(Photo by Roberto Torres)
Warren V. “Pete” Musser, the Safeguard Scientifics founder who saw his personal worth balloon up to a billion dollars and then plummet after the dot-com bust, is worried about SpaceX CEO Elon Musk.
“I think he’s a little too ambitious,” the mythic 90-year-old investor quipped about the Silicon Valley superfounder during an exclusive interview with Technical.ly at a massive roundtable in his Radnor office.
Ambition — a double-edged word that implies both hard work and unbridled thirst for more — is a trait that is not lacking in the ballad of Pete Musser, a man touted by both locals and out-of-towners as a captain of industry way before entrepreneurship was the cool thing to do.
And wouldn’t you know it: it all started because of a girl.
“When I was working for Pennsylvania Bell, I was dating a girl who’s father was a stock broker,” Musser said of his time at the phone company (which we know today as Verizon). “When I went to visit her, she was never ready on time so we’d have these little chats. He was a lively, effervescent guy and he asked me once, ‘Why do you want to work for the Pennsylvania Bell?'”
The entry-level training program was indeed starting to bore Musser, a restless, nimble engineering grad from Lehigh University. So he went and knocked on the door of a brokerage company called Hornblower & Weeks, a stodgy old firm that had the good foresight of hiring Musser as a trainee.
"There's no greater satisfaction in the world than starting something yourself and making it a success."
“I didn’t know anything about the stock market, but I knew I didn’t want to be an engineer,” Musser said, in a casual tone someone might use to describe their weekend plans.
The deal was simple: Musser, then a 25-year-old newlywed (to his first wife, Betty), made $250 a month as a trainee, learning the ways of the stock market until a coworker named Frank Diamond proposed a revolt.
“Diamond came to me and said, ‘Let’s leave these people and form our own company,'” Musser remembers. “Back then, everything was within one block of Walnut Street. So we paid a visit to a law firm down the street called Freedman, Landy and Lorry to form a company.”
There was only one catch: starting a brokerage firm in Philadelphia would run you $25,000 of working capital back in the 1940s. A modest sum in today’s world of multimillion-dollar venture capital rounds, adjusted for inflation that number is closer to $250,000 in today’s dollars. Still, Musser found himself in a place where countless entrepreneurs later stood before him: needing that first vote of confidence in the shape of a thick check.
A dentist named Alfred J. D’Angelo who frequented the Hornblower offices would end up stepping up with that early capital. Thus, the Philadelphia Securities Company was born.
Musser, heralded by Fortune magazine as a “seasoned, old-school businessman,” remains grounded enough to pepper his speech with compliments towards others. “He had all the ideas,” Musser concedes of Diamond, who in 1953 egged him on to start another venture: the Lancaster Corporation. The founders sold stock in the company and set out to invest the earnings in what, at the time, was the sexy field: atomic energy.
“It was very romantic to think about it because it’s like internet today,” Musser recalls. “We didn’t have many contacts and didn’t know any people but somebody brought us a cable television, which was just getting started.”
Actually, television itself was just getting started. Philadelphia, as a region only had three channels as did most big cities. In smaller towns, though, TV sets barely got any channels. But a man named Milton Shapp — “he later became governor of Pennsylvania, can you believe that?” — had this idea: build a tower on the top of a peak in Tupelo, Miss., run a cable down into the town and provide cable TV into people’s houses. That company was Lancaster Corp.’s first investment, which later sold for $600,000.
If the tale sound familiar, that’s because the buyer of that out-of-the-way cable system was Ralph Roberts, the founder of a small Philly startup later renamed Comcast.
The deal that launched Comcast kicked off a career in which Musser championed tech investments along the Route 202 Corridor. The first tech breakthrough, however, wasn’t an OG software package or a ’90s era dot-com startup but a check-writing machine from the Safe-Guard Corporation, a company Musser’s firm acquired in 1955. The machine was such a hit among businesses that by 1966, the Lancaster Corporation changed its name to Safeguard Industries.
But perhaps the company that best sums up Musser’s journey is Novell: the small software firm that had its stock ballon up from $2.50 to $500 a share and, at one point, was present in 80 percent of the desktop market.
“We wanted to sell software that would allow separate systems to be on the same network,” Musser recalls of the initial idea. “Nobody had done that so we got in with a group of students from Brigham Young University who built a similar program. Sounded simple enough but nobody had done it.”
It was the first company in which Safeguard made use of what would later become a catalyst of the dotcom era: a rights offering. Musser gets up from his chair and saunders over to a wall in his office. He points to a framed piece of paper: the official document that allowed the firm to sell options to acquire stock in a promising company like, in this case, Novell. It’s dated 1985.
“See, I say Novell and he wags his tail, cause he knows that’s a success story,” Musser says of the humongous Golden Retriever that accompanies him everywhere. “Good boy, Higgins.”
“As long as your sales go up, it’s all good news,” Musser said. “This all seemed so wonderful that we thought, ‘Why don’t we do this some more?’ We had the biggest returns in the ’90s. We were making more money for people through rights offerings than Microsoft was making with their stocks.”
But then came the crash.
“You would have loved it in the ’90s,” Musser tells this reporter, who was but a wee 10-year-old in 1999. “But it was completely built on speculative enthusiasm. And when it topped out in 2000, the internet market went kaput, like that.”
Indeed it did.
Musser’s personal worth, which topped at a billion dollars in the year 2000, came tumbling down as did the price of Safeguard’s stock. The crash brought the stock price from $98 a share in March of 2000 to just over $6 in December of that same year. And Musser, who had never sold any of his shares, took the fall right alongside the company he help build.
“I’m fighting hard to put this behind me,” a younger Musser told a Fortune reporter in 2001. “I got seduced by the value of my holdings,” he ceded back then, in reference to him taking on debt to buy stock in tech companies. The Fortune story puts the amount Musser borrowed close to $100 million using Safeguard’s stock as collateral. As the numbers cratered, creditors started knocking on the door.
Any lessons learned from falling off a financial cliff that steep?
“The main thing is: don’t get so caught up in your own enthusiasm that you can’t weather a change in the cycle,” said Musser. “That’s what a lot of us entrepreneurs have the habit of doing: get so caught up in it and then get caught short when it doesn’t happen. That was exactly my cycle. Of course, there’s no excuse for that at all. You’re supposed to know better.”
So how does a guy bounce back from the biggest monetary loss of his career? Even long-time secretary Diane Swiggard, who’s been working with Musser for 40 years through ups and downs, can’t quite explain the turnaround.
“He’s a strong person,” Swiggard told Technical.ly, “but I personally don’t know how he got through that.” Yet he did.
Regrouped under the smaller umbrella of the Musser Group, the investor went back to picking companies and infusing cash into them. The formula that had once worked at Safeguard, this time yielded some solid bets, most notably, Fort Washington, Pa.-based Nutrisystem. As recently as 2015, Musser’s company was investing in startups like Cleveland-based Acceleration Systems.
Talk to a guy like Steve Zarrilli, Safeguard’s current CEO, and all signs point to Musser’s work ethic as what got him over the crash.
“Pete never stopped,” Zarrilli told Technical.ly. “He still never stops. He’s in his office before 9 a.m. and doesn’t leave until 3 p.m. He was likely putting in a full day until he was about 85.”
Swiggard begs to differ: quitting time for Musser is closer to 4 p.m. these days, with frequent breakfast meetings at 7:30 a.m (sometimes at the famed Radnor Hotel where a lot of his early deals went down). What does he do all day? Takes phone meetings, advises business execs and reads the emails Swiggard prints out for him: The tech investor doesn’t use a computer.
“He’s a great boss and he’s extremely generous,” Swiggard said. “Sometimes to a fault.”
Musser slips back to talking about Musk like the image of his younger self still haunts him: a billionaire at the top of his game seeing everything around him falter.
“He’s perhaps the most brilliant man alive,” Musser said of Musk. “He’s the Edison of his age but he’s playing the game in an all-out way. Already there’s been several moments when he’s been close to bankrupcy. He’s on that precipice right now: he has to keep raising millions of dollars. Any one of his five things would be a heroic endeavor, but to do five at once? I don’t know how he even goes to sleep. He must have a cast-iron stomach.”
“I think he’s an amazing guy,” Musser said. “He has more energy to help entrepreneurs than any 10 guys I know.”
Speaking of helping, Musser astutely segues, the Musser Foundation is “one smart thing” he did by taking a portion of his Safeguard stock and using it to start a foundation, which, to date, has donated $50 million to the investor’s favorite charities. “We helped a lot of Boy Scouts, a lot of help went to the Red Cross,” he said. “I think that’s what entrepreneurs should do. Better than sell the stock, you put it in a foundation.”
Ten years have passed since this all-encompassing profile on Musser by writer Amy Donohue Korman was published by Philly Mag, but hardly anything has changed.
The aging exec is still putting in a half day of work at Safeguard’s old offices, which today shelter the five-person team that is the Musser Group. Musser is still seeing a lady by the name of Mary Barton, who he takes out to dinner almost every night. He’s still, per Swiggard, eating baloney and mustard sandwiches for lunch, with a single Oreo cookie for dessert. A man of seemingly simple habits, which Korman summed up as “The Pete Principle” in her story.
One thing did change, though. His beloved Golden Retriever named Higgins (both Higgins I and II) have gone to doggie heaven. A few weeks after Higgins II was put to sleep, Musser took a drive over to Delaware Valley Golden Retriever Rescue and came back with a sweet nine-month-old pup. Her name? Higgins III.
Musser has garnered a reputation as kingmaker for at least a portion of Philly’s entrepreneurial history. It’s a tough question to ask of an old-timer, but: What does he feel he leaves behind? What’s Musser’s legacy for the region, and how would one measure that?
“I think by the successful companies that are still around,” the exec said. “When I talk about Comcast, I feel wonderful. It’s worth $100 billion! Can’t hate that. I look at how the community has benefited, at all the companies that we helped. There’s no greater satisfaction in the world than starting something yourself and making it a success.”