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Love Those Computer Glitches


Cover Story: Hot Growth Companies: REMEDY

LOVE THOSE COMPUTER GLITCHES

Lawrence L. Garlick's goals were modest when he started Remedy Corp. in a cottage behind his Palo Alto (Calif.) home in 1990. Years spent grappling with computer networks at Xerox Corp. and Sun Microsystems Inc. convinced Garlick, then 41, that network managers needed better tools to fix the inevitable glitches. Garlick says he wanted to work on "a series of small products that might help."

Little did he know. Remedy's first batch of software was such a blazing success that Garlick never got a chance to design the other products. His brainchild: the Action Request System (ARS), a program to automate the management of technical support. In five years, it has been snapped up by 1,300 corporate customers, including Motorola, Compaq, Wal-Mart, and J.P. Morgan. Remedy's three-year annualized growth of 160.5% in sales and 272.9% in profits rockets it to the top of BUSINESS WEEK's list of Hot Growth companies for 1996.

BIG ORDERS. What makes ARS so popular? The program speeds service at internal help desks--the beleaguered call centers that company employees turn to when their computers go haywire. Each time a call comes in, the software notes the problem and alerts the right expert. Problems get solved faster, and users build up databases showing where the glitches are. "It expedites finding a solution," says Jack Leifel, senior director of information-technology services at Motorola Inc.

The software has proven so flexible that Remedy's clients are quickly expanding its use to build databases on interactions with their own customers. "Remedy is the largest, most profitable, strongest player in this segment," says Neil Weintraut, an analyst at Hambrecht & Quist, which helped bring Remedy public. He expects the market for customer-interaction software to grow sevenfold, to $3 billion by 2000.

Armed with bachelor's and master's degrees in electrical and computer engineering from Stanford University, Garlick spent years at Xerox Corp. and Sun Microsystems Inc. By the time he quit, he and two co-founders from Hewlett-Packard Co., Dave Mahler and Doug Mueller, had amassed thick files of industry contacts.

It didn't take long for the money to start flowing. Launched in November, 1990, with $1.4 million in venture capital, plus $100,000 from Garlick's pocket, Remedy managed to turn a profit in its fifth quarter--thanks in part to big orders from Stanford and Xerox. Remedy's initial public offering last March was priced at 23. The first trade was at 43, and the stock is now at 83 after a three-for-two split--giving Remedy a market capitalization of over $1.1 billion.

For all its meteoric success, Remedy has also had dark hours. In his struggling first year in business, Garlick tried to get Xerox to purchase a stake in Remedy in exchange for royalties. Xerox balked. But the sting has long since faded. "Xerox is a wonderful customer today," says Garlick, "and I don't have to keep feeding them money." Success, after all, is the best remedy.By Neil Gross in New York


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