Magic Solutions, Inc.

Magic Solutions, Inc.

Former type	Private
Industry	Computer software
Founded	1988
Defunct	1998
Headquarters	Paramus, New Jersey, U.S.
Key people	Igal Lichtman, Founder & CEO Andrew Rawson, VP Marketing Michael Pallatta, VP Sales, Vadim Mostov, Chief Architect Efim Gendler, Head of Search Technology Jon Von Lintig, CFO Florence Schlanger, VP Client Service Barbara Johnson, VP International
Products	SupportMagic
Website	www.magicsolutions.com

Magic Solutions International, Inc. (known as Magic Solutions) was a company specializing in help desk automation and asset management software. It started as an unplanned spin-off from a computer system integrator. Based on the east coast of the United States, it became one of east coast's most successful independent software vendors of the 1990s. The company was founded in 1988 by Igal Lichtman and headquartered in Paramus, New Jersey.

The company started with one programmer and a single customer and grew to over 300 staff serving 6,000 customers. It reached a yearly revenue level of US$64M. In 1997, the company was sold to Network Associates, Inc (now known as McAfee) for $110M in cash. Along the way, Magic Solutions avoided venture capital and kept the original management team in place. The company continually outperformed, out-developed, outsold and out-marketed their better-financed west coast rivals. The company's original help desk software product, SupportMagic, lives on today as part of BMC Software (NYSE:BMC), to whom McAfee sold the business in 2004.

Early history

MicroAge of Mahwah (New Jersey) was a highly successful retail computer franchise in the 1980s. They successfully transitioned from a seller of stand-along computers to become a value added reseller installing complete LAN's in local businesses. One problem they faced was keeping track of the equipment that was sold and returned for service. At the time, there was no PC-based program that would track equipment, serial numbers, and warranty entitlement along with the complete service history. Igal Lichtman, president of MicroAge and one of the three owners, designed the workflow for a service management program to run their service department. Writing in C and working with former colleagues and friends from the Israeli army, he created what would eventually become known as ServiceMagic. Shortly thereafter, One of MicroAge's largest clients, a Fortune 50 company based in Westchester, NY was getting rid of their mainframe computer and needed to find a help desk application that would run on a PC network. Igal worked with this company's IT department to modify ServiceMagic, creating a new product, SupportMagic. The client installed the fledgling Btrieve-based software and successfully transitioned from Computer Associates mainframe-based NetMan to SupportMagic. A few months later, an IT business magazine ran a story about what this large company had done to replace its mainframe-based Help Desk Software. The article mentioned MicroAge of Mahwah as the developer. Within days of the article hitting the street, Igal had over one hundred telephone inquires for SupportMagic. Igal knew he was on to something. Magic Solutions was born.

Growth

Igal focused on Magic Solutions full-time. He added a talented Russian programmer, Vadim Mostov, and hired sales staff. Among those first sales people where Mike Pallatta, a recent Stevens Institute of Technology EE graduate and Andrew Rawson, a former MicroAge customer. In its fourth year, Magic Solutions booked nearly US$6M in revenue, the customer base was growing and SupportMagic had received positive press coverage. Pallatta became the VP of Sales and Rawson became the VP of Marketing. Pallatta built a telemarketing sales force that kept the cost of sales very low. He also worked with Rawson to develop a series of "over the phone" sales tools. This allowed deals in the $50,000 range to close without requiring a face-to-face sales call. While the sales capacity was growing, Igal kept a close hand on product development and insisted that the product direction be determined by the customer base itself. Magic Solutions grew without a single dollar of advertising. Rawson worked with the internal PR staff to manage a press editorial calendar and exhibit at trade shows. The company developed an international series of sales seminars that were attended by thousand of support professionals in the US, Canada, and Europe.

With the initial management team in place, Igal focused on expanding the product capabilities. The development cycle was short as product feedback from customers drove new features and functionality. Pallatta built a 60-person direct sales staff and opened up a European distribution channel. Rawson put in place the infrastructure to support his sales team. Pallatta became a board member and ran the day-to-day business operations of Magic Solutions. Rawson became the public face of Magic Solutions, speaking at conferences and providing industry insight to the press and analysts. Rawson grew the marketing team to over 35 people and positioned Magic Solutions as both the dominate help desk software provider and thought leader in the internal IT help desk market. Magic Solutions' primary marketing activity was attendance at trade shows. A single trade show event might include a complete, interactive support center and an animatronic bunny (Magic Solutions' mascot) in a space shuttle flying over the show floor. An event like this might run the company more than $250,000. For one trade show, the company elevated its key support personnel to trade show celebrity status by displaying them in life-size photographs.

In 1996, the company purchased WINsales, Inc, a sales force automation software company based in Seattle. This gave the company a foothold in the rapidly expanding customer relationship management market. Igal added Florence Schlanger as the VP of Client Services and Jon Von Lintig as CFO. Igal also hired additional programming talent. Efim Gendler, an ex-Israeli army friend, joined Magic Solutions in 1995 and began work on a proprietary search engine. Named for its searching style, Statistical Information Retrieval, SIR was similar to early Internet search engines. The technology was licensed to Microsoft for use with their CD-based TechNet knowledge base. Magic Solutions also signed numerous other cross-licensing deals. Intel signed a cross-licensing agreement to embed their wake on LAN and inventory discovery tools. Ziff-Davis embedded their Support On Site content into what was now termed the SupportMagic Platform, as did ServiceWare with their Knowledge-Paks which were later spun off to form RightAnswers, Inc.

International

While Pallatta focused on domestic sales, Magic Solutions' international sales were bolstered by its VP of International, Barbara Johnson, who continued to expand a host of European, Asian and Latin American distributors that accounted for almost 40% of Magic Solutions' sales by late 1997. This overseas expansion included a key acquisition in 1996 of Magic Solutions' largest distributor, SupportMagic Benelux. Later that same year, Magic Solutions released the Kanji version of SupportMagic, distributed in Japan by Transcosmos.

Dominance

Along the way, Magic Solutions avoided venture capital and kept the original management team in place. The company continually outperformed, out-developed, outsold and out-marketed their better-financed west coast rivals.

By 1996, Magic Solutions was competing in a market place that was beginning to consolidate. The company was facing competitors that were bundling help desk software with their other products, as McAfee did with their anti-virus product. The company was considering either an IPO or venture capital to fuel growth. To this point in time, Igal had kept Magic Solutions completely independent. He had to make choices about the company's future from a limited set of options. By 1997, Wall Street was actively pursuing Magic Solutions for a public offering. Igal Lichtman brought in a well-known pre-IPO executive, Ray Sozzi to be president as a precursor to that IPO.

However, Network Associates, Inc. (NYSE:NETA, now McAfee) had entered the help desk market through the 1995 acquisition of 2 small companies known as Vycor and PHD Help Desk. Unsuccessful in challenging the two market leaders, Magic Solutions and Remedy, Network Associates began acquisition discussions with Magic Solutions.

Ultimately, on April 2, 1998, Network Associates purchased Magic Solutions for US$110M in cash. The company's original help desk software product, SupportMagic, lives on today as part of BMC Software (NYSE:BMC), to whom McAfee sold the business in 2004.

Awards

• Marketing Company of the Year, New Jersey Tech Council, 1997.
• Entrepreneur of the Year for Software Development in New Jersey (awarded to Igal Lichtman), Ernst & Young, 1996.
• Blue Chip Enterprise Company of the Year, United States Chamber of Commerce, 1995.
• FAST 50, Deloitte and Touche, 1995.
• INC 500, 1995 & 1996.