Page 120 - ENTREPRENEURSHIP Innovation and entrepreneurship

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Source: New Knowledge 113

ently picked up where the Brothers Pereire had left off, added the
knowledge base of banking to the venture capital concept, and suc-
ceeded. The first was J. P. Morgan, who had been trained in London
but had also carefully studied the Pereires’Crédit Mobilier. He found-
ed the most successful entrepreneurial bank of the nineteenth centu-
ry in New York in 1865. The second one, across the Rhine, was the
young German Georg Siemens, who founded what he called the
“Universal Bank,” by which he meant a bank that was both a deposit
bank on the British model and an entrepreneurial bank on the
Pereires’ model. And in remote Tokyo, another young man,
Shibusawa Eichii, who had been one of the first Japanese to travel to
Europe to study banking first-hand, and had spent time both in Paris
and in London’s Lombard Street, became one of the founders of the
modern Japanese economy by establishing a Japanese version of the
Universal Bank. Both Siemens’s Deutsche Bank and Shibusawa’s
Daichi Bank are still the largest banks of their respective countries.
The first man to envisage the modern newspaper was an
American, James Gordon Bennett, who founded the New York
Herald. Bennett fully understood the problems: A newspaper had to
have enough income to be editorially independent and yet be cheap
enough to have mass circulation. Earlier newspapers either got their
income by selling their independence and becoming the lackeys and
paid propagandists of a political faction—as did most American and
practically all European papers of his time. Or, like the great aristo-
crat of those days, The Times of London, they were “written by gen-
tlemen for gentlemen,” but so expensive that only a small elite could
afford them.
Bennett brilliantly exploited the twin technological knowledge
bases on which a modern newspaper rests: the telegraph and high-
speed printing. They enabled him to produce a paper at a fraction of the
traditional cost. He knew that he needed high-speed typesetting, though
it was not invented until after his death. He also saw one of the two non-
scientific bases, mass literacy, which made possible mass circulation
for a cheap newspaper. But he failed to grasp the fifth base: mass adver-
tising as the source of the income that makes possible editorial inde-
pendence. Bennett personally enjoyed a spectacular success; he was the
first of the press lords. But his newspaper achieved neither leadership
nor financial security. These goals were only attained two decades later,
around 1890, by three men who understood and exploited advertising:
Joseph Pulitzer, first in St. Louis and then in New