Triangle Business Journal-Built from the basement up

IT outsourcer brought to life in bowels of UNC business school nears $2M in revenue

DURHAM - To be certain, there were creatures growing in the basement of UNC’s business school in the summer of 2001, but none as quickly as Ron Unger’s fledgling company.

What had began just months earlier as Unger’s entry into an entrepreneurial competition at UNC’s Kenan-Flagler Business School had morphed seemingly overnight into a living, breathing business.

Unger’s idea, based on a concept of outsourcing IT infrastructure design and support, took home one of the competition’s grand prizes. The booty: free office space in the bowels of Kenan-Flagler. WorkSmart Inc. in April 2001 set up shop in a 30-foot-by-30-foot basement room, and Unger went to work. Equipped with two phone lines, Internet service and a pair of work stations, he handpicked a couple of cohorts – undergraduate acquaintance Richard Ayers and UNC colleague Clay Harris – to partner with him in the venture.

The trio began making calls to small and mid-sized companies around the Triangle, feeling their way into a complex IT industry with hardly a shred of technical know-how. WorkSmart was hunting potential clients before it had landed its first technical consultant, operating on the belief it could sell a service despite having yet to hire the technical talent to actually do the work.

Shortly before classes let out for the summer in 2001, Unger was approached by a student who was interested in securing an unpaid internship with WorkSmart. Word began to spread and, within weeks, the three-man, subterranean startup had netted a dozen interns, landing a seat among the top-recruiting companies at UNC that year.

“They wanted to work with us because they wanted to be part of something new and great, and they needed work experience,” Unger says. “We didn’t have any money, so we just kind of paid in pizza and WorkSmart T-shirts and Foosball.”
WorkSmart Inc. was by no means off the ground in 2001, but with 12 interns – working the phones for pizza – and free office space for six months, the business was definitely alive.

Unger kept it that way by painstakingly piecing together about $70,000 in outside investment, a sum he admits is paltry compared to many of the Triangle’s startups at the time. The rest of WorkSmart’s capital came the old-fashioned way – by aggressively pursuing sales and scrutinizing costs.

As the summer wound to a close and WorkSmart drew nearer to the day when its free rent would run out, Unger made a key hire – the company’s first technical consultant. With the capability to deliver its IT services, the company started reeling in clients in the second half of 2001.

WorkSmart achieved profitability in 2002, though not without personal sacrifice on the part of its work force. In addition to settling for “foldable” furniture and foregoing paychecks, Unger says his company weathered its first year by staying close-knit.

“We were motivated,” Unger says. “We were bound and determined, and we were in that age group, early to late 20s, where you just feel like you have nothing to lose.”

Since 2002, WorkSmart has continued to slug away in the IT industry, upping its revenue to more than $1.4 million in 2004, about $900,000 of which comes from Triangle clients.

As the company gradually branches outward from the Triangle with outposts in Charlotte and Greensboro, Unger says it will be important to attract clients with multiple locations. One such customer is Chapel Hill-based Southern Assisted Living, which was sold for $82.9 million to Chicago-based Brookdale Senior Living this year.

“We have 40-something locations primarily in North Carolina, and it was a strain on our IT staff to service them,” says Southern Assisted Living Vice President of Information Technology Dana Gillon. “We saved a significant amount of money by having an outsourced solution through WorkSmart.”

Last year, with a work force of 22, WorkSmart posted a 38 percent gain in overall revenue, recording $1.96 million in sales from 300 clients in eight Southeastern states.

“It took a lot of sacrifice,” Unger says, “and sacrifice comes in different forms. In the beginning days, sacrifice was no pay, no salary for the owners, but that kind of sacrifice has got us to the place we’re at now.”