Academic journal article Entrepreneurship: Theory and Practice

No Magic: Just Software That Works

Academic journal article Entrepreneurship: Theory and Practice

No Magic: Just Software That Works

Article excerpt

"Most people whom I meet seem surprised when I tell them that my husband and I have a business which is based in Lithuania," explained Victoria Girdziunas, President of No Magic, Inc., a software development and consulting company. "All people react in this manner--be it Lithuanians, some of whom believe that to better their economic condition they need to find a way to the U.S. or Western Europe, or Americans or Western Europeans, who sometimes exhibit very naive viewpoints about Eastern Europe." She continued:

   We don't find it strange at all. We see that the 'globalization of
   business' and the 'global economy' are not future occurrences, but
   present realities. Businesses which are not adapting to this change
   will lose their competitive advantage. We also find that Lithuania
   has the fundamental infrastructure needed to support our business.
   Certain elements may be lacking in various degrees or not available,
   however, the basics--a developing infrastructure, and the most
   important element, an educated workforce--are available to the
   degree we need them.

Founded in 1995 by Victoria Girdziunas and her husband Paul Duncanson, No Magic provided systems software development services to Western European and U.S. clients. By 1999, No Magic had programming facilities in Lithuania and Thailand that created software products and provided outsourced software development and installation services. Taking advantage of the cost advantages of offshore locations, No Magic's revenues increased steadily through 2000. By 2003, however, the company had experienced two consecutive years of losses. Victoria believed that No Magic needed someone to develop a marketing plan and to build an internal sales organization. She estimated that it would take $700,000 to hire a chief sales officer and two additional dedicated sales people to develop and implement a sound marketing plan. She and Paul thought that No Magic had matured to the point of needing outside money and expertise, but were cautious about relinquishing control of the company to outside investors. As Victoria worked on a business plan to present to potential investors, she reflected on how she and Paul had started No Magic and pondered how they might proceed into the future.

Setting up a software development operation in the United States would have been challenging enough for most American-born MBAs with limited managerial experience. But while Victoria prided herself on being able to wade through financial statements, to negotiate deals with Europeans and Americans alike, and to "talk tech" with software engineers, instilling American cultural values about work in Eastern Europe seemed, at times, beyond her grasp.

   In the early days, we were the guys picking up the toilet paper at
   the little shop in Lithuania on the way to work. On the same day,
   we were the guys negotiating the deals in the U.S. at 10 P.M. local
   time. During the day, we dealt with training staff and establishing
   the local [Lithuanian] infrastructure--office space, buying
   computers, establishing the software development process, ties and
   relationships with universities, local vendors, and government
   officials. In other words, we were chief cooks, bottle washers and,
   when necessary, got dressed up and cleaned up to play the 'American
   company founders and executives.' During the weekends, we worked on
   writing proposals, reviews, policies and procedures--you get the
   picture.

As frantic as those times appeared, there was satisfaction in building something new. Paul oversaw most of the software development and Victoria acted as coordinator and chief financial officer. Managing banking relationships in a country with little expertise and standardization and creating cohesion among No Magic's Lithuanian workforce was trying at times, but rewarding.

The business started off slower than she and Paul had envisioned, but revenues--and profits--grew steadily (see Exhibit 1) for the first 4 years. …

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