New startup pulls Magic out of hat, analysts fear a disappearing act

By Laura Furr

This past Saturday night around 11 o’clock, 27-year-old Niels van Galen came home from the gym with a craving for Asian cuisine.

Van Galen wanted to make a to-go delivery order to his home in Palo Alto, California, but all delivery services in his area had stopped taking requests at 10 p.m.

On a whim, van Galen tried the new “deliver-me-anything” SMS-based service he had heard about from a friend, appropriately named Magic. Within the hour, he was eating chicken curry for two.

“We were actually joking,” van Galen said. “We thought they were never going to say yes or that there would be no options. I was really surprised when they said ‘yeah, what do you want?’ ”

It was a similar situation that led software developer Mike Chen to create Magic, which has already delivered thousands of requests across the country since it was launched less than two weeks ago.

Chen was hungry. He wanted something now and he wanted it conveniently.

“The basic idea behind Magic is that people shouldn’t have to spend their time figuring out the details of getting the things they want,” said Chen, 30,  who  founded the service with Ben Godlove, Nic Novak, Michael Rubin, and David Merriman and Aaron Kemmer.

So on Feb. 20 ,  Chen created a simple website with a white background and text that was originally written as an email to a small group of friends, outlining Magic’s objective.

At 12:42 p.m. on Thursday March 5 I learned I had been taken off the Magic’s wait list courtesy of the startup’s PR department so I could report this story. I immediately asked for a mini cactus. (Laura Furr/Medill)

Users text in their requests to a short-code telephone number. The Magic team then personally responds to each text with a price and proceeds to get the users what they want as soon as possible.

But what sets Magic apart from other delivery or assistance apps like GrubHub or Postmates is that there are no limits. Users can request anything they desire from Chinese food, to airplane tickets, or like this Wired writer, anything from cookies to a car. They don’t even have to download an app.

“Instead of having to deal with a website or app, you just text in what you wanted,” Chen said. “It’s kind of like you had a friend, or assistant or family member you can go to and say ‘hey I need this’ and then it’s done.”

Those who have been able to use the service, like van Galen, say it is working as intended.

“It was really cool and really convenient,” van Galen said “I didn’t have to look up restaurants or anything. I just gave them what I wanted to order and I got it. “

But not all users’ experiences were as magical.

According to Chen, the waitlist for the service has reached about 40,000 people.

Because the Magic team started with only six responders, it was not able to fill to the overwhelming number of requests it received over the weekend and was forced to stop accepting new users.

Early users whose requests were not filled were fully refunded and given free order vouchers, Chen said.

I have wanted a mini cactus for about a year. I think they are cute and it would be my form of a pet in the city. But I didn’t feel like searching for one. I entered my debit card information and waited. (Laura Furr/Medill)

In the past week the team has expanded to about 30 members in response to the high demand, but the waitlist continues to grow.

Analysts and those closely involved in the tech world said this is a problem that the team should have prepared for.

“They launched it with a technology that everyone already has and they launched with no focus,” said Waverly Deutsch, a clinical professor of entrepreneurship at the University of Chicago’s Booth School of Business.

Deutsch said that because most Americans today work long hours and are willing to “trade cash with flexibility,” delivery and assistance apps that allow the average person to save a minute are taking off.

But she warned that these types of services require more than just one good idea.

“These guys are out in California and they think that dual-sided network businesses are a technology,” she said. “It has nothing to do with the technology and has everything to do with the logistics of managing the two sides of the system.”

For example, the first of its kind Chicago-based food delivery service GrubHub, which serves more than 5 million people across the U.S. and in London, goes through a series of steps before adding a restaurant to its menu.

At 1:49 p.m. on the same day I got a call from Magic that my cactus was delivered early. The receipt from Home Depot showed that it cost $4.35. I payed $37.
At 1:49 p.m. on the same day I got a call from Magic that my cactus was delivered early. The receipt from Home Depot showed that it cost $4.35. I payed $37. (Laura Furr/Medill)

Deutsch said the company has to analyze if the restaurant has the capabilities of producing as much food as the app might demand or if it is willing to work with an outside party. She said the two parties then work on a business model to ensure a profit.

Deutsch said it was clear that Magic is operating without this type of plan in place. Even Chen himself acknowledged that this startup was not as “calculated” as other projects he has worked on.

Deutsch said that the high level of demand will have to be sustainable under a thought-out strategy if Magic hopes to become more than just a fad.

“It really requires a business model where you can meet the need and meet it profitably to generate enough money to be a business,” Deutsch said. “An app is not a business.”

Photo at top: Laura Furr’s texts with Magic, the new SMS-based delivery service that launched Feb. 20. Furr requested a mini cactus that was delivered in about an hour. (Laura Furr/Medill)