The Great Persuader

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Steinberg was helped in this endeavor by Michael Masri, who grew up around the corner in Great Neck and who describes the complementary attribute to Steinberg's relentless ambition: competitiveness. "He's extremely, extremely competitive," says Masri. "When you would play tennis with him, even if you were just hitting, he'd want you to call the lines. He just drills that ball and he comes up to the net. He's always won and he always lets me know."

Steinberg graduated from Washington & Jefferson College in 1991 with an economics B.A. and average grades -- he is a dyslexic who mangles words -- "anecdotally" becomes "antidotally" -- but makes up for it with acute interpersonal skills. At first, the budding entrepreneur took an internship clipping newspaper items for Sen. Ted Kennedy's Judiciary Committee as preparation for his father's suggested career path: the law. But within months, Steinberg grew bored. One day as he clipped articles, he came across an employment ad for the Pennsylvania Life Insurance Co. "I told my father that I was going to take another year before law school and sell insurance door-to-door," says Steinberg, "and he flipped."

Then Steinberg talked to stepdad Irv. The conversation went like this:

"Will they pay you any money?"

"Yes."

"Will they teach you to sell?"

"Yes, they will."

"Take the job."

And so it was that Steinberg hawked insurance for 18 months, during which time he was promoted to branch co-manager, won awards for his cold-calling skills, and made plenty of money. He'd found his calling, it seemed, until one day he came across a bright-yellow coupon for a free mobile phone. Intrigued, he drove to the phone store with a friend. There was a woman behind the counter, and Steinberg began quizzing her about how the business worked. She told him she got paid about $300 per phone activation and the phones cost her about $150 each. "It was like, 'Wow, you make $150 each time you give away one of these for free?" Steinberg says. As he walked out, he turned to his friend:

"I am in the wrong business."

At the time -- 1993 -- the mobile phone industry was in its infancy and the phones were still "bricks" that were installed in cars by professionals. But Steinberg saw potential. Never one for modest gestures, the first thing he did was ask his stepdad to give him $50,000 to start a cell phone business. Siegel turned him down, suggesting that he should work for a pro for a few years to learn the ropes. "But he didn't have time for that," says Siegel. "He had to be his own man fast."

So Steinberg started the business anyway. Because he couldn't afford a physical store, no carriers would sign him up as a dealer. Instead, he turned to subcontracting for another dealer (Siegel did vouch for Steinberg's creditworthiness so that the dealer would front Steinberg phones to sell). Working out of his own basement, Steinberg and five friends he recruited from his insurance job went door-to-door to D.C.-area businesses and soon were selling more than $300,000 a month -- more than the dealer they represented. Results in hand, Steinberg convinced Siegel to co-sign a lease and opened a store selling phones for mobile carrier Cellular One. "Very ballsy," says Siegel. "He was only 23 or 24."

Within six years, Steinberg had built the company, Sterling Cellular, into a 58-location chain. Already, his brashness and relentlessness were in full bloom. At the time, his friend Brad LaTour was considering starting his own business in sports marketing, but over one of their regular lunches at a Chinese restaurant in a Maryland strip mall, Steinberg appealed to LaTour to put his own ambitions on hold and join Sterling Cellular. "He said, 'If you take this job, I will make you a success," LaTour recalls. "I made him write it down and sign it. I still have that napkin hanging in my home office." LaTour, who started working for Sterling three days later, is now InPhonic's vice president of direct sales and customer service.

As Americans grew more comfortable with cellular phones, Steinberg and LaTour worked on cutting the one-on-one aspect out of sales. As soon as everyone had bought their first cell phone, the partners figured, consumers would need less handholding. When people bought their second and third phones, they'd worry more about price. The sales cycle could be more and more automated, which would drive down costs. Telemarketing -- not brick-and-mortar stores -- seemed the most effective way to sell mobile phones. They tested it, and it worked. "We found that someone would buy a phone in 4.5 minutes over the phone as opposed to 45 to 60 minutes in a retail store," Steinberg says.

Sterling's move to telemarketing was made easier because he'd seen that the forces that would sweep the cell phone universe were already rocking the travel industry. In that business, thousands of mom-and-pop agents were struggling while Internet clearing-houses, like Expedia, were thriving. So, in 1999, Steinberg broke Sterling into three parts -- a retail chain, a telemarketing company, and a behind-the-scenes operation that activated and shipped phones. He spun off the retail and telemarketing groups and kept the back office, which would become an Internet empire -- the "Expedia of the mobile phone industry," in Steinberg's words.

There was, however, a problem. While some websites were advertising phones, no one was selling them effectively on the Web. This meant that when Steinberg went to raise money, he had to sell an untested idea, fronted by an unknown 29-year-old CEO, to dubious investors. Steinberg realized he would need big patrons. In a confluence of luck and salesmanship, he attended a Young Presidents' Organization conference at the Washington Hilton in the fall of 1999 where John Sculley spoke. Afterward, about 100 eager entrepreneurs surrounded Sculley and peppered him with detailed questions about business trends. Some of the more brash owners pitched him ideas. Steinberg stood back at first. He wanted to make a distinct impression. When the opportune moment came, the CEO of InPhonic -- all 6-foot-3 of him -- leaned in and asked Sculley a question: "Did you see Pirates of Silicon Valley?"

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