00:03:47 · David Steinberg, Guillaume Moubeche
[00:03:47] S0: As my friend Alex Karp likes to say, Data sovereignty is the key to maintaining your company's alpha. And we had Zeta Live the other day, and Alex was sort of my surprise keynote. He came out, he was unbelievable, as you would expect. He doesn't do a lot of those things. So it was very, very cool for us to have it. Of course, Palantir is one of our biggest partners globally now. And we quite frankly are a very important partner to Palantir, as he said on stage. But companies that are feeding all of their proprietary data into frontier and large language models are going to ultimately be giving away what's their differentiator in business, because ultimately that data feeds models that learn that can feed your competitors. Right? And that's one of the reasons we believe that no data exhaust and maintaining our client and our proprietary data outside of the frontier models is something that's been mission critical to us as a company. And I would tell you for our 800 plus global branded clients, very, very important to them too. [00:04:54] S1: I want to go back a little bit to 2017 because obviously Zeta has like a long journey. And at some points, your company was highly profitable and you went to your boards and said, okay, like, I think this is the time we need to totally change where we heading. Can you maybe walk us through the story and how you convinced the board to let you do what you wanted to do? Yeah. I mean, to
00:05:20 · David Steinberg
[00:05:20] S0: set the stage, we were a good, not great customer life cycle marketing platform. We sort of had a CRM engine. We had a customer acquisition engine. We had a customer monetization engine, and we operated in silos. And one day I had to run a report. We had built this huge data repository. Back then you called it a data lake, where we had millions and millions of opted in consumers. Today Zeta has five fifty million globally opted in individuals in our data cloud. But back then it was sort of smaller, but it was a value to us and it helped us with the marketing. We were going to make in 2017, call it 50,000,000 in EBITDA, which was a lot of money back then. It's still a lot of Yes, it is. Yeah, know. I know. I was going to say that so I don't sound like too much of a dick. But now it's a month for us in some months for profit. But the reality is back then, it was all the money in the world. And I had to go into a private equity backed board and explain why we were going to make no profit for the next two or three years, because I was going to take 400 engineers and put them full time on building an entirely new platform that would put this new technology they thought was science fiction called artificial intelligence and data as foundational to the application layer. Now, the catalyst was I had to run a report for a very large client. And back then, I'd need a very typical startup. We're in this sort of building on the corner of 34th And Madison Avenue in New York. It was a really cool, but smaller building. And we were on five floors. And I don't mean we had five floors. I meant we were on five floors, right? Because we kept running out of space and then we'd have to get more space in the building. And then this guy guy was leaving on that floor, we'd take that space. So I had to go down to the floor where the data scientists were and say, I need this report. And they were like, Great. So I go back up to my floor, I'm doing what I'm doing. Hour later, I'm like, Where's the report? I go downstairs, like, Guys, where's the report? They're like, Oh, don't worry. We've got it. We sent the data over to our India campus. To this day, our biggest employee group is in Hyderabad, India, and they're going to work on it. They're going to have the report back for you next week. Now, I needed that report in minutes.
00:07:55 · David Steinberg
But what was happening was data was growing so exponentially that no reporting infrastructure of its time could keep up. Now at the same time, Steve Gerber, my partner, our president, came to me with an idea around this company called BoomTrain, which was sort of like the hot AI technology company of its day. Was too early, but an unbelievable team. Chris Memberg and Nizh Gore, who were two of the three co founders, were running the business. To this day, Chris is our Chief Technology Officer and Head of Product, and Nizh is our Global Chief Data Officer. But at the time, we were just introduced to them and they were using natural language processing to process very large amounts of web data very, very quickly. I ended up meeting Chris. We went for a two hour walk. I like to do that, especially if it's a beautiful Parisian day, beautiful New York day, beautiful Miami day. I'm like, Let's just go walk. And I got back to the office and I said, Jesus, we need to buy this company. And Steve and I set the stage for that. Then independently, I was introduced through my friend Fred Wilson, who runs Union Square Ventures to discuss DISQUS, which was at the time... I mean, now it's the world's largest commenting platform. But at the time, was commenting platform that was embedded into millions of publishers from a first party technology perspective. And the data that it was extracting on a deterministic basis was unbelievable. They weren't even monetizing it. Their whole strategy was selling the technology to publishers, sort of like on a SaaS basis. For better or worse, publishers didn't have a lot of money back then to do it, less now. So we sort of had this conundrum. We wanted to buy BoomTrain. We wanted to buy Discuss. We didn't have the money to do both. At the same time, we knew that the company, to become what we wanted to become, required a complete rearchitecture of our platforms that we had invested hundreds of millions to date to build in 2017. So I go into this board meeting and I'm trying to decide, do we want to buy BoomTrain? Do we want to buy Discuss? Do we want to start with the AI layer and then figure the data out later? Do we want to start with the data layer and figure out the AI later?
00:10:24 · David Steinberg
And in this board meeting, I mean, of the most contentious of my life, let me be honest, probably second most contentious board meeting I've ever run, but the most contentious board meeting by far that we'd ever had at Zeta. And at that point, we were already eight, nine years old, and by far the most contentious even today at Zeta. There was one at a prior company that was pretty ugly, we'll go with this one. And this young guy who was an analyst, I'm sorry, he became a partner in the fund, but he was on it. He just was adamantly opposed to these deals. He pissed me off so much during the course of the board meeting that, Gee, I just said, You know what? We're buying both. And this guy's head exploded. It was just great. Listen, for better or worse, I controlled the company. I still vote greater than 50% of the shares today. My family, through everything, we're still by far the largest shareholders in the company today. And back then I was the controlling shareholder. Still, as I said, vote the controlling shares. I just said, Well, we're going to do this. And to be honest, everybody sort of lined up except for them. That group was not for it. Fortunately, the young person... I shouldn't say young person, in his mid to late 20s at the time, is no longer involved with us. He's off doing something else as he should be. The gentleman who was the partner on the deal is actually still with us and says to this day, He was wrong. This was the best decision ever. Was funny, G, a few months ago, a Harvard case study actually published on Zeta written by Columbia with Harvard on that board meeting, which for an entrepreneur, right? I didn't go to Harvard. I didn't... So having that happen was pretty cool. But that was the moment that launched us into who Zeta is today.
00:12:23 · Guillaume Moubeche, David Steinberg
[00:12:23] S1: Yeah. And talking about Zeta today, I think you you made quite a nice announcement recently with Athena OS. So can you maybe like walk us through from that 2017 moment to now, like what has changed and what's kind of the vision of the future for Athena? [00:12:42] S0: Yeah. So a lot happened between 'seventeen and Athena OS, but what I would say is we went live in late twenty twenty with the Zeta Data Cloud and the Zeta Marketing Platform, and they were fully integrated. Data and AI were foundational, and shockingly nobody cared because AI was not part of the vernacular yet. So we spent a lot of time getting out there, pitching everybody, explaining why AI at the core would allow you to have the highest return on marketing spend humanly possible. Because ultimately that's the metrics in marketing our clients care about. What's the return on spend? What's the return on technology spend? Jump forward, today, according to independent surveys by Forrester, for every dollar a client spends in marketing through our platform, we return between $607,100 percent. [00:13:35] S1: Wow. You need to increase price.
00:13:38 · David Steinberg, Guillaume Moubeche
[00:13:38] S0: Now you sound like a bunch of my shareholders. But the reality is that that's a statistical fact, 600 to 700% return on marketing spend. We also have done independent studies for every dollar you spend on our technology, there's a 297% return on technology spend. So now I exist in a world where if a company is delivering a 250% return on marketing spend, they're considered best of breed, and I'm at 600 to 700%, and I'm able to return just under 300% return on technology. But that was certainly not evident in 2020 when the platform went live. We were talking about, talking about, talking about it. And then what changed? We're going to look back, in my opinion, whoever wins, whether Anthropic wins, whether OpenAI wins, whether Google wins, whether somebody sitting in their basement right now wins, we're going to look back and the day after Thanksgiving in 2021 is going to be the day that everything changed for AI. It was the day ChatGPT went live. And that was the seminal moment. It's when AI went from science fiction to boardroom conversation. Every board went to every CEO and said, What's our AI strategy? And then every CEO went to every CTO, CIO, CMO, and said, What's our AI strategy? And for a year and a half, we'd been out pitching the heck out of an AI strategy. So all of a sudden, gee, the phone is ringing. From 2021 to 2025, I think we're in our fourth consecutive year of greater than 30% compounded top line growth, greater than 50% compounded EBITDA growth, and greater than 75% compounded free cash flow growth. [00:15:24] S1: Congrats.