Hella Nation - Evan Wright [110]
Demand for phone sex had far outstripped Warshavsky’s capacity to provide it. He dreamed of opening a central call center where dozens of operators could handle the volume in shifts, and he talked the Steichen brothers into putting up $100,000 as participating lenders for a facility in Southern California. Their partnership, Telecom Development Group, ran into trouble after a few months and ended badly when the Steichens realized that they were being taken. “Seth is a thief,” Peter now says. “He cooks the books. We never saw a dime. A twenty-year-old kid comes along and runs circles around two pretty experienced, pretty savvy and pretty cynical businessmen. We’re still laughing at what that asshole did to us.”
After the Steichens quickly ended their partnership with Warshavsky, he became the sole owner of the phone-sex company. Warshavsky denies any wrongdoing. “They got all their money back,” he says. “They made fifty percent in eight months.” Meanwhile, he rented space for another of his audiotext entities in the IBM building in downtown Seattle and opened a call center in California that employed more than thirty operators. He was still just twenty years old.
Soon afterward, Warshavsky became close friends with Ian Eisenberg, a phone-sex player whom Seth would later characterize as his mentor. Three years older than Warshavsky, Eisenberg was set to one day inherit the massive audiotext fortune amassed by his father, Joel, a man known as the George Washington of phone sex.
Eisenberg and Warshavsky began their business relationship as collaborators. Together, they designed a software program to streamline the billing process. But they soon became embroiled in a lawsuit over who owned the software. International Audiotext v. Seth Warshavsky was Warshavsky’s first major civil suit. After the preliminary hearing, Judge Nancy Holman issued an oral opinion that offered an illuminating portrait of Warshavsky, then twenty-one. “And with all [his] talent and impressive-ness, I am concerned about just how irrepressible, and maybe irresponsible, Mr. Warshavsky can be.”
Eisenberg and Warshavsky reached a settlement, but the experience seemed to awaken an addiction in Warshavsky that would rival his dependency on phones. Warshavsky became a litigation junkie. He once sued a local Internet-porn rival for spitting in his face and calling him a “little pussy” on a website. More recently, Warshavsky sued a young woman for allegedly stalking him and throwing eggs at his BMW. Though he did not pursue the case to trial, it perhaps brought him special satisfaction. The alleged egg thrower was an eighteen-year-old girl whom, he says, he’d “hung out with occasionally.” She was Julie Eisenberg, the kid sister of his erstwhile mentor Ian.
Warshavsky’s dealings with Eisenberg exposed him to a relatively sophisticated world of business, where vast sums were being made from intricate technological and financial setups. Which makes it all the more remarkable that during this period he hooked up with a young guy named Sean Sullivan, who was burglarizing computers from area businesses.
Shortly after Sullivan’s burglaries began, Warshavsky took out an ad in a local paper to sell a laptop computer that had been stolen by Sullivan. The cops busted him, and he pleaded guilty to two counts of possession of stolen property—but later changed that plea to not guilty. Sullivan went to prison. When I recently asked Warshavsky about this, he said, “I was a kid. I didn’t know what I was doing.”
That seems an odd excuse given the fact that only a few months after his arrest, when he was twenty-one, Warshavsky and two partners invested $1 million to form their own long-distance phone company, WKP. The company was born out of Warshavsky’s desire to bill consumers directly for audiotext purchases. The way the business worked then, when you called a phone-sex line, you had to punch in a credit-card number. But once Warshavsky had created his own long-distance company, phone-sex charges showed up directly on his customers’ phone bills.
Warshavsky