The Great Persuader

Tweet

This past year, when the federal government finally allowed cell phone users to transfer a number from one carrier to another, InPhonic capitalized again by putting up a site called Wirefly. "If you know what's going on early, you can plan for it and maximize profits," Steinberg says, alluding to his contacts in the political world. "Lots of people thought number portability was going to be pushed back again. We knew it wasn't." Suddenly, a company that had $10 million in sales about two years ago was on its way to $200 million.

Successful entrepreneurs sometimes inspire a Stockholm syndrome-like devotion among employees; they have the skill to spin an illusion palpable enough to inspire people to make great sacrifices. At InPhonic, work and life have long since become synonymous. "You have to be prepared when you go in [to Steinberg's office] or you'll get your ass handed to you," says Charlton. "There's intense focus and pressure on achievement." Steinberg is the kind of leader, says Brian Westrick, president of another InPhonic division, who "has the ability to push you right to the edge, and then pull you back."

Everyone knows that Steinberg is making the same sacrifices. Last summer, when he took his first vacation in four years, he sealed his BlackBerry in a Ziploc bag so he could type away on the beach. On a snowy Halloween in 2003 -- which happened to be Steinberg's daughter's birthday -- he spent the day at the company's Maryland warehouse shipping phones to cover for employees who couldn't make it through the storm. "He'll get off a redeye from California and come to the office, exhausted, and work," says Westrick. "He does not ask people to do more than he's willing to do."

During the four-day trips to the annual Consumer Electronics Show in Las Vegas, Steinberg typically has 20 contract-centered meetings and negotiates each deal himself, down to the penny. "He pushes you hard and you still want to work with him," says Matt Waldie, who has negotiated with Steinberg on behalf of AT&T Wireless. "That's why he seems to get what he's after." Waldie recalls sitting with Steinberg and 10 others in the Las Vegas branch of sushi palace Nobu. The waitress delivered an astronomical bill that Waldie did not want to pay. At the time, he and Steinberg were haggling over $500,000 that Waldie thought InPhonic owed, and Steinberg turned to him with an offer. "He says, 'If you forgive the $500,000, I'll get the bill," says Waldie. "And I said, 'You got a deal.' It's goofy stuff, but it's a really good way to run a business."

Steinberg also used the prospect of IPO riches to keep his staff hungry. The company completed its successful offering -- one of the biggest of 2004 -- in November. The money raised will likely go toward more acquisitions. Steinberg mentions ring tones and phone accessories as obvious extensions, and then goes further as he imagines unrelated products, such as financial services. As InPhonic grows, of course, it will be expected to clear that most basic hurdle, profitability. InPhonic's loss over the first nine months of 2004 was $8.9 million, down from $28.6 million the year before. But, according to CFO Lawrence Winkler, the company's EBITDA has already turned positive, and what interests investors most is InPhonic's ability to manage costs. Over the first nine months of 2004 revenue rose 77.2% while operating expenses rose 29.5%. If those trends continue, the company should soon be profitable.

As Steinberg settles into the life of a public CEO, Sculley believes that he has learned the entrepreneur's toughest lesson. "The hardest thing for a successful entrepreneur who's never had a boss is to be able to recruit people who are better than he is at certain things," Sculley says. "And David now hires people who are better than him." He's also learned to delegate -- even in sales. He says that he handles "relationship management" these days, and claims to be "down" to 80-hour weeks. But Steinberg's ambition is clearly beyond the current scope of his business and his skills at relaxation are nascent at best. Can this hurried CEO settle for managing a business as it settles in, establishes, and even slows? Or will a man likened to Jobs and Gates feel stirrings to try to do more? "Those are guys who changed the world," he says. "I don't think my legacy is to change the world. When people look back on me, I want them to say that he built one of the great companies that people actually love to work at, want to own stock in, and like to do business with. I have every intention to stay here for many, many years to come -- in an executive, not a noninvolved, role. I don't really dream about the next big thing."

Angled in the corner of Steinberg's office, which is decorated with old phones, pictures of his family, and snapshots of his dinner with Clinton, sits a huge carved desk. The desk is actually a Scottish foyer table, a piece of furniture Steinberg bought in 1993 just after founding Sterling, when the 24-year-old wanted something imposing to make him look older. Michael Masri, his childhood friend, points to that oversized desk as a metaphor for Steinberg's trajectory. "It used to be funny because everything was too small for him," says Masri. "Now everything is finally in proportion."

The desk no longer seems too big for the man.

Ian Mount wrote about JetBlue's David Neeleman in Inc.'s April 2004 issue.

 PREV  1 | 2 | 3 | 4 

Read more: