Does he like it?
"No."
Does he have a choice?
"Absolutely not."
If the company loses its patent protection, anyone could copy what Mag does, and then there would be no way Maglica could charge a premium for his product. Without the premium, there can be no Mag. The premium is what enables the company to be state of the art. It's what lets Maglica pay his employees more, spend thousands of hours on research and development, and reject goods others might ship. Without it, Maglica says, he might as well shutter the windows and lock the doors.
So ever since he learned that imitators were coming to market, Maglica has fought back on all fronts. He never knew how costly the battle would be. "Back when we first started, I said to myself, no matter what it takes -- even if I have to spend $250,000 -- I am going to win."
As Maglica and his wife, Claire -- the company's second in command -- tick off the endless rounds of discovery and depositions, lawyers, letters, and litigation, it's easy to understand how the bills climbed to $16 million so fast.
First, there was the work to ensure that Maglica's patents -- filed when he began manufacturing flashlights -- were airtight. Then came a lawsuit to keep imitators from importing copies of Mag's lights into the United States. At one point Maglica was told the hearing -- to be held in Los Angeles -- was about to start. So airline tickets were purchased, a suite of rooms was reserved, and Maglica brought everyone (four attorneys, witnesses, the Maglicas, their experts, and thousands of support documents) to L.A. Then they waited for six weeks. The judge wasn't ready. Finally, the hearing was postponed. Cost of the delay: more than $1 million.
Then there were the suits against the companies that did the copying (a third one will start in September), the pending litigation against the retailers who sold the copies, and the constant searching in the marketplace for other imitators.
And all the while, the meter keeps ticking.
"We have hired nothing but the best attorneys, and we haven't tried to cut corners at all," Maglica says. "If we didn't sue, there would be no way I could plan for the future. I can't think about new products or expanding my plant, if there's a chance that someone can copy me."
How else could Maglica have fought the imitators? He could have granted them a license to use his technology or subcontracted manufacturing to them.
"But then we wouldn't have had control of the quality," he says. "No, we had to do this."
So far the strategy of fighting back has worked. Mag's future appears secure. But it's security that to date has cost $16 million.
Of course, Maglica didn't know when he started Mag Instruments about all the litigation to come. All he knew was that he wanted to build the best flashlight the world had ever seen, and so he set to work. The decision could have been fatal. Suppose he built the perfect light and no one cared?
But Maglica got lucky. "In essence, he invented a brand-new category: high-tech flashlights," says Stanley Kravetz, a venture-management consultant and former head of Timberland and Rockport, two companies known for turning out quality shoes. "There was an untapped need for a flashlight that people knew would always work when you turned it on."
Indeed, that was the market Maglica was courting. But he went further. Not only would his flashlights work better, they'd look better, too.
"The light had to be distinguished, beautiful, a showpiece," Maglica says. "I wanted people to be proud to give it as a gift. Besides, if you are designing something to last a long time, you have to build it so that people are willing to look at it for a long time." This kind of obsessive attention to detail -- present from the very beginning -- set Mag Instruments on a course that allowed no turning back.
In designing the initial flashlights, Maglica specified incredibly close tolerances to make sure the parts fit together well. And he built safeguards into the design to eliminate some of the reasons traditional flashlights fail. For example, over time batteries leak, and the corrosive acid eventually dissolves the on-off switch, making the light useless. So in his prototype, Maglica created a switch that rubs off the buildup every time you flick the light on or off.
The design is clever, but there was no manufacturing equipment on the market that could meet Maglica's specs. He had to build his own, which meant an investment of time -- and money. After all, it's easier to open the box and plug in a machine than to build one from scratch.
It's within the company's work force, however, that the commitment to quality may exact its highest price.
* * *
The entire executive staff of Mag Instruments could fit comfortably into the Maglicas' Rolls-Royce. There are Tony and Claire, of course, and Jim Zecchine, who handles finances, and there are the two executives who oversee production and sales. That's it. To a large extent, Mag Instruments is a mom-and-pop operation that happens to have 400 employees.
You see that clearly when it comes to hiring people for the plant floor. Tony Maglica interviews almost everyone. No, he doesn't read all 30 résumés that drop through the mail slot after he advertises for a screw-machine operator. But after the supervisors have narrowed the list down to a handful, he gets involved, and no one gets hired until he approves. Interviewing, on average, takes up to two full weeks of his time per year.
Why does he do it? It's simple: these are the people who will determine Mag's reputation. While Maglica has built as many quality safeguards into the design as possible, it's still the people running the machines who ensure his vision becomes a reality. He wants to meet them.
And how does Maglica motivate his new employees once hired? By pointing with pride to the quality product they're turning out? By spending time on the shop floor trying to build esprit de corps? By "communicating"?
Yes, to some degree, says Maglica, clearly puzzled by the question. "But the biggest thing we do is pay them."
