When philanthropist Joe Fitzsimmons sought some big donors to join the United Way’s Tocqueville Society a few years ago, he approached venture capitalist Rick Snyder.
Snyder had already helped birth the economic development group Ann Arbor SPARK and was a frequent guest at the U-M’s business and engineering schools. He didn’t have much of a profile on social causes but clearly had the money to give.
As Fitzsimmons recalls it, Snyder was glad to make a sizable donation–even more than the $10,000-a-year minimum–as long as the agency used it to entice others to contribute similar checks.
The approach tells a lot about how Snyder leverages his wealth to support people and causes he deems worthy. Those causes begin with start-ups–including one that Snyder personally bailed out when it couldn’t make its payroll–and extend to The Henry Ford museum and the Detroit-based Sphinx Organization, which encourages minority classical musicians through competitions and scholarships.
Right now, though, his central cause is the state’s economy–and his own move up. Snyder has said that as a teenager in Battle Creek, he mapped out a career path with three parts: business, public service, and teaching. A year ago, he switched onto the second track by announcing his candidacy for governor. In a six-way race for the Republican nomination, he’s positioned himself as a political outsider with the business experience to reinvent Michigan so our children can thrive here.
Snyder is running a corporate campaign, with high-priced Washington strategists and experts brought in from California and the East Coast. When staffers travel, they stay at the luxurious Mission Point Resort or the Grand Hotel on Mackinac Island, and the Washington, D.C., Hilton preferred by lobbyists and business types. And Snyder himself is paying most of the bills–he has passed up state campaign funds (which come with spending strings) and is not accepting contributions from political action committees. By the end of last year, he and his wife, Susan, already had poured more than $2.6 million in gifts and loans into his campaign
Earlier this year, Snyder jumped in the polls after he ran a Super Bowl ad labeling himself “one tough nerd.” Snyder did make his fortune in a nerdy industry, computers. But at Gateway, the former accountant “wasn’t the resident nerd,” company cofounder Ted Waitt recalls. “He was kind of the adult supervision.”
Snyder grew up in Battle Creek. His father owned a window cleaning company and his mother cared for their modest 900-square-foot home and raised Rick and his sister, Sharon. Always ambitious, he took community college courses in high school. By the time he was twenty-three, he had earned undergraduate, MBA, and law degrees from the U-M.
When Snyder graduated from law school in 1982, Michigan’s economy was in a tailspin. He was offered two jobs–one with a company in Texas and the other in Detroit at the accounting firm now known as PricewaterhouseCoopers. He told the Washtenaw Economic Club that he chose the Michigan job after he was promised mentoring and the possibility of a fast track to partnership.
“Rick was very quick at picking up” international law, complicated tax code, and, later on, corporate mergers and acquisitions, says Matthew Rizik, who helped recruit him. His combination of business expertise and his skills, Rizik says, helped him make partner in the promised six years, when the standard time frame was eleven.
Around 1990, the Snyders moved to Chicago, where Rick launched the firm’s new mergers and acquisitions practice. That gave him a big taste of deal making–and introduced him to Waitt.
“Rick became an extremely close advisor on the outside,” Waitt recalls–so close that when his brother left Gateway in 1991, Waitt asked Snyder to “become my right-hand person.”
Snyder moved to South Dakota to become Gateway’s executive vice president and joined its board of directors. He was, says Waitt, “the detail-oriented execution guy who handled operations.”
“Rick was the yin to Ted’s yang,” says Alan Kirts, who served as a press relations manager for Gateway during the 1990s. “Ted is kind of a cool ponytailed [guy] and Rick was…three-piece suits, well groomed.”
Playing up its heartland location, Gateway shipped its computers in cowhide-patterned boxes. In the early 1990s they were selling like crazy: the company’s revenues increased fivefold from 1992 to 1995.
Waitt found Snyder a great partner and a relentlessly hard worker. “He never lost his cool,” Waitt recalls, not even amid significant messes or when coping with sometimes crazy ideas from his boss. “I needed someone who was not afraid to tell me no,” Waitt recalls.
In an era when stock options were passed out like popcorn, Snyder’s ownership stake in Gateway grew rapidly. After he helped the company go public in 1993, that translated into real wealth.
According to a Gateway proxy report, by 1997 Snyder earned a salary and cash bonus of $675,000, plus thousands more in country club memberships, life insurance, and other perks. Though he left the company that year, he held onto his stock, which at the peak of the Internet bubble in 2000 was valued at almost $100 million.
The Snyders and their three children returned to Michigan. They lived briefly in Dearborn, Susan’s hometown, before buying a $920,000 home in Geddes Glen, a gated subdivision east of Ann Arbor. Since expanded and now valued at $1.5 million, the home sits in one of the lots furthest from Geddes Road and closest to the Huron River in an exclusive enclave that sends its children to Ann Arbor public schools but pays the lower taxes of Superior Township. The addition appears to include a large gymnasium and second living space tacked onto the back of the traditional orange-blond brick house with three-car garage. The property taxes alone came to $25,383 last year.
“He came back to help Michigan,” says Snyder’s friend Ken Nisbet, executive director of the U-M’s tech transfer office. “He was a Battle Creek boy, and he wanted to make a difference for his state.”
The year he moved to Ann Arbor, Snyder launched a $100 million venture capital fund, Avalon Investments. The investors included some people from Snyder’s Chicago days and his former boss, Ted Waitt.
“It was tough going doing venture capital back then,” recalls Chris Rizik, who worked with Snyder first as the VC firm’s attorney, then as its managing director. (He and Matthew Rizik of Pricewaterhouse are brothers.) Michigan didn’t have as many start-ups as other parts of the country, so Avalon also invested in firms in California, Massachusetts, and elsewhere. “We were very, very active,” Rizik recalls.
In 2000, Snyder, Rizik, and others launched a second $100 million fund, Ardesta. “Rick is a builder. He takes great pleasure in turning nothing into something,” says Rizik. At board meetings of the start-ups they funded, Snyder “comes prepared, with the kinds of ideas and opinions you don’t hear from every board member.”
When I ask Snyder to choose five words that most describe himself, his initial answers tumble out as: “Honest. Bright. Thoughtful. Caring. Fun.” Then a moment later he adds, ‘hardworking has to be in there somewhere'”and when I insist he stick to five, bumps “thoughtful” to make room. His motto in business captures some of his other key priorities: “Make money. Help people. Have fun.”
Just how much money he’s made is anyone’s guess. Jake Suski, the campaign spokesman, says that Snyder draws a salary of just $20,000 a year from Ardesta–and promises that the candidate will release his tax returns in coming months. But between Gateway and his venture capital investments, Snyder appears to be quite wealthy. The best VCs, says Gene Riechers, a cofounder of Valhalla Partners in Vienna, Virginia, work long hours and earn a lot: “You can get very rich doing that.”
Snyder’s funds have been part of two big successes recently, both based in Ann Arbor. HandyLab, a maker of molecular diagnostic platforms, was sold to Becton, Dickinson and Company for $275 million last fall. (The proceeds were split with five other funders and likely some senior managers at HandyLab.) The other, HealthMedia, provides online health coaching and information to help employers reduce their medical costs.
Snyder helped Victor Strecher, a U-M professor of public health, found HealthMedia in 1998. Chris Rizik recalls how Snyder spent three hours at a whiteboard, mapping out the business plan–“Rick could see the potential in that technology that others didn’t see.” But by 2001, Rizik says, the company was “on the ropes and couldn’t make payroll.” When HealthMedia’s funders refused to advance it any more money, Snyder gave the company a personal loan–at which point others chipped in, too. His faith in the company and loyalty to its founder paid off when it was purchased by Johnson & Johnson in 2008.
Yet when asked about his biggest success, Snyder turns from the business world and points to his family–“Sue and three great kids and Doogie, the wonder mutt.” His oldest, Jeff, a Huron High grad, is about to graduate from Albion College with a psychology degree. Melissa graduated from Greenhills, is currently at Washtenaw Community College, and will go to the U-M in the fall. The youngest, Kelsey, is in the eighth grade at Greenhills and is active in her father’s campaign.
Before Snyder declared his candidacy last year, he was approached to run by both Democrats and Republicans, according to Nisbet, a close friend. “He was obviously flattered. He thought it was interesting,” Nisbet says.
Snyder says he never “seriously considered” running as a Democrat–he describes himself as a lifelong Republican who started campaigning for then-governor William Milliken at age sixteen. His donor list looks like a roster for a business organization, with more CEOs and partners than some chambers of commerce get. Many are from Ann Arbor–business owners, neighbors, fellow venture capitalists, and even university types who say they appreciate his can-do, collaborative approach.
“I’m not from the autocratic world of management,” Snyder says, sitting in his Ardesta office on the top floor of the First National Building. “I set the vision and coach the team.”
Snyder’s “one tough nerd” ad begins with unflattering photos of “career politicians–both Republican and Democrat–who, it’s implied, have failed to right the state’s troubled economy. Snyder comes across as both savvy and accessible: he’s shown as a cute kid in a suit and tie, a young adult sticking out his tongue at the camera, and an avuncular, white-haired figure in business casual declaring “we need to reinvent Michigan.” In mid-April, his Facebook page had nearly 19,000 friends.
Behind the scenes, though, access to Snyder is carefully controlled. For weeks last winter, he didn”t appear at a single public event, and it took five requests before the Observer was granted a single, thirty-five minute interview. Even his town hall meetings around the state required an advance reservation.
The precautions may reflect the fact that Snyder is still is growing into his role as a campaigner and speaker. For most of his life, he notes, he “flew under the radar,” working primarily behind the scenes. “He doesn’t look for the limelight,” says Nisbet.
And Republicans running statewide in Michigan can easily get in trouble with an incautious word. Veteran Michigan political handicapper Bill Ballenger explains that candidates must appeal to the party’s conservative base to win the August primary–so right now “all the candidates are scrambling to get to the right of each other” on issues like gay rights, immigration, and abortion. But to win a general election, Republicans must corral independents and some Democrats–so the primary winner will have to scramble back to a more moderate tone by November.
Snyder’s campaign seems designed to minimize such veering. Nowhere in his abundant white papers does he address the social issues vital to the GOP base. When asked about them in public forums, he usually sidesteps, turning the topic back to the economy.
It’s only deep in his website, buried in a Q&A section, that he describes himself “a pro-life, pro-family Republican.” Even there, however, he immediately adds, “my focus as governor will be on economic recovery.
According to his “nerd” ad, Snyder’s “ten-point plan to reinvent Michigan is so detailed that, well, it’s likely no politician would even understand it.” It is long–but not that complicated.
To encourage business formation and development, Snyder wants to abandon incentives targeted to single industries–he frequently criticizes the state’s new film tax credit–in favor of a broad business tax cut. He’d replace the Michigan Business Tax with a flat 6 percent tax on business income, reducing companies’ total tax burden by two-thirds. Citing a Tax Foundation study, he predicts firms will use the $1.5 billion savings to hire more workers–whose rising incomes (and income tax payments) will help fill the hole in the budget. And he’d “reinvent state government” by making it more transparent and customer focused, including the adoption of a rule that grants state permits automatically if regulatory reviews are delayed.
At the same time, Snyder says, he’d work to provide a great quality of life by protecting Michigan’s natural resources. To revitalize Detroit and other cities, he advocates tax credits for young professionals who live and work in the cities and the restoration of arts funding. Renewed cities and “exciting career opportunities,” he says, will keep more young adults in the state.
When asked about his business experience with such dramatic turnarounds, Snyder mentions some unspecified start-ups and his brief return to Gateway in 2006.
Even after he moved back to Michigan, Snyder continued to serve on Gateway’s board of directors. Based on Gateway financial reports, it appears that Snyder held onto most of his stock even after the tech bubble burst–as late as 2006, he still owned 817,000 Gateway shares, twice as many as any other board member. And after the company’s president and CEO resigned suddenly, Snyder returned to lead Gateway from February through September 2006.
Snyder told Fortune magazine that he hoped to turn Gateway around by returning to its core values as a fun place to work and a “friend and trusted guide” to consumers buying PCs. Instead, within a year, Gateway was sold to Acer, a fast-growing computer maker from Taiwan, for $1.90 a share. Though only a fraction of its peak price, even that represented more than a 50 percent premium on its Wall Street value. Acer continues to sell some Gateway-branded computers, but none are made in America.
Given Gateway’s diminished condition, that may have been the best outcome. But it’s not very encouraging for a state with its own beleaguered industry.
Snyder walks into the Corner Brewery in Ypsilanti wearing his trademark sky blue oxford shirt with no tie, trim dark pants, and a quiet gray-and-blue checked wool jacket. He wears similar outfits almost every day, staffers say, though the shade of blue varies a bit.
He approaches a table almost formally, standing as tall as his five-foot-ten-inch frame will allow and pushing his hand out in a starched straight line. Discreetly holding a mug of diet Faygo root beer in his left hand, he smiles and listens to the guests’ ideas and comments respectfully, almost dutifully.
He’s given a glowing introduction by Rene Greff, who with her husband Matt owns the Corner Brewery and Arbor Brewing Company. Her support–which includes a $2,000 donation–is a coup, since in past elections, she has consistently supported Democrats. Greff admires Snyder’s “solid plan” to deal with Michigan’s budget deficits and his willingness to forgo PAC money. “He’s kind of the Republicans” version of an Obama candidate, such a broad base of support,” says Greff. “He doesn’t have a social agenda whatsoever. If I had any concerns he was going to take our state backwards in [terms of] the rights of women or the rights of gays, I wouldn’t support him.”
Snyder spent more than $700,000 last year on consultants and pollsters–half of it for John Weaver, a veteran Republican campaign advisor who worked for the George W. Bush and McCain presidential runs. “The money–it’s a big advantage,” says Ballenger.
Snyder’s political assets include his fortune, some good ideas, and “a circle of business friends who know him and respect him,” says L. Brooks Patterson, the Oakland County executive who briefly considered running for governor this year. But Patterson has endorsed Oakland County Sheriff Mike Bouchard. In a March EPIC/MRA poll, Bouchard and Snyder were in a virtual tie, at 13 percent and 15 percent respectively. Both trailed Michigan attorney general Mike Cox (21 percent) and Holland congressman Pete Hoekstra (27 percent).
Hoekstra, Cox, and Bouchard all have experience running political campaigns and track records on issues that voters can verify. Yet Snyder and his supporters think his outsider status may help him. “I trust him to accomplish what he says he’ll do–not like many politicians,” says Joe Fitzsimmons, who serves as the campaign’s treasurer.
“We’ve exceeded all of our internal goals through this point in the campaign,” says Suski, Snyder’s spokesman. “Rick has increased a tremendous amount in public polling, enthusiasm is growing, and our campaign’s organization is getting stronger every day.”
Snyder is stepping out in the real world more too, with a series of debates planned with the other candidates and as many as fifty town hall meetings around the state between now and the August primary.
Snyder considers it worthwhile to raise his expectations for himself. “I think I’m still climbing,” he says. And he’s willing to spend the millions it takes to make a serious run at the governorship. Says Snyder, “I am committed to win this race.”