DEC - The Prequel

DEC Board of Directors: Seated left to right at an early board
meeting are: Harry Hoagland, Jack Barnard, Jay Forrester, Bill
Congleton, Harlan Anderson, Ken Olsen, Dorothy Rowe,
Vernon Alden, Arnaud de Vitry, and Wayne Brobeck.
Rowe (the only woman) was a VP at the venture capital firm
that had funded DEC, and Treasurer for DEC’s Board. 

This column is about what led up to the Digital Equipment Corporation (DEC) meeting Maynard, Massachusetts, in 1957. It involves Kenneth ‘Ken’ Olsen, Harlan Anderson, Georges Doriot and the Massachusetts Institute of Technology (MIT) Lincoln Laboratory.

The intertwining of DEC and Maynard starts with a visit by Ken Olsen and Harlan Anderson to Maynard on July 9, 1957, followed by signing of a lease at $300/month for 8,680 square feet of rental space in mill building #12 on August 27th. Start-up funding for the new company came from $70,000 from the American Research and Development Corporation (AR&D), a venture capital firm, headed by Georges Doriot. DEC first began producing printed circuit logic modules used by engineers to test electronic equipment. Based on these modules, the company developed the world's first small interactive computer – a ‘mini-computer’ – with first delivered product in November 1960. It was named PDP-1 for Programmed Data Processor. DEC’s end came with the announced sale of the company to Compaq on January 26, 1998, followed by the completion of the deal on June 11, 1998.

Kenneth ‘Ken” Olsen was born February 20, 1926 in Bridgeport, Connecticut (died February 6, 2011, age 84). His grandparents were immigrants from Norway and Sweden. His father designed machine tools. While in high school, Ken working summers in a machine shop and also fixed radios for neighbors. In 1944, age 18, he either enlisted or was drafted into the U.S. Navy. He attended radar school for a year and served in the fleet for a year, but did not see military action. Upon discharge, he enrolled at the Massachusetts Institute of Technology (MIT) where he earned a BS (1950) and an MS (1952) in electrical engineering, a major that included computer sciences as those existed at that time. He had married Aulikki Valve, a native of Finland, in 1950. After graduation, he worked on military-related projects at MIT’s Lincoln Laboratory, located in Lexington, MA. This included a 13-month stint in residence at an IBM research site, where he observed (and came to dislike) the hierarchal organizational structure of that large company. The matrix management structure developed at DEC was in part a reaction to IBM’s way of doing things.

Harlan Anderson was born on October 15, 1929, in Freeport, IL. (died January 30, 2019, age 89.) He married his high school sweetheart, Lois Jean Kahl in 1950. At the University of Illinois, he earned a BS in 1951 and an MS in 1952, both degrees in physics. While in college, Anderson became interested in computers while taking programming courses for use of a large custom-built mainframe computer being built for UI. In June of 1952, Anderson and his wife were both hired by Olsen. There, he became a member of the Lincoln Lab systems office, which was responsible for specifications for the IBM production of the SAGE computer.

Georges Doriot and Ken Olsen (date unknown)

Georges Doriot (September 1899 – June 1987) was an émigré from France. He became a professor at Harvard Business School in 1926, and then director of the U.S. Army's Military Planning Division, Quartermaster General, during World War II, eventually being promoted to brigadier general. In 1946, he founded American Research and Development Corporation, to encourage private sector investments in businesses run by soldiers who were returning from World War II. AR&D is regarded as one of the world's first venture capital firms, earning him the sobriquet "father of venture capitalism". In addition to the $70,000 investment in DEC ($670,000 in inflation-adjusted 2021 dollars), AR&D made approximately two million in loans to DEC in those early years. Doriot remained a friend and advisor to Ken Olsen until his death in 1987.

It was at Lincoln Laboratory that Olsen and Anderson worked on the TX (for Transistor eXperimental) projects that were substituting novel transistor technology for the glass vacuum tubes that were standard for computers at the time. Transistors date to a successful demonstration on December 23, 1947 at Bell Laboratories, at that time the research arm of American Telephone and Telegraph. Within a few years, transistors were commercially, albeit expensively, available. By the late 1950s the technology had improved to allow for ‘pocket-sized’ transistor radios. Meanwhile, at Lincoln Lab, the high-speed operation and interactive features of the TX-0 and TX-2 computers greatly influenced early minicomputer design at Digital.

In 1957, Olsen and Anderson decide to start a company. They submitted a proposal to AR&D in May. They got an investment of $70,000 for a 70 percent share in the company. There was pushback from the investors about “computer” being in the company’s name, because at the time computers were large, expensive, mostly unprofitable machines – think IBM and UNIVAC – hence the name became “Digital Equipment Corporation.” By August they had rented space, and they – and Stan Olsen, Ken’s younger brother – spent weekends painting the space themselves. DEC was launched.

Olsen and Anderson went to Gruber Bros. Furniture and bought $69 worth of office furniture – on 30 days credit.