Dan Goldstein - Formula

The Midas Touch

Before being overtaken by Amdocs on the curve, Dan Goldstein owned Israel's biggest software firm. Once he also had dreams of communications. He was the entrepreneur who founded Elitech, the first company to compete with Bezeq in the field of NTP (network terminating points), and its subsidiary company, Adir Communications, which bit off part of Bezeq's international communications by means of dialling cards.

Goldstein was also unsuccessfully involved in the international communications tender. The one thing he never failed at, though, was making money. It all started in 1982, when Dan Goldstein and Yossi Galon founded Formula Systems (FORTY) as a software house. Its first major customer was Bezeq, and Formula is still Bezeq's principal software supplier. Other customers followed.

In 1987, Formula started to adopt a strategy of growth through mergers and acquisitions. First to be acquired was the Projecta software firm and the next was the Elitech company shell, which had become a lever for the company's communications business (although that died out over the years). Public capital raising commenced in 1991. Goldstein's motto is that the lever for growth is in the capital market, provided that one does not rest content with a 15% maximum annual growth rate. Many companies dream of such growth rates, but Goldstein is not satisfied with them.

Goldstein is regarded as both brilliant and adroit. His brilliant brain prompts him, ahead of all the others, to choose the right field at the right time. His adroit hands make the right moves and rake in the profits. Formula was thus one of the first companies in Israel to spot the market inherent in the Y2K bug, and proceeded, on that foundation, to build Crystal, which specialized in that field and was floated in the United States. Goldstein also identified the cable television billing market, founded Wiztec Solutions, made a killing by floating it in the United States, and sold it at a profit of hundreds of percentage points to Convergys of the US.

The acquisition of control in Mashov, and consequently also of Magic Software Enterprises and the Walla! portal, was one more Goldstein-style head-and-hands project. The company was on the ropes, but today, with Goldstein guiding its policy for the past year, it is up in the clouds, and considered a professional and economic success story.

Published by Israel's Business Arena December 22, 1999

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