Yes, they did it right. They carefully selected markets which could be served with point-to-point RJ's but were too small to attract the interest of the Canyon-Blue Death Star.

But even so, their market niche was limited...attempts to expand outside of that would require narrow-bodies, and they would have to enter the brutal domestic cage-fight. To make matters worse, they were still employed by CAL, so they were further limited in that they had to avoid direct competition with CAL (or get fired).

The real difficulty for a traditional regional seeking to make the transition from regional contractor to real airline is that as they grow their branded flying they will eventually compete with their major partner, and get fired. The trick is to have enough money when you get fired to continue operations and grow into a self-sustaining operation without your regional feed income.

Startup airlines historically have about a 1% chance of survival