Spotting the potential of small, portable phones – which were then generally the size of bricks – Mr Ross encouraged his friend to start a mobile phone business. He would be the chief operating officer, he said, taking care of legal and financial issues. Mr Dunstone could focus on marketing and sales. Together, they would make a mint.
"We have an intimate, personal understanding of what makes each other tick," Mr Ross has said. So they did: four years later, the pair had 20 stores. Riding the wave of the telecommunications boom, their firm grew at dizzying speed. Over the next decade, Mr Ross would become a millionaire several hundred times over, making him one of Britain's most revered entrepreneurs.
Which is why the 43-year-old's sudden and unforeseen fall from grace, over a £130m shares scandal, has taken so many by surprise.
How could a businessman who founded one of Britain's most successful retailers, who is chairman of National Express and on the boards of three other major British companies, make such an elementary error of judgement as borrowing against £130m of his shares in Carphone Warehouse without telling the company's board?
How could the situation have gone unnoticed for two-and-a-half years? And what now, in such difficult financial times, for his stake in Carphone given that the property market he was investing in has crashed?
There is little doubt about the scale of the ambition, political and otherwise, of this public school buccaneer who may have blown it all. Mr Ross is, in many ways, a strange and somewhat contradictory character. He can sometimes portray himself as a self-made man – a Northerner who has succeeded in the business world of London.
But in fact Mr Ross's father, John, ran Cosalt, a safety services firm which is Grimsby's only quoted public limited company, and on whose board Mr Ross Jnr still sits. Indeed, the family is part of the Ross frozen food dynasty.
Dispatched to the imperious Uppingham School in Rutland, where he counted the radio presenter Johnny Vaughan among his close friends and fellow boarders, his relationship with his father did much to harness his aspirations.
At the age of 16, the young Mr Ross was dispatched by his father to work on a building site in Algeria. "At that age, you want to be going to your mates' birthday parties and chatting up girls – you don't want to spend your summer holiday with a load of Algerian builders," he said. "It was a defining moment because it was so bad I had to get away from it and be able to control my destiny."
And so he did. Over 13 years as the chief operating officer of Carphone, and latterly as a deputy chairman at the firm, he acquired a vast fortune, largely by investing intelligently in property. This year's Sunday Times Rich List recorded Mr Ross as the 87th-richest man in the UK with an estimated personal wealth of £873m.
It was in the late Nineties when, still in his early thirties and cutting a dashing figure, Mr Ross emerged as a man who could float between the worlds of business, high society, and politics.
In 1998, he began dating Ali Cockayne, the ex-girlfriend of England rugby star Will Carling. Ms Cockayne, whose brother-in-law is Gary Lineker, with whom Mr Ross remains close, lived with the multimillionaire for three years. Their jet-set lifestyle was a staple of gossip columns. When that relationship broke down, others soon followed. He met Michelle Ross, by whom he has a five-year-old son, Carl Cosmo Thomas, by chance at Heathrow in 2001 when he helped her with her luggage ahead of a flight to the Isle of Man for a golf tournament. Ms Ross, a former lap-dancer better known as Shelley, did 120 hours of community service after she was found guilty of benefits fraud four years ago.
More recently, Mr Ross spent two years dating Saffron Aldridge, the former face of Ralph Lauren whom he split from in April.
She was one of many he entertained at his huge villa on the sun-soaked, private Caribbean island of Mustique. There he has frequented parties attended by, among others, Mick Jagger, the publisher William Cash, merchant banker Mark Cecil, and Prince William and Kate Middleton.
But his life has also been touched by tragedy. Last month Mr Ross announced that he was selling Brampton Ash in Northamptonshire, following the harrowing death there of his step-sister Fiona Marshall at the hands of her estranged husband Alex Marshall. Marshall, 38, stabbed his 41-year-old former wife and 44-year-old boyfriend Richard Flippance to death before burning down the house, which is part of a 1,500-acre estate still valued at around £7m, to destroy the evidence.
These days, he divides his time between houses in Switzerland, London's Knightsbridge and his Grade I-listed mansion in Leicestershire, Neville Holt. A 13th-century, 30,000 sq ft house, it has 300 acres of woodland, 1,000 acres of arable land, and 100 acres of pasture to go along with the reputed 90 bedrooms. Mr Ross's gold Land Rover, used by Ranulph Fiennes on one of his Arctic expeditions, is parked in the driveway.
He frequently spends Sundays shooting game with the likes of Lineker and Sir Richard Branson, and when he hosts parties does so with no expense spared: a few years ago, his champagne-fuelled 40th birthday party was themed on the Carry On films. But his contacts extended to the world of politics as well. It says much about the esteem in which Mr Ross has long been held that senior Tories seriously considered nominating him as their candidate for Tory Mayor of London.
Barely a year older than David Cameron the pair have become friends.
In October, Mr Cameron flew from London to West Yorkshire and back on Mr Ross' private helicopter. Two summers ago, Mr Ross paid for Mr Cameron's return flight from Germany for a World Cup match. Since 2001, Mr Ross has donated £117,560 to the Tories, either to Conservative Central Office or to local branches of the Conservatives near his home in Northamptonshire.
And his involvement in politics has given in him entrée into his other passion – sport. He is a member of the Sports Council, on the board of Wembley Stadium and was recently appointed by Boris Johnson – to whom he bears a passing resemblance – as his representative on the board of the London Organising Committee for the Olympic Games (Locog).
At the time of his appointment Mr Johnson's aides made clear it was his financial acumen that he was valued for. He would be "breathing down the neck" of Olympics chiefs to identify cost savings, they said. They also hoped he would be useful in raising some of the £2bn of private funding still needed for the Olympics.
"David Ross is one of the UK's most successful businessmen," said Lord Coe, the Locog chairman. "He is passionate about sport, and his interest in sport, combined with his strong commercial acumen, will make him an important part of the team as we focus on staging a truly memorable Games."
Amid the instant calls now for him to be removed from his position at Locog, many are concerned in Tory central command about the links between Mr Ross and the party and the potential for further embarrassment.
Much will depend on the outcome of an investigation by the Financial Services Authority.
But even if he is cleared of any wrongdoing, and what happened was, as Mr Ross claims, an oversight, his problems may not be over.
The commercial property bubble has crashed – as have the shares which Mr Ross used to guarantee the loans he took out to buy the property. He is in danger of forfeiting the stake in the company he built and much of his midas reputation.
He was a businessman of his time. His fall may be equally as apt.
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