Mixed markets: Reale on the streets of La Paz Photo: Frederic Savariau

Bolivia is probably the least likely country in the Western hemisphere to serve as home to a technology company. It is South America's poorest; more than 60 percent of its people live in poverty. Only about one in thirty Bolivians has a telephone line, and people here use computers in their homes at roughly the rate that Americans grow their own food. The rate of illiteracy is high. On the plus side, the low cost of living makes what educated labor there is in Bolivia inexpensive. The challenge for Colosa has been finding enough tech-savvy employees in the country. As a result, the firm has had to become creative in its staffing efforts. Reale points out two makeshift workspaces--narrow tables against the windows--and says, "I think this is where we'll put the interns."

For the third summer, Reale has recruited young programmers from Duke to come to La Paz on a three-month internship. It's a mutually beneficial relationship. Because Colosa is so young and small, the interns take on more challenging jobs--including developing new products--than is typical in more established corporate settings. And they get to practice their language skills and indulge peripatetic longings at places like Machu Picchu and the Island of the Sun.

Perhaps elements of the firm's operations style will one day be seen as visionary, but Colosa's unconventional approach to start-up survival is equal parts chutzpah and dogged determination. It is the denouement of a fifteen-year story of two boys striving to build something together. Two Florida kids--and later Duke graduates--with a passion for invention, a grown-up tendency toward the world of free markets, and more energy than they could find activities to sink it into.

Reale and Vernon first became pals in 1984 as eighth graders at Boca Raton Middle School in, appropriately, beginning-Spanish class. By the end of middle school, the two had become best friends, seldom seen apart, even though Vernon would attend Spanish River High School and Reale would head to Boca Raton High.

Like a lot of teens, the two were drawn to the unknown. But, unlike most, they actually institutionalized the pursuit of new adventures. Says Vernon, "You know how, when you're kids and you're bored, you sit around and ask each other, 'Well, what do you want to do?' I remember one day where we finally said, 'Let's just go. Let's just start walking. Let's just see where it goes. Let's see where it takes us.' We always found ourselves on the coolest adventures, up a tree somewhere, swinging into a canal. We've followed that theme all of our lives."

Staff member tweaks technology Photo: Frederic Savariau

Even then, Reale and Vernon were fascinated by the idea of creating a business, and they brought their adventure-seeking approach to the whole affair. The two came up with their first "invention" in high school--a "study hat" designed to provide the easily distracted with the wearable advantages of a lonely, austere study carrel. In fact, recalls Reale, "it was designed after the blinders that horses wear. It had flaps that came down on the sides of the eyes so that you could only look forward at the book you were supposed to be reading. One of the big debates was whether we should have earplugs dangle down from the hat." The two envisioned putting college logos on the side and marketing them to university students. Reale and Vernon saved $500 to have six prototypes of the hat made. That's as far as it got; they soon realized they didn't have enough money to keep the project going.

After Reale, an English major, graduated from Duke, he worked in a refugee camp in Guant·namo Bay, studied stage lighting with a Cuban theater group, and hopped freight trains, hobo-style, across the United States. In 1996, he entered the work world, selling computer modems to businesses. The job led him in the direction of emerging technology in developing markets and, in 1998, to Bolivia to live.

Vernon, on the other hand, has walked a more conventional line for much of his post-collegiate career. Not only did he choose the strait-laced insurance industry, but even his method of settling on that career showed a deliberation foreign to Reale. Hoping to capitalize on his love of travel, foreign language, and adventure, Vernon bought a book that listed companies with international operations and systematically scoured it for one that would allow him to indulge his interests. He pounced on an opportunity with the insurance and finance company American International Group, because it appeared to be the one that would most quickly toss him into the thick of business action. From there, he climbed the ranks in the insurance industry, following his original love of foreign cultures to jobs in Argentina and Brazil.

Despite their differences in style, the two, now in their thirties, have maintained their friendship and constantly revitalized it through the primary thing they have in common: the desire to create a company of their own. Like the founders of most start-ups of that day, Reale and Vernon began by soliciting their families for cash and by throwing in as much of their own money as they could afford--about $25,000 each. From there, they turned to friends and social contacts. But, as the two quickly realized, gone were the days of angel investors ready to spend their old-economy dollars on a chance to ride shotgun with a small group of bold young entrepreneurs.

As soon as their business plan was polished, Reale recalls, "We said, 'Okay. Let's get a list of venture capitalists and get a million dollars.'" But it was March 2000, and Reale and Vernon were thinking in decidedly February 2000 terms. On March 13, the tech-heavy NASDAQ closed below 5,000 and headed south on a zig-zag course. With it went the bread and butter of the late-Nineties start-up venture--the more calculating and predatory venture capital that had kept young businesses afloat into 2000.

In addition, both held demanding, full-time jobs. They decided that at least one would have to quit his job to go full-time with the new company. Reale was hopelessly bound to his first company, Unete, which was in the midst of frenetic acquisition negotiations. Vernon, on the other hand, had just become the father of his first child. Feeling that it might be a good time to leave Latin America for the safety and familiarity of the United States, he decided to make the jump to full-time with Colosa. He moved to Miami, which was close to where he grew up and, at the same time, a vital hub for business between the United States and Latin America.

Back in La Paz, Reale was building the core of the Colosa team. He found a few programmers by spreading the word of his need for talent in the small technology community in La Paz. In the summer of 2000, Reale brought his first intern from Duke to Bolivia--David McMillan '00, who had come down to work for Unete, Reale's first company in the summer of 1998. McMillan moved into Reale's apartment for the summer and was immediately thrust into developing code for what would become Colosa's prototype workflow software products.

Meanwhile, with Vernon working full-time for Colosa and paying first-world prices to raise a family in Miami, the firm's need for investors grew. In early 2001, Vernon entered into a promising dialogue with one Japanese investment bank. Then came the World Trade Center attack. "Our contact called up and said, 'I've been fired. The Third World is at war with the First World. And we're not going to invest in the company,'" Reale recalls. In January 2002, Mexbrit Ltd., a Miami-based reinsurance intermediary, agreed to invest in Colosa, take on Vernon's salary, and establish a business partnership between the companies.