The Digerati: How to hatch an e-company

Want to set up online? Paul Zwillenberg could help kick-start your business.

Kansas City, Missouri, is famous for two exports: prime beef and Paul Zwillenberg. The latter has, until recently, been quietly going about his business as head of Associated New Media, part of the Daily Mail & General Trust.

But things are changing. Last month, Hollywood mogul Mark Patricof recruited 32-year-old Zwillenberg to run a "digital studio" in London for his investment company . Such a venture could see Internet hopefuls bargaining for production deals in a similar way to film stars. Zwillenberg's aims to "incubate" selected start-ups in return for up to a fifth of that company's equity.

He has already seen the technology business cycle from the coalface. At Duke University in the Eighties, he spent his summer vacations working for the telecoms giant Sprint, for whom he put together plans to develop a 900-network (similar to the 0891 network in the UK). On returning to study history for a fourth year, Zwillenberg realised his heart wasn't in it and packed his car, drove to Colorado and launched his own company with the help of three friends.

By the time he was 23, he was providing services for clients including Coors beer and USA Today. "I had nothing to lose and everything to gain," he explains.

"I was intrigued by technology and by the things it could do. I began working in a spare room in somebody's house, with people I had met at Sprint. We built computers using 286 chips, created a fibre-optic network and started to talk to information providers about the benefits of delivering inter-actively, using 900 numbers."

Zwillenberg also learned early on how to cut his losses. "In the States, these numbers became rapidly associated with dial-a-porn, which sent the corporates running. After 18 months, I decided to leave the business, rather than go down-market. And, because I wanted to stay involved in media as opposed to the hardware side of technology, I went to New York."

He took a succession of jobs, consulting for AT&T and Bell Atlantic and then, in 1994, he became the global marketing director for a project which the DDB Needham agency launched in conjunction with Digital Equipment Corporation.

The move to London came about in 1996, when Murdoch McLennan, at Associated Newspapers, asked him to head its new media team - tasked with the development of various ventures including the Internet search engine UKPlus and websites such as Soccernet. Zwillenberg was attracted by the prospect of a continent on the cusp of change. "A lot of big players had established themselves in the States, but having had worldwide responsibilities, I was keen to fulfil my ambition to work in Europe or Asia - actually doing it, instead of just talking about it," he says. "UKPlus wasn't what one might have expected of a newspaper group, but I looked at the industry to see what services people were attracted to - where advertisers were spending their money. I linked that to what a mass-media company does, and the business case for UKPlus developed."

Zwillenberg says that while he is sometimes frustrated by what technology cannot yet do (it's 10 years, for instance, since he first formulated a scheme to provide video-on-demand), he has always favoured incremental innovation over "elegant solutions".

He elaborates: "You take something that people understand and make it a little bit better, and a lot more efficient. That's better than making something with lots of whistles and bells, which is too expensive and not fit for the purpose."

Recently, he's been bitten again by "the bug" - that old urge to move on and create something new. He got talking to Mark Patricof, a friend from New York who had switched from making multimillion dollar deals with Hollywood stars to striking similarly hard bargains with Internet entrepreneurs. He was offering to surround them with marketing and production expertise in return for between 5 and 20 per cent of equity.

One of Zwillenberg's jobs is to separate Internet wheat from chaff. "A lot of companies were coming to Associated to buy advertising, do deals, and be placed on the site. I saw the volume of start-ups, and I said if I don't do it now, I'll never do it.

"Some people say they're great at starting up businesses; others are better at building them. I can do both, pretty well, and what motivated me was this: nobody knows what the future is going to look like because things are changing so fast.

"There's so much innovation coming into the marketplace and it's impossible to tell how convergence is going to end up. What appealed to me was the opportunity to be involved in building all these different businesses in related areas, across London, New York and Los Angeles. I wanted to spot the links and to understand how the picture was fitting together.

"What I'm most excited about is what we haven't seen yet. The possibilities to create, to re-create and to define new forces of media and entertainment are breathtaking."