Yesterday I finished book #11 in my 2010 book-reading quest - Creative Capital, by Spencer Ante. This book tells the story of Georges Doriot, considered to be the “Father of Venture Capital”, and the first venture firm, American Research and Development Corp (ARD). The author wass a technology/finance editor at Business Week (recently moved to the WSJ), so he knows the subject matter quite well. He writes a very entertaining and educational book that not only tells a history, but also gives some larger lessons learned about what makes venture capital tick.
Georges Doriot was an immigrant to the United States from France who ended up a young professor at the relatively new Harvard Business School. During WWII, Doriot served as a leader in the Quartermaster Corp, overseeing wartime R&D. He believed that high-risk R&D needed to be supported after the war and started what became the first VC firm. Among his other accomplishments, Doriot also founded INSEAD, one of Europe’s leading business schools.
1) Old-school banking and finance – the Morgans, Rothchilds, and Mellons of the world – just wasn’t ever going to fill the role of VC. A new industry built on a new model of risk had to be developed.
2) Good things only come from hard work. This is a standard lesson, but it does good to hear this again and again in the context of different people’s experiences. Doriot was nothing if not a hard worker. He rarely took the easy path.
3) Every day is filled with plenty of bad news, but if you make more good than bad decisions over the course of time, you will likely succeed. Doriot was constantly seeing portfolio companies have ups and downs, and his firm was beset by the IRS and the SEC constantly. He fought through it all.
4) Life is not all about your accomplishments. Doriot married later in life and never had children, and his later years struck me as very lonely as he sought out people to spend time with. I think he grasped “the bigger things in life”, but seemed sad since he hadn’t really spent time and effort to build them into his own life as much as he could have.
5) People matter. While most investors believe that great ideas are what power venture capital investment decisions, it is mostly about the people.
Doriot and ARD’s largest success was DEC – Digital Equipment Corporation – as well as the legions of VC 2.0 firms that he and ARD spawned.
I am going to put together a “Venture Capital Reading List”, and this is going to be the first book on my list in chronological order. Understanding where the venture capital industry came from really helps me to understand where it is going, and I would recommend this book for any budding venture capitalists, or any finance history students.
Some stats, because metrics matter: it took me 15 days to finish this 259-page book that contains about 106K words, giving me an average just over 7000 words per day (WPD) or ~17 pages a day, and an average reading speed of ~233 WPM (only about 30% faster than my normal snail’s pace of 180 WPM).
Book #12 = The End of Baseball, by Peter Schilling. This is a fictional account of what baseball would have looked like had Bill Veeck realized his dream to buy the Philadelphia A’s and integrate them with Negro League stars… I read anything Bill Veeck, and can’t wait to dig into this one.