Creative Capital: Georges Doriot and the Birth of Venture Capital

321 Pages·2008·1.23 MB·English

by  Spencer E. Ante

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C R E AT I V E
C A P I TA L
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C R E AT I V E
C A P I TA L
Georges Doriot and
the Birth of Venture Capital
<
SPENCER E. ANTE
Harvard Business Press
Boston, Massachusetts
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Copyright 2008 Spencer E. Ante
All rights reserved
Printed in the United States ofAmerica
12 11 10 09 08 5 4 3 2 1
No part ofthis publication may be reproduced, stored in or introduced into a retrieval system, or
transmitted, in any form, or by any means (electronic, mechanical, photocopying, recording, or
otherwise), without the prior permission ofthe publisher. Requests for permission should be directed
to [email protected], or mailed to Permissions, Harvard Business School Publishing,
60 Harvard Way, Boston, Massachusetts 02163.
Library ofCongress Cataloging-in-Publication Data
Ante, Spencer E.
Creative capital : Georges Doriot and the birth ofventure capital /
Spencer E. Ante.
p. cm.
Includes bibliographical references and index.
ISBN 978-1-4221-0122-3
1. Doriot, Georges F. (Georges Frederic), 1899-1987 2. Capitalists
and financiers--Biography. 3. Venture capital--History. I. Title.
HG172.D67A58 2008
332.6092--dc22
[B]
2007036142
The paper used in this publication meets the minimum requirements ofthe American National Standard
for Permanence ofPaper for Publications and Documents in Libraries and Archives Z39.48-1992.
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CONTENTS
Acknowledgments vii
Introduction xiii
one Roots 1
1863–1898
two The Student 15
1899–1920
three Coming to America 29
1921–1925
four The Professor 41
1925–1930
five Slouching Through the Depression 63
1930–1940
six War—The Inflection Point 79
1940–1946
seven Founding Fathers 105
1946–1951
eight The Birth of Venture Capital 129
1951–1956
nine A Star Is Born 147
1957–1961
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ten The First Home Run 175
1962–1967
eleven The Takeover 199
1967–1972
twelve How the West Won 221
1972–1980
thirteen A Love Story 241
1974–1987
Epilogue 257
Notes 261
Index 285
About the Author 300
vi CONTENTS
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ACKNOWLEDGMENTS
This book relies predominantly on a number of primary materials: Georges
Doriot’s voluminous notes on American Research and Development Corpo-
ration’s operations and meetings; the annual reports of American Research
and Development, European Enterprise Development, and Canadian Enter-
prise Development; U.S. military documents from the Library of Congress
and National Archives; and manuscript collections, oral histories, letters,
diaries, memoirs, newspaper and magazine stories, newsletters, pamphlets,
DVDs, VHS cassettes, interviews, and personal observations of Doriot’s
homes and workplaces.
Several sources merit special mention. First and foremost, this book could
not have been written without the personal papers of Georges Doriot, which
are housed at the M.I.T. Entrepreneurship Center Library (and on loan from
the French Library and Cultural Center of Boston). Doriot was an extraordi-
nary record keeper who seemingly documented every moment of the his-
tory of American Research and Development. The papers comprise more
than twelve hundred pages from eight different books. I owe considerable
thanks to my first research assistant, Tess Oliver, for her diligence in cor-
ralling these papers and sending them to me. They helped jump-start my
research, serving as a touchstone throughout the entire process.
I also owe a special thanks to Roanne Edwards and Elaine Uzan Leary of
the French Library for introducing me to many of the men and women who
knew General Doriot. Roanne, in particular, was a huge help and inspiration
in the beginning of this journey, and generously shared with me many of her
contacts.
Besides Doriot’s papers, the most important source ofinformation were the
dozens of interviews I conducted with the people who worked at American
Research and Development, the entrepreneurs who were financed and nur-
tured by the firm, the men who studied under Doriot at Harvard Business
School, and the large circle of Doriot’s friends and colleagues. I conducted
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interviews with these individuals between October 2005 and July 2007: James
Aisner, Vernon Alden, Steven Anders, Harlan Anderson, Gordon Bell, Brian
Brooks, George H. W. Bush, Philip Caldwell, Patricia A. Clark, Charles
Coulter, Wilbur Cowett, Alexander d’Arbeloff, Arnaud de Vitry, Nicholas
DeWolf, Catharine-Mary Donovan, William Elfers, Sumner Feldberg,
Frederick Frank, Art Goldstein, Richard H. Groves, Jean Gueroult, F. Warren
Hellman, Winston Hindle, Molly Hoagland, Ralph P. Hoagland, Ray
Hoagland, Daniel J. Holland, Francis Hughes, Eileen P. Jacobs, Claude Janssen,
Ted Johnson, Michael Koerner, Arnold Kroll, Josh Lerner, David L. Luke,
Derek Mather, Dina McCabe, Robert McCabe, Parker G. Montgomery, James
F. Morgan, Gib Myers, Kenneth H. Olsen, Thomas J. Perkins, Eveline Poillot,
Marie-Helene Poillot, Isabelle Pounder, James P. Robinson, Andrew G. C.
Sage II, John A. Shane, Robert Shapiro, Jack Shields, James M. Stone, Lewis
H. Strauss, Gerald D. Sutton, Janet Testa, Marvin Traub, Jimmy Treybig,
Donald T. Valentine, Charles P. Waite, William Welsh, and Peter Wilson.
I spoke to every one of these people at least once, and some of them I
interviewed two, three, or more times. Without their cooperation, this book
would not have been possible. I owe an especially deep gratitude to Robert
McCabe, one of Doriot’s closest friends. Bob stepped up from the beginning,
answering every one of my phone and e-mail queries, as well as opening
many doors within the Doriot network.
I also would like to give a special, warm thanks to Marie-Hélène Poillot
and Eveline Poillot, the surviving members of the Doriot family. Eveline is
Georges Doriot’s niece, and Marie-Hélène is her daughter. The Poillots were
very supportive from the start of the project, and were gracious hosts to my
wife and me when we visited Paris for a week to research the roots of Doriot
and his family. They invited us to visit them at Doriot’s ancestral home in
Courbevoie, where Eveline still lives today. There, she gave us a tour of the
home, hosted an outstanding lunch featuring a rack of lamb, and shared
scrapbooks, photo albums, and other family memorabilia. Afterward, they
continued to lend a helping hand whenever I needed it, answering questions
and providing me with many family letters, documents, and photos, which
were crucial elements of my research.
During our trip to Paris, we also met with two other individuals who
deserve special mention: Arnaud de Vitry and Claude Janssen. Arnaud and
Claude were also surrogate sons of Doriot. They both were extremely sup-
portive of the project, inviting us into their homes and sharing many
viii ACKNOWLEDGMENTS
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wonderful stories. Afterward, they both continued to answer every question
I threw their way, whether by e-mail or phone.
I owe a debt of gratitude to several other research assistants who scoured
through various collections of papers scattered across the country. The papers
of Lewis Strauss, which are housed at the Herbert Hoover Presidential
Library in West Branch, Iowa, proved an invaluable window into Doriot’s
first two decades in the United States. Many thanks to Dwight M. Miller for
discovering a treasure trove of letters in the Strauss papers. Kudos to Jason
Godin, a PhD student at Texas A&M University, for digging up some jewels
in the archives of the George Bush Presidential Library in College Station,
Texas. And thanks also to Monica Corbin, who translated the Poillot family
letters and other French-language materials.
The files of Deans Wallace B. Donham and Donald K. David at the
Harvard Business School’s Baker Library provided another invaluable source
on Doriot’s teaching career, from the 1920s all the way up until the late 1950s.
I owe a big thanks to Rachel Wise and Laura Linard of the Baker Library ref-
erence staff for pinpointing the relevant files in a mountain of material.
The papers of Georges Doriot housed in the manuscript collection of the
Library of Congress provided an extraordinarily detailed account of Doriot’s
military career, during and after World War II. Spanning six linear feet and
containing eighteen boxes, including one box of classified material (which I
was able to declassify), the register contained a total of thirty-six hundred
items. Many, many thanks to Manuscript Division staff members Lia Apodaca,
Jennifer Brathovde, Jeffrey Flannery, Joe Jackson, Patrick Kerwin, and Bruce
Kirby for helping me navigate through this collection during my week-
long stay.
The papers of Ralph Soda were another critical source. One of the most
well-known journalists of his generation who broke stories about Iran
Contra and other government scandals for the Gannet News Service, Soda
was commissioned in 1988 by the trustees of Doriot’s estate to write a biog-
raphy of Georges Doriot. Soda never finished the project, and he died in
2004. But some of the research that Soda did for the book survived in his
estate. Many thanks to Soda’s close friend Robert Dubill, former executive
editor of USA Todayand the executor of Soda’s estate, for sending me a large
box of papers filled with these materials.
Several items in Soda’s Doriot papers deserve special mention. Soda’s
interviews and notes on Doriot’s early years were especially valuable, as well
ACKNOWLEDGMENTS IX