HOW A COMPANY GROWS IN THE INCUBATOR:

Emerging Technology Center Spurs Creation of Good Jobs

A Chronicle Staff Report
       A FUNNY THING HAPPENED on the way from Northern Virginia to New York City: Web-On-Site, Inc. took a detour to the Can Company, the city’s latest business incubator.
       From the company’s spacious, informal third floor offices overlooking a stunning view of the Harbor, John Shin, chairman and CEO, allowed as how a pool table might be the next piece of furniture they install. That’s because the 16 employees are burning the midnight oil to grow their company, and they could use a chance to relax by hitting a few balls. The need for a break is great: Mr. Shin says his workday is down from 20 hours a day to “only 16.”
       The staff is working so hard in its egalitarian low-walled cubicles that, according to vice president Bryan Anschuetz, “There’s no time to be scared. It’s getting to be fun. We’re really pleased to be here.”
       Web-On-Site provides free internet access through custom-configured kiosks that are set up in “holding tanks” for people, such as hotel lobbies and airport lounges.
       Among the exclusive on-line attractions offered on the company’s kiosks is yourpicks.net, a sports game-picking site maintained by Lenny Loff, the company’s vice president of business development. Here, users can play a game of choosing what teams will win what games, with the possibility of winning incentive points and prizes.
       “We were the first to be absolutely free to the end user,” said Mr. Shin. The company’s primary revenue comes from advertisements, and the rates they charge are based on the number and demographic quality of “hits,” or site visits.
       Hugh Bethell, president and chief operating officer, deals with the logistics of getting the blue kiosks in place and electronically linked to the company’s server. Computer upgrades, diagnostics and repairs can usually be done from one centralized location.
       “We’ve found the typical user of our kiosks is online for about ten minutes,” said Mr. Bethell.
       Web-On-Site is growing fast. “There are two things going on here,” he said. “People are cutting deals, and at the same time jobs have to be done and the pieces have to come together.”
       Perhaps the hardest part is over, however. “The most ambitious part was getting the company off the ground, coming up with enough venture capital, and getting the right employees,” he said.
       Mr. Shin said most of the staff has moved from Virginia to Baltimore; the three who drive from there to here each day have found the trip relatively easy because “it’s a reverse commute.”
       Mr. Shin said his firm chose to locate at The Can Company because of the “generous and flexible terms and great support” offered at the incubator. He is already anticipating two needs: “We’re going to need a lot more bandwidth in order to grow,” he said, “and recruiting may be a little more difficult now.”
       The company has raised $1.5 million in capital to date, and hopes to soon reach the $2 million mark. At some point, Mr. Shin expects Web-On-Site to go public.

       On Good Terms
       This is exactly the kind of story the Baltimore Development Corporation (BDC) likes to hear. By providing a site and offering services and support, the City and State hope to benefit from helping high-tech businesses develop. As they grow, they’ll seek to hire qualified people locally, the thinking goes. And as high-tech hiring increases, area college and university graduates are expected to be more likely to settle here. The hoped-for end result is a synergy that could create even more high-tech business activity, stimulate the local economy, and generate greater tax revenue.
       Ann Lansinger, BDC senior manager and incubator director, said 13 companies now occupy The Can Company, with two more moving in soon and only two vacancies left to fill.
       One tenant, CycleShark.com, has carved out a marketing niche for motorcycle enthusiasts. Another, Telspan Services, Inc., using a license from the Goddard Space Flight Center courtesy of NASA, one of the incubator’s underwriters, is developing a flat-panel cold cathode 50” television screen that’s only four inches thick. “It’s the billboard of the future,” Ms. Lansinger predicted.
       The tenants pay modest rents of $14 to $18 per square foot including internet service via the high-speed two T-1 lines serving the building, and receive such amenities as a shared receptionist, light use of a copier, shared equipment and facilities such as a fax machine, postage meter, staff kitchen and lunchroom, and conference room.
       In addition, the incubator package includes access to tenant improvement loans at favorable rates, networking with a broad array of professional services and area university resource people, and seminars on such topics as intellectual property, insurance, and raising venture capital.
       Two other incubator sites are operating in Baltimore. Bard Labs, for biotech businesses, is located in 30,000 square feet of space in Baltimore City Community College’s Bard Building at 600 East Lombard Street. The first to open, in 1991, was the Technology Development Center on Key Highway.

       Beyond the Incubators
       The next Microsoft Corporation might be incubating in Baltimore right now, in the affordable nests provided by taxpayers through their governments--or somewhere else in the city, operating without government help of any kind.
       What about those other entrepreneurs elsewhere in Baltimore City who might want to branch out in similar directions? What government entity is willing to equip them with high-speed internet connections, administrative support, and access to capital?
       “We have more people coming in than we have space for right now,” acknowledged Paul Taylor, director of business development for BDC. He pointed out that the Maryland legislature has passed a tax credit to encourage companies to upgrade to high-speed T-1 internet access.
       Unfortunately, T-1 access is not available in all parts of the city. According to Mr. Taylor, there is no map yet showing where T-1 is available, for example. Butch Easton, of the Department of Public Works Computer Center, said, “We wouldn’t have any idea where the utility company is putting them. There are many portions of the city where we don’t have fiber [optic cable] in.”
       For the past two years, under former Director of Public Works George Balog, the City has been installing underground conduit for telecommunications use when street work is done, but the City does not install the wiring.

       Speed Is Of The Essence
       Anyone who has attempted to download a photograph from the internet knows how slow the process can be. Speed is of the essence, especially for businesses whose lifeblood is quick responsiveness online. And in Baltimore City, this speed comes with a high price tag, if it can be obtained at all.
       Cable internet access would be a fine option, but it is unavailable here because TCI, under exclusive contract with the city to provide cable services, does not provide it. “We had plans,” said spokesperson Jinaki Green, “but they may be on hold because we’re not being bought by AT&T now.” (TCI is now expected to be acquired by Comcast, which currently offers cable internet access in some, but not all, parts of Baltimore County.)
       One option that is faster than telephone internet access is a DSL--Digital Subscriber Line--which is available through Bell Atlantic. Media spokesperson Ells Edwards said DSL is only an option for customers who are within three “wire miles” from a telephone central switching office. “It all depends on the way the wire runs,” he said.
       Asnychronous DSL costs $49.95 monthly for residential users; businesses pay $64.96 per month but receive five different email “mailboxes” instead of one.
       ISDN, an older internet option, is now universally available in the City, but is considerably slower than DSL and has other disadvantages.
       Additional costs--sometimes prohibitively high--are involved in hooking up to either kind of service.
       No matter what a user selects for internet access, as with all the new technologies, it will soon be superseded by something that’s better, faster, and cheaper. For example, Bell Atlantic will be “rolling out [the still faster] snychronous DSL in the first half of 2000,” according to Mr. Edwards. There’s a T-3 fiber optic cable now. And one day soon, wireless access may eliminate the need for cabling and phone lines altogether.
       


For information about The Can Company (two 900 square foot spaces are still available for lease), call Ann Lansinger at 410-327-9150.


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This story was published on January 5, 2000.