Page 28 - Priorities #60 2014-November/December

28 H How did he get from there to here? A little bit of luck and a whole lot of ambition. “I knew I wanted something bigger,” he says today, remembering what it was like to leave Idaho as a teenager. Of course, Magnuson didn’t start out as an in- vestor; he started out as an Economics student at Stanford University. When he arrived in Stanford, in 1974, Bluegrass music was in the air and the technological
“I think of Rick as the consummate Priory parent leader. His contributions to all areas of progress at the school over the past 10+ years including Trustee Chair, Capital Campaign, annual Founders Club and oversight of the Finance Committee set the standard for the rest of us.”
—Hank Plain
Former Priory Board member
first taste of the world of venture capitalism. Magnuson went on to simultane- ously pursue business and law degrees at Stanford, in the university’s highly competitive JD/MBA program, which he completed in 1982. In the last year of the program, he was hired on at Menlo Ventures, became a partner in the firm after two years, and remained there until 1996. “I’ve always liked money,” says Magnuson with a laugh, when asked why he was drawn to investing. “Also, I’ve always been interested in the strategies of risk and reward.”
Magnuson learned a lot at Menlo Ventures and, after 12 years of experience investing in a wide range of companies, he realized that his favorite companies to work with were smaller ones that were just starting out. That’s when he struck out on his own to become an angel investor for promising startups. “I love work- ing with small companies and start-ups,” he says. “I love the puzzles presented by technology and strategy, situations in which you’re trying to find a product or service that matches with a specific market, build it quickly, and stay ahead of the competition.”
Magnuson, who says he joins the boards of nearly two thirds of all of the companies he invests in, also likes investing at the ground level because a com- pany is the most malleable in its initial stages. In a company of 20 people, he says, if something isn’t working, it can be easily changed. In companies with hundreds or thousands of employees, structural or institutional change is a lot harder to execute.
Some of the tech companies Magnuson is proud to have invested in over the years include IKOS Systems, Inc., Progress Software, PlaceWare (which was ac- quired by Microsoft), and Jigsaw data (which was acquired by Salesforce). He’s also currently investing in the peer-to-peer lending company, SoFi, and a new business in his old hometown, the Wallace Brewery. “Wallace is an old mining town where the mines have been mined out,” he says. “It’s pretty depressed, economically. Actively investing in this brewery is a way to give back to Wallace. It will provide jobs and economic activity.”
Of all the companies Magnuson invests in, the brewery, he says, is the only one that has a strong personal connection for him; the rest he has chosen because he thinks they will be successful businesses that will eventually turn good prof- its. But, Magnuson says, his investment in a company always initiates in him a feeling of care and personal responsibility. “Once you get into a company and you’re building it, there’s a feeling of community and you want to support it,” he says. “These are people’s jobs. These people have kids.”
Magnuson’s startup investing savvy has played a role in another part of his life: It’s made him a smart investor in nonprofit organizations, like Priory. “I’ve
fffffrevolution was starting to brew. During his last year as an undergraduate, he began working as an accountant at Tandem Computers, Inc., where he got his ff