When speaking to venture capitalist David Magerman, I was able to tell that he had a purpose for making money—to help make an impact on klal Yisrael in a big way.
David began his career as a computer scientist in a hedge fund. Using his unique analytical and data science skills, he was able to transform a failing part of the company from losing money to making billions of dollars. After leaving the company, coming back, being fired, and settling a lawsuit, David settled into his career as a venture capitalist.
David is a well-known philanthropist, having supported many major Jewish institutions over the years. He made headlines after pulling his financial support from his alma mater Penn University over their response to the October 7 massacre and the pervasive anti-Jewish atmosphere on campus.
We spoke about his unique investment strategy, why you can make more money by not taking risks, as well as his unique way of giving back.
—Nesanel
I was born in Brooklyn. When I was three years old, we moved to Long Island. A few years later we moved from there to Kendall, Florida, where I spent my formative years. I have one sister.
“My mother’s parents come from a small village in Russia where there were a lot of pogroms. They came to America in the 1910s. My father’s father was from Poland; he came to America in around 1920 and spent most of his adult life as a garment worker. In or around 1930, when my grandfather was close to 40 and still a bachelor, he was paid by a family to rescue their young sister, who was in her 20s, from Poland. He found her, rescued her and married her. Sadly, my grandmother was sickly and ultimately passed away when my father was young.
“My father had a very difficult life; he worked as a taxi driver. He was very close to my uncle and very emotionally dependent on him, and I think when he found out that my uncle had stomach cancer, he lost his own will to live. He had started getting chest pains and decided not to treat them, and he eventually passed away from a heart attack at the age of 52. I was only 18 at the time and a freshman in college.
“I grew up in a typical unobservant Conservative home. We used to do somewhat of a Seder. I would go to shul with my father on Yom Kippur, but not really do much there. I had a bar mitzvah. I learned the rudiments of the prayer service on Shabbos. But my Jewish knowledge was very limited.
“When I was young, I got into computers, which back then in the 1980s was not really a thing. I took a computer class when I was in sixth grade, and then I got a small computer. I wrote software but nothing entrepreneurial. My mother was an office manager for an accounting firm, and she was always complaining about their time and billing software. I took it upon myself to write a time and billing software system in Pascal and gave it to my mother’s firm, which brought it to the company that had provided the software they were using and said, ‘An eighth grader wrote this, and it’s better than your system—fix yours.’ They were suitably embarrassed and fixed their system. I was doing it just to prove a point; I wasn’t doing it to go into business.
“I sold candy in high school and got suspended for it because apparently you weren’t allowed to do that. On Sundays I’d go with my father to a pharmacy that sold discounted candy bars, and I’d buy a bunch of candy bars for 15 or 20 cents and then sell them for 50 cents at school. I had a spreadsheet on which I listed all 20 candy bars I was selling, and every day I entered the sales of each one. That was my first foray into business. Then I got a job as a programmer at an after-school program and spent the rest of my time writing software.
“In 1985 I went to Alexander Muss High School in Israel for ten weeks. It was pretty much an indoctrination program to get you to love Israel. You also learned some Torah along the way, but that was incidental to the program’s purpose. Still, I came back wanting to be religious, until my mother ‘deprogrammed’ me. She was terrified that I was going to ‘ruin my life.’
“After high school I went to the University of Pennsylvania, where I studied computer science and math. I wrote a significant senior thesis as an undergrad about natural language processing and AI. I was quite ahead of the curve. I was very into AI computer science back then, and I wrote a paper about using data-driven methods to learn language from text. The paper got a lot of attention. I was a grad student at Stanford at that point and had worked at a lab for a year. Someone who ran a lab at IBM wanted me to come work for him in Yorktown Heights, NY. I finished my requirements at Stanford and then went to New York. I spent most of my graduate school years working at IBM while doing my PhD thesis research.
“When the IBM lab director left to run a lab in Johns Hopkins, I applied for a faculty job with him. Baruch Hashem, I didn’t get the job, or I could’ve been a poorly paid professor today. He told me if I applied again the following year, I’d get the next job they were offering. I ended up working for a company called BBN in Cambridge, Massachusetts, where I spent a few months. Someone at IBM for whom I’d voluntarily done some work had left there and gotten a management position in a quantitative hedge fund, which wasn’t really a thing back then, but this fund had been started by a famous mathematician. Now this person was trying to bring some of the programmers and researchers whom he knew from IBM to join him there.
“A few months after I started working at BBN, he asked me if I’d interview for a job at the hedge fund. I had just started the job and didn’t feel comfortable quitting, so I turned him down. After a few more months at BBN, I realized that I had made a mistake. I felt I was going to be languishing away at this company, working hard but not having much impact.
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