Phone Outfit Keeps Calls Short

San Francisco Business Times, Volume 9, Number 26; Week of Feb. 24- March 2, 1995

Lee Dorfman is arguably a born entrepreneur. At the age of 9, he went door-to-door in his Michigan neighborhood, handing out business cards and lining up customers for lawn mowing and snow shoveling services. He landed so much business he had to hire other kids to do some of the work.

Dorfman started a catering business in college and went on to own a real estate brokerage firm in San Francisco. In the late 1980s he spotted a business opportunity in the burgeoning cellular phone market.

In 1988 cellular phone use more than doubled, from 1.2 million to nearly 3 million subscribers. However, cell phones were expensive and there was no option for people who needed a phone for short-term use. In the spring of 1989, Dorfman launched San Francisco-based Action Cellular Rent A Phone Inc., investing about $6,000 to buy a half-dozen cellular phones.

The Loma Prieta earthquake was a watershed event for Dorfman's fledgling firm. The night of the tremor, he and his wife took the company's six phones to the Marina district, where phone service had been virtually wiped out. People lined up to use the cellular phones, and in the weeks that followed, Action Cellular did a brisk business renting phone to city officials, emergency personnel and engineering firms trying to cope with the aftermath of the quake.

From there, Dorfman built Action Cellular with sweat equity and grass-roots marketing. "We did a lot of networking, a lot of hustling, made a lot of calls," he said.

His target market included film and television production companies, convention and event organizers, traveling dignitaries, celebrities, broadcasters, journalists, and business people on the go. Action Cellular has been growing by 20 percent to 30 percent a year. The company can accommodate orders for well over 1,000 phones and offers delivery and pick-up service worldwide. Its customers include American Express, American Airlines, Apple Computer, the New York Times, MTV Cirque Du Soleil, Nelson Mandela, Mikhail Gorbachev, Al Gore, Paul McCartney, Madonna and the Saudi Royal Family.

Action Cellular just introduced satellite-phone rentals and is poised to roll out an automated rental system for cellular phones with machines in airports, car-rental offices, convention centers and hotels, Dorfman said.

There are now hundreds of small companies in the cellular phone rental business. "There's more competition," Dorfman acknowledged, but there's also more demand, and Action Cellular secured a place in the market by entering early, when cellular phones were taking off. "Timing," said Dorfman, "is critical."