Speaker 1:
From the Library of the New York Stock Exchange at the corner of Wall and Broad streets in New York City, you're inside The ICE House, our podcast from Intercontinental Exchange on markets, leadership, and vision and global business, the dream drivers that have made the NYSC an indispensable institution of global growth for over 225 years. Each week, we feature stories of those who hatch plans, create jobs, and harness the engine of capitalism right here, right now at the NYSC and at ICE's exchanges and clearing houses around the world. Now, welcome, Inside The ICE House. Here's your host, Josh King of Intercontinental Exchange.
Josh King:
ICE Mortgage Technology's mission is to reduce the time to originate mortgage to minutes and the closing window to just days instead of weeks. It should be familiar to listeners of our humble little podcast using robust data, machine learning, and the combination of products brought under one roof here at ICE. The goal is to remove most of the cost, aggravation, friction, and risk taken on by buyers, sellers, and every intermediary in between.
Josh King:
What it does not solve for is the marketing churn created around that process. Anyone who's recently bought or refinanced a home is inundated with an onslaught of geolocated targeting, online ads within our favorite news stories, and old-fashioned junk mail cluttering up our mailbox. All these marketing assets are aimed really at the unlikely case that someone who just got a new mortgage and paid all those closing costs associated with it is excitedly in the market for yet another mortgage.
Josh King:
This is part of the flaw in how many companies and their marketing data partners parse out the data. It's not just a problem with large scale purchases like mortgages. The next time you buy anything online or where your traceable data is used in the purchase, why don't you take note of how many times you're going to be targeted for that exact product again. The amount of times I'm offered a new Ruroc ski helmet in my feed is living proof of that, which all brings us to our guest today, Zeta Global CEO, David A. Steinberg, whose company is focused on how to use the data created by online activity to predict what someone's going to need next instead of reselling based on past behavior.
Josh King:
For that mortgage example, Zeta Global's product might serve up an ad for an alarm system, a reasonable thought given that a person moving into a new neighborhood might feel a little skittish and want to protect their investment and those inside. It seems intuitive, but we're going to talk to David on what it takes to make a better mouse trap for the modern consumer. Our conversation with David A. Steinberg on Zeta Global's mission to be a one-stop shop for marketing results, his career, and how web 3.0 is going to be a paradigm shift unlike any before it, it's all coming up right after this.
Speaker 4:
Connecting the opportunity is just part of the hustle.
Speaker 3:
Opportunity is using data to create a competitive advantage.
Speaker 5:
It's raising capital to help companies change the world.
Speaker 6:
It's making complicated financial concepts seem simple.
Speaker 7:
Opportunity is making the dream of home ownership a reality.
Speaker 8:
Writing new rules and redefining the game.
Speaker 9:
Driving the world forward to a greener energy future.
Speaker 10:
Opportunity is setting a goal.
Speaker 12:
Charting a course to get there.
Speaker 13:
Sometimes the only thing standing between you and opportunity is someone who can make the connection.
Speaker 14:
At ICE, we connect people to opportunity.
Josh King:
Our guest today, David A. Steinberg, is the co-founder, chairman and CEO of Zeta Global. That's NYSC ticker symbol ZETA. Previously, David was the CEO of in InPhonic, Sterling Cellular, and a bunch of other companies. Welcome, David, Inside The ICE House.
David A. Steinberg:
Oh, it's really a pleasure to be here. Thank you for having me.
Josh King:
So in 2020, you said in an interview that despite the company's growing size and success, I'm going to quote you here, "Every conversation starts with, 'Zeta, who?'" I mean, are you getting that question less now following two more years of growth, including your 2021 IPO and becoming the third largest data cloud after Google and Facebook?
David A. Steinberg:
Well, it's really funny that you say that because literally yesterday, post our earnings call, I was talking about how it no longer starts with, "Zeta, who?" Going public on the New York Stock Exchange, which was a very large part of our branding as a company, we hosted our first ever Zeta live conference last year, which was a grand slam, home run for us.
Josh King:
Where'd you do it?
David A. Steinberg:
So we did it Midtown, 29th. I don't know if 29th and 6th. It would technically be Midtown, but we did it there in an amazing space in New York, and with Zeta being headquartered in New York, we feel it's really important to grow here and do things here. So we had thousands of attendees for our first event, the vast majority of which were virtual, but it was incredible to get the speakers to turn out. As the company has continued to win in the marketplace, people are no longer saying, "Zeta, who?" in our industry. Now, if I'm talking to my wife's friends or I'm talking to my kids or their friends, they're like, "Huh?"
Josh King:
I mean, before we're going to get too deep into how Zeta is helping companies merge data with their marketing, I was wondering about your own merging of those disciplines. When we looked at descriptions of your father and your stepdad, David, they're central casting for the path to success in one form of a movie or another. One, there's an Ivy Leaguer with an MBA and a career with a company that's now PWC. The other is this serial entrepreneur with no formal degrees. I'm curious, how did growing up with both of those kinds of influences shaped the business person that I'm sitting across from today?
David A. Steinberg:
It is really interesting the different dichotomy I had between the two male role models that started ... My grandfather was also a very interesting man, who had a lot of very interesting attributes, but my father, Ivy League educated, ended up one of the senior people running internal controls and governance at PricewaterhouseCoopers, and my stepfather who built a series of very, very successful companies.
David A. Steinberg:
It was interesting to see both of them in action. I feel in many ways I bring, I don't want to sound too conceded to say, I bring the best of both of them. I feel like my stepfather, Irv Siegel, was so relationship oriented and he really understood people, and he understood how to make deals work. It starts with the math and then extends out to how do you build a relationship between your organization and the one you're trying to work with that is mutually beneficial. I truly believe that if you don't drive value to your customers and help your vendors, you're not going to win in the long term.
Josh King:
Self-taught or did he have influences?
David A. Steinberg:
No. He was purely self-taught. He was the ninth of nine children born into abject poverty.
Josh King:
Where?
David A. Steinberg:
In Brooklyn, New York, from a Eastern European background, told this great story, which is so hard for me to really associate with as I think many of us. He remembered being a child when his older siblings were out of the house and his father wanted to take him and his wife, my stepfather and his mother, to the beach, and she had to explain to them that they did not have a nickel for the bus. That day, he sat out on was probably the walk up fire exit for the building. I don't recall exactly what those were called, but sat out there and made the decision that that was not going to be his life, and he started a series of businesses that resulted in what became called getting to know you and a very big new homeowner welcoming business.
David A. Steinberg:
My father was, there were two brothers. My dad went to Penn. His brother went to Princeton and Harvard. I think my dad got his MBA at NYU, and just was the total other side of the coin. My grandfather had gone to Columbia. My great, great grandfather had come over and they were very, very focused on education, very focused on working in large organizations. My uncle, who we were close to, just the two brothers, ended up running a division at the NIH, my dad at PWC, started at Coopers & Lybrand, for those of you old enough to remember it back when there was a big seven, now there's a big four.
David A. Steinberg:
The dichotomy was really interesting, seeing the different things. I was also very dyslexic and still am and have diagnosed ADD, which I think you can say about many CEOs, specific to entrepreneurs. So when I looked at the paths, my stepfather's path made more sense to me because I was not an exceptional student, and a lot of what my dad had done was not really in the cards for me.
Josh King:
So I'm interested in following that path maybe of your stepdad because coming out of that dichotomy that you described, David, despite some early successes promoting parties at the Polo Club while you're in school, you end up at Washington & Jefferson College. What drew you to the precedence, and how did you pursue your academic career knowing that reading itself was going to be so difficult based on dyslexia?
David A. Steinberg:
Well, I always knew in my family that I was destined to go to college. I got into a few schools, one of which was the University of Arizona, and my dad was like, "There is no way you're going there," because he didn't think I'd make it through there. We made a deal that if I went to W&J, I could spend my junior year in London. So I went over and spent that year in London, which was really great. This was 1990. I was on a program that we did classes at LSC and did stuff, but it was really cool. I got to do theater classes, economics class.
Josh King:
I did that same drill a couple years.
David A. Steinberg:
Yeah. I'm an economist by training. I graduated with an economics degree, but the W&J, which I was on the board of, I think, I forget how long, but for multiple sessions, the 11th oldest college in the country, really, really a great place for me to be in a small environment. I found my way into a fraternity with some very good friends. I worked hard to get through school because I knew getting a degree would be important for what I wanted to do in the future. Here I am.
Josh King:
I mean, talking about what you wanted to do in the future, I mean, after college, I think we both spent some time inside the beltway, me in the Clinton White House, you with the late Senator Ted Kennedy, before we made a move into, of all places, the insurance industry. How did an internship with the judiciary committee end up with you selling insurance and then starting a cellular company?
David A. Steinberg:
Well, that is also a great story, and the research continues to be exceptional here. I found out very quickly that I would not be a good government employee. It was just not what I wanted to do. It didn't move at the speed at which I wanted to move at. I mean, listen, I got to work with some of the world's most interesting people. Ted Kennedy was my direct boss. I think the reason I got that gig was because I played tennis in college and the senator liked to play tennis, and we had a lot of fun doing that at his house, and there's a secret tennis court in the Hart Office building, as I'm sure you're well- aware.
Josh King:
Used to watch him throwing a tennis ball to his Portuguese water dogs at our dog park all the time.
David A. Steinberg:
He loved those dogs, which, of course, he bought for Obama. He was an amazing man. Of course, the chairman of the committee who I also worked for was a young Senator Biden. So that was an interesting time in my life. I ended up in the insurance business briefly because I thought it was an opportunity to learn how to get from government into business.
David A. Steinberg:
Back to your first question. I remember calling my father and telling him I was going to sell disability insurance to self-employed people, and he freaked out. He's like, "Are you crazy?" I called my stepfather and I told him I was going to do this and he said, "It'll be the single smartest thing you've ever done."
David A. Steinberg:
I said, "Why?"
David A. Steinberg:
He said, "Because you need to learn how to hear the word no, and you have just never really experienced that."
David A. Steinberg:
I heard it a lot selling insurance, but it was fun. I was very fortunate. I was one of the top sales reps in the country for the company I worked for back then. I got invited to give a speech in Akron, Ohio. At the time, I was living in DC, and I had been made a group leader. I don't want to overplay it. I had a few guys who worked with me and we had a lot of fun, and they said I could either fly out and they'd pay for my coach middle seat ticket or I could rent a van and take my team with me. "Great. I'm taking my team."
Josh King:
Road trip?
David A. Steinberg:
Yeah. Let's do this, right? So back then, we wore suits. I'm sure some people still do, but I went over to the budget Rent-A-Car on Wisconsin Avenue. I went in and they had a gift certificate for a free cellular phone on the counter. So I folded it up into three parts. I shoved it in my pocket. I went to Ohio, I gave the talk, I came back. Two, three weeks later, I put that suit on and I said, "Ooh, I'd like a cellphone." This was late 1990-1991. I went in to a place called ASAP Cellular, which was in Northern Virginia and I said, "How on earth do you do this?"
David A. Steinberg:
The woman who worked there was like, "Oh, my gosh! Cellular One pays us a really big commission to do this, and we get a percentage of your recurring revenue," and yada, yada, yada. I walked out, got in my car and said, "I am in the wrong business." I called my stepfather and said, "I'm going to start this business. I need some money."
David A. Steinberg:
He said, "Absolutely positively not." He said, "You need to go to work for somebody for a year in that industry, and as you learn, then I'll back you with whatever you need."
David A. Steinberg:
I did not listen. I ended up maxing out my credit cards and convincing a few people to make me an authorized sub-dealer, which is how we started. The business grew from there.
Josh King:
Another similar experience at about the same time you're doing that, I am in Tortola, British Virgin islands working with a guy named Bob Goodman who had partnered with Cable and Wireless to create this business called Boat Phone throughout the Caribbean, and I parlay that to get back to business school, but you eventually sold Sterling to AT&T, and strategically negotiated not just the right to the parts of the business that would underpin your next venture, InPhonic, but also this large contract with the telephone giant. What did you see about the cellular business at that particular inflection point of its history and the growing influence of the internet that others might have missed?
David A. Steinberg:
Listen, as I always like to say, it's better to be lucky than good. In this case, it might have been a little bit of both in that I've always had this theory around the evolution of technology. I think you can take almost any technology product and boil it into three different quadrants. One is the development stage, two is the monetization stage, and three is the commoditization stage, right? You've got guys like Apple who have managed to never get out of that monetization stage, but most companies and most technologies move through that.
David A. Steinberg:
When I draw this on a whiteboard, I would do quadrant, line, quadrant, line, quadrant, and I would do a circle back in 1997, half in the monetization phase and half in the commoditization phase, and that's when a product should move to virtual distribution because people know it well enough that they didn't need to touch it and feel it, but you could still make a lot of money. As I looked at where wireless was at that point in its evolution, that was what we saw.
David A. Steinberg:
Now, interestingly enough, I think I sold three businesses, all called Sterling, to what is today called AT&T. I had started a telemarketing business inside of Sterling to sell wireless phones to people and deliver them. Back then, we had to employ couriers because you needed a signed contract. We worked with a team, a guy named Eric Van Dyke and his team out of what was Southwestern Bell Mobile Systems at the time, to build the first ever break the seal contract in wireless. This might sound crazy, but they wanted a signed contract and they wanted it in quadruple back then.
David A. Steinberg:
What I said was, "Well, look at Microsoft. They're putting their contract right on the outside of the box. It very clearly states you're agreeing to this contract. Why are we not able to do that?" We made some moves and it worked. In the telemarketing ecosystem, I figured out that you could sell the products virtually. It was also where we built the pick, pack, and ship systems, the inventory systems, and all of that.
David A. Steinberg:
So when I sold Sterling Communications to AT&T, we made a deal to be the exclusive online seller of AT&T products for some period of time, which they probably walked away from the table laughing their butts off at me.
Josh King:
"What's he going to do with that?"
David A. Steinberg:
Right, right, "This kid's crazy," and it worked out for us.
Josh King:
That's amazing. I mean, you talked, David, about CEOs needing to really be self-aware so that they can hire people with the skills to complement both their strengths and also their weaknesses, and InPhonic was the first business that you did with John Sculley, who is still your business partner. What makes your duo with John so successful, and how did this chance meeting at a YPO event become what is now a 20-year relationship?
David A. Steinberg:
John is, first of all, not just a man who's run two Fortune 500 companies, but he's probably the nicest human being I've ever met. We originally met when he was speaking. He was being interviewed by Larry King, who reminds me much of how you're doing right now.
Josh King:
No relation.
David A. Steinberg:
Yeah.
Josh King:
Great Miami guy, though.
David A. Steinberg:
I agree. Great all-around guy, really, really fun guy, but Larry was interviewing him on stage at a YPO Summit in Washington, DC. I attended the event, and like everybody else, I waited to speak to John as he came off the stage, but unlike everybody else, everybody was asking John about Apple, Pepsi, the future, and there had just been this mini series called the Pirates of Silicon Alley, and John was featured prominently in it. I remember Anthony Michael Hall played Bill Gates, Noah Wyle played Steve Jobs. He came up and I said, "John, I don't know if you saw the Pirates of Silicon Alley, but what'd you think?" He stopped what he was doing. The guy who played Bill Gates channeled him. He was amazing, and we talked for 10 minutes, and then that night, and I could tell this story in a funny way, that night there was a big ball. One of my buddies had arranged for the ball. So I had all the names tagged changed. I had myself seated next to John at dinner.
Josh King:
Great move.
David A. Steinberg:
He thought it was happen circumstance, I mean, he knows now, of course, that it wasn't. He would tell you today that if I hadn't changed those name tags that he would've been disappointed in me. I talked about the evolution of the internet, how I thought technology moved through these three quadrants, and how I thought wireless was really the next big evolution there. He was like, "That's really interesting. The next time you're in New York, let's get together." Then of course, miraculously, "John," I called the next day, "I'm going to be in New York on Tuesday."
David A. Steinberg:
"Oh, John's not here Tuesday."
David A. Steinberg:
"Well, you know what? I'm still going to be there Wednesday." You know what I mean?
Josh King:
"here all week."
David A. Steinberg:
Right, "I'm here all week."
Josh King:
Was he looking for a guy like you at that time?
David A. Steinberg:
John has a lot of guys who surround him. I think that he's done an exceptional job mentoring entrepreneurs post his running Fortune 500 companies. He's been an absolutely unbelievable partner to me. His wife, Diane, and my wife, Kristen, are very, very close and we always try to do stuff together, but I do want to get this point out. When I made that statement, it was really less about John because John and I are actually pretty similar in the assets and attributes, I think, we bring. It was looking at the team that you put with you has to be your foil. If you look at people like Steve Gerber, who's our president, chief operating officer, comes out of Bain & Company, and Digitas, he's just so detail oriented and he's so on it, and he does have that Ivy League education, right?
David A. Steinberg:
You look at our chief financial officer, Chris Greiner, who is just brilliant, his fourth or fifth time as a public company CFO, best finance guy I've ever worked with. I don't want to be insulting anybody else. I've worked with a lot of great, great guys. Chris really is exceptional.
David A. Steinberg:
Then my general counsel, Steve Vine, another hyper educated guy, who's really able to do a lot of the things I don't do well. When I started as a young entrepreneur, I thought I could do everything better than everybody. When I became a mid-aged entrepreneur, I felt I could do it better than everybody, but I still delegated some stuff. Now, I truly know as an old CEO that I don't do everything as well as anybody else, and I need to really focus on the things that I focus on.
David A. Steinberg:
The people I've mentioned, you've got Chris Monberg, our CTO, Neej Gore, our chief date officer, Will Margiloff, who is running our activation business, which is by far our largest division, Jeremy Klein, running our actions business, it's been really extraordinary to me to have learned a number of lessons from my last company. The most important of which is the people who can get you to where you are are not always the right people to take you where you want to go.
Josh King:
Absolutely. Mark McCormick, his seminal book. If you're going back to those years, InPhonic, I mean, eventually, you think it was the second largest IPO of 2004, but eventually the time is ending. What did you learn from that specific experience that helped you scale and then brings Zeta Global public as the CEO?
David A. Steinberg:
Well, first and foremost, we were second to another small company that you might not be familiar with called Google. They fared better than that company by a lot. Listen, InPhonic was a really interesting business. It scaled very quickly and then got caught up in the downturn of 2007-2008 like a lot of companies, had the wrong balance sheet at the wrong time. Private equity firm bought it, restructured it, and then ended up selling it for a lot of money, but at the end of the day, the people to get you where you are are not always the people to take you where you want to go.
David A. Steinberg:
Overindex index on systems, overindex on great finance and legal people, and make sure that you're building a business that's recurring instead of one time in nature. If you look at Zeta, over 80% of our revenue is either recurring or reoccurring, and that was not an accident. That was something that we were really focused on in the beginning.
David A. Steinberg:
The other thing that I think we really wanted to do was put all of the tools a marketer needed in one place, which allowed us to do it in a substantially more efficient way and allowed us to have substantially more efficacy in our platform because it allowed us to look at the data, the artificial intelligence, the marketing platform, and the activation platform all in one user interface with one reporting tool. So our ability to measure is really second to none.
David A. Steinberg:
One of the things that's been most interesting to me about this business is the value we drive to our customers. To put it in perspective, for every $1 a client spends on our marketing platform, we return an average of $10 in revenue to them if they use our software and our data. That is going to make for a very sticky relationship between you and your customer.
Josh King:
Talking about measuring, David, in 2020, you launched a five-year plan called the Zeta 2025. Curious, what was the goal of the plan at the time, and to the big measuring question, what are the metrics that you're using to chart your success?
David A. Steinberg:
When we started Zeta 2025 in 2020, which we recently announced, I have always felt that a business needs a north star, and you really want something bigger to really focus on. I will tell you, in 2020 when we said, "In five years, we want to get to a billion in revenue, at least a 20% operating margin, be an employer of choice, and the largest marketing cloud in the United States," I'm sure there were a lot of people even on my team who were laughing at me behind my back when we announced that. We made so much progress on it in the first two years that Chris Greiner and Steve Gerber collectively with me and Steve Vine pushed us to announce it and really put a flag in the sand.
David A. Steinberg:
So we recently announced it. Based on our first quarter, we continue to be ahead of where we would've hoped to have been at this point. We feel very, very good about that. For us as an organization, putting that flag in the sand and announcing it publicly was our statement to the world that we're here, we're real. We are now the largest independent marketing cloud, but we really want to be the largest marketing cloud.
David A. Steinberg:
Now, I want to be clear. I joke we have some little competitors out there, Salesforce, Oracle, and Adobe, yeah, just small, small companies, right? We're not saying we're going to be bigger than Salesforce. We're saying we're going to be bigger than their marketing cloud. We're saying we're going to be bigger than Adobe's marketing cloud. We're going to be bigger than Oracle's marketing cloud. The answer is not that they're not great companies with great core products, it's that we are better in the marketing cloud ecosystem.
David A. Steinberg:
Forester just put us as far to the right and high as you can go in their leader report. I have to be careful saying we are the leader. The reality is that when they looked at our platform, they said that nobody helped solve complex marketing problems better than Zeta Global.
Josh King:
Do you have this plan Zeta 2025 that you hatched in 2000, but kept it under wraps for a while? What are the discussions like with your team about how this marketing company is actually going to make its big reveal?
David A. Steinberg:
Bottom line, there was a big lead up and, really, Chris Greiner and Steve Gerber took the lead on it. We unveiled it at one of our quarterly town halls, which we do every quarter. I mean, we literally got a cheering ovation, and it was really cool, and everybody was really excited about it. When we really went out with it, people were believers.
David A. Steinberg:
One of the things I love to talk about is we win over 50% of the RFPs and engagements that we get invited to participate in. In 100% of those competitive processes, we are either displacing or beating Oracle, Adobe, Salesforce. They're great companies. They have great brands. They have great core products. So they are formidable competitors, but we're winning a disproportionate percentage of the time, and I think it's because having our massive pool of first party data, which can get to a level of intent-based score on an individual, which is unparalleled, you put that together with our activation methodologies, which can go across an omnichannel ecosystem, pretty much anything that exists digitally today or will exist, and we're able to deliver that 10-to-1 return on investment.
Josh King:
In the past few years, you have aggressively acquired DSPs, and curious for our listeners, describe what they are and how do acquisitions of companies like Sizmek, Rocket Fuel taking on the DSP business from PlaceIQ and IgnitionOne fit your vision of what you call the single source of truth?
David A. Steinberg:
It's really interesting. So if you think about what is the biggest moat around the Zeta business, it is our proprietary first party data. If you look at it, the makeup of that comes from 20 different plus publishing businesses and tools that we've built for publishers, none of which make up even one-tenth of 1% of our total traffic. So it's really well-distributed across five plus million websites that use our platform.
David A. Steinberg:
That data is then synthesized through natural language processing and artificial intelligence into intent-based scores on what does somebody intend to do next, whether it's buy a product, buy a car, subscribe to a new credit card or churn off a cellular platform, all of that results in an automated curriculum of contact.
David A. Steinberg:
Now, what really happened was we started to look at the advent of CTV and programmatic at scale, and we had a decision to make. For the first time ever, were we going to take our data and then allow it outside of our own proprietary cloud and load audiences into third-party platforms or would we buy or build our own? Well, I think in the rear view mirror it's very clear we made the decision to own it. To know me is to know I want to own all of it. So it makes sense.
David A. Steinberg:
What we did was we centralized on one platform, which was the Rocket Fuel platform. We've upgraded it pretty heavily. It's got a new user interface and it's seamlessly plugged into our Zeta marketing platform. So everything we do from the data cloud to analytics, to activation, whether it's programmatic, online video, CTV, which is by far our fastest growing business, messaging, social media, it all goes through one common setup tool and one common reporting infrastructure. So that was really key to it.
David A. Steinberg:
We then bought the other DSPs and we sunset their technology. We didn't really. It's a misnomer. A lot of people like to talk about how we're "a lot of companies put together". The truth of the matter is we are one global platform with a number of modules that plug into it, but from a DSP perspective, the other companies you talk about, which include PlaceIQ and IgnitionOne, we sunset their technology and we migrated the clients onto our what we call the ZDSP, the Zeta Demand Side Platform, and it's been really, really exciting to see how that business has gone from not existing to one of our largest business lines.
Josh King:
Clients clearly happier with the migration and the service and the efficiency?
David A. Steinberg:
Well, last year, we had a net retention rate of over 120%. So I think that would infer our clients like us. I think it's also really interesting when you think about our fastest growing new businesses, which are our CDP business and our CTV business, not to throw too many acronyms at you at one time, but to me, the future of marketing is about the consumer data platform. It's if you think about what's going on today, and when you sit inside of a business that's about to celebrate it's 230th anniversary, it's hard to talk about something today on the hope that one day my grandkids are listening to this.
David A. Steinberg:
When you think of the ecosystem today, you've got these very large technology platforms who are currently battling it out around how do you track consumers on the internet, right? So Apple has just eliminated their tracking methodology called the IDFA, and Google has publicly said they're going to be eliminating their third-party tracking mechanism called a cookie, and they're battling it out together.
David A. Steinberg:
The thing about Zeta is we've never used the IDFA and we've never used the third-party cookie to identify or measure. So as there's been a lack of efficacy in other platforms that depended on that, our efficacy has stayed strong and in many cases gone up. The reason that's important to talk about is because as businesses think about what their biggest assets are, their first-party data is one of them. Most marketers are now beginning to understand that unlocking the power of their first-party data is how they're going to win in the marketplace.
David A. Steinberg:
The data ecosystem today, which is largely dependent on behind the firewall, data warehouses, data lakes, DMPs, do not unlock consumer data. They build large cohorts, but to really understand your consumer, you need a CDP or consumer data platform. Zeta is the best builder of CDPs in the world, in my opinion.
Josh King:
So you've described this one global platform, David, and one global platform that really now does a lot of interesting partnerships and deals with other big names in the industry. Back in February, Snowflake, that's NYSC ticker symbol SNOW, we had its CEO, Frank Slootman, on the show not too long ago, and Zeta Global announced an integration. At the time you said, "The market wasn't quite understanding the potential impact of putting Zeta and Snowflake together in this integration." Do you think the clients and the market are getting it now?
David A. Steinberg:
Well, I don't think it's a coincidence that we have beat the next three quarters in a row pretty handedly after making that announcement, but back to, "Zeta, who?" Right? So you had the IPO on the New York Stock Exchange. You had Zeta Live. You had the major partnership with Snowflake. You had the major partnership with Dun & Bradstreet and other storied company. Reality is that we've really been able to put together some great partners, and it resonates.
David A. Steinberg:
When you're partnering with organizations like that, clients look at us and say, "Okay. Let's give these guys a shot." I will tell you, the Snowflake ecosystem is really, really powerful. We like working inside of it. We partner with them. We've gone to market with them for a number of wins and integrations.
Josh King:
After the break, David A. Steinberg, the co-founder, chairman, and CEO of Zeta Global, and I are going to talk about Zeta Global's position to advance how marketers use data, protect consumer privacy, and grow opportunities from there. That's all coming up right after this.
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Josh King:
Welcome back. Before the break, David Steinberg, CEO of Zeta Global, and I were talking about his career arc, the creation of Zeta Global. So can't ignore what we're seeing right now in the past couple weeks and even today, what's happening to some valuations of stocks that are on this exchange, that are on the other exchange up the street. How have economic headwinds of inflation and uncertainty affected your business?
David A. Steinberg:
Well, it's obviously a very turbulent time, right? You've got a lot going on and changes driven heavily by what started as a supply chain crisis and now has resulted in pretty heavy inflation. One of the things that's been very interesting about the Zeta marketing platform is the efficiency of it. When a client spends a dollar on our software, they return $10 in revenue. So as crazy as this will sound, we've seen our business growth accelerate through a lot of this turbulence, and we think that's a trend that's going to continue.
David A. Steinberg:
That's not to say it doesn't work in up markets because everybody's always looking for efficiency, but as Machiavelli said, "Never waste a crisis." What we're seeing is marketers right now are going through the biggest change they've seen certainly in 10 years, right? They are seeing the highest inflation since 1981, and back then, they didn't have any digital tools, right? At the same time, it's been the best of times for 10 years, I mean, other than a little blip a couple of years ago, which was not fun, but certainly rebounded quickly.
David A. Steinberg:
So as marketers are looking out on the landscape, they've got to figure out how to get in front of the right people at the right time with the right product and not be trying to boil the ocean. When you look at the Zeta data cloud, our ability to understand when a consumer is actively in market for a product and will be approved for it in realtime. So our ability to activate on behalf of our clients to that customer who has a high level of intent and a high propensity for approval is really unparalleled. So in a downturn, we are seeing our results accelerate.
Josh King:
When you are on stage at the Milken Institute last week, you're basically giving a reality check to every CMO out there saying that the boss is saying CMOs have to accomplish more with less. So let's just break that down exactly. They come to Zeta Global, you're telling them $10 of revenue for every dollar invested. How does that actually work?
David A. Steinberg:
As I was moderating, I moderated two panels at the Milken Global Institute, which is just an absolutely amazing place and it's just such an honor for me to continue to be involved in it, I did one panel on unlocking data and one panel on the future of marketing. It was really interesting to hear from the chief marketing officers of major league baseball, Citi, Dun & Bradstreet, Algorand, the former CMO of Kraft, and really everybody kept talking about how in a downturn you need to really focus on efficiency.
David A. Steinberg:
One of the things people don't really understand about Zeta is our ability to put together a proof of concept in a very easy and inexpensive way that can then scale very, very quickly. So whereas a lot of our competitors really require integration, so if you're hiring a marketing cloud, you're usually bringing in an integrator. So you're hiring Accenture, you're hiring D&T, you're hiring Merkle to come in and build and integrate that for you.
David A. Steinberg:
At Zeta, we do everything plug and play because it's all cloud-based and the data and the artificial intelligence are both native to the application layer. So we're really able to stand things up very, very quickly. We can prove to a client very quickly the return on investment for using our software bundled in with our data.
David A. Steinberg:
What I said on our earnings call just last evening is one of the reasons I think we're so far ahead of original expectations and continue to be ahead of original expectations is that clients are starting. They used to start from a sales motion perspective on a proof of concept, then they would grow a little bit and they'd test again, and then they'd test a third time. Why? Because they weren't familiar with who Zeta was, right? So they really wanted to kick the tires for a long time, and they would go from proof of concept, and then if we really did a good job, they'd become a scaled customer.
David A. Steinberg:
Then in two or three years, they would move into what we call our super scaled customers, right? We are literally now moving clients from proof of concept to super scaled customer. They're literally going right there, and it's because the return on investment is so good and they're seeing through the measurement using the Zeta ID and our ability to deliver true return on investment metrics in a down economy. There's nothing more important. In a high inflationary time where the consumer is spending a much greater percentage of their income on energy, food, and housing, clients need to not waste money talking to people who are not going to be in the market to buy their products at least that week.
Josh King:
You've often used the phrase web 2.5 to describe the current state of the internet. Among other things that I watched at the Milken Institute, Coinbase Global CEO, Brian Armstrong, talking about web 3.0 as, the way he would describe it, as read, write, and own. Brian didn't mention web 2.5. How do you define 2.5 and how does it bridge us from where we are now to maybe that 3.0?
David A. Steinberg:
Listen, Brian is a certifiable genius and he's really out front on this web 3.0 stuff. Web 2.5 is really my term. I think it's really where we're going to be for quite some time, right? So the basic principle of Web 3.0 is the consumer owns everything. The basic principle of web 2.0 is the large enterprise owns everything, right? So what is 2.5? It's a hybrid. So literally, when I started talking about this, the example I gave, well, I think that Facebook, Meta, at some point will begin to pay people to be creators in their marketplace. Same thing with Instagram, which, of course, is also part of Meta. Everybody said I was crazy.
David A. Steinberg:
Last week, Facebook announced they're going to start paying creators to make reels. That's Web 2.5, where the large enterprises are going to seed some of the ownership of the content. I equate it, as you and I were joking we're the same vintage, right? Remember when the cellular companies owned your number, right? So if you wanted to change from Verizon or AT&T or T-Mobile or any of the other carriers that used to exist that are now parts of those carriers, you would literally have to change your number. What a lot of people would do is they'd pay for that old number for a few months and they'd put a voicemail up saying, "Here's my new ..." Then wireless local number portability happened, and you were able to take your number with you.
David A. Steinberg:
It's going to be a very similar thing in web 2.0, in my opinion. I believe that you will begin to take ownership of your wears, your creativity, your content, and you will be able to take it with you. To me, that's 2.5, right? I think we're going to be there for quite some time.
David A. Steinberg:
The other thing that I think is really interesting, and I think a lot of people forget this, and this is where I think Web 3.0 goes for our world, and there's a lot of worlds to 3.0, right? There's a lot of different components of it, but people forget that the blockchain is very different from a cryptocurrency, which is very different from an NFT or a token, right? They are built on top of the blockchain.
David A. Steinberg:
So what does that mean? It means that, effectively, you're able to create providence from the beginning to the end. That's where I think marketing is going, providence, the ability to understand true attribution models. How is it going to change real estate? How is it going to change title transfer? How is it going to change finance, credit? All of those things are going to be changed by the blockchain.
David A. Steinberg:
I happen to be a big believer in crypto and NFTs. I don't know how they get to where they're going to maturate. It's often not a straight line. Sometimes things go down before they go up. When I talk about the dot com crash, and everybody talks about how catastrophic it is, I try to remind them that Apple, Amazon, Google, Netflix, Microsoft all came through it, right? So you've got great companies that come through that turmoil, and I think we're going to see a similar thing in the Web 2.5 and Web 3.0.
David A. Steinberg:
Interestingly enough, I don't think Web 2.5 becomes Web 3.0. I think they're different tracks because the large companies are not going to go gently into that good night, right? It's just not going to happen, just like many of the large companies from many years ago did not want to go gently into that good night, but ultimately, many of them did and many pivoted and survived.
Josh King:
We touched on it earlier. Let's dive into it a little bit more, privacy. You mentioned that Zeta doesn't use third-party cookies, but instead depends on its own ecosystem. ICE operates in jurisdictions, particularly in the EU where regulation is evolving how data can be collected, but can you refresh our audience on the larger issues around cookies and how Zeta is poised to move into the post-cookie world?
David A. Steinberg:
Yeah, it's funny because that's a great question. So many people just nod their head when you say, "Cookies are going away," and they're thinking, "What's happening to my Chips Ahoys and my Oreos?" Right? The reality is that a cookie was the original tracking capability that was created on the internet, which allows you to identify an individual.
David A. Steinberg:
So the big move in marketing when 2.0 really proliferated was the move from running an ad alongside of the content somebody was consuming to running an ad to somebody individually. So if you think about it, why did NBC always spend so much money to make Thursday nights the biggest night of the week? Because movies opened on Friday and they needed to open the movie big, and they wanted to run tons of advertising for movie companies and, of course, car companies sell most of their cars on Saturdays. So they just figured Thursday night, right?
David A. Steinberg:
Ultimately, you were running your ad alongside Friends or, I mean, if you really want to go back, Cheers, which, by the way, I just started rewatching again. It's just such a great show, but literally, you were running an ad alongside of content. The original internet started that way, too. You would run an ad in this finance section because you believed the person reading that article would be interesting. The cookie is effectively a very small packet that sits inside of your web browser that allows a supply side platform or SSP to know who you are. Hand that cookie to a demand side platform, which then cross references what it knows about that individual. It then looks at all of its clients and says, "This is a good person to show an ad for this product." Then if that person clicks on that ad, goes to that client's site and buys a product, you can build an attribution model back based on that cookie. It's that simple.
David A. Steinberg:
Now, Google, for a whole host of reasons we won't discuss on an open podcast, has made the decision to eliminate that third-party cookie. It is a very, very important thing to many advertising technology and marketing technology companies. One of the decisions we made many, many years ago was to build our own ecosystem. So today, the tools that we create and give away to publishers are being used by over five million websites, not one of which makes up even 1% of our traffic.
David A. Steinberg:
In exchange for giving them this wonderful technology to power their sites, receive comments on articles, share articles to their social graphs, they give us a few things in exchange. The first thing is they host our JavaScript on every page they publish. So effectively, it's a window into the platform. Two, they host our first-party tracking pixel, which allows us to identify that individual inside of there. Three, every few weeks as consumers do more on the platform, they're directed to one of our sign-in portals to resign in.
David A. Steinberg:
So it's really interesting. I think this is missed by people. When we talk about having 235 million opted in Americans, that is literally how many people were active in the last 30 days. It's not a 10-year aggregated number. Every 30 days it turns over. That's how much of the United States population we're touching through that five million websites and publishers.
David A. Steinberg:
Now, what do we do in exchange? We never sell that data to anybody at any price at any time. All we're doing is ingesting the signals, which we then synthesize down to an individual and we use that to build intent-based scores. So what do you intend to do next? The good news is because we have the first-party tracking pixel and we have what we call the Zeta ID, we can then build attribution models back by using that as an identifier. What it also allows us to do is activate across any marketing methodology with a deterministic capability. So I can know that this person opened a message this morning and didn't click on it and we can show them an ad inside of The Handmaid's Tale that night. We can do connected marketing in a way that nobody else can.
David A. Steinberg:
The other thing we can do, the reality is that the first time we started watching it, I saw the same commercial for the same brand 27 times, and yes, I counted. Frequency caps are a mission critical component of efficiency of marketing, and if you don't know who someone is, you can't really do that, right?
David A. Steinberg:
So our platform was really built, our entire platform was built on top of the Zeta ID to protect the privacy of the individual. So back to what you were talking about, the UK, which whether it's part of the EU or not, does adhere to GDPR. We were GDPR compliance six months before it needed to go into practice, and our business grew by 30% that quarter. Consumer Protection Act of California, we lovingly call it CCPA, we were compliant a year before we needed to be.
David A. Steinberg:
So when you are a good actor, you don't wake up and say, "Let's have more regulation," but we do like when there's a fair marketplace and that people are good actors. When you look at the ecosystem, I think one of the reasons we've continued to accelerate is we are using that one prolific ID number and we're keeping the consumer's data private at all times. They never know that this is Joe Smith who wants to buy that credit card and be approved. They only know what Zeta ID number and that's why they have to use us to activate.
David A. Steinberg:
So it's interesting. We got started earlier on the CDP system. When we put our CDP plus into a client, we merge our data cloud in and allow them to see attributes, thousands of attributes that they would never know. We then synthesize that to the Zeta ID number, not to their PII. So now they're seeing targeted audiences like they've never been able to access. If they want to activate to them, they have to go through us.
Josh King:
Great business model, David. I know that Intercontinental Exchange has seen a lot of similar things as it's grown over those 22 years. As we wrap up our conversation, I mean, this episode is going to come out a couple weeks before you are going to celebrate that one year anniversary of Zeta Global's IPO, just reflect on the last 12 months, how has being a public company impacted the company?
David A. Steinberg:
Well, listen, I mean, there's been some incredibly good things and there's been some tough things, right? We have an incredibly complex, difficult to understand business, and when everybody says to me, "Why don't you simplify it?" I say, "Well, that's why we keep winning in the marketplace," right? Sometimes that complexity is necessary to being really successful. I think people are starting to get it. I think the more quarters that we beat and raise, the more they get it, right? Some of that is credibility. We came out into a tough market and we are experiencing an even tougher market. So those things are not really fun.
David A. Steinberg:
What I will say is the experience of going public on the New York Stock Exchange, the event around it was just awesome. The team was second to none. You really feel the weight of the 230 years of experience, the grandeur of the building, the access to capital and markets like nowhere else in the world. So that has been just an absolutely stellar experience.
David A. Steinberg:
It's funny because when you tell somebody you trade on the New York Stock Exchange, I think they always look at you a little differently than a number of the other markets, which some of the other markets are great. I mean, I've been public on one of the other ones and they're great, too, but for us, the experience of being here has been very, very special.
Josh King:
I have certainly got a sense of this in the last hour that you and I have been talking, but you've described the atmosphere of Zeta as joyful. We've heard culture described in many ways over our 300 or so episodes of Inside the ICE House, but we've never heard that adjective used in terms of describing a company culture. What does it take to build a joyful culture?
David A. Steinberg:
We strive to be joyful, right? I can't say that every one of the people in my company would agree with that. What I can say is I'm really joyful and I'm really thankful for the people who have chosen to join us on this journey. I look at the human capital inside Zeta and, I mean, I'm dumbfounded often by the level of individual who has chosen to make us part of their journey in their career, in their life, with their family, and we take very, very seriously that the decisions we make every night, the people who work with us go home and have to feed their families and look their siblings, spouses, and families in the eye that they made the right decision as an organization, and part of it's just having fun, right?
David A. Steinberg:
It's good to be serious and when I try to crack jokes with some of my engineers, they look at me like I'm strange, but I still do it and I still try to have fun with it. We do really aspire to be a joyful organization. We want people to put their families first. We want people to be really happy and we want people to show up to work when it's time to work and work really hard.
David A. Steinberg:
The lines between work and families started to blur. I would argue they're now totally gone, right? It is unusual if a child, a dog, another animal are not jumping on a Zoom with you while you're doing it, right? It's been a really interesting time.
David A. Steinberg:
Back to the Milken conference, they asked the group, "What lessons of leadership did you learn in the downturn?" and it was one of those just absolutely uncomfortable silence. Nobody spoke. There were 30 people in the room. I got so uncomfortable that I spoke. I pulled my mic forward sheepishly and I said, "I don't know about anybody else, but the one thing I have truly learned over the last few years is empathy." It is so difficult for people in the positions that we're in to understand the plight that other people are dealing with.
David A. Steinberg:
I can't say that those plights are new. A lot of people have been going through them for a long time, but they became really evident to me as I began to come into people's homes through zoom, experience them in a different way, and begin to understand more about the plight and the troubles that people are going through. I can't say I was the world's most empathetic guy even 10 years ago, probably also another influence of my wife. She tends to be far more empathetic than I am, but it's been an interesting journey for me to start my first business at 16, my first real company at 21, and to be here now at 52, that's hard to even say it, and really understand that I know one-tenth of what I thought I knew when I was in my 20s.
Josh King:
We all knew so much back then. Didn't we, David?
David A. Steinberg:
Oh, I wish I still knew that much.
Josh King:
I mean, on that empathetic note, let me thank you for spending some time with us back today at the New York Stock Exchange. Wish you all the best in the rest of your week in New York at your upcoming town hall at Zeta Global and wherever our paths may meet in the future.
David A. Steinberg:
This was so great. Thank you so much for having me.
Josh King:
That's our conversation for this week. Our guest was David A. Steinberg, the co-founder, chairman, and CEO of Zeta Global. That's NYSC ticker symbol ZETA. If you like what you heard, please rate us on iTunes so other folks know where to find us, and if you've got a comment or a question you'd like one of our experts to tackle on a future show, email us at [email protected] or tweet at us @ICEHousePodcast. Our show is produced by Peter Asch with production assistance from Ken Abel and Ian Wolff. I'm Josh king, your host, signing off from the Library of the New York Stock Exchange. Thanks for listening. Talk to you next week.
Speaker 1:
Information contained in this podcast was obtained in part from publicly available sources and not independently verified. Neither ICE nor its affiliates make any representations or warranties, express or implied, as to the accuracy or completeness of the information and do not sponsor, approve or endorse any of the content herein. All of which is presented solely for informational and educational purposes. Nothing herein constitutes an offer to sell, a solicitation of an offer to buy any security or a recommendation of any security or trading practice. Some portions of the proceeding conversation may have been edited for the purposes for legal clarity.
