Lon Horwedel | AnnArbor.com
If nerds are supposed to be expert number crunchers, this nerd missed a few key calculations.
Apparently no one told Rick Snyder companies are supposed to shut down after they’ve run out of money. When one of Snyder’s investments, Ann Arbor software startup HealthMedia, ran out of cash in 2001, some investors were ready to give up on the company.
But Snyder — who’s branded himself as “one tough nerd” in TV commercials during his campaign for Michigan’s Republican gubernatorial nomination — had faith in the company’s future, regardless of the financial realities.
So, he wrote a series of personal checks to pay the salaries of HealthMedia’s 50 employees.
“The professional investors in that deal thought he was nuts to put his personal money in,” said Chris Rizik, Snyder’s venture capital business partner for the past 13 years.
That vision paid off. The company got back on track and grew to about 150 employees by the time global health giant Johnson & Johnson bought it in a blockbuster deal in 2008. Johnson & Johnson kept the company in Ann Arbor and is investing in its growth.
“That company is one of the best success stories in the state,” Snyder said.
Snyder, 51, now wants to become a Michigan success story of his own. The former president of computer-maker Gateway Inc. believes his business experience can heal a state government ripped apart by fiscal crisis and political squabbling.
But he still seems slightly uncomfortable in the spotlight.
“One of the toughest things I’ve (encountered) is talking about myself,” Snyder said in an interview from his 10th-floor office in a historic downtown Ann Arbor building. “We’ve always tried to fly under the radar. Credit has never been a relevant measure to me. It’s not about who did what. It’s about getting good stuff to happen.”
Whether he can win the Republican nomination on Aug. 3 likely depends on whether voters embrace his story.
Battle Creek bookworm
Richard D. Snyder was born Aug. 19, 1958, in Battle Creek when his mother, Helen, was 45 years old. He grew up in a 900-square-foot house on North 22nd Street.
His father, Dale, worked various jobs before buying a small window-cleaning business. It served industrial customers, including Battle Creek’s cereal companies, before Snyder’s father sold it in the early 1970s and retired.
Learning defined Snyder’s early years. He borrowed copies of “Fortune” and “BusinessWeek” magazines from a neighbor when he was a kid. He got excited at age 14 when a Kellogg Community College catalog arrived at his house as a newspaper insert.
The catalog described an early form of dual enrolling, which allowed high school students to take community college classes. He asked his mom if he could enroll, but she told him he had to wait until he could drive.
“I remembered that. I came back pretty much a year later on the button and said, ‘Mom, we talked about this a year ago,’” said Snyder, then a student at Battle Creek Lakeview High School. “And she said, ‘How much is it, honey?’ And this dates me—it was $22 a credit hour.
“She just got out her checkbook and handed me a check.”
File photo | AnnArbor.com
Snyder started going to community college as part of his plan to get his degrees early.
In November 1975, a few months into his senior year of high school, Snyder convinced a University of Michigan admissions adviser to allow him to enroll in January 1976.
Snyder sped through classes, earning his bachelor’s, master’s of business administration and law degrees by May 1982. He was 23.
He got a job as an attorney for accounting firm Coopers & Lybrand (now PricewaterhouseCoopers) in Detroit, where he met his wife, Sue. They married in May 1987 in Dearborn at Cherry Hill Presbyterian Church, Sue’s childhood church. Snyder said he’s a Presbyterian, though he doesn’t attend services “as well as Sue would like.”
About a year later, Snyder’s firm offered him a promotion at the company’s Chicago office. He convinced Sue to leave the area to give it a shot.
The family moved to Chicago in 1989, shortly after Sue gave birth to their son, Jeff, now 21. They would go on to have two more children, Melissa, now 18, and Kelsey, 13.
Gateway to opportunity
In Chicago, Snyder met Ted Waitt, the legendary founder of Gateway.
Waitt, who later became a billionaire through Gateway’s rise, hired Coopers & Lybrand to analyze the merits of an acquisition. Snyder advised against it, and Waitt was impressed with the young accountant.
Waitt concluded that Gateway’s freewheeling culture — employees were allowed to drink beer at the office — needed the stabilizing influence of a responsible business mind and recruited Snyder to join the company as executive vice president.
When the Snyders moved to Gateway’s then-headquarters in South Dakota in the summer of 1991, Gateway had fewer than 1,000 employees and some $600 million in annual sales.
Snyder had never run a company before.
“There was a great learning curve, but that’s one of my skill sets is being able to adapt to a new environment and bring what I think are common sense measures and good management skills,” he said.
In December 1993, Gateway went public. Investors loved the company,
which branded its computer boxes with its famous black-and-white cow
In January 1996, Snyder was officially named
president and chief operating officer. Gateway capitalized on the
global surge in desktop PC ownership as sales grew from $1.1 billion in 1992 to $5.04 billion in 1996, according to Securities and Exchange Commission filings.
By Dec. 31, 1997, five months after Snyder resigned as president, the company had 10,600 employees in the U.S., 1,600 in Europe and 1,100 in Asia.
Shifting to venture capital
Snyder, who became wealthy because of Gateway’s success, wanted to try his hand at investing in companies through venture capital. He settled in the Ann Arbor area, and with his business partners raised $100 million to invest through his new firm, Avalon Investments. Waitt was one of Avalon’s early investors.
“This was a good economic opportunity, but it was also an opportunity to help our state because there weren’t many venture capitalists and people that knew how to do young companies, to be entrepreneurial and innovative,” Snyder said.
That’s when Snyder met U-M professor Vic Strecher, who was developing software to help people make healthy lifestyle choices and reduce health care costs. A one-hour introductory meeting turned into an intensive four-hour discussion on how to get Strecher’s HealthMedia Inc. started and funded.
When HealthMedia later slipped into financial problems, Strecher said most investors lost interest in the company.
“Rick never, ever did that,” Strecher said. “He stayed the course. He understood it was going to be hard, and to me that’s why I’m helping him to become governor if I can.”
Avalon made all its investments by 2000, so Snyder and his partners raised another $100 million to form a new Ann Arbor venture capital firm called Ardesta, which specialized in nanotechnology and micro-technology companies. That firm made its last new investment in late 2008, months before Snyder declared his candidacy.
Record called into question
Snyder, the only candidate who has worked exclusively in the private sector, is calling himself a “job creator.” He labels his opponents as “career politicians” who can’t fix the mess in Lansing or fight Michigan’s unemployment crisis.
But his critics have challenged his record, accusing him of shipping jobs overseas at Gateway.
From 2001 to 2005, when Snyder was serving on Gateway’s board, the company endured a rapid decline. The company’s computer sales plummeted 54.3 percent from 1999 to 2003 as competition in the PC industry intensified.
Ryan Stanton | AnnArbor.com
Gateway, which had grown to 21,100 employees in the U.S. and 3,500 in 16 foreign countries as of Dec. 31, 2000, quickly contracted. The company closed its overseas operations by Dec. 31, 2003, leaving it with 7,400 employees in the U.S. and only seven overseas, according to SEC filings. Some of those jobs were lost because Gateway contracted with foreign manufacturers to do some of its work.
“We need somebody who has a track record of creating jobs in the United States and in Michigan, not sending them overseas,” said Mark Brewer, chairman of the Michigan Democratic Party.
Waitt made several strategic missteps as CEO of Gateway from January 2001 to March 2004. The company founder, who still owned 32.8 percent of Gateway’s stock as of Feb. 4, 2004, lost billions. He gave up control after Gateway acquired competitor eMachines Inc. for $289.5 million in March 2004.
Wayne Inouye, eMachines’ CEO, took over Gateway. He further shifted manufacturing to eMachines’ network of foreign suppliers, reflecting a general trend in the industry. By Dec. 31, 2005, Gateway had just 1,800 employees, all in the U.S.
Snyder argues that, as a single member of Gateway’s board, he should
not be held responsible for the company’s downfall and subsequent job
losses. “I was a minority voice on the board, saying I didn’t agree
with several of those steps,” he said.
Economic development focus
File photo | AnnArbor.com
After Snyder returned to Michigan, he became active in economic development issues. Former Gov. John Engler appointed him as chairman of the Michigan Economic Development Corp. from 1999 to 2001.
In 2005, he brought together a coalition of business leaders, university executives and political officials to form Ann Arbor SPARK, a nonprofit organization devoted to boosting the Ann Arbor region’s economy. Snyder said he believes SPARK’s model can be extended to the rest of the state.
“Most of the things we’re doing I think have potential to be duplicated in other areas and, in fact, create collaboration,” SPARK CEO Michael Finney said, emphasizing SPARK does not make political endorsements.
Snyder also wants to eliminate most of the state’s tax incentives, arguing the state should focus on creating a better environment for businesses. He wants to ax the controversial Michigan Business Tax and replace it with a flat 6 percent corporate income tax.
“The Michigan Business Tax is a job killer,” he said. “It’s fundamentally unfair.”
Snyder has faced skepticism among social conservatives who question his views on issues like abortion. He said he believes abortion should be illegal except in cases of rape, incest or when the mother’s life is in danger.
Lon Horwedel | AnnArbor.com
Still, he has repeatedly said sparking Michigan’s economic revitalization is what interests him most. That’s why he got into the campaign in the first place, and he showed early he is not afraid to spend his own money.
Although he’s had political aspirations for years, he said he wasn’t ready to act on them until “date night” with Sue at Ann Arbor’s West End Grill in February 2009.
“We started talking about the state and the governor and what was going on, and he said, ‘You know, this state is such a disaster,”’ Sue said. “He was just getting so frustrated.”
“And I said, ‘Well, why don’t you run for governor?’ And his eyes lit up like a little boy in a candy shop. He says, ‘Do you really mean that?’
“I said, ‘You’re the only one that can do this. You’re the only one that can turn this state around.’”