Millennials — a.k.a. Generation Y, a.k.a. echo boomers — are widely characterized as spoiled, impatient, and narcissistic. Their childhood bedrooms overflow with trophies earned just for showing up. Raised on a diet of adoration and encouragement, they enter adulthood rosy with entitlement. As they swarm into the workplace, their hair perpetually mussed from the wind stirred up by helicopter parents hovering nearby, companies worry how to accommodate their outsize expectations. Merrill Lynch (NYSE:MER) sponsors a Parents Day for summer analysts, so Mom and Dad can ensure their offspring are well cared for by their new work families.

As a CEO, you may wonder how to absorb such difficult young people into your company. But here’s a better question: How do you compete with them? Because they are starting some fascinating companies.

Dismissing the latest crop of twentysomethings as navel-gazing screen-a-holics is a mistake. This generation, at nearly 80 million strong, is poised to be the largest, the most educated, and the most diverse in American history. That gives its members special insight into the largest, the most educated, and the most diverse market in history. They are also fearless about technology. The kids of the ’80s grew up with computers; the kids of the ’90s can’t recall (and shrink from imagining) life before the Internet. And they are idealistic and optimistic — traits that influence their perceptions of business. Steve Jobs and Mark Zuckerberg are their heroes. And when they think of corporate America, they think of Office Space and maybe Enron. Were these guys born to be entrepreneurs or what?

As for being spoiled and narcissistic: I have yet to meet an entrepreneur of any age who isn’t supremely confident, easily distracted by new ideas, and proud of being unemployable by ordinary companies that insist on coloring inside the lines. Entrepreneurs believe they can do anything. That belief is no less powerful for having been hammered in by their parents.

But, yes, Millennial entrepreneurs are a breed apart from those who came before. The ways in which they start companies — and the companies they start — reflect those distinctions.

The most significant differences arise from growing up wired. Say what you will about Facebook and MySpace; those who frequent them accept communal action — including communal idea generation — as the norm. Millennials are, in general, far more open and collaborative than their older counterparts. The iconic image of the lone-wolf entrepreneur holds little romance for them. Instead, they start businesses with partners — in some cases with entire teams. Etsy, a Brooklyn, New York, website, is a virtual crafts fair at which artisans market handmade walnut coffee tables and lamps made out of vintage glass coffeepots. Co-founder Rob Kalin, an aspiring classics professor, came up with the idea in 2005 and partnered with two techies whom he met in college to launch it.

Millennials also like to build elements of community into their businesses. Matt Mullenweg’s wildly successful software company, Automattic, which handles blogs for CNN and The New York Times, began as an open-source project to create better blogging software. Then a teen with no experience in software development, Mullenweg recruited volunteer coders who built, tested, and refined what has become WordPress — one of the most popular blogging platforms — all for no pay. Anyone can contribute to the code (so far, hundreds of people have done so), and anyone can download the software for free. “We’re democratizing publishing,” says Mullenweg.

And, yes, Millennial entrepreneurs are often impatient. (Inc. was even scooped by Bobby Kim of The Hundreds, who blogged about this article and who would be mentioned in it about six weeks before it hit newsstands.) But why shouldn’t they move fast? Many start either Web-based or service companies whose barriers to entry can be quite low. And their customers — particularly those customers who share the founders’ demographic — don’t blink at beta. In fact, many Gen-Y entrepreneurs, infused with the aforementioned communal spirit, rely on feedback from early users to improve their offerings. Rather than sweat over business plans, they throw out something rough, then tweak and experiment. Xobni, co-founded by Adam Smith and Matt Brezina, hopes to transform Microsoft (NASDAQ:MSFT) Outlook inboxes into social networking tools. Early on, the founders routed users through a welcome page that humbly noted the product wasn’t perfect and asked for feedback. It’s company building as class science project.

Millennials are the most globally minded generation since the one that invented Earth Day. Making the world a better place is sometimes an element in their mission statements, sometimes their founding principle. Meraki, for example, which is backed by Google, builds mesh Wi-Fi networks that provide free or low-cost Internet service to poor communities. MIT student Sanjit Biswas tested the model in a low-income housing development in San Francisco; Meraki is now expanding into India, Africa, and Latin America.

The Millennials may resemble their ’60s counterparts in idealism. But unlike counterculturalists, they do trust people over 30. Accustomed to the nurturing and guidance of their parents, Gen-Y entrepreneurs are receptive to the advice of older, successful company founders who were minted in droves during the ’80s and ’90s.

Brendan Ciecko, founder of Web design firm Ten Minute Media, has three mentors, all more than a decade older than he is. One helps Ciecko think about the business of technology. Another one advises him on intellectual property issues. A third is his social responsibility guru. “It was really surprising to me that people like this would be willing to take time out from their own businesses to talk to me once or twice a month,” says Ciecko. Smacks of entitlement, doesn’t he?

So Millennials get by with a little help from their friends, their parents, and their mentors. But they also draw on an unprecedented formal support system that grew up, like them, in an era of fascination with entrepreneurship. This infrastructure now serves a demographic that is intellectually prepared and temperamentally inclined to exploit it.

Much of that support system, not surprisingly, is university-based. Millennials start companies in dorm rooms while studying the subject of starting companies in classrooms. Approximately 2,100 colleges and universities offer at least one class in entrepreneurship, according to a 2006 study by the Ewing Marion Kauffman Foundation, and the discipline has sprouted more than 400 endowed chairs. Many schools also sponsor business plan competitions. Nate Alder, a student at Brigham Young University, has won first or second place in 11 competitions over the past year for his company, Klymit, which has developed a way to insulate outerwear and outdoor gear using argon. Alder racked up $200,000 in prize money, potential strategic partnerships, and recognition in the national business press before he even had a product to sell. (See: Gen Y, impatience of.)

Business incubators, too, are contemporaries of the Millennials. Though incubators have been around since the 1950s, there were only 12 in the United States in 1980 — but more than 1,400 by 2006, according to the National Business Incubation Association. Some newer incubators are particularly conducive to the kind of support and collaboration on which Gen-Y entrepreneurs thrive. For example, Y Combinator, in Cambridge, Massachusetts, funds start-ups in batches. Each class starts and finishes at roughly the same time, encouraging group learning and support. The founders of Xobni are among the promising Y Combinator grads.

“One thing that differentiates the young founders is who they can connect with early on,” says David Cohen, executive director of TechStars, a Boulder, Colorado, incubator that works with Millennial company founders. “People are starting companies at young ages. They fail fast, learn a lot, and keep going.”

That’s another trait of Gen-Y entrepreneurs: They are comfortable with a business world in constant flux. For Millennials, change isn’t something to manage; it’s something to relish.

Profiles reported by Max Chafkin, Donna Fenn, April Joyner, Ryan McCarthy, Kate Pastorek, and Nitasha Tiku

Leah Culver

Current Venture: Pownce, a San Francisco start-up that combines elements of blogging, instant messaging, and file sharing. Friends can use the software to send one another messages or trade files.

Why She’s One to Watch: When Culver described the idea to her then-boyfriend, the creative director at the popular website Digg, he replied that his boss, Kevin Rose, was pursuing a similar concept. The three joined forces to launch Pownce, and Rose’s involvement prompted buzz. Weeks after Pownce’s debut, The New York Times proclaimed it “the hottest start-up in Silicon Valley.”

The Backstory: “I didn’t grow up with computers any more than your average suburban kid,” says Culver, 25. “I wanted to be a graphic designer, but I sucked at design.” So reluctantly, she majored in computer science at the University of Minnesota.

Employees: Two

Sample Budget Item: $700 for beer for the launch party

On Being a Young CEO “When we hit 90,000 users, I remember thinking that Pownce was bigger than my hometown.”

Una Kim

Current Venture: An avid skateboarder, Kim hated the women’s boarding sneakers then available — “Pink, puffy pastel things that you couldn’t even skate in,” she says. Keep, the Los Angeles — based line of footwear she created, aspires to be chic and “cruelty free,” which means that Kim, 29, doesn’t use leather and monitors conditions in her factories. Sales are approaching $2.5 million.

Why She’s One to Watch: Kim mixes an elegant aesthetic and top-notch branding skills. A Stanford M.B.A., she began her career at Faith Popcorn’s trend-forecasting company, where Kim developed youth-marketing campaigns for Tylenol and Campbell’s Soup. She enjoyed the work but felt a bit like a sellout. “I thought, Wouldn’t it be great to have a business that actually came out of the culture, as opposed to helping a big company see what young people want and spin it back at them?”

Employees: Six

On Being a Young CEO “I think the key is energy management. Passion comes quickly to the inexperienced, but having a lasting commitment is a different story.”

Rob Kalin

Current Venture: Etsy, a vast website that helps artisans sell handmade clothing and crafts. The Brooklyn, New York, business processes 20,000 orders a day, at an average sale of $15. The site charges a listing fee and takes a small commission on each transaction.

Why He’s One to Watch: In just three years, Etsy has attracted 200,000 sellers, a million registered users, and more than $27 million in funding.

The Backstory: The son of a Boston furniture maker, Kalin flunked out of high school, briefly enrolled in an art school, and then faked an MIT student ID so he could take classes on the sly. He so impressed the professors there that they helped him get into NYU, where he learned how to build a website. In 2005, he launched Etsy with two classmates.

Employees: 65

After Hours: Kalin is learning to sew.

What’s Next: Kalin, 28, stepped down as CEO in July, though he remains actively involved as Etsy’s chairman and chief creative officer. “A lot of companies are started and prepped for an acquisition,” he says. “But I hope this will be an independent company for hundreds of years.”

Brendan Ciecko

Current Venture: Ten Minute Media, a Holyoke, Massachusetts, company that creates websites for music industry clients, including Mick Jagger, Katy Perry, and the reunited New Kids on the Block. The business is on track to do $450,000 this year.

Why He’s One to Watch: Ciecko’s break came in 2001, when he won a fan contest to create a Flash webpage for the website of the punk band Slick Shoes. Sony BMG, Warner, and Universal saw Ciecko’s work and hired the then-13-year-old to build sites for their artists. Given the music industry’s travails, he is moving into the corporate market with clients such as MassMutual (NYSE:MCI) and Clear Channel (NYSE:CCO) in the pursuit, he says, of “major scalability.”

Employees: None; he works with 20 freelancers, many of them in Eastern Europe.

What’s Next: Ciecko recently bought a large building in Holyoke, the mill town in which he grew up. He plans to develop the space into an art gallery, a music venue, and a business incubator.

On Being a Young CEO “When all my friends were getting ready to go back to school, I met with Mick Jagger to talk about his website. And I just had to laugh.”

Gerard Craft

Current Venture: Niche, a St. Louis restaurant that will gross $2.6 million this year

Why He’s One to Watch: Craft’s penchant for experimentation can be seen in the menu, which features fried pig’s head and lamb with white chocolate hummus. “He’s a pioneer in terms of both food and location,” says Dana Cowin, editor of Food & Wine magazine. “Niche has a minimal, modern feel, which might have been a risk in a historic St. Louis neighborhood. Its success is a tribute to how good the food is.”

The Backstory: Craft dropped out of culinary school (“I never did well in the classroom — I got bored”) to work at a car wash and a pool hall. He eventually returned to the kitchen, first working a series of restaurant jobs and then raising Niche’s seed money from his brother and parents.

Employees: 36

What’s Next: Craft, 29, recently opened Veruca, a café and bakeshop, as a creative outlet for his pastry chef. He hopes to expand the business further: “I would love to see a brand of Niche with talented chefs that put out good food and make fine dining more approachable.”

A Confession: “I’m dying to be on Iron Chef.”

David Karp

Current Venture: Tumblr, based in New York City, has built an online community around a blogging tool that lets users post short entries, Web links, and music and video clips. The site’s 400,000 members have a knack for generating buzz. Dating columnist Julia Allison parlayed her Tumblr posts into a deal to do a pilot reality show for NBC, for example.

Why He’s One to Watch: At 15, Karp dropped out of Bronx Science to be homeschooled so he could work full time. At 17, he took a job as the community manager at a parenting website. He overhauled the message-board functions, and traffic skyrocketed. After that, he started Tumblr, which raised a small amount of VC money in 2007.

Employees: Three

What’s Next: Tumblr plans to roll out a paid “pro” version of the application that has new content management features.

On Being a Young CEO “It’s never quite clicked with me that I’m part of any particular age group,” says Karp, 22. “I’ve always been hopping between age groups, and I’ve had a hard time picking up on where I fit in.”

Matt Mullenweg

Current Ventures: WordPress.org, a nonprofit that makes open-source blogging software; and Automattic, a for-profit company that manages and customizes the WordPress software for clients such as News Corporation and CNN

Why He’s One to Watch: Mullenweg, 24, turned down a $200 million offer for Automattic, opting instead to raise $29.5 million from The New York Times Company and two venture capital firms.

The Backstory: Mullenweg began building WordPress when he was 18, with the goal of making easy-to-use software that would “make your blog look really good — and, ideally, even get you laid.”

Employees: 29

On Being a Young CEO Early on, “it was kind of weird to be at a business party and be the only person who couldn’t drink. I try to have a little facial hair so I look older.”

Aaron Arnold

Current Venture: Music Is My Business, an Atlanta company that matches performers with marketers at clients such as Heineken and ESPN and produces original music and animation

Why He’s One to Watch: Chris Brown’s recent hit “Forever” — which doubled as a Wrigley jingle — has stoked marketers’ interest in wrapping slogans around song lyrics. Arnold, 29, who worked as an unpaid intern for Sean “Diddy” Combs at Bad Boy Entertainment, is taking advantage of the trend.

Employees: Two

The Backstory: Combs repaid his former intern by supplying Bad Boy’s Danity Kane to perform at a concert sponsored by ESPN, Arnold’s first client. “My first check came from Puff,” he says.

Nate Alder

Current Venture:

Klymit, in Ogden, Utah, is designing a technology to adjust the temperature of cold-weather gear like ski jackets and tents by pumping argon or another harmless gas into the lining, just as cold-water divers rely on tanks of argon to stay warm.

Why He’s One to Watch: Alder, 27, has won $200,000 at collegiate business-plan competitions, and he is partnering with Descente, a sports gear company, on a product field test.

Employees: Three

The Backstory: Alder came up with the idea while on a diving trip to Brazil. Before launching Klymit, he admits, he knew little about basic chemistry. “I thought argon was just a character in The Lord of the Rings,” he jokes.

Adam Smith

Current Venture: Smith co-founded Xobni with Matt Brezina (see next page); the company’s software organizes the information contained in a Microsoft Outlook e-mail account to make it easier to search.

Why He’s One to Watch: At a developers’ conference last February, Bill Gates hailed the San Francisco start-up as “the next generation of social networking.” Some 14,000 people with Microsoft corporate e-mail addresses use the software, and Microsoft has even reportedly made an offer to buy the company. For Smith, a 23-year-old MIT graduate, Microsoft’s interest is especially meaningful. “Bill Gates was a hero of mine,” he says. “When I was a teenager, I sent him a logic puzzle to solve.” Gates didn’t complete it, but his office sent Smith a nice thank-you letter.

Aaron Patzer

Current Venture: Mint.com, based in Mountain View, California, helps 450,000 users organize bank accounts, credit card statements, and investment information. The site suggests ways to save money on fees by selecting another credit card or brokerage account; banks pay Mint.com for the referrals.

Why He’s One to Watch: Patzer, 27, has raised $17 million and gives one of the best elevator pitches around. “After 10 minutes, I said, ‘I got it. I’m in,’ ” says Ram Shriram, a Mint.com investor who also backed Google (NASDAQ:GOOG). Patzer once demonstrated an early version of the site for venture capitalist Josh Kopelman using a battery-powered server that Patzer kept in the trunk of his car.

Employees: 25

Aaron Hall

Current Venture: Borrego Solar Systems, based in San Diego, designs and builds solar panels. CEO Hall was a baby in 1980 when the company was founded; in 2001, he wrote a turnaround plan for Borrego for a class at Northwestern. Borrego’s owner (a family friend) then let Hall put it into effect.

Why He’s One to Watch: In 2006, California pledged $3.3 billion to encourage residents to install solar panels on their roofs. Hall has six offices in the state and accepts energy tax rebates as partial payment. Revenue is set to hit $60 million.

Employees: 160

The Backstory: Hall, 29, learned strategy at the blackjack table. When he was in college, a friend of his father’s paid Hall $10 an hour, plus 10 percent of the profits, to gamble with the friend’s money.

Matt Brezina

Current Venture: Co-founded Xobni with Adam Smith (see previous page)

Employees: 16

The Backstory: The partners met in 2005, when Brezina, a grad student at the University of Maryland, posted a roommate ad on Craigslist, and Smith answered it. The two became friends, and Smith persuaded Brezina to help him launch Xobni. “I thought, I’m not liking grad school too much, and this girl just broke my heart, so I decided to change my life,” says Brezina, 28.

On Being a Young CEO “Raising money is hard when you’re in your 20s and you’re asking for $3 million to $5 million when you’ve never managed more than $10,000 at a time.”

Bobby Kim

Current Venture: Co-founded with Ben Shenassafar (right) The Hundreds, a company in Los Angeles with a clothing line, three retail stores, and an online magazine. Sales are on track to hit $4 million this year.

Why He’s One to Watch: The Hundreds enjoys a rabid following. When the company opened its first store in San Francisco this year, it was mobbed.

What’s Next: A deal with Disney. After The Hundreds paid homage to the Lost Boys characters from Peter Pan in a few designs, Disney approached Kim, 28, to talk about a line of Lost Boys streetwear. The Hundreds is pursuing the project eagerly and without irony. “Disney is a huge part of American culture,” says Kim, “so being involved is a great opportunity.”

Dalton Caldwell

Current Venture: Imeem, a social networking site in San Francisco that lets users listen to music and watch videos for free. More than 27 million people visit the site each month.

Why He’s One to Watch: Caldwell, 28, beat out MySpace and Facebook to sign deals to share online ad revenue with all the big music labels, a coup that landed major advertisers such as Apple and Toyota. Ted Cohen, a board member and former EMI exec, says Caldwell succeeded where others failed because “he has no ego, and he gave the labels confidence that this was a true partnership with long-term revenue expectations.”

Employees: 90

On Being a Young CEO “I’ve been doing this nonstop for four and a half years. I actually feel kind of old.”

Ben Shenassafar

Current Venture: Co-founded The Hundreds with Bobby Kim (left)

Employees: 30

The Backstory: Shenassafar, 28, met Kim at Loyola Law School, and together they came up with the idea for The Hundreds. “I was 100 percent sure I was not going to practice law,” says Shenassafar, who put off studying for the California bar exam to pack boxes in the company’s warehouse.

What’s Next: The Hundreds plans to open two or three more retail stores in 2009.

Sanjit Biswas

Current Venture: Meraki sells low-cost wireless routers that allow telecom companies in developing countries to charge $10 a month or less for Internet access.

Why He’s One to Watch: Biswas, 26, has raised $25 million from Google and Sequoia Capital; has won an award at Davos; and has elicited praise from Nicholas Negroponte, the head of the One Laptop per Child program. “Meraki allows communities to grow their local infrastructure at costs that are orders of magnitude smaller than what is normally expected,” Negroponte says.

The Backstory: Meraki began as a project to provide free Wi-Fi to MIT grad students.

Employees: 40

Smart Move: Without aid or approval, Meraki put up a test network in San Francisco that now has 100,000 users and serves as a huge ad for the company. “It really helped people connect the dots,” Biswas says.

Sumi Krishnan

Current Venture: K4 Solutions, a federal contractor specializing in IT work, based in Falls Church, Virginia

Why She’s One to Watch: Krishnan landed her first government gig — a contract to create a database of images for the Bureau of Alcohol, Tobacco, and Firearms — seven years ago, when she was a senior at Virginia Tech. After graduation, she took a job at the Patent Office but eventually quit. “You can’t do it part time and expect your company to grow,” she says.

Employees: 80

What’s Next: Krishnan’s status as an 8(a) certified business should last for another six years, but she is already planning for the day when her company outgrows it. She has gone through the intensive process of getting cleared to go after defense contracts, including classified work.

On Being a Young CEO “My father always says, ‘If you don’t accomplish something great by the time you’re 30, you’re never going to accomplish something that great.’ That kind of always inspired me.”

The Rise of Method Home

Step One: Differentiate Yourself

Step Two: Persistence Pays – Even in a Recession

Step Three: Branding Isn’t Just for Big Companies

Step Four: Stay Nimble

From a distance, it looks like a rock concert: a gritty part of the Brooklyn, New York, waterfront, where dive bars and cavernous clubs provide a backdrop for an endless parade of girls in skinny jeans and guys piloting fixed-gear bikes. On an evening in June, trickling into one of the unmarked doorways is a massive throng of young people. They are loud, obscene, and drunk with enthusiasm — clapping, hooting, and bouncing up and down in place. Outside this dance club — a massive box of bricks called Studio B — a line wraps around the block for several hundred feet.

Something big is about to happen, but it’s not a concert. The crowd is almost exclusively male, and there’s a disproportionate share of khaki. The warm-up acts are a spiky-haired magician and a guy who attempts to pump up the crowd with exhortations like, “How many of you watch video on hand-held devices?” Yet somehow, the audience is eating it up, cheering every time someone mentions Apple, Twitter, or anything remotely technical. What we have is a gathering of iPhone-coveting, micro-blogging, honest-to-goodness geeks — roughly 1,300 of them — and they are all here to see Kevin Rose. He’s the spokesperson for a new generation of entrepreneurs and the envy of pretty much everyone who dreams of making it big in technology.

Sometime around 7 o’clock, a cab pulls up, and out pops Rose. He’s 31 years old, sturdily built and 6 feet tall, with a youthful mop of hair, wearing a tight black T-shirt. He has a small entourage in tow.

“Kevin,” a loud male voice calls in the flat moo peculiar to frat boys and those pretending to be frat boys. Rose beams and strikes the kind of pose that only celebrities can pull off — half a wave, half a shading of the eyes from camera flashes. “Keeevviin,” another voice pleads. “Keeeevviiiin,” as he disappears inside the club.

Several minutes later, Rose takes the stage for a taping of an online television show called Diggnation. The show is produced by Revision3, a company that Rose co-founded in 2005, and it was inspired by the wildly popular website Digg.com, another Rose creation. Digg is sometimes described as an online newspaper or a social search engine, but it feels more like a seedy bar that happens to serve news. Digg allows its visitors, mostly young men, to submit links to newsworthy items — blog postings, images, newspaper articles, or online videos — and write their own headlines and teasers. The stories, which frequently involve technology, scantily clad women, or Ron Paul, are automatically posted to the site and then put to a vote. A story with enough votes, or “diggs,” lands on the homepage, bringing glory to the user who submitted it and torrents of traffic to the website that posted the original content. (Web marketers call this the Digg effect. It is powerful enough to catapult a site to the mainstream and even take down a company’s servers in a matter of hours.)

If Google (NASDAQ:GOOG) imagines the Internet as an orderly place governed by clean lines, Stanford math, and general good sense, Digg embraces the chaos of mob rule. It is a place where serious business news — “U.S. Government Helping to Arrange Sale of Lehman Brothers” (587 diggs on a recent afternoon) — appears alongside what can only be described as trash — “Dad Chases Nude Boy From Daughter’s Room With Pipe” (2,557 diggs). There may be something disquieting about the fact that a website like this attracts roughly 30 million visitors each month — twice the traffic of the website of The Wall Street Journal — but it’s evidence that Rose is onto something big. Digg has been the continual subject of acquisition rumors for the past three years, and Rose has found himself in meetings with Barry Diller, Al Gore, and Rupert Murdoch. No one can agree exactly how much Digg is worth, but valuations range from $60 million to $300 million. That makes Rose, who maintains a substantial equity stake, a very rich man.

A rich man with a TV show. For about 40 minutes every week, Rose and a bespectacled co-host named Alex Albrecht sit on a couch holding their laptops, consume several beers each, and discuss the top stories on Digg. As usual, the news value is questionable, and the show plays like a parody of a lad magazine. Tonight’s topics include a review of the world’s most innovative brothels, the best add-on for the Firefox Web browser, and a story of a geek whose wife forced him to organize his DVD collection. “My friends, marriage only leads to terrible things like this” is Rose’s take on that story.

Thanks to this wholehearted embrace of juvenilia, Diggnation attracts roughly 200,000 viewers each week, which would make it a respectable cable television show were it on TV. A throwback to television’s golden age, it makes money through sponsorships and on-air endorsements. Tonight’s main sponsor is Microsoft (NASDAQ:MSFT), and, before the taping begins, Rose announces that he will be giving away several Zune media players to the audience. Almost immediately, the only woman anywhere near the front of the stage hoists herself onto someone’s back and offers — in jest, we can only hope — to have sex with Rose, as the crowd noise reaches a terrifying pitch. Elsewhere, a man with a swirling red light affixed to his head gyrates wildly, like some kind of human squad car. Most everyone appears to be at least mildly inebriated and hanging on Rose’s every move, word, and beer chug.

The event is fun if you are into that sort of thing. But it’s also an expression of power. Rose has managed to put himself at the center of an ever-expanding new-media empire. In addition to Revision3 and Digg, he recently launched an Internet messaging service called Pownce. Thanks to Rose’s star power and a well-designed website, Pownce quickly attracted more than 150,000 people, who use it to share music, videos, and links with their friends. This means Rose owns an online newspaper, an online television network, and an online communications platform.

Ladies and gentlemen, geeks of the world, please welcome Kevin Rose. He is the first vertically integrated Internet celebrity — part Steve Jobs, part Howard Stern — and the next media mogul.

Immediately after the taping ends, Rose is mobbed by fans waiting to have their pictures taken with him, and it is impossible to get close enough for an interview. Eventually, I give up and walk around the club as it empties. There is a young couple who drove six hours from Massachusetts, and a guy who flew in from Georgia. Another attendee explains that he likes Digg because “it’s not all this old-media bullshit, like NPR or The Economist.” I find out later that some 400 people had been turned away at the door, though Rose was kind enough to go outside and take pictures with them, too.

The cult of Rose is even more pronounced online. When Rose decided to shave his head, some 800 people watched live. The tech gossip site Valleywag follows Rose obsessively, chronicling his prolific dating habits and even his cell phone purchases. “[L]onely techies…feel like they’re part of a big club,” wrote the site’s then-editor, Nick Douglas, trying to explain the Rose phenomenon two years ago. “It’s like Oprah without all the books.”

Where does this enthusiasm come from? “Geeks see themselves in Kevin,” says Daniel Burka, Digg’s creative director and one of Rose’s closest collaborators. “He’s one of them.” In fact, what makes Rose different from, say, Mark Zuckerberg — the Facebook founder and the only other young Internet entrepreneur whose renown approaches that of Rose — is that he is eternally accessible, the kind of guy who seems ready to throw back a drink with whoever might saunter into his life. “Kevin is an Everyman,” says David Sze, a Digg board member, a partner with the venture capital firm Greylock, and an investor in Digg and Revision3, as well as Facebook. “Mark Zuckerberg is an aloof, Harvard-brilliant engineer. Kevin is the guy who hangs out with everybody else. He’s the guy you party with.”

Over eight years, Rose has built a massive community — one that he actively curates, corresponds with, and, occasionally, panders to. He has more than 64,000 Twitter followers, which puts him in second place after Barack Obama. He receives a thousand or more comments on Twitter every week — a handful of which he responds to. Several weeks after I see Rose in Brooklyn, a Twitter user named Siders writes Rose five messages within a span of a few hours, beginning with, “I’m not trying to be weird, but I’ve been trying to catch you outside Digg to get your autograph.” Rose eventually invites the young man in, still via Twitter. “Thank you very much, sir. You are my hero!” is the reply. Rose’s Twitter fans find the exchange touching: “Pretty cool,” writes one. Two others confess to having the same idea.

Rose says he tries to evade office drop-ins when possible, and he asked me not to print the exact location of Digg’s offices. (The company takes up two floors in a warehouse in an industrial neighborhood near San Francisco’s waterfront. And — attention, stalkers — you can look it up in the phone book.) I have flown to the Bay Area to try to understand the phenomenon that is Kevin Rose, and we are in a taxi speeding toward that semiundisclosed location. “We’ve had people stop in on their honeymoons,” he says, shaking his head. “I was once pulled out of a meeting because we had an 11-year-old kid whose mom brought him.”

Earlier that morning, I had met Rose in the studios of KITS, the city’s alternative rock station, where he does an hourlong segment every month. Rose provides the station with a built-in audience and an endless wealth of quirky news stories, and the station gives Rose yet another platform from which to promote his mini media empire. I find him sitting alone in the lobby, wearing his usual uniform of jeans, fashionable sneakers, and a T-shirt. He is fiddling with his laptop, trolling for stories to mention on the air. “This shouldn’t be too bad,” he says, his voice hanging in a way that suggests he is not quite awake. “When I did live national TV, now that was nerve-racking.”

We hear the show’s deejay offer a plug, and Rose comes alive. He picks up his laptop, walks into the studio, and puts on the oversize headphones. Just as the weather guy is about to update listeners, Rose sends out a message to his Twitter admirers, inviting them to tune in to an online video broadcast of the show. “There are 524 people watching now,” he says. “Let’s see how many people we can get in there.” By the end of the hour, there are more than 1,200, the second most the show has ever attracted.

For most of the hour, the questions are either innocuous or adulatory, but there is an exception. A caller, Peter in Santa Rosa, asks what, exactly, Rose does all day. Rose nods and then responds calmly. “I design future versions of Digg,” he says, before the host redirects the question into safer territory. In the cab, I bring this up. “You know, I’ve actually thought about that a lot, and it’s a valid question,” Rose says. “But you want to get those questions out of the way as fast as possible, because it’s such boring stuff. You’ve got to be entertaining; otherwise, someone hits the button and changes the channel.” The television metaphor is not accidental: Rose launched his career as a production assistant on TechTV, the now-defunct cable channel bankrolled by Microsoft co-founder Paul Allen. In fact, given that Rose runs his life like some kind of a reality show, it’s not even really a metaphor.

“Kevin is building a media empire in a whole new way,” says Jeff Jarvis, a media consultant and the author of the forthcoming book What Would Google Do? When Jarvis gives presentations to newspaper executives looking to revamp their online efforts, he puts up a picture of Rose and says, “There’s the next Rupert Murdoch.” Says Jarvis: “What hits me about Kevin is that when he left his show, he didn’t find a job at another network; he created a network.” Jarvis believes that Rose is doing for the Internet what Ted Turner did for cable TV and what William Randolph Hearst did for newspapers. “He’s the media mogul of the future,” Jarvis says.

Today, Rose is the consummate technology insider. But, like so many of his fans, he started his career as a geek — ambitious, obscure, and fascinated by all things technical. He grew up in Las Vegas with computers, writing his first program in second grade, building his own machines by the beginning of high school, and, before he graduated, working as a technician at the Department of Energy’s Nevada Test Site. He started a little Web business, offering customized wallpaper graphics for Windows, as a freshman at the University of Nevada, Las Vegas, and left college by the end of his sophomore year. He never made any money from that first company — in fact, he never really had a business model — but it helped him land a job at a Bay Area start-up called NextOffice in 2000. Within a year, the Internet bubble burst, NextOffice went out of business, and Rose moved to Washington, D.C., where he muddled his way through the recession working for a defense contractor.

In 2002, he took a job as a production assistant at TechTV. Though Rose had been a fan of the channel, he saw the job as little more than a stopgap. “It was a way to get me back to the Bay Area,” he says. He was a middling PA, but when he discovered a security flaw in Windows, executive producer Paul Block put him on the air. “In some ways, he was like Johnny Carson,” says Block, a veteran television executive who early in his career was a booker for Carson. “He was tech’s bad boy — a guy saying things that no one else would say.” Rose’s ethically ambiguous suggestions, which earned him the on-air moniker the Dark Tipper, included hacking various computer systems, using explosives to destroy sensitive data, and, most memorably, attaching a rat zapper to a video game controller — “So when you got hit in the game, you really got hit.” He became so popular that the show’s producers made him a host.

On December 13, 2004, Rose got in front of the camera and offered a pointed critique of Slashdot, a tech news site that would become Digg’s chief competitor. “The only problem [with Slashdot] is you’re relying on whatever the editor thinks is really cool,” he intoned, pronouncing editor in the most disparaging way possible. “So what we’ve got is a couple of websites that give the power back to the people.” The bulk of the segment was devoted to a discussion of Digg, during which Rose gave no hint that he had launched the site out of his bedroom a week earlier.

Rose started Digg with $1,200 and an insight about the changing nature of news. Thanks to cheap broadband and easy-to-use blogging software, there was suddenly an endless stream of news, gossip, and rumor about pretty much any obscure topic — say, new versions of Linux or 9/11 conspiracy theories — spread across millions of blogs and websites. Rose and others like him were spending hours digging through these stories and then passing them around to their friends. What, he wondered, would happen if someone harnessed that energy?

Rose signed up for a cheap hosting service and hired a Canadian programmer he met online. He designed the site himself, giving it a utilitarian — even ugly — look. It had no graphics, but it did offer something special: a way for anyone to get his or her news in front of lots and lots of people. In addition to his promotional efforts on TV, Rose started talking up his venture on his blog, which had nearly 10,000 registered users. In January 2005, he described Digg as “a friend’s site and one of my favorite technology news websites.”

Just a month later, a hacker somehow managed to download and post the contents of Paris Hilton’s cell phone address book, and a link was submitted to Digg. Within a week, the site saw its traffic quadruple as the Hilton story wound up in The Washington Post and The New York Times. Digg had its first major scoop, and Rose realized for the first time that he was onto something. He left television the following month, with a plan to make Web videos for fun and to pay for his life by selling advertising on Digg using Google’s AdSense service. “I’d always liked the idea of being independent and working for myself,” he says. “I was sitting in my room thinking, If I can just make a few hundred dollars a month in ad revenue, I’ll be able to support myself, pay my rent, and have a good time.”

The site grew faster than he could have imagined. Rose rounded up $50,000 in angel funding, hired a real designer, and started getting acquisition offers. That summer, just months after Digg’s founding, Jason Calacanis, the founder of Weblogs, offered Rose $4 million for the site. Rose said no. Instead, he persuaded his mentor, Jay Adelson, the founder of a data center company called Equinix (NASDAQ:EQIX), to join him as an adviser and then as CEO. The pair raised $2.8 million from Greylock Partners and some angels. “Jason could have had it, if he had been cool about it,” says Rose. “But he was pressuring me so much that I kind of stepped back and said something isn’t right.” Calacanis was so taken with Digg that, after he sold Weblogs to AOL, he started a copycat site under AOL’s Netscape.com brand. He even offered Digg’s most active users $1,000 a month to defect. (The effort failed: Traffic was flat, Calacanis quit, and the Digg clone was moved off the Netscape homepage in 2007.) Digg’s traffic, meanwhile, exploded. By late 2006, the site had 11 million users.

Somewhere along the way, Digg became a cultural touchstone, inspiring a rash of double-consonant copycats such as Mixx, Pligg, and Sphinn. Today, the website of nearly every large media outlet — including The Wall Street Journal, The New York Times, and Fox News — has a Digg button, a little advertisement that encourages readers to submit stories to Rose’s website. When Rupert Murdoch’s News Corporation bought the Journal last year, one of its first moves was to cut a deal with Digg by which the paper’s online edition, for which the company normally charges $89 a year, would be made available to Digg users free of charge.

Meanwhile, Digg’s influence, which has been most profoundly felt in the tech world, seems to be broadening. This fall, Adelson interviewed Nancy Pelosi at the Democratic National Convention, using questions submitted by Digg users in an online interview. The questions that received the most votes on Digg were read verbatim — including hardball questions like, “Does your support for telecom immunity have anything to do with the fact that your husband has millions invested in AT&T (NYSE:T)?” Rose says more interviews are in the works: “I’m excited about it, because it’s completely unfiltered. It’s going to be a great way to get the masses’ questions in front of people they’d never be able to talk to.”

The idea of making the Speaker of the House take hostile questions from an anonymous user identified only as “Spkrcity” gets at the populist appeal of Rose and Digg. Beginning in 2003, Rose began producing a series of Web videos called The Broken. The show, which he described in the videos as “a little shady, a little underground, a little borderline illegal,” featured Rose and a friend drinking 40-ounce bottles of malt liquor, swearing incessantly, and showing hacker-wannabes how to gain access to other people’s wireless networks, how to crack Windows passwords, and how to build a battering ram to break down actual doors. It attracted two million downloads in the first year online and inspired Rose and Adelson to launch Revision3, with the tag line “Kill Your Television.”

But if Rose presents a subversive face to the world, he approaches his business interests as seriously as anyone. Digg began in a series of notebooks, a few of which Rose still has stashed in his cubicle in Digg’s headquarters. Rose’s designs always start with a drawing representing the flow from one webpage to the next, and he eventually works them into complex diagrams. “Computers don’t work for that kind of stuff, because they’re not fast enough,” he says. “I’ll just sketch out a Digg page and say, ‘How would this work?’ and I can start scribbling and messing things up. Once I come up with something on a piece of paper, I fire up flow-chart software and just go to town.”

When he’s not designing Internet products or creating videos, Rose goes to the climbing gym. A few times a year, he goes bouldering, which involves attempting short, difficult climbs without using ropes. “In bouldering, each climb is called a problem, because it’s not about strength,” he says. “It’s a puzzle that you have to figure out.” It’s also not a bad analogy for the work he does at Digg, which — to answer the question of Peter in Santa Rosa — mostly involves solving problems related to the way people use the site. Although Rose effectively controls the ultimate fate of the company at the board level, his day-to-day responsibility is restricted to marketing and product development. As CEO, Adelson oversees finance and partnerships with big media companies. Ad sales are outsourced to Microsoft. This allows Rose to act, as Adelson put it, “as a hit man.” “The way I work best is sitting down in my cube alone with a piece of paper, sketching and drawing ideas,” says Rose. “The last thing I need to do is worry about managing folks.”

Managing his image is another story. Minutes after I arrive in San Francisco, a nondisclosure agreement drops in my e-mail inbox with a number of surprising demands. I, the business journalist, am not allowed to include any financial information about the company or to reveal any details about the personal life of the company’s founder. When I refuse to sign — what kind of profile includes no personal details? — Digg’s publicist, Lacey Haines, apologizes. “We’ve never allowed someone in the offices for so long,” she says, even though I’m scheduled to be on the premises for just a day and a half. “Everyone is really scared.”

Yet, in person, Rose doesn’t seem scared at all as he acts the part of the incredibly laid-back executive everyone sees and everyone loves. He takes me around Digg’s headquarters; the company just leased a second floor to accommodate its 75-person staff. He greets the inevitable company dogs, points out the free beer in the company fridge, and introduces me to the Ph.D. he recently hired. Later, during a “bug quash,” Rose sits on the floor and eats sushi while 25 Digg employees gather around a large table and look for problems with a new feature that will offer personalized recommendations for readers. Rose leans back and holds court from the corner of the room. He finds a few bugs, offers some guidance to the manager leading the team, and then gets up to leave. “I can’t wait till Day One,” he says. “It’s going to be freaking hot.”

Around 4 p.m., employees again gather in the conference room to participate in an online geek-out, an “iPhone stack.” The idea is to see who in the world can pile the most phones on top of one another. After reaching 10 and then taking some pictures, everyone starts drinking wine as part of the company’s monthly Wine Wednesday event. It is all very much in line with the picture Rose likes to present of his company: geeky, fun-loving, and drunk.

But Rose misses the phone stack and the wine. He disappears into videoconferences and eventually leaves the office for a dinner meeting. The next day, he confesses that the image of the entrepreneur as partyer is more a character than it is a real person. “There’s two different sides to what we do,” he says. “When I do Diggnation, I’m partying with the fans. It’s just us being geeks and going crazy, and when I’m here at work, it’s a very different environment. I spend most of my nights going to the rock-climbing gym and drinking tea. And then once a month, I go to a party, and pictures get taken, and it paints a different picture.”

Rose is quick to downplay the extent to which he is a public figure. “It’s not celebrity,” he says. “It’s Internet celebrity.” But for many Digg users, that distinction does not exist, and Rose concedes that representing the company — “being the frontman,” as he puts it — is a substantial part of his job.

David Sze, the Digg investor and board member, says that Rose’s real breakthrough, “the magic of Digg,” was not his idea of having regular people vote on the news but the fact that he actually got them to do it. This is thanks to both his ability as a Web inventor and his sense of business as performance. “Kevin has an instinct for democratic systems and anything social,” says Jay Adelson. “If we could figure out where it comes from, I think we’d all be going to school there.” It’s no coincidence that a master of online expression — a guy who can get 200,000 people to watch him drink beer and make dirty jokes — understands how to build a company that harnesses the desires of millions of geeks.

Of course, Rose is more than a geek icon, and he is eager to see Digg reach far beyond technology news. “We’re not there yet,” he says. “I want everyone to see Digg as a utility that can be used to help spread information.” The idea is for Digg to be a conduit for personalized news and, eventually, personalized advertising. The recommendation feature, which launched in July, is a first step. It works by comparing your favorite news articles with those of other users — so a political junkie would see lots of political news, while someone interested in stories like “The Saddest Male Models in the World” would have an endless supply of offbeat humor. Rose supervised the construction and design of the recommendation feature, beginning with notebooks, then whiteboards and flow charts, and eventually code. Early reviews have been mixed, but the total number of diggs increased 40 percent in the month after the launch.

Rose has steadfastly declined to comment on the acquisition rumors that surround Digg — the latest involved Google buying the company for $200 million. But in September, the company raised $28.7 million from a group of investors led by Highland Capital Partners. Rose says the money will allow Digg to double its staff, move into a larger building, and expand internationally. The plan is to make Digg the next big media company. Most immediately, that means Rose is working on the product, but if building Digg means doing shots on camera or talking about the most innovative brothels, he is willing to go there, too.

Is this self-indulgence or self-sacrifice? Is it both? Rose’s antics seem gimmicky and juvenile, but it’s hard to argue with the results. He has figured out how to turn something as ephemeral as Internet celebrity — whatever that means — into a real company. “There are stories about me on Digg,” Rose says, “where the top comment says, ‘Who is Kevin Rose?’ I love that. It’s awesome. That’s just Digg doing its thing.”

Max Chafkin is a senior writer for the magazine. He wrote for the October issue about Ghanaian entrepreneur Herman Chinery-Hesse.

Aaron Patzer of Mint.com

Step 1: Create a product that makes a difficult, tedious task easy and fun

Step 2: Choose a market that’s really, really big.

Step 3: Develop a business model that actually allows you to, well, make money.

Step 4: Don’t pay to acquire customers. Ever.

Step 5: Be a compete stickler about who you hire.

Stick With It

Simplify Your Mission

Ditch Your Safety Net

Exceed Expectations

Do More With Less

Don’t Go It Alone

Be Nimble

Have a Plan for Actually Making Money

Do Your Homework

Be Prepared

Stay Genuine

Send In The Geeks

Don’t Manage Angry

Don’t Be Afraid

You Can’t Mask Mediocrity

Do What You Love

Vintage and Vintage-Inspired Clothing, ModCloth

Artisanal Foods, Foodzie

Airplanes, Larkins Enterprises

DIY Live Video, Justin.TV

Handmade Jewelry, DANNIJO

Dry-Erase Paint, IdeaPaint

Multimedia Platform, Apture

Advice for Teens, Hey Josh

Tips for “Dudes,” Thrillist

Organic Children’s Clothing, Barley & Birch

Networking Events for Rising Stars, Summit Series

Music Super Site, Hype Machine

Snap Caps, M3 Girl Designs

The Ultimate Social Media Guide, Mashable