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Doriot's vision and charm were instrumental in winning over investors Ivan Massar

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In the fall of 1965, in fact, Doriot had already secured an underwriter. On a trip to New York, he persuaded Longstreet Hinton, an ARD director who was executive vice-president of the powerful Morgan Guaranty Trust Co., to buy 20% of Digital's offering. With this valuable promise, Lehman Brothers President Robert Lehman happily agreed to take Digital public.

The task for building Digital's investment case fell to a 31-year-old junior banker named Arnold Kroll. "No one at Lehman had the slightest interest in doing an offering for a minicomputer," says Kroll. "No one knew what a minicomputer was. There was a prejudice that IBM was the only company that would ever do good. It was a throwaway, and it was thrown at me."

ARD had helped Digital in countless ways since its inception. Doriot invested money in Digital when no one understood the importance of computers, he stocked the Digital board with ARD staffers to help guide its business, he rejected many takeover offers for his precocious child, and Doriot himself became the chief mentor of Kenneth H. Olsen, Digital's co-founder and president.

Doriot's orchestration of the Digital IPO was a crowning achievement that perfectly symbolized his philosophy: He believed in building companies for the long haul, not flipping them for a quick profit. And now, nine long years after his first investment in Digital, Doriot had decided it was time for Digital's coming-out party. Kroll grabbed the ball that no one wanted and ran up to Digital's headquarters in Maynard, Mass. Burrowing into the company, he analyzed Digital's management, its products, and its market. Olsen stood in the background while Doriot guided the entire process, articulating the value and uniqueness of the operation to Kroll and the staff of Lehman Brothers.

Kroll wrote a report strongly recommending the Digital offering. The biggest concern was competition from IBM (IBM). But Digital executives and Doriot convinced Kroll that Big Blue couldn't move quickly enough to catch up to Digital's innovative band of engineers. "I came away with the feeling that the company would be able to make its internal projections, which were very high," says Kroll. The firm green-lighted the IPO.

Perfect Pitch

Over the summer, Lehman bankers pitched the deal. Back in the mid-1960s, there were no "road shows." The sales process consisted primarily of meetings between Lehman associates and potential investors in New York and Boston. Olsen made a few appearances. But Doriot played the leading role, infusing many investor meetings with his vision, charm, and gravitas. "People got very intrigued by it," says Robert Shapiro, who as part of Lehman's syndicate desk was responsible for identifying a nucleus of long-term investors. "It was because of Doriot and the reputation that he enjoyed. He was highly respected as a man of a scientific mind who also understood the business aspects."

Ultimately, the deal attracted far more demand than supply. Lehman Brothers wanted to price the shares at $17, but Digital's board held out for $22 a share.

As the summer drew to a close, it was time for ARD's Cinderella to put on her glass slipper. On Aug. 19, 1966, Lehman led an $8 million offering to sell 375,000 shares of stock in Digital Equipment under the ticker DEC. It easily sold out. In nine years, ARD's $70,000 investment had skyrocketed in value by a factor of 500, to $38.5 million, validating Doriot's vision and proving the shortsightedness of the SEC in one dramatic transaction.

But there was no celebration inside the Civil War-era woolen mill that served as Digital's headquarters. "I don't think anyone viewed it as a way to get rich quick," says Digital executive Winston R. Hindle, one of about 30 employees who owned IPO shares. "It was a quiet sense of enthusiasm and pride" that "reflected Ken's and the General's style," said Digital executive Jack Shields.