Profit-Minded Professor

So many professors are going into business that students frequently confront their teachers when they go asking for a job. With U.S. business hungering for specialized talent, such top scholars as New York University Economist Marcus Nadler earn up to $300 a day as consultants to management. University of Pittsburgh Chancellor Edward H. Litchfield is also chairman of Smith-Corona Marchant and a director of Studebaker and Avco Corp. The hub of this extracurricular activity is Boston, where some 1,000 space-age companies have grown up since World War II, most of them started there to exploit readily available brain power and many of them founded by Massachusetts Institute of Technology and Harvard theorists themselves.

In terms of range and imagination, the dean of the businessmen-professors is a longtime (since 1926) Harvard Business School professor named Georges F. Doriot, 63. As president of American Research and Development Corp., he has helped to father 78 new companies, from Adage Inc. (computer support systems) to Zapata Off-Shore Co. (oil). Doriot's A.R.D. is the first risk-capital company in the U.S. to raise its money by selling shares to the public, and the first and only such company to be listed on the New York Stock Exchange. By bankrolling bright men with new ideas, including some of Doriot's Harvard Business School students, the company has profited handsomely, losing money on only ten o investments.

High Voltage Gains. A.R.D. was founded in 1946 by French-born Doriot, Massachusetts Investors Trusts lateChairman Merrill Griswold and Vermont's former U.S. Senator Ralph Flanders. Doriot soon took over as president, and the company took a loss on its very first investment--a degreasing gun. It lost money consistently for the first four years. It also failed to see much future in Ampex or Varian Associates, which went on to rise high in the space age.

But Doriot persisted in searching out promising ventures, fearlessly backed some successful firms--such as Bostons Ionics Inc., whose main business salting water--that were declared valueless by technical experts. Almost alone, ARD. took note of M.I.T. Professor Robert J. Van de Graaff's research into super voltages, put up $200,000 for him to start High Voltage Engineering Corp. in 1946-- and has since seen the value of this investment grow to more than $13 million. A.R.D. has raised $19 million from the public distributed $4,500,000 in capital gains to its shareholders, has current assets of $31 million. This week at its annual meeting, Doriot will tell stock holders that the company now has stakes in 45 young companies, of which 28 are returning profits and 30 set sales records last year.

Watch & Worry. Once he puts up money to get a company started, Doriot figures that his job is to "watch, push, worry and spread hope." Every year 500 to 1,000 aspiring entrepreneurs beat a path to his Boston office, but Doriot weeds out all but a promising few. He is helped in the selection by seven aides, of whom four are former Doriot students. (His current students are dubbed "Doriot's raiders;" groups of them have earned up to $30,000 by publishing their probing classroom reports on companies.) When investing, Doriot always looks at the man as closely as he looks at the idea. "We haven't made any technical mistakes," he says, "but we have made people mistakes." Unable to resist the professor's penchant for grading, Doriot imposes one rule on his associates: a Grade A man with a Grade B idea is better than a Grade A idea presented by a Grade B man.

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