The Web masters: W3-design creates Web sites for clients as diverse as Paramount Pictures and Kaiser Permanente. They're getting rich.

Three years ago, when an executive with Nike was looking for someone to design the company's Web site, she paid a visit to the office of W3-design Inc. - which was actually just the South Central Los Angeles apartment of USC anthropology professor Michael Mascha.

It was a quick visit. The Nike executive was extremely nervous about leaving her shiny black BMW parked out on the street in Mascha's low-income neighborhood.

"Now, we're the ones driving the BMWs," Mascha says with relish. "In just 1,000 days, we have completely changed our position."

You know you're in a cutting-edge business when a company considered an industry veteran and pioneer was founded only three years ago. Yet that's the status W3 now enjoys, having jumped in that short time from its modest beginnings into a 27-employee company with a satellite office in New York, $2 million in revenues last year and projected 1997 revenues of between $3.5 million and $4 million.

W3, now based in Culver City, caught the Web development wave just as it was beginning to form, and has built a solid reputation that extends beyond just design.

"It's pretty much assumed now that Web designers will do good work, but it's the other areas that are becoming important," said Jeannine Parker, president of interactive industry consulting firm Magnitude Associates. "The real crunch comes in things like, can you deliver on time, are you good to work with, do you know the client's business? Those are all areas in which W3 excels."

If that isn't enough, consider this: W3's co-founder and chief executive, 31-year-old Nick Rothenberg, says he actually wears a tie about three days a week. That may not seem like much in the buttoned-down corporate world, but in L.A.'s interactive design community it's downright revolutionary.

Perhaps W3's most popular site to date was created last year on behalf of Paramount Pictures to promote its film "Mission: Impossible." The site, which included an espionage game and other interactive attractions, pulled in more than 1.5 million hits a day after the movie opened.

Other big-name W3 clients include the Academy of Motion Picture Arts & Sciences. AST Computer. The Hollywood Reporter, Infiniti Motors, Kaiser Permanente and Universal Studios Inc.

W3's work is no longer done in Mascha's apartment, but at an ultra-modern office designed by architect Eric Owen Moss in the Hayden Tract of Culver City, a growing center for multimedia firms.

The beginnings of W3 were actually formed in 1993, when Rothenberg wats a doctoral strident in visual anthropology at USC. One of his professors was Mascha, now president and creative director of W3 and former director of the university's E-Lab, a new-media laboratory run by the anthropology department.

Mascha and Rothenberg collaborated on a groundbreaking Web site called the Mercury Project, which was the first Internet application that allowed users to alter a physical environment through the Web. Mascha set up a robotic arm attached to a video camera at USC, and visitors to the Mercury Web site were able to control the movements of the arm and see the effects on-screen.

Users were led to believe that the arm was actually located at a radioactive test site in Nevada; their mission was to dig up artifacts using the arm. The site informed users that there was some underlying meaning behind the artifacts, if users could figure out the puzzle. But to do so, they had to collaborate with other users who had made their own discoveries, using online chat and an interactive notebook to which anyone could contribute.

Before long, the Mercury Project became an extremely popular Web site - so popular that it was consuming 80 percent of USC's network traffic, and university officials expressed concern that it would overwhelm the system.

"This was definitely the Dark Ages, when too many hits was considered a bad thing," said Rothenberg. "But that was when we realized that this was a viable commercial medium. We realized we could just as easily bury a Coke can (in the Mercury Project's fictional archaeological dig) and sell this as a marketing device."

The lessons learned from that project have been the basis for everything W3 has done since. In essence, the company builds communities of Web users to create brand identity for its clients.

In other words, it creates content that is interesting enough to draw a mass audience to it Web site - which happens to be sponsored by a corporation seeking to advertise itself. Rather than static Web sites that simply promote a client. W3 builds sites that stand on their own as entertainment or learning devices. The presence of the sponsor on the site is almost secondary.

For example, W3 was hired by the children's software division of Virgin Interactive to promote the division's titles. So W3 created a site that allows children to design their own personal Web pages. On each page, the child lists his or her likes and dislikes. Then, the child is able to access all the pages of other children who share the same likes - or their "evil twins," kids whose likes and dislikes are the polar opposites of the user. There is even an e-mail function allowing them to communicate with their soulmates, or their evil twins.

Through the site, it's also possible to order Virgin software, and the name of the company appears repeatedly, but it is by no means the focus of the site.

"The marketing aspects are important, but not sufficient (to attract and hold the attention of a community of Web users)," Rothenberg said. "These sites are not so much selling products as building brands."

Spotlight

W3-design Inc.

Year Founded: 1994

Core Business: World Wide Web site development

Top Executive: Nick Rothenberg, chief executive officer

Revenues in 1994: $500.000

Revenues in 1996: $2 million

Employees in 1994: 2

Employees in 1997: 27

Goal: Continue to develop new, better ways to build brand awareness of clients' products and services on the World Wide Web.

Driving Force: Advancing Internet applications on its clients' behalf.