Aiming at an industry; Internet: A new multimillionaire has founded a company that sells office supplies online, tackling the giants of the industry.

THE BALTIMORE SUN

It is often said that the Internet is changing society.

This is a story about how the Internet changed one woman -- an office secretary and former Atlantic City hotel worker -- into a multimillionaire by age 30. It's also about how she plans to use the Internet to change an industry.

Paula Jagemann, now 32, is the president and chief executive officer of Online Office Supplies Co., a private Frederick-based company that, as its name suggests, sells stationery and office equipment over the Internet.

The company is new; it incorporated in March and hung its shingle on the World Wide Web on Aug. 18 at www.onlineofficesupplies.com. However, the venture has attracted far more attention than a normal start-up. The office supplies industry is large -- estimates of its size vary, but conservative tallies put the yearly U.S. market at a bit more than $100 billion -- and analysts say it is a promising market for vendors who can offer the convenience of Internet buying.

"Certainly, office products would be a category conducive to online sales," said Mark D. Mandel of ABN-Amro Inc. in New York. "They're small, they're easily portable. They don't need to be touched and kicked. A lot of people are comfortable ordering those products sight unseen."

The reason for the interest in Online Office Supplies, though, is Jagemann herself. After all, she has been involved in one big Internet success story. For the past 10 years, she has been the secretary of one of the most successful entrepreneurs the Internet has produced, John W. Sidgmore.

As the president and chief executive of Fairfax, Va.-based UUNet Technologies Inc., Sidgmore turned a small Internet access provider into an industry player, forging an alliance with Microsoft Corp. and going public in 1995 with a $68 million stock offering that turned UUNet employees -- including Jagemann -- into overnight millionaires.

Sidgmore sold UUNet to MFS Communications Co. for $2 billion. After MFS and UUNet were bought by WorldCom Inc. for another $14 billion, Sidgmore was named vice chairman and chief operating officer at WorldCom, the aggressive telecommunications giant that bought MCI Communications Corp.

Throughout this run, Jagemann has answered Sidgmore's phone, assisted with the tricky arts of marketing and investor relations, made contacts and soaked up the lessons of success.

"There's nothing John does that I'm not probably 90 percent equally versed in," Jagemann said. "I think like him. I couldn't have imagined a better teacher."

Sidgmore returned the compliment, saying, "Paula is a very creative marketing person, and that was what was so powerful about her at UUNet as well," he said. "That creative energy and spark are part of what sets her apart from more normal people."

A "more normal" person might be tempted to relax a bit after making a few million. However, after the UUNet public offering made her a rich woman, Jagemann stayed on as Sidgmore's secretary, a position she still holds as she works to get Online Office Supplies off the ground.

While working for Sidgmore ("a full-time job in its own right," she said), Jagemann has also taken classes at Hood College in Frederick -- where she has a 3.8 grade-point average -- and plans to graduate with an economics degree this year. She fills her spare time by reading Internet industry magazines.

Jagemann doesn't have the air of a stereotypical overworked Web geek. She's a stylish dresser with a ready smile and a quick informal manner. While she admits that she is under no financial pressure to work another hour in her life, she said she is temperamentally unable to give up working.

"I can't," she said. "It's just this internal clock that never stops ticking. I'm one of those people who if I get four or five hours' sleep, I'm at my best the next day. It's hard to turn off."

Born in England

Jagemann, born Paula Wilcockson in Manchester, England, remains a British citizen -- a fact concealed by her nasal East Coast accent. Her father, an air-conditioning engineer, moved the family to the United States and Iran while Jagemann was a girl. The family moved to New Jersey in the late 1970s as the situation in prerevolutionary Tehran worsened, assuming they would return when things calmed down.

Jagemann spent the rest of her childhood on Long Beach Island, north of Atlantic City, N.J. Her parents divorced. To support the family, Jagemann's mother worked at a state welfare-to-work office as a receptionist and later a placement officer.

"She worked there from nine to five, and then everybody would leave. They'd drive away, she would circle around the block, come back, and she would come into the office and be the maid and clean all the desks, empty the trash, clean the bathrooms and all of that," Jagemann said.

After Jagemann finished high school, she planned to attend college at Villanova University near Philadelphia. However, before she left home, her father moved to Michigan and could not be reached for the college money he had promised to his daughter.

Unable to attend school that fall, Jagemann went to work with her mother at Trump's Castle (now Trump Marina), a hotel and casino in Atlantic City. She met her husband, Joseph Jagemann, on a visit to Washington and moved to Maryland, his home state. She took another hotel job, but a corporate headhunter friend thought she was better suited to work as an executive assistant, and put her in touch with a corporate headhunter who in turn introduced her to John Sidgmore.

Now, after watching Sidgmore's impressive rise, she's starting her own business. The idea for Online Office Supplies was born last January, when a brother-in-law working in the office-equipment industry mentioned that no one was selling supplies on the Web. Incredulous, Jagemann scoured the Internet for office-supply sites and found little more than advertisements.

Draws on experts

Jagemann decided that she could make a bundle using the Web to sell office supplies. She drew on the technical experts surrounding her at work for advice on how to set up a commercial site. She tapped into her own considerable personal wealth (which she places in the "eight figures") and garnered investment money from Sidgmore to pay the $500,000 necessary to get the business started and sock away an additional $250,000.

She has also drawn on the top-level contacts she made in the Internet world to assemble what she calls "a killer board of directors," which includes such industry luminaries as Ascend Communications Inc. President and Chief Executive Officer Mory Ejabat, and Daniel Rosen, the general manager for new technology at Microsoft, in addition to Sidgmore.

Jagemann said her company has begun picking up customers and expects to take in $6 million this year and $22 million in 2000. Some office supply industry analysts, though, say that modest gains could be hard to come by for an online start-up in a market dominated by such behemoths as Office Depot Inc. and Staples Inc.

"I don't think there's going to be an Amazon in the office supplies area," Daniel Binder of Brown Brothers Harriman & Co. in New York said, referring to the online merchant that came out of nowhere to steal huge chunks of the nationwide book market from entrenched bricks-and-mortar booksellers like Barnes & Noble Inc.

Size is advantage

Binder and other analysts said the big traditional office supply companies are able to use their size to get favorable prices from manufacturers and wholesalers, an advantage that would be difficult to match for small, unproven companies operating in an industry with low profit margins.

"You can't really compete on price in this industry unless you're willing to take a loss," Binder said. "Size matters in this industry. Pricing will improve with size."

Jagemann denied this, saying the agility and low overhead of Internet selling will allow her to price office equipment competitively. "It's a huge market," she said. "I'll take 1 percent of this market. I don't even need 10."

Pub Date: 1/24/99

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