DEC, a legendary company from the dawn of the computer age, we enter a landscape that more closely resembles our own. Doriot left his mark in other realms–­principally as an early advocate of globalization, by founding a ­European-based counterpart of Harvard Business School called the Institut Européen d’Administration des Affaires, or INSEAD. Yet his chief legacy is his quarter-century at the head of the first organized venture capital firm to raise its funds from institutional investors and the public. Contemporaneously with ARD’s watershed investment in DEC, others began walking the trails Doriot had blazed: Arthur Rock (a student of Doriot’s in the Harvard class of 1951) backed the departure of the “Traitorous Eight” from Shockley Semiconductor to form ­Fairchild Semiconductor in 1957, then funded ­Robert Noyce and ­Gordon Moore when they left ­Fairchild to found Intel; ­Laurance ­Rockefeller formed ­Venrock, which has since backed more than 400 companies, including Intel and Apple; Don ­Valentine formed Sequoia Capital, which would invest in Atari, Apple, Oracle, Cisco, Google, and YouTube.

Creative Capital is not a yellowing evocation of a vanished era of business. Nor does it suggest that there are, or once were, more systematic, less speculative ways of investing in technology startups. But if one is struck by how little Doriot’s venture capi­talism differed from that of today’s Silicon Valley, Ante’s book does show how the structure of venture capital has evolved. At the 1960s’ end, for instance, when Doriot sought a successor at ARD, he favored one of his former students, Thomas Perkins, who’d made a name for himself as administrative head of the research department at Hewlett-Packard. Perkins found polite reasons to decline Doriot’s offer, but his real motive–as he told Ante–was simply that “there was no way to make significant money because of the structure of ARD.” Doriot endured bureaucratic regulators who did not understand or care how a venture capital firm differed from other investment companies. ARD suffered because, since it was incorporated as a publicly traded investment company, its employees could not generally receive stock options in its portfolio companies, despite Doriot’s ceaseless pleas to the U.S. Securities and Exchange Commission.

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Tagged: Business, business, government, venture capitalism, markets

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