Web whiz-kids count their cool millions

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The Independent Online
THEY ARE fabulously rich and ludicrously young. Their fortunes reduce National Lottery jackpots to peanuts and make City bonuses seem like restaurant tips (albeit generous ones).

This is the deal: think of a simple idea, such as, say, selling last- minute airline tickets over the internet. Act swiftly and convince an investor. Drop out of university or that dead-end sales job. Set up a company in a cramped office with two other staff. Call yourself something dynamic, such as, say, dynamic.com. Wait a year or two, and bingo. A big fish such as Cable and Wireless offers to buy you up because it wishes it'd had the idea first. Or you float the company for the odd billion and wander off quietly with the winnings.

That's what this lot tend to do rather effortlessly - and often before their 25th birthdays. They are the precocious and proliferating breed of "dot com" millionaires. Tomorrow a new member will ascend to their not-so-exclusive ranks when Dixon's floats Freeserve, a free internet service dreamed up by 35-year-old John Pluthero.

A year ago, he was working in Dixon's distribution and aftersales department. You can't even level the "computer nerd" accusation at Pluthero. A stranger to e-mail, he convinced the chairman of Dixon's, Sir Stanley Kalms, of the Freeserve concept, which gives computer users free access to millions of websites.

Pluthero's brainwave was to draft in the help of an outsider, another multimillionaire, Peter Wilkinson, then part-owner of the website design firm Planet Online. He sketched out the bare bones of the concept on the back of a napkin on a train journey from Yorkshire, and the rest is web history.

Launched last September, Freeserve is the UK's largest internet access provider, attracting 1.32 million users. Its profits derive from charging advertisers to sell their products; its market value is estimated at around pounds 1.5bn.

In a challenge to Freeserve's dominance, last week the vast America Online (AOL) internet service announced that it is planning a similar service in the UK. The internet offers the infinite marketplace; the overheads are minimal, considering the instant potential to reach a global audience.

According to Philip Beresford, compiler of the Sunday Times Rich List, last year there were fewer than 10 hi-tech multi-millionaires in the list. This year 10 were listed; next year's list will contain at least double that.

"It's the fastest growing sector for wealth creation," he says. "Each time one of these companies floats, it's like a month's worth of Lottery jackpot rollovers. It's leaving everything else standing."

Ajaz Ahmed, 26, is chairman of AKQA, the UK's largest independent internet service. He provides web management and software technology for companies such as BMW, Orange, Sainsbury's and Carlsberg. "Design of the website is one component," he explains. "We also create the technology behind it. If BMW has a used car directory on their website we'll create the software for that." He is worth pounds 27m, at the last count.

Another recent high climber is Jason Drummond, 29 and managing director of VirtualInternet.net. He argues that it's not as easy as it seems to pioneer this relatively unsaturated field. "The misconception is that everything succeeds on the internet," he says. "But only one idea out of a thousand will make it."

Drummond's company is now worth $35m. And the list goes on. Lastminute.com, founded last year by 30-year-old Brent Hoberman and 26-year-old Martha Lanefox, sells bookings for trains, flights and hotels. Formed last year, the company is estimated to be worth pounds 20m.

What makes internet businesses unique is the discrepancy between their profits and estimated value once they are floated on the stock exchange. Some of the biggest internet companies, such as Yahoo!, Amazon.com and AOL, have been valued at more than Boeing and Disney, even though their profits are nowhere near as impressive. Freeserve may have a floating valuation of pounds 1.5bn but it has a turnover of pounds 3m and made a loss of pounds 1m.

Karl Foster, editor of Internet Access magazine, says: "It's an immense amount of money for something that has yet to prove itself." The figures reflect, maybe, the faith investors have in the future of "e-commerce".

There are fears, though, that the bubble may burst, especially if the stock market falters. Guy Feld, head of research and technology analyst at the stockbrokers Teather and Greenwood, says, "The short-term concerns are if the market shows a weakness, then the last place you want to be is in internet stock run by a 25-year-old."

In the long term, however, this generation of youthful entrepreneurs is likely to clean up. As Karl Foster says, "In terms of e-commerce we've barely scratched the surface."