David Morgenthaler - A Man Who Knew Where to Place the Lever

When I read today that venture capitalist pioneer David Morgenthaler had died one of my first thoughts was the statement attributed to Archimedes "Give me a place to stand and with a lever I will move the world". David moved the world in many important ways. As one of the first venture capitalists he used his own money to start Morgenthaler Ventures which he went on to build into a premier firm that invested in more than 325 startups. As a founding director of the National Venture Capital Association he helped shape the development of the industry, including leading the successful legislative effort to allow pension funds to invest in venture capital which vastly increased the capital available to innovative startups.

These are all immense and important accomplishments but when I thought of the Archimedes quotation I was thinking of an equally powerful placement of a lever by Mr. Morgenthaler which illustrates the modest side of the man. In 1994 David was visiting MIT, including the Alfred P. Sloan School of Management at MIT (previously known as the MIT School of Industrial Management and now known as the MIT Sloan School of Management). There wasn't a lot of entrepreneurial activity at that time - the school was about industrial management. In talking with students he learned about the MIT $10K Business Plan Competition, as fledgling entrepreneurial competition initiated by MIT students in 1989, of which I was a founding judge. As a true visionary David saw something in this modest beginning and in true "problem solving" mode and with inquisitiveness David probed the student organizers about what they were trying to accomplish. "Bringing Scientists, Engineers and Management students together to create innovative solutions to problems" was the gist of the students' response. "What is your biggest problem?" David asked. At the time it was raising the prize money - a total of $10,000 at the time. "What would you do if you didn't have to do that?" David asked. "Think about that over the weekend and let's talk on Monday" he said.

On Monday the students said they would work to "Build Tomorrow's Leading Companies". It wasn't about making a pretty business plan, the goal was to build companies that made an important difference. David's response: "My wife and I will donate the $10,000 prize money for the next 3 years - go make it happen". The rest is history. Over the next 25+ years the $10K became the $50k and then the $100K. The MIT $100K has facilitated the birth of more than 160 companies, which have gone on to raise $1.3 billion in venture capital and build $16 billion in market capitalization. More than 30 MIT $100K startups have been acquired by major companies, such as Oracle and Merck. Over 4,600 people are currently employed by MIT $100K companies. Within a few years of the Morgenthaler grant the students started the Global Startup Workshop to train students from around the world how to launch and run similar competitions. John Harthorne, one of the Global Startup Workshop lead organizers went on to found MassChallenge, the world's largest startup accelerator competition whose 2015 Impact Report notes its "growing international alumni pool of 835 startups have raised over $1.1 billion in outside funding, an achievement which puts us firmly at the top of the pack globally among accelerators. Our alumni have also created over 6,500 high-paying, quality jobs and 32,500 indirect support jobs that add to their communities and the global economy. These are truly impressive achievements that validate progress towards our greater goals of creating jobs and building strong entrepreneurial ecosystems around the world."

David Morgenthaler's vision and early financial support was key in all of this. He participated as a $10K judge for a number of years. Although a competitive venture capitalist he never asked for anything in return for his support of the $100K. He was helpful and modest, but then again if you know "where to place the lever" the satisfaction comes from actually seeing the world move.

In an era that has seen people become increasingly self absorbed and self promotive we need more true leaders like David Morgenthaler. David, you will be missed but certainly not forgotten.