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Remembering Digital Computer’s Ken Olsen: He Changed the World & My Life As Well

February 10th, 2011 Leave a comment Go to comments

Ken

One of the true heroes of American business, Kenneth Olsen, died this week. Olsen was founder of Digital Computer Corporation (DEC), which during its heyday of the 1970s and 1980s, was one of the largest, most technically advanced and most successful computer companies in the world. Bill Gates, the Microsoft co-founder, called Mr. Olsen “one of the pioneers of computing,” adding, “He was also a major influence on my life.” Gates’s interest in writing software was formed as a 13 year-old, while playing around on a DEC computer.

Olsen was also one of the businessmen I most admire, and played a small, but lasting part in my own career. I met him in 1986, at DEC headquarters in Maynard, MA, outside of Boston. I was there to interview him for Forbes Magazine. I remember Olsen as a warm, modest, wry  – and above all, very patient man.

It was my first assignment as a Forbes reporter, having only joined the magazine, on its lowest rung, a month earlier. Olsen was 60 at the time, one of America’s most celebrated and wealthiest entrepreneurs. I was a 27 year-old, with no real knowledge of business or journalism, and had never seen, or used, a DEC computer.  Thinking back, I’m amazed Ken Olsen didn’t take one look at me, and send me straight back to my windowless cubby in Forbes’ New York headquarters.

I’d persuaded my editors at Forbes to let me do some research on Georges Doriot, a then 87 year-old former Harvard Business School Professor. Doriot is the founding father of the venture capital industry in the US, and his VC firm, American Research and Development Corporation (ARDC),  was the original investor in DEC. I had a hunch that Doriot’s role in American high-technology was underappreciated. To my surprise, and even more to my editors’, Olsen agreed to see me to share his recollections of working with Doriot.

In 1957, Ken Olsen was a 31 year-old whose only experience up to then was as a lab worker at MIT.  Doriot agreed to invest $70,000 to finance DEC’s startup. Digital began producing printed circuit logic modules used by engineers to test electronic equipment. The company also started developing the world’s first small interactive computer, a forerunner of the IBM PC.

Within a decade, at the time of DEC’s IPO in 1967, Doriot’s investment was worth $355 million, a 500-fold increase.  Doriot’s investment in DEC  is generally considered not only the first great success of the US venture capital industry, but the standard all other venture capital investments have been measured against ever since, not only on financial terms, but also in lasting impact.

For more than a generation, DEC was one of the world’s most important and successful technology companies, dramatically lowering the cost and complexity of business computing, by selling smaller closet-sized computers that rivaled IBM giant room-sized mainframes in power and performance. DEC made all its own hardware and software. This was before the founding of Intel and Microsoft, the two companies that eventually toppled DEC’s dominance, doing to DEC what it had done to IBM.

When I met him, Olsen was nearing the pinnacle of a remarkably accomplished career. DEC was among the most admired and profitable companies in the world, with sales approaching $10 billion.  As for Doriot, the venture capital work was really something of a sideline for Doriot. He continued to teach management courses at Harvard Business School all the way up to his retirement.

As things turned out that day in 1986, Ken Olsen never got around to telling me  about Doriot. Instead, when I walked in, Olsen said matter-of-factly, “I just finished a long series of interview with reporters at Fortune Magazine”, Forbes’ main competitor. “They are planning a cover story about me.”

I may have been new to journalism, but I did figure out Olsen was spoon-feeding me my first scoop. If I could get him to talk about DEC, instead of Doriot, I could rush back to New York,  write up the interview and, with any luck, beat Fortune into print.

Fortune was renowned, back then, for spending months reporting, discussing, polishing, photographing and group-editing their cover stories, like a group of sous chefs fussing over preparations for a Royal Dinner at Buckingham Palace.  Forbes was always pluckier,  quicker to turn ideas into print – more like short-order cooking.

It all worked as well as planned. My story came out about a month before the Fortune cover article, which called Olsen “America’s most successful entrepreneur”.  This was my first byline at Forbes, and one of the few times a new junior hire was allowed to get a story into the magazine. It was the start of, and probably set the tone for, my very charmed nine year career at Forbes. Within less than a year, I was promoted twice and handed my dream job as a foreign correspondent in London. As far as I know, it was the fastest rise ever at Forbes, from cub reporter to foreign correspondent. Though I never got to meet Ken Olson again, I never forgot his central role in all this.

When I read Olsen’s obituary, I went searching online for my Forbes article. I hadn’t read it since it came out. No luck. Forbes’ online archive doesn’t go back 25 years. I called the Forbes switchboard in New York. I don’t know anyone working now at the magazine. I eventually got through to a librarian. She sent me the article. Here it is:  Olsen article

I’d remembered Olsen’s key part in undoing the dominance of mainframes. But, I hadn’t recalled he was such an early proponent of networked computing. At the time, I didn’t grasp the significance of what he was telling that day in his office, about introducing a new kind of office computer, called the VAX 8000 that would link newly-launched IBM PCs together. I do understand it now.  Those linking computers came to be known as servers, and this “client-server architecture” is still the way the internet, as well as company networks, are configured.

For this, Olsen deserves to be remembered as one of the earliest and most influential pioneers of the internet. Back when I met him in 1986, there was no such thing as the internet or broadband. Signals traveled between computers using 14.4 bit modems. A typical 10kb story of mine would take about five minutes to upload to my Forbes editors. Today, sending that file would take less than a second.

Thanks to the VAX line of computers, DEC became the world’s first dominant server manufacturer. It was because of this that Compaq, a PC company that later was bought by HP, agreed to buy DEC in 1998 for $9.8 billion. Eventually, Sun Microsystems overtook DEC as the leading specialist manufacturer of networking servers, before it too was holed below the water line – in Sun’s case, by cheap servers using Intel chips. These Intel-based servers remain preeminent today. But, this was all long after Olsen retired from Digital in 1992.

Olsen didn’t get it all right, of course. He thought servers would always do most of the work of business computing and so earn most of the money, that PCs would remain, what they were when I met him, expensive machines with too little memory and processing power to do more than the most rudimentary tasks. I’m writing this now on a Dell laptop that is a thousand times more powerful than the VAX computer DEC launched right around the time I met him.

While much else has changed in my life over the last 25 years, I continue to meet great entrepreneurs. I’m lucky enough to have some as clients. But, no entrepreneur played a larger role in getting me to where I am today than Ken Olson. By handing me a scoop, he handed me my first big career break. I can’t begin to compute all the wonderful things that have come my way as a result,  and so can’t begin to compute the debt I owe him.


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  1. Terry Crossman
    February 12th, 2011 at 02:39 | #1

    A most wonderful tribute and great original article. Thank you for this Peter.

  2. Anthony from HK
    February 14th, 2011 at 02:05 | #2

    Great story, made my day.

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