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Print Edition StoriesTuesday, December 1, 2009
DEC co-founder Anderson on VCs and Route 128
MHT's Galen Moore: Honoring innovation in New England
Companies born in the recession
MHT's Galen Moore: Hiring trends and opportunities
In 1957, Harlan Anderson co-founded Digital Equipment Corp. with Ken Olsen, planning to make the world’s first computer that companies could afford to buy. The venture-capital deal they took was one of the earliest for VC pioneer American Research and Development — and its terms, 70 percent ownership for $70,000, set up the first VC “home run.” Anderson recently spoke with MHT writer Galen Moore about the venture capital industry then and now.
Q: Right now, the venture funding climate is perceived as difficult — yet you got venture funding at a time when it was unheard of.
A: With the amount of venture capital that is available and invested every year, I wouldn’t necessarily agree that it’s hard to get capital for new enterprises. For us, it was in some sense a bit of a crapshoot. It wasn’t much money by the standards they had. I think they liked us. We had a good story from our bosses at MIT when they checked our references and things. MIT had been a key participant in the formation of American Research and Development. I don’t think there was overwhelming enthusiasm, based on the deal they offered us. I think it was a low-risk thing, and it had a lot of things going for it. They knew computers were important, and MIT seemed to be a fountainhead of new ideas.
Q: What did you do right in the early going at DEC?
A: We started very small, that was one thing. We didn’t require huge amounts of capital for the way we went at it. We didn’t start out building computers until we had our feet on the ground. I would say starting small is harder today because things move so fast. Everyone thinks they have to grow into a big company right away. We grew very slowly, but we grew profitably. The lesson I would see is: Start small and try to make a profit at a small level to demonstrate that you’re able to run a business with a new idea.
Q: When people talk about Route 128 falling behind Silicon Valley, they often point to the downfall of DEC. Was DEC’s culture somehow representative of a Route 128 mentality?
A: I think it was peculiar to DEC. In the same time period you had companies started here in the Boston area like Lotus and EMC. I think the demise was a lack of market vision. It was never known as a company with a strong marketing. When the market changed to be software-driven and standardized, Digital was apparently hung up on proprietary software and hardware.
Q: What are you doing now?
A: A lot of my time is spent in nonprofit things. I’m a trustee at the Boston Symphony Orchestra, and a former trustee at Rensselaer Polytechnic Institute. I’m particularly interested in doing whatever I can to make college education more affordable. One of the initiatives I’m involved in is to use more distance-learning technologies for full credit at traditional universities. The other is to have better relations between community colleges and traditional universities so that kids can go to community college where they live and then transfer to universities without losing credits.
Launched more than 50 years ago and dominant in the Massachusetts economy from the 1970s into the 1990s, Digital Equipment Corp. blazed a technology trail that others followed. And as shown by two new books and a “preview” of a PBS documentary, the tale isn’t over. Read Alan R. Earls' review.
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