How To Grow A Business To $100 Million In Sales, From Someone Who's Done It Twice
Steinberg jumped into the growing cellular phone industry a year out of college, founding the retail chain and business-to-business provider Sterling Cellular in 1992. He then founded the telemarketing company Sterling Communications, which he sold in 1999 along with his retail business, starting online cellular commerce and business-to-business company InPhonic that same year.
At its height, Steinberg says, InPhonic was bringing in approximately $400 million in revenue. In 2004, it was named the fastest-growing private company in the U.S. by Inc. magazine and went public that same year. By 2007, however, it was in bankruptcy due to mismanagement and a host of other factors.
He quickly moved forward, founding the digital marketing firm that was rebranded this year as Zeta Interactive with his business partner John Sculley, former PepsiCo president and Apple CEO. Steinberg tells us that Zeta brought in revenue of $90 million last year and that it's already passed $100 million this year. He projects year-over-year growth of 90% and says its operating margin is in the mid-teens and rising, meaning that Zeta is on a healthy, fast-growth path.
Here are some powerful growth lessons Steinberg says he's learned from being at the top to being at the bottom, and how they are helping him today:
Set up people and processes for sustainable growth.
One of the reasons InPhonic ultimately failed is because it grew too quickly, Steinberg says. It went from offering 100,000 phone rebates to customers to offering one million in the span of a year - and the company simply wasn't ready to handle it, both in terms of manpower and technology. Customer service began to suffer significantly due to the inability to adapt, and Steinberg tells us that rebate turnaround times increased from one month to six months.
Looking back, Steinberg says he should have eased the company into a more manageable direction, in addition to replacing certain employees that were not good fits for a new direction. "The people who got you to where you are won't always get you where you need to go," he says.
At his current company Zeta, Steinberg says he has chief information officer Jeffry Nimeroff focus on making sure that the company's technology is always able to handle Zeta's growth. By using a data-based growth strategy, Steinberg is able to avoid unnecessarily risky initiatives that the company may not be able to adapt to.
Hand off responsibilities.
"It took me 20 years to realize I'm not the best at everything," Steinberg says, laughing.
For example, he says that 15 years ago he wouldn't have been able to effectively manage his current chief operating officer, Steve Gerber, because he wouldn't have been able to hand off day-to-day management decisions to him.
Steinberg says that he's learned that to increase your chances of developing leaders within your own company, it's necessary to hire very intelligent people for your team. "You can teach smart people to do almost anything," he says.
Pivot every six to nine months.
Steinberg thinks that a high-growth company needs to constantly reinvent itself to stay relevant, and that doesn't necessarily mean that it needs to go in a radical new direction.
Zeta started in the education sector before pivoting over to big data marketing solutions, and it's worked out well.
He says that as head of InPhonic he should have acquired an outside wireless company to keep InPhonic interesting and able to handle accelerated growth.
Never put yourself in a situation you can't get out of.
On that note, Steinberg says he made the mistake of setting self-imposed limitations on what InPhonic could be. Part of this had to do with his former obsession with getting press for InPhonic when it was still young, which resulted in excessive coverage of certain initiatives he should have dropped when they stopped working.
This time around with Zeta, he focused on finding what worked before reaching out to the media. He says that today it's "the biggest tech company in New York that no one's heard of." It's better to figure out a growth strategy under the radar than limiting your ability to change course, he says.
Don't be afraid to let the market come to you.
"Most startups wait to start in a time that's hot for their industry," Steinberg says, but that's not necessarily the best option. If you sit on an idea and wait for the market to open its arms to it, then you risk reaching an opportunity for scaled growth at a time when that particular market cools.
If you happen to have a great idea, Steinberg recommends building a company regardless of what the market is doing. And if that great idea turns out to be a great company, then you can still find an audience.
Similarly, Steinberg says, he's never started a company with an exit strategy, as some serial entrepreneurs do. "The exit will find you," he says.