New start-up's owners hoping sky's the limit

Dream: Partners in an Internet company sign on for the challenges of succeeding in an uncertain industry at a tough time.

START-UP: A new companys journey

May 27, 2001|By Stacey Hirsh | Stacey Hirsh,SUN STAFF

Greg Cangialosi weaved through the rooms of his new offices waving a wand of white sage that burned orange at the tip. He took long, braided strands of sweet grass and lit them on fire, too.

An aroma seeped through each room: the scent of an ancient Indian ritual said to cleanse the surroundings and produce positive energy.

It was just after 9:30 a.m. Cangialosi, and his partner, Richard Cruit, were moving into the office of their start-up company, Blue Sky Factory Inc., which designs and hosts Web sites, develops databases and provides marketing and other consulting and Internet services. Cangialosi was hoping the ritual would bring good vibes to their new venture.

"I just look at it as a reset button," he said. "It's like a blessing for our space."

But it will take more than a blessing to build success. A start-up faces formidable challenges. Building a new company takes a lot of time, and many circumstances, like the economy and the labor market, are beyond its control.

What's more, the market for Web companies is crowded, and many potential customers - Internet companies - have run out of money, said Tim Miller, president of Webmergers.com, a San Francisco-based company that researches Internet businesses.

"Their marketing challenge will be to find traditional companies that have cash," Miller said. "In addition, I think companies in general have cut back on spending in the face of an uncertain market right now. That only complicates things for them."

The Sun will follow Blue Sky Factory in a periodic series of articles. The stories will explore the company's successes and its failures, and chronicle how Cruit, 39, and Cangialosi, 27, pursue their dream at a time when the competition is fierce and the economy unforgiving.

Every year, more than 500,000 small businesses are formed. But the job is not easy: 34 percent of them shut down in the first two years, and more than half close within four years, according to the Small Business Administration.

"It is only a very, very small number of people that start their business today and are wildly successful tomorrow," said Monika Edwards Harrison, who oversees entrepreneurial development programs at the SBA.

But, as they opened Blue Sky Factory on April 25 with six employees, the two founders were confident.

They have worked with a start-up before. Each has run his own company. They have little debt. And they have a business plan: to make their new-economy company grow slowly and steadily - the old-economy way.

"We believe we know how to do this and we know how to succeed," Cruit told his employees during a pep talk at bar in Federal Hill before move-in day. "If we follow the plan correctly, there's no way we can fail."

The roots of Blue Sky Factory reach back to college for Cangialosi, when he was a student at the University of Maryland, Baltimore County. One evening, a fraternity brother arrived at Cangialosi's Catonsville townhouse with a floppy disc.

"He goes, `This, my friend, is going to change your life,'" Cangialosi recalled.

And it did. The disc allowed Cangialosi to dial into the Internet from home. Soon, he was online day and night. "I became a professional Web surfer," he said.

After college, Cangialosi ran a one-man business organizing concerts at Baltimore bars and small concert halls. But a fascination with the Internet tugged at him, and Cangialosi began building Web sites for the bars as well as for other local businesses.

In January last year, Cangialosi accepted a job with a new Web company at the ETC high-tech incubator in Canton, 0280 (zerotoeighty.com) Inc. Three months later, Cruit, who had been working in technology for years, joined the same company.

The two sat next to each other at work, shared the same laid-back attitudes and became fast friends.

Cruit, who spent much of his childhood in Bethesda, had started his first one-man business in sales in the early 1980s. About 10 years later, he took his first technology job at Employee Health Programs Inc. in Bethesda, where he created databases. He dabbled in other jobs, from running a temp agency to working as a computer programmer, before landing in Baltimore last year. But he wanted his own business.

"Ever since I was young ... I wanted to have my own company," he said.

In February, Cruit left zerotoeighty.com partly to do just that, partly because the economic downturn left him fearful of being laid off, and partly because - like Cangialosi - the job at zerotoeighty.com wasn't going where he wanted it to.

When Cangialosi left zerotoeighty.com that same month, he was poised to take a job selling products, rather than services. But his plans changed in Cruit's Canton home one night. Cangialosi was on a black leather couch while Cruit sat across from him, proposing that they form a new company.

Cangialosi agreed to first find out if they could land potential clients, but "when he said he was willing to do the feasibility study, in my heart I knew it was a done deal," Cruit said.

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