In 1899, von Zeppelin started to manufacture a rigid airship based on the design of David Schwarz, a Croatian wood merchant. The design was used by the German entrepreneur Carl Berg to procure a contract to build an airship for the Prussian Government. After Schwarz died in 1897, Berg teamed up with von Zeppelin, who had seen the potential in rigid airships during the 1870s and could raise the capital required to fund the venture, and the German designer Theodor Kober who completed the design. Berg, von Zeppelin and a third investor, formed the Gesellschaft zur Förderung der Luftschiffart (Society for the Promotion of Airships).
At a little after 8pm on 2nd July 1900, the Zeppelin LZ1 left its floating hanger on Lake Constance in southern Germany, and took to the skies: the first successful untethered rigid airship flight. The LZ1 was made from aluminium (supplied by Berg) covered in cotton cloth. It was over 400 feet long, nearly 40 feet wide, and was powered by two 15-horsepower Daimler internal combustion engines, which each turned a pair of propellers. The flight lasted seventeen minutes in which time the five passengers travelled 3.7 miles reaching a maximum altitude of 1,300 feet before landing back on the Lake
In spite of problems with the design and mechanics the LZ1 flew twice more before being scrapped. Nevertheless, the Society attracted no further investment and the three partners liquidated it. Undaunted, von Zeppelin continued to develop airships financed from his own pocket, as well as a lottery and private donations – which, somewhat perversely, flooded in following a well publicised crash landing of one of his airships. Within ten years of the first flight of the LZ1, his company was producing commercial airships, which were so popular that they became synonymous with him.