When traditional manufacturers began leaving Massachusetts in the 1970s, politicians faced a daunting task: How could they revive a flagging economy?

They responded by starting their own venture capital firm to help finance the launch of innovative, technology-based companies. The Massachusetts Technology Development Corporation would create thousands of new, high-paying jobs.

John F. Hodgman, who retired as president and CEO of MTDC in 2001, shares an insider's tale of how the unique public-private partnership achieved financial success--explaining why the MTDC was created and...