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Like all entrepreneurs, Jim Luty started his business by using his credit card, purchasing 50 copies of a program called Ghost.

The product is the mastermind of Murray Hazard, who lives in New Zealand. In mid-1996, Luty contacted Hazard and offered to market the product. It was really that simple.

Now, Luty sells about $2 million per month to customers across the world. Like any good software company, Ghost Software's margins are extremely high. Each diskette costs 35 cents and the manual is $1.25. Then there are phone bills, salaries and R&D. The rest is pure profit.

So, what is Ghost? On the surface, it is very simple software that copies programs. But doesn't any operating system do this? Well, in the old days, Ghost didn't make sense. All you needed to do was use the Xcopy command. However, as operating systems started to introduce new functions, such as long file names, Xcopy became ineffectual.

With Ghost, you can copy the complete contents of one hard drive to another hard drive. Or you can copy your hard drive onto a disk image file and that image can then be used as a template to be copied to other hard drives. This is known as cloning (interestingly enough, many refer to the process as "ghosting").

For the average consumer, the product isn't very useful. But for a corporation, which may have thousands of servers and PCs littered throughout its organization, having a quick way to duplicate a system can mean big cost savings. For example, Ghost can take a 300-Mbyte Win95 system and duplicate it on another workstation in about five minutes.

Ghost works with the major operating systems, such as Win95, WinNT and OS/2 -- dealing with the intricacies of long file names, OS/2 boot manager partitions, NTFS partitions and so on. The software also works seamlessly in networked environments.

Ghost is also easy to use. You don't need to learn such frustrating tasks as FDISK and FORMAT. Instead, Ghost uses a simple user interface.

But having a good product is only the first step. You need to find a way to get people to buy it. "For me to have done this business four years ago would have been impossible," says Luty. That is, his credit card would not have been able to afford the shelf space at CompUSA or Egghead.

But, with the Internet, Luty was able to establish his own virtual software store and Ghost was perfect for the Web. "The product is geared for technicians," says Luty. "They are always looking for the latest technology and are very comfortable with the Web."

Essentially, the Web opened the world to Ghost, as about half the product sales are from overseas. "We understood the power of the Web when we got an order from the Tasmanian police department," jokes Luty.

But the event that jump-started sales of the product was a review in PC Week. Ghost was named one of the year's top 10 products, so it was no surprise that major companies like Dell, Federal Express and Arthur Andersen began buying the software.

Since then, the Ghost site has been generating a tremendous amount of traffic, and gets an average of 1,200 downloads per day.

"Our sales strategy is really very simple," says Luty. "We sell a solution, not software. If you go to CompUSA to buy software, you will be lucky to get any assistance. As much as possible, we try to give our customers the information they need."

The company has also been using banner ads. "So far, they have worked very well," says Luty. "We prefer them over print ads."

The company uses a network of distributors, many of which are small companies and cover regions in Europe and Asia.

Ghost Software has yet to accept any venture capital funding; nor does it plan to seek any. Instead, Luty wants to add more products to his virtual store to leverage its rapidly expanding customer base. "There are 1,000 decent products that don't see the light of day," he says. Luty wants to focus on utility products that help companies with "total cost of ownership" issues; that is, the cost of maintaining computer systems, which according to various studies can be $15,000 to $30,000 per machine.

All of this has earned Luty a nomination for Ernst & Young's Entrepreneur of the Year award. Considering what he's done in such a short period of time, Luty's company will be a ghost no more.

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