His lectures were so memorable and controversial—he once lectured his students on how to pick a wife—that many former students who have forgotten most of what they learned at business school still remember Doriot vividly. He stressed common sense themes such as self-improvement, teamwork, and contributing to society, while spicing up his philosophy with practical and pithy words of advice:
“A real courageous man is a man who does something courageous when no one is watching him.”
“If any information is to be exchanged over whiskey, let us get it rather than give it.”
“An auditor is like a tailor; he can make a fat man look thinner or taller or younger.”
“You will get nowhere if you do not inspire people.”
“Always remember that someone somewhere is making a product that will make your product obsolete.”
Doriot was one of the century’s most visionary thinkers. He was early to recognize the importance of globalization and creativity in the business world. And decades before economists appreciated the value of technology, Doriot realized that innovation was the key to economic progress. “A lot of the things that were attributed to Peter Drucker were Doriot’s ideas,” says Charles P. Waite, a former student who went on to work at ARD for many years.
In his classes, Doriot often spoke about the railroads, air conditioning, and air travel, and how those technologies opened up new worlds and increased the productivity of business. “The general’s view of the world as one of constant competition, led to his belief that innovation, continuous innovation, never relaxing, was the only way to stay ahead of the competition,” says Robert McCabe, a close friend and former investment banker at Lehman Brothers.
During World War II, Doriot played a critical role in the Allied victory—and learned how to become a venture capitalist. As the head of research and development in the Office of the Quartermaster General, Doriot led a revolution in the military by applying science to the art of war. Under his command, the U.S. Army found substitutes for critical raw materials, and developed dozens of innovative items such as water-repellent fabrics, cold weather shoes and uniforms, sunscreen, insecticides, and nutritious compact food, including K-rations. In one confidential project, Doriot oversaw the invention of Doron, lightweight plastic armor that was named in his honor. For his achievements, Doriot was promoted to the rank of Brigadier General and won the Distinguished Service Medal, the highest U.S. military medal given to a noncombatant, as well as being decorated a commander of the British Empire and awarded the French Legion of Honor.
Doriot’s wartime experience proved his exceptional talent: he was not only a visionary but also a man of action, someone who had the energy, discipline, and charisma to bring his big ideas to fruition. Indeed, during the postwar period, Doriot went on to found a number of important institutions. In 1954, his vision of a peace-time research organization for American GIs was born with the opening of the U.S. Army Soldier Systems Center in Natick, Massachusetts, a research lab dedicated for the last sixty years to providing America’s soldiers with the world’s best equipment. In 1959, his dream of a European business school came to life with the Institut Européen d’Administration des Affairs (INSEAD), today’s leading European business school.
Scaling each of these peaks, Doriot bucked the prevailing system. Although he helped implement the Business School’s famous case study method early in his teaching career, after the war Doriot transcended this approach. Instead he lectured students with his philosophy of business and life, and gave them practical experience by sending them on consulting assignments with real companies. In the military, he ruffled feathers by resisting orders so he could make sure soldiers had the equipment they needed to survive in the trenches. And in the financial world, he upset the conventional wisdom by proving that there was big money to be made from patient investing in and the nurturing of small, unproven companies.
In hindsight, it is Doriot’s work running ARD that truly distinguishes him as a twentieth century giant. In 1946, Doriot was recruited to run ARD by a cadre of New England elites—Massachusetts Investor Trust chairman Merrill Griswold, MIT president Karl T. Compton, and Vermont Senator Ralph E. Flanders, the first Congressman to publicly upbraid Joseph McCarthy.
Fresh from the U.S. victory in World War II, these luminaries conceived ARD as a vehicle to revive New England and the U.S. economy. In their minds, ARD would solve a major imperfection of modern U.S. capitalism: new companies were starved for money and professional management. It’s hard to imagine these days, with billions of dollars swimming around the globe, but after the war, entrepreneurs had a difficult, if not impossible, time raising capital. Banks were ultraconservative, reluctant to lend money to unproven ventures. Sure, rich families like the Rockefellers invested in new companies but they were few and hard to reach. ARD promised to break down the walls of an elitist, insular world, reviewing ideas from thousands of companies across the country.
In his personal life, Doriot was cautious to a fault at times. But in his professional life, Doriot realized venture capital was all about taking huge but calculated risks. “He always thought ARD should have a major goal or undertaking that could be worked on as a Holy Grail,” says Daniel J. Holland, an ARD staffer during the late 1960s. “But he wouldn’t write a check until all the risks were understood.”
ARD’s beginnings were modest—its first venture fund was a mere $3.4 million. A few of its initial investments failed, and Doriot spent a lot of time in ARD’s early days responding to angry and impatient shareholders. But under the General’s leadership, ARD created the paradigm of entrepreneurial success. The dozens of prominent companies nurtured under ARD were the most obvious proof of Doriot’s achievements. Yet Doriot also exerted an influence through his writings, speeches, and ARD’s annual meetings, in which its investment companies set up booths and enjoyed an opportunity to network and talk to potential investors. “He gave a dignity or a substance to the process, and that always attracts imitators,” says Lehman’s Kroll, who attended many meetings over the years. In the late 1960s, Doriot’s influence persisted through the work of his disciples, as various ARD alumni founded and ran the second generation of successful VC firms, including Greylock Partners and Fidelity Ventures.
Doriot achieved success by staying true to his patient investment philosophy. He believed in building companies for the long haul, not flipping them for a quick profit. Returns were the by-product of hard labor, not a goal. Doriot often worked with a company for a decade or more before realizing any return. That is why he often referred to his companies as his “children.”
“When you have a child, you don’t ask what return you can expect,” Doriot was quoted in a 1967 Fortune magazine story. “Of course you have hopes—you hope the child will become President of the United States. But that is not very probable. I want them to do outstandingly well in their field. And if they do, the rewards will come. But if a man is good and loyal and does not achieve a so-called good rate of return, I will stay with him. Some people don’t become geniuses until after they are 24, you know. If I were a speculator, the question of return would apply. But I don’t consider a speculator—in my definition of the word—constructive. I am building men and companies.”
One child, an ambitious little outfit called Digital Equipment Corporation, grew to become a giant, cementing the legend of ARD and Doriot. In 1957, ARD gave $70,000 to the two young MIT engineers who cofounded Digital—Kenneth P. Olsen and Harlan Anderson—in exchange for 70 percent of the start-up’s equity. Olsen, who was Digital’s president and undisputed leader, wanted to build smaller, cheaper, and easier-to-use computers that would challenge the glass-encased mainframes of IBM, the dominant computer manufacturer and only one making money.
It was a perfect match. In Olsen, Doriot found the archetypal engineercum-entrepreneur who was dedicated to making his company a success. “A creative man merely has ideas; a resourceful man makes them practical,” said Doriot. “I look for the resourceful man.” Olsen embodied that ideal. In Doriot,