#203 Georges Doriot (Birth of Venture Capital)

**David Senra** (0:00)
I want to tell you about a one time only limited event that I don't think you're going to want to miss. I am doing a live show with Patrick O'Shaughnessy from the Invest Like the Best podcast in New York City on October 19th. Patrick has interviewed over 300 of the world's best investors and founders for his podcast. I've read over 300 biographies of history's greatest entrepreneurs for my podcast. We'll be talking about what we learned from seven years of podcasting, sharing our favorite ideas and stories, and doing a live Q&A. There will also be special event-only swag. If you live in New York City, I think it's a no-brainer. But if not, I think it's a great excuse to fly in. I've already heard from a bunch of people that bought tickets. They're flying in from other cities. Some people are flying in from other countries. That's setting the bar really high. So I will have at least four shots of espresso or four energy drinks before or during the show so we can make it a night that you'll never forget. If you're interested in attending this unique live event, I will leave a link down below. I highly recommend you get your tickets today. And I hope I get to see you in New York on October 19th. It wasn't until the second half of the 20th century that venture financing became a professional large-scale industry.
And the man who led that transformation was Georges Doriot.
I can't recall exactly when I first came across the name of General Georges Doriot, but I do know that in 2002, when I looked into the sparse literature on the history of venture capital, his name kept popping up.
I found a bunch of newspaper and magazine profiles, a chapter on him and a book or two, and a short film, but no full-length biography.
He is the founder of the modern VC industry, but there's been remarkably little written about him. He is the first person who basically ran an institutional venture capital fund, and he played a lead role in getting the VC community to see itself as a real industry.
The venture capital industry began to take shape after World War II on the Northeastern seaboard when in 1946, Doriot became president of the first public venture capital firm, Boston-based American Research and Development Corporation.
The famous inventor Charles F. Keatering predicted ARD would go bust in five years, but Doriot proved him wrong. Over the next 25 years, as his firm financed and nurtured more than 100 startups, many of which became huge successes that pushed the frontiers of technology and business.
ARD companies led the way in developing computers, atom smashers, medical devices, and new machines that desalinated brackish water. Doriot even backed George HW. Bush's first company, Zapata Offshore. He was very important because he was the first one to believe there was a future in financing entrepreneurs in an organized way. The more I researched Doriot's life, my fascination with an idea transformed into a fascination with the man behind the idea. Doriot was one of the most charismatic characters I have ever come across. Though I have never met the man, I fell under his spell.
That was an excerpt from the book that I'm going to attempt to talk to you about today, which is Creative Capital, George Doriot and the Birth of Venture Capital, and is written by Spencer E. Ante. And the reason I say I'm going to attempt to try to talk to you about this book today is because this book produced, prompted so many disparate thoughts and ideas in my mind while I was reading it. I'm going to try to tie together, but I might not succeed. I might be all over the map today. So hopefully you stick with me. I have an insane amount of highlights and notes and just tangents in front of me. So let me first tell you why I wanted to cover this book right now and what caused me to push this up the queue because I have a couple hundred books. A lot of recommendations obviously come from you of books to cover in the future. But I wanted to put this towards the top because a few weeks ago, I did a two-part series on the house of Rothschild, the Rothschild family. And there was a section in the second book that I did in that two-part series that really put together the importance of the Rothschild family and how they generate so much wealth. And that book was written by Neil Ferguson. And in that section, he describes that the Rothschilds were responsible for inventing an entire new asset class. And that, surprisingly, was also mentioned in this book. So I'm going to skip ahead in this book. I'm going to read an excerpt about the Rothschilds that comes from Creative Capital. And I'm going to try to tie this into how this relates to the life and career of Georges Doriot. The most powerful bank in the 19th century, the House of Rothschilds, is a case in point. In the first part of the century, the Rothschild family rose to power transforming a small merchant bank in Frankfurt and a closed exporter in England into a multinational financial conglomerate by lending money to war-torn, cash-strapped European governments. Later on, they created the biggest bank in the world, and this is the most important part, by pioneering the creation of the modern bond market, enabling British investors to buy internationally tradable bonds on other European nations with a fixed interest rate. The Rothschilds made a colossal fortune by making these loans and by speculating on their rise and fall. So that summary that's in this book is an extension of what Neil Ferguson wrote in his book, The House of Rothschilds, Money Profits, is the subtitle of that book. It's one I covered a few podcasts back. But this idea that they created an entire new asset class, now you fast forward 200 years later, the international bond market is something over like $100 trillion, $19, $120 trillion. And when I read that, that just blew my mind.