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Disruptive thinking

For as long as he can remember, Paul Lego has had an affinity for technology that changes the way people do things. As a boy of 8 or 9, he built robots and his own short-wave radio because he wasn't satisfied with traditional toys.

Today, as president and CEO of San Mateo, Calif.-based Virage Inc., he's doing much the same thing.

The company, as he sees it, is "disrupting" traditional thinking in the area of digital-media editing and distribution. Virage develops asset-management software, which is used to maintain a database of video and audio files. On Major League Baseball's Web site, for example, it allows users to search for and access clips of a particular player or even entire games.

Surprisingly, given his youthful interests, Lego gravitated to the management side of technology. "You'd think engineering would be my eventual goal, but I soon found out that a lot of engineering is not that fun tinkering that I still love to this day; it's a lot more rigorous discipline," he explains. "I tend to do more tinkering as a business man now than when I worked in an engineering capacity."

Lego moved into technology management in 1988, about the time the desktop computer began to have a significant impact on professional audio and video production. He met Peter Dogger, founder of Digidesign, a small, four-year-old audio editing/mixing company with annual sales of about $800,000.

After several meetings, Lego recalls, Dogger told him, "I am going to make it possible for the average garage musician to be able to record and mix music on a computer, with no concession in quality to what the major recording studios were doing."

Lego soon joined Digidesign as chief operating officer. The company's approach to audio editing was disruptive for the time, he says, adding that it is a way of thinking he still finds appealing.

"I love it when a certain technology completely changes the traditional thinking," he says, citing the combustion engine and the first television as other examples. "Up to that point, everybody was recording and mixing audio in the analog world on tape. The disruptive change happened when disk drives got fast enough to record digital audio data."

Although recording on disk was promising, Lego says, it was years before audio professionals fully embraced it. But they did. In the seven years that he ran the business, the company's market share rose from less than 5% to 90%, and revenue grew to more than $30 million.

Lego left soon after Digidesign was sold to Avid Technology in January 1995. Looking back, he's "really proud" to see Digidesign's progress (it maintains about 80% market share in high-end audio postproduction) but laments Avid's corporate influence, which he believes has tended to stymie innovation. "Both those companies started out as innovators of disruptive technology, but I don't think they innovate any more."

Lego joined Sutter Hill Ventures in 1995, with the idea that, within a year, he would either become a venture capitalist or sign on with one of the companies in which the firm had invested. It was while overseeing "a large stack" of business proposals for technology ventures that he began working with Virage, which he joined as interim CEO in 1996.

He has been there ever since and today oversees 200 people and nearly $20 million in annual revenue.

"The image-management technology that Virage was developing and its view of the future of the media industry really interested me," he recalls, adding that "broadband in most consumers' homes is two to three years away, but, when it gets here, the streaming industry will explode, and we plan to be in the middle of it. Having a video experience that's a personalized, two-way communication with the user, that's what we're working [for] at Virage."