A Proposal to American Research and Development
Ken Olsen / Harlan Anderson · 1957
"A small team could sell profitable digital circuit modules first and interactive computers later, at a moment when investors were sure computers were a money-losing business."
In 1957, two MIT Lincoln Laboratory engineers, Ken Olsen and Harlan Anderson, wanted to build smaller, cheaper computers to challenge IBM's expensive mainframes. IBM and other established players had already turned them down, and at the time 'the computer business' was widely seen by investors as a money-loser — only giant, well-capitalized companies could survive it. So instead of asking for money to build computers, they proposed building profitable digital circuit modules first, using that revenue to prove the team and the technology worked, and only later building full interactive computers. American Research and Development Corporation (ARD), one of the first venture firms in the US, funded them: $70,000 in equity for 70% of the new company, Digital Equipment Corporation, plus a further loan.
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