When ARD liquidated its stake in Digital, the company was worth more than $400 million—yielding a return on their original investment of more than 70,000 percent. It was the young venture capital industry’s first home run, and it helped make the Route 128 area outside Boston a technological mecca. “ARD led the advent of technology companies being financed by venture capital firms, which ultimately became important factors in our economy,” says F. Warren Hellman, a former president of Lehman Brothers, which took many ARD start-ups public, including Digital. “Doriot was very much at the forefront of fundamentally changing our economy.”
Just as important, ARD’s support of Digital and dozens of other unproven little companies ushered in a new era of corporate culture. At Digital, the engineer was king. Hierarchy was out. Controlled chaos was in. Like Jack Kerouac and the Beat Generation, Digital was a petri dish in which the counterculture was spawned in the late 1950s. “He was definitely part of a social revolution that loosened things up,” says Parker G. Montgomery, founder and chief executive of Cooper Laboratories, a successful health care products company that ARD financed during the 1960s. “There was such support, his presence, his philosophy, his belief in new enterprise was an inspiration.”
Doriot did not act alone. His wife Edna Allen supported him every step of the way, allowing him to focus obsessively on his intellectual and commercial pursuits. A pretty, intelligent, and caring American woman, Allen was a research assistant at the Harvard Business School when she first laid eyes on Doriot. For the next forty-eight years, Edna was his devoted wife and closest friend, and the couple enjoyed a lifelong storybook romance. Doriot would often write love poems about Edna. And the favor was returned. “When he went on a trip he’d find a love note in his pajamas,” says Olsen.
Despite Doriot’s singular talents, he was far from perfect. ARD should never have been incorporated as a publicly traded company. Doriot never groomed a successor to take over the firm. And Doriot never figured out a way to appease government regulators, who repeatedly threatened to put ARD out of business. The Securities & Exchange Commission (SEC), to cite one example, ruled that ARD officers could not hold stock options in client companies, which meant Doriot could not attract the best and brightest talent. The tension grew so great that in 1965 the SEC even raided its offices to conduct a “surprise audit.” Doriot was so enraged at the SEC that he kept a file of vituperative letters addressed to the agency that were stamped: “Not sent—on advice of counsel.”
Despite a somewhat tragic ending to his career, all of the strands of Doriot’s life connect to form something quite profound. In the second half of the twentieth century, the United States experienced a historic transformation, in which a society dominated by large corporations such as Standard Oil, U.S. Steel, and General Motors shifted to a nation driven by venturebacked start-ups such as Digital Equipment Corporation, Intel Corporation, Microsoft, Starbucks, and many others. Ever since, those small, innovative companies have created new markets and millions of high-paying jobs while also forcing old industries to become more efficient and productive. A recent study by the National Venture Capital Association found that U.S. venturebacked companies between 1970 and 2005 accounted for ten million jobs and nearly 17 percent of the nation’s gross domestic product.
Doriot was the prophet of this new “Start-up Nation,” the leader of a social and economic crusade that democratized the clubby world of finance. More than any other person, Doriot—through his teaching, writing, and leadership in the military, academic, and financial worlds—pioneered the transition to an economy built on entrepreneurship and innovation. For playing this role, Doriot should be revered as much as other well-known business titans such as J. P. Morgan, John D. Rockefeller, or Andrew Carnegie. Hopefully, you’ll agree with me after reading the book.
ONE
ROOTS
(1863–1898)
ON A SUNNY AFTERNOON in the spring of 1913, Georges Frederic Doriot ran as fast as he could all the way to his home on the outskirts of Paris. Young Georges and his family lived in Courbevoie, a bustling town twenty miles north of France’s capital nestled along the eastern bank of the Seine River. Thanks to its proximity to the wide ribbon of water, Courbevoie had established itself as a manufacturing center. In factories sprinkled around town, companies produced automobiles, perfume, and other products in their more affordable environs, and then shuttled their handiwork down the river to the big city.
It was the end of the school year and thirteen-year-old Georges was running home because he had good news to share with his family. A student at Coubert 7, Courbevoie’s public secondary school, Georges disliked school because he was always afraid of not doing well and saddening his parents, particularly his demanding father.
But today was different. Georges had excelled in his classes, and had the paper to prove it. He excitedly careened around boulevard corners and shortcut across intersections, nearly colliding with several flâneurs strolling down the street. It was only when he reached Rue Franklin, a block from the walled garden of his family’s home, that he paused long enough to savor the honor embossed on the scroll he cradled in his sweating palm: Georges had placed second in his class at the École Communale.
It was an award certificate—the first such honor he had ever received. Beaming with pride, he couldn’t wait to share the good news with his family. Educational achievement was prized highly in the Doriot household. His father and mother would be pleased with him, he was sure. And so he resumed his dash for home.
Camille, his doting mother, responded as Georges had expected. An educator herself, she knew the value of supporting the achievements of young, insecure children. She embraced the radiant Georges with a warm hug, gave him a laudatory pat on the head, and set out a generous serving of homemade cookies that marked special family occasions. But Auguste, his stern father, had quite a different reaction. In stark contrast to Camille, Auguste seemed unimpressed with his son’s award. He acknowledged the certificate with only a cursory glance, nodded perfunctorily, and then fixed his son with one of those chilling stares of appraisal. “And why not first?” asked Auguste.
Auguste’s voice was calm but his words were a blow to Georges’s heart. And his father’s cool stare was more painful than any punishment Georges had ever received. Staggered, Georges didn’t know what to think, or how to react. He had expected congratulations. He had expected his father to be proud. Instead, he was knocked back on his heels, put in his place. Bewildered and humiliated, he fled to his room, tears welling up in his eyes. His glorious triumph had ended disastrously. Why, Georges wondered? Why did I disappoint father?
It was an experience that could have scarred him for a long time. But as Georges calmed down and reflected on the situation, he began to understand the reasons behind his father’s behavior. His father, he would tell a friend years later when recalling the incident, was not concerned that Georges had failed to achieve first place honors in his class at École Communale. No, he was concerned that Georges was happy placing second. To Auguste, a famous automobile engineer who had raised his children to strive for excellence in everything they did, celebrating anything less than the best possible result smacked of contentment. And contentment, Auguste believed, is a state of mind that recognizes no need for improvement. As Georges came to realize, his father’s seemingly cruel question was actually a well-meaning parent’s method of challenging their child to reach the stars.
It was a challenge he never forgot, and an experience that some friends theorize was responsible for driving Georges Doriot to extraordinary accomplishments later on in his life. Georges Doriot would never again be satisfied with being anything less than the best. Not in himself. Not in others. Not in anything.
When Auguste Frederic Doriot was discharged from the French Army in the fall of 1889, he was a young and ambitious man who harbored great hopes and dreams. Up to this point, however, they had been dreams deferred. Doriot was unfortunate in that he had to devote five years in the prime of his youth to the military. And yet he was also lucky. He happened to serve in the Army during one