Old blood rejuvenates dreams of younger men

Old advice: The e-mail marketing company started in April is being advised by a 70-year-old retired CEO from J. Walter Thompson.

January 10, 2002|By Stacey Hirsh | Stacey Hirsh,SUN STAFF

In the lounge of a posh New York hotel last fall, two men munched on bagels and chewed over the future of Blue Sky Factory Inc.

One of them was Greg Cangialosi, 28, who had spent the past eight months pouring his personal savings and virtually every minute of his time into the Baltimore startup, hoping the e-mail marketing company would make it big.

The other was Burt Manning, 70, who may have the power to make it happen.

"It comes down to what it takes to run a business, any business, at that level, the level that we do not have the experience in - the post-startup level, the national company level," said Richard Cruit, 40, Cangialosi's partner.

Manning was once chairman and chief executive officer of J. Walter Thompson Co., the New York advertising giant, and still serves as chairman emeritus. He also invests in and advises several other businesses, and over the past year had seen promise in e-mail marketing.

Cangialosi and Cruit are in that business. Their technology - animated e-mail messages with moving images and video - is used as an advertising tool to steer people to Web sites or sell products.

But e-mail marketing wasn't always the focus of Blue Sky Factory. Since it was founded in April, the company's staff, business model, even its core product have been overhauled in an effort to succeed. Now, the new company is almost beginning again.

The Sun has followed Blue Sky Factory in a periodic series of articles since the startup began. Its founders, Cruit and Cangialosi, formed the business at a time when dying companies seemed far more common than those just getting started. Today is the final article in the series.

In its short lifetime, Blue Sky Factory has already endured a merciless summer when money was tight. It survived the economic uncertainty that followed Sept. 11. And, in an unusual twist, it may have actually been given a boost by recent anthrax scares, as advertisers shied away from traditional mail and looked to e-mail marketing.

As the economy continued to soften, the startup began to transform. Now, Manning has agreed to come on board as Blue Sky Factory's adviser, adding to the list of drastic changes the company has endured since inception.

"I looked at a number of companies that were doing it," Manning said of e-mail marketing. "The one that was most interesting to me, the one that I thought had some real potential to take advantages of the opportunities, was what Greg and Rich are doing."

Cruit and Cangialosi got their introduction to Manning through a colleague in New York. Several phone calls and meetings followed, including one at the stylish W Hotel in Manhattan, which to the Baltimore men solidified the relationship with Manning.

Manning will coach the two founders, assist with presentations for potential clients, partners and investors, and help Cruit and Cangialosi shape their company. He will also spearhead assembling the company's advisory committee.

If Blue Sky Factory is successful, Manning will also reap some of the financial benefits, though he declined to reveal terms.

But his involvement comes at a critical turning point for Blue Sky Factory, as the company tries to grow from small startup to big player in its field.

"This is where most startups struggle, most startups stumble, most startups fall," Cruit said.

Experts said that bringing in an experienced adviser at this juncture is common.

Several new businesses in fast-moving sectors, such as technology, don't have the luxury of time: Management can't afford to earn while they learn, and they need someone with experience in growing a company quickly, said Erik Gordon, director of M.B.A. programs at the University of Florida's Warrington College of Business Administration.

"For many of these companies there's a very, very slim window of opportunity," he said. "You jump in and get big now, in the next 12 months, or somebody else does."

In one of the best case scenarios, the entrepreneur is flexible and follows the adviser's lead, Gordon said.

But the marriage between company founder and adviser often fails, Gordon said. The most common reason? The adviser and the founder want to take the company in different directions, he said.

"The typical thing is to bring somebody in, it works for 12 to 24 months," Gordon said, "and then there's a parting of the ways."

To avoid such pitfalls, companies should look at both the personality and vision of potential advisers as well as their track record for running companies, said Lisa Melsted, an Internet analyst with the Yankee Group in Boston.

Still, Gordon said entrepreneurs often have to choose between a rock and a hard place: Either they risk losing some control over their business or having it stray from their vision, or they gamble on going it alone and possibly being boxed out of the market.

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