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Serial Entrepreneur David Steinberg’s Four-Startup Journey (Part 5)

Posted on Sunday, Jul 13th 2014

Sramana Mitra: That IPO was 2004?

David Steinberg: That’s correct

Sramana Mitra: You stayed with the public company till?

David Steinberg: 2007.

Sramana Mitra: Is that the timeframe in which you started the current company?

David Steinberg: Yes. I left there in August of 2007 and I started this company in October of 2007.

Sramana Mitra: What were the circumstances of this company? What was going on in the market? What opportunity did you identify and how did you validate?

David Steinberg: I felt like I had exhausted my mobile experience. I felt like the next evolution was not what I was looking for. What I saw was that there was an opportunity to help companies better understand how to create customers and keep the ones they have for a longer period of time by using large amounts of data. As an Internet marketing company, our Wirefly division of InPhonic was spending a hundred million dollars a year on the Onternet in advertising. It was all metrics-based.

What I saw was that marketing was shifting or pivoting from what has been a marketing world that was focused on creative and relationships to a marketing world that’s more about analytics and data understanding. We felt like we could bring a whole new level of understanding to that ecosystem by buying a few very interesting marketing companies and combining their assets into a new concept that could help large companies run very efficient customer acquisition and CRM programs by using Big Data over the Internet. That’s what we focused on.

Sramana Mitra: Was there any kind of process that you followed early on in founding this company to validate the opportunity?

David Steinberg: No, I had a premise and we dove in pretty deep. Once again, I invested a substantial amount of my own capital into founding this business. My partner is John Sculley, who was the CEO of Apple and Pepsi. He was my partner at InPhonic, Wirefly, and now at Zeta Interactive. Our third partner Bill Landman came in as an institutional investor. The three of us put up all the money to found it. We got going and started running very quickly.

Sramana Mitra: Where is this based?

David Steinberg: New York City but we have a big office in San Mateo. We have 17 offices globally. We have just over 650 employees operating in four continents.

Sramana Mitra: I’d like to extract a more granular journey piece of your process. How much money did you and your partners put into the starting of the company?

David Steinberg: $10 million.

Sramana Mitra: In terms of team, what did you need to build something with that $10 million and get it going?

David Steinberg: The first thing we wanted to do was go look at what we thought were undervalued companies that had very large databases but were not monetizing them. We ended up buying a very small company that was half-digital and half-telemarketing. The first thing we did, for example, was shut down the telemarketing business. We focused solely on digital. We used their data as what became the backbone to what we’ve built. We then bought a really interesting but small email marketing company. We put the data of one company and the clients of one company and we put it together with the email capabilities and analytics capabilities of the other one. We merged them into something that became really interesting.

Then we pulled out our Rolodex. We opened our Outlook and started calling our relationships. We said, “We’ve got this massive database. We can help you create customers at much cheaper pricing.” We were able to grow the businesses very quickly through our relationships and people that we knew. Then we focused really heavy – here is an example of the pivot – on the for-profit education space years ago because it’s a very high lifetime value per user. But we saw a regulatory change coming and as a part of that regulatory change, we moved very quickly to diversify out of education and focused on our five main verticals today, which are financial services, insurance, health and wellness, communications, and education.

This segment is part 5 in the series : Serial Entrepreneur David Steinberg's Four-Startup Journey
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