David Steinberg, CEO of Zeta | Basis Points

Added: 2026-05-29

[00:00:00]All right. Hello everybody. Welcome back to another episode of Basis Points. We are very honored and privileged to be here today with the CEO of Zeta, Mr. David Steinberg.

[00:00:10]>> Thank you.

[00:00:10]>> Thank you for being here.

[00:00:12]>> Very excited to be here. I love your stuff. Watch it all the time. So, this is this is really cool for me, too.

[00:00:18]>> Thank you. And you guys are in New York.

[00:00:20]>> We, by the way, I it took me about 5 to seven minutes to walk here. So, this was uh this was easy.

[00:00:25]>> I was trying to read a contract on the way and kept sort of like running into people. Uh but uh but here we are.

[00:00:30]>> So le let's let's jump right from that point. To get to the podcast, you had to walk. While you were walking, you were reading a contract trying to get a deal done. You've been in business for a while. You've had a long history with founding companies.

[00:00:43]>> So you're calling me old admit. I mean, I thought we were going to wait.

[00:00:47]>> He's not even 30 yet, right?

[00:00:48]>> I'm calling you experienced, you know.

[00:00:50]>> I'll take it.

[00:00:51]>> What What has it been like uh operating at the level of success that you've operated at? And I guess more broadly speaking, how did all of those experiences and you can talk about kind of your early career lead you to be the CEO of Zeta?

[00:01:02]>> Well, first of all, like most people, this will sound odd. I don't really feel successful, right? I I mean, I don't feel not successful, but I I feel like I'm doing my thing every day. And I wake up and I joke to my I turn to my wife and I say, "Time to make the donuts."

[00:01:22]Referring to a very old commercial uh for Dunkin Donuts. And my wife for some reason still gives me the prefunctatory laugh which is great. Uh but you know you wake up every day and you do what you have to do and and and I would say first you know Zeta is my I think sixth or seventh company. It depends on how you count it. I've sold four taken two public. I'm chairman of another.

[00:01:45]>> And you know I've had wins. I've had some some some not wins. And the funny thing is, like a lot of us, I've learned far more from the ones I didn't win than from the ones I did.

[00:01:57]>> Yeah.

[00:01:58]>> And I always sort of joke, you sort of either win or learn because fail is such a like a such a negative connotation to it. I mean, it's certainly not fun, but at the end of the day, I think it's something that I've learned a lot from.

[00:02:13]And, you know, my first few companies I bootstrapped. The next few companies we raised large amounts of outside capital and it's been sort of an interesting evolution for me uh to go from entrepreneur to sort of like manager of a bigger company >> right >> and the thing that most entrepreneurs don't get right so so let me be clear for the first 20 years I was an entrepreneur started my first company at 21 I was the youngest person in the room for the last 20 years I have been universally ly the oldest person in the room that I walk into. When I was a young entrepreneur, I thought I could do anything better than everybody in my company. And I was totally wrong. As an older entrepreneur, more experienced, I actually believe the single most important job I have is to hire, recruit, train, and empower the world's best people.

[00:03:14]Hire the world's best people. Let them do their jobs. Now, I'm good at my job, which is sort of leading. I focus heavily on strategy, as you would imagine. I focus heavily on customer relationships. I call it relationship management, aka sales. Uh, and I I really focus on M&A. Uh, Steve Gerber, who's my partner, president of of the company, he's really the biggest rock star I've ever worked with. And by the way, Steve would have never worked with me 20 years ago because I would have never let him do his job. You know, he's Bane in company. He was at Digitas was part of the group who sold that to Pubilis and and and you know, then took another company, sold it to Verona Schuler and and is just such a great thing. And my CFO and then my general counsel and our CTO and our chief data officer. It's really the six of us, I think, more of as a partnership than sort of I mean, obviously we're a corporation. We're public. We have I don't know how many corporations at this point on how many continents. But the the reality is that that's how I think about operating. I could have never done that as a young entrepreneur, >> right?

[00:04:19]>> As a young entrepreneur, I had to be the guy. Now I don't care at all. Like it's almost funny like I I find it funny like we were just in a meeting and I walked into the meeting and I could tell everybody was like super nervous that I was there and they had to like report stuff and I asked this one guy this question and he was sort of like uh uh uh and I was like dude there's only one of two answers. There's you know the answer or you're going to go find out and you'll tell me later. Both are acceptable. The only thing that's not acceptable is giving me the wrong answer just because you think you have to say something.

[00:04:50]>> And 20 years ago you probably would have been really upset at that. very angry.

[00:04:54]Why don't you know this? Why aren't you on?

[00:04:56]>> The truth of the matter is I can't imagine that this guy would have actually known the TI we were getting from a landlord on the number multiplied by the number of square feet for a new spot we're looking at. But it's just something that my mind naturally understands and goes to as we think about that. I'm I'm still very involved in our, you know, offices and how we design >> TI dollars on commercial real estate is so fascinating. I've done several of those.

[00:05:23]>> Yeah.

[00:05:24]>> Brand new buildouts. It's crazy.

[00:05:26]>> Well, and of course, you know, the landlord might say, "Oh, you're getting a buck 50." But they're really getting it for a buck 30. So, I always say, "Great. We'll take it and we'll bid it out." And you know, sometimes people who are like really like I shouldn't say professional, but people who have been like in their jobs for a long time, they just don't think like that, right?

[00:05:48]They're like, "It's not their money. I think this is my money." I mean, it's my shareholders money. Like, we've got to make sure we're doing the best possible job. It's just an example of it's a little weird for me now that people are nervous around me because I just don't think of myself that way. But, uh, that's sort of sort of the journey.

[00:06:07]>> So, let's go back to 2017. There is a specific interview that you did and I watched I'm like, I need to learn more about this guy. I need to learn more about this company. And it was one of the main catalysts for me looking. It was probably the main catalyst for me looking into Zeta and then a subsequent catalyst for me investing in Zeta. Full disclosure, I've been investing in Zeta for quite some time now. And you had said and working with boards. I can only imagine what this was like when you went into the boardroom in 2017. Yeah.

[00:06:38]>> Said the famous they we call this the infamous board meeting. Yes. I can only imagine and that probably doesn't even do it justice because you went in if I'm not mistaken and said the $50 million of Ibod that we just did get used to it next three years 000 because we have to reconfigure and re-engineer everything to fortify us >> just throw everything out and start new.

[00:07:01]So it wasn't even re-engineering. It was starting from scratch.

[00:07:04]>> It was we need So >> before you answer, how did you have the foresight to is it what was you said in the interview wasn't even being discussed?

[00:07:14]>> Yeah. Which is >> which is AI.

[00:07:16]>> Yeah. I mean the the decision to throw out our existing platform which we had spent a fortune to build and buy to rearchitect an entirely new platform that put this technology that nobody had heard of called artificial intelligence as native to the application layer. We also made our data cloud native to the application layer was a bit uh a bit uh crazy at the time. it. And and I'd like to say I knew everything was going to happen right the way it was happening.

[00:07:47]Here's what I did know, Steve. I knew that at the time our systems were not fast enough to make the right decisions for our clients to create the best return on marketing spend possible because we were ingesting even at the time billions of signals.

[00:08:05]Today it's trillions of signals. And I went down to an engineer and I was like, "I need to run a report on this thing."

[00:08:14]And the report was a complex report. And I went down like two or three hours later. I was like, "Where's my report?"

[00:08:21]And the guy is like, "Oh yeah, I'll have that for you next week." I was like, "What do you mean next week? We got to run the campaign. Like it's this has got to He's like, "Yeah, yeah, we can't crunch that type of data. we need we were sending it to our office in India and we had our analytics people there and they were building it >> and I had been reading and it really started with machine learning right and we'd been really focusing I so let's step back again I I don't sleep a lot I read I'd say five to seven hours a day >> books articles just a lot of white papers a lot of books nowadays I probably waste a little time on Instagram or X but but but uh a a lot of ingestation of information. I read five to seven publications cover to cover every morning and and sort of all this different stuff and I had started reading he about heavily uh natural language processing >> and I started looking at it and the ability to process billions of data points in seconds was just really exciting to me. And we started looking at the ecosystem and and we found this company called Boom Train which was being run by our now CTO and chief data officer uh Chris Mberg and Nish Gore and we started working with them and they had built one of the most incredible products that nobody would ever buy possible and they hate when I say that but but the truth is they had built a platform that ingested everything you read and recommended what you should read next. Think of it as like the Netflix recommendation engine for publishers.

[00:09:56]>> And then they had to go to publishers who had very little capital and were running out of capital and sell it to them for a lot of money.

[00:10:03]>> Yeah.

[00:10:03]>> So I said we should buy this company and we should convert your natural language processing into signal synthification for marketing.

[00:10:12]>> Right.

[00:10:13]>> But we needed a deterministic individual and we needed the ability to track them on the internet. So simultaneously we had been introduced through uh I don't know if you guys know guys know Fred Wilson who runs Union Square Ventures.

[00:10:25]>> Yeah 100%.

[00:10:26]>> So Fred's a good friend >> early in Coinbase Twitter legendary investor.

[00:10:29]>> I mean le Fred's a legend and and and by the way as good a guy as anybody you'll meet.

[00:10:35]>> Just a great guy. He called me up. He said, "You should look at this company in our portfolio called Discuss, DISQUS, which at the time was the world's largest commenting platform. And they were selling publishers this tool to comment, which once again, they didn't really have the money to buy, >> but they had, I don't know, 200, 300 million people logged in a month. they were tracking because every publisher that used the technology, they had their first-party tracking pixel and their JavaScript on the page. So, I'm triangulating all of this, right? So, now I'm reading articles about machine learning. We're learning about natural language processing through the boom training guys. We're then learning about how the open web works with the Discuss guys and and we're trying to get smart on all of those things. And I didn't just go into the board meeting and say, "We're going to go from making 50 million this year, 60 million next year, and 70 million year after to zero." I went in and said, I actually didn't know exactly what I was going to do the day I walked in a board meeting.

[00:11:43]Because the the big question was which of the two deals could we afford to do?

[00:11:48]Could we do boom train and then figure out the data part later? could we do the data deal and then figure out the NLP natural language processing part later >> and I was simultaneously trying to sell the board that we would buy these assets and in some way go from making all this money to nothing for three years. Uh it actually was longer than that but then we just told them three years but but but we didn't know that at the time. I mean, I thought it would be be two or three. And by the time I got halfway into the argument with one of our private equity partners, I just looked at him and said, "You know what? We need to do both of these deals."

[00:12:26]>> And in the even more pissed off, >> right at ease. You think his head would have exploded, this young guy. And you know, the good news was I controlled the company. So, we we were able to get there. It's the first board meeting I have run in over 20 years that I didn't have unanimous vote.

[00:12:50]>> And by the way, I have tortured the guy who voted against it since that day. But >> still a board member.

[00:12:57]>> Yes. You know why? It's important to have board members who disagree with you.

[00:13:01]>> Absolutely.

[00:13:02]>> And by the way, he hasn't disagreed with me again smartly. But the point is that we went into that board meeting not knowing exactly what we were going to do.

[00:13:13]>> And then I had to call the boom train guys and I had to call Fred who was the big investor and say I want to do this deal. I'm going to do it in conjunction with this deal.

[00:13:23]>> So I need to restructure the offer and we're going to do more earnout a little less cash because I don't have the cash.

[00:13:29]I'm going to give you a little more stock, but we're going to put this whole thing together and we're going to build a multi-billion dollar company. And they thought I was nuts, but they didn't have a lot of options. So, we bought Boom Train, we bought Discuss, we put them together in San Francisco into one office, and it became, you know, gamechanging for us. It really, it changed the game. So, today we are the only marketing cloud that has artificial intelligence and data as foundational.

[00:13:58]It's literally native to the application layer.

[00:14:01]>> So let's get into that and and I think this is going to be an important question for a lot of people. A lot of people understand marketing. They understand targeting. They understand like having a digital profile of people in the world of AI. It seems like it's more accelerated because you can just process so much more data. What exactly would you say Zeta's competitive advantage is in this broad landscape of trillions of dollars that are spent on marketing uh in regards to being AI native which is basically where the entire world is starting to go that you were ahead of >> in 2017 but the problem is they can't become AI native >> why >> because they have a legacy architecture so let's pretend this is a marketing cloud for Salesforce Oracle Adobe SAP they bought exact target responses neolane and they still use the same architecture. So if they want to do an algorithm, they have to step out of the platform through an API to an algorithm to query it.

[00:14:53]>> The algorithm then does a data dip into a data repository back to the algorithm to create the intelligence and then it informs the platform what to do.

[00:15:03]>> That latency, >> so they're just daisy chaining it, >> right? But that latency destroys return on investment. I because it's native I can make a decision in a millisecond and look at a thousand attributes. They can make a decision in seven to 10 seconds looking at five.

[00:15:22]So when you look at the targeting capabilities for either churn reduction, monetization of a customer or a new customer acquisition, you can make a decision so much faster. It allows to create much better return on investment.

[00:15:36]By the way, recently Forester put out a study that for every dollar a client spends through our platform, we return 6 to700% >> right >> return on marketing spend. The other massive moat in our business emit is our data cloud. The only we have 555 million optedin individuals who have given us permission to track them and market to them >> via third parties via >> no this is all 100% >> like they would be using a different website where you guys pop up and say hey can we >> no >> they either they're subscribed to discuss they're using our ESP they're subscribed to one of the billions of newsletters we send out all of this is a this is misunderstood I'm glad we're talking about this 100% of our data cloud is firstparty proprietary data now we license data to append to it so like I'm not a credit we don't do credit scores it's zeta but we're an agent of the bureau for all three credit reporting agencies because I can build an audience that's not just of the highest level of intent I can build an audience of people who will absolutely be credit approved for my client's products before we spend a dollar >> right >> so let me take you through the process it's actually super cool So, we set up a consumer data platform for our enterprise client. The huge enterprise puts all of their first-party data into that CDP. We then match it with our data. We match in the US at greater than 92%. We have 245 million Americans opted into the data cloud. We then remove the personally identifiable information to protect the consumer. There's another big benefit to us and I'll share that with you in a minute.

[00:17:19]And we import 5 to 7,000 data elements per person, demographic, psychoraphic, every credit card transaction they do, location-based data, uh, and tons and tons of web behaviors because we've removed their personally identifiable information, the enterprise never even sees it, >> right? But then what happens is our proprietary algorithm inside of the consumer data platform starts saying, "Okay, their best clients read articles on these three topics for 3.5 minutes.

[00:17:51]They had a credit card transaction where they complained about renting a car in the six months prior to signing up for their service. They entered these three retail locations prior to making the decision to buy our clients products. We then do two things that nobody else can do. We then take 100% of our clients data. We layer it against the 245 million Americans and remove their existing customers before we spend any money on marketing.

[00:18:20]How many times a day do you get an ad for products you already own?

[00:18:24]>> No. More than I can count.

[00:18:25]>> Yeah, that's a waste of money.

[00:18:27]>> 100%.

[00:18:28]>> We eliminate that waste. Then let's say it's a we're trying to issue credit card. We say these two million people are actively in market for our clients products, but this 1 million won't be credit approved by their criteria, >> right?

[00:18:42]>> Don't waste any money on them because all of our data is deterministic. So now let's go back to the Zade ID number. We go back to the consumer data platform and we tell our client that this 1 million people are not your customers.

[00:18:57]They're actively in market to buy your product and they will be credit approved with a 90% or greater propensity by your credit score for your products. Would you like to market to them?

[00:19:09]>> There's no primmer to decode the Zeta ID. You can't take that data anywhere.

[00:19:16]You have to market through us, >> right?

[00:19:20]>> And if you terminate us, you lose 100% of the learning in the consumer data platform. Which is why I think last year our net retention rate as a company was 120%.

[00:19:34]100%'s considered great.

[00:19:36]>> Yeah, >> we got several companies with a higher net dollar retention rate.

[00:19:40]>> Yeah. I mean, maybe Palunteer.

[00:19:42]>> Yeah. Just like two of them. Palanteer, Nvidia, maybe.

[00:19:45]>> Yeah. Yeah. Nvidia, I'm sure. But uh you know the reality is that that's because our clients love us and they keep spending more money and it's because we deliver them a superior return on investment. I know that's a really long answer to why native AI is a differentiator to the marketing cloud.

[00:20:02]But let's look at the SAS apocalypse for one second. Let please let's just I would love for somebody who actually works in this >> runs a software company to explain >> runs a software company because I have my own thoughts on this that I've been saying for quite some time is I've been the one that's actually negotiated the contracts on the other side of the table. Yeah.

[00:20:20]>> So I would love to hear what you have to say. So let me start by saying that any software company that is solely focused on workflow management and is not creating intelligence and return on investment for their clients is going to have a massive problem in an AI world and is going to have to heavily pivot their business >> because you believe the foundation models will intermediate the application layer if you're just a a a uh >> workflow management platform that is essentially going to commoditized.

[00:20:52]>> Yes, I think that's going to happen.

[00:20:53]It's already happened. We're seeing it in the slowing down of numbers shrinking, >> right?

[00:20:59]>> You know, Salesforce Marketing Cloud shrunk last quarter.

[00:21:01]>> Yeah.

[00:21:03]>> You know, Tradeesk is not growing, you know, the way they used to. I mean, these are great companies, but but but in an AI world, they're they're challenged, right? When you think about and by the way, last quarter, our segment grew 8 to 10%, we grew 50%. 30 of that was organic. So by definition, we're taking meaningful market share, >> right?

[00:21:23]>> Right. We're we're now, you know, well above a billion in revenue and still growing. It was our fourth consecutive quarter of accelerated growth. That's because of AI native. That's because of controlling our data. But but let's go to what is going to be valuable.

[00:21:37]Proprietary data, intelligence, and return on investment. So let's look at Zeta. Let's go back to the CDP example.

[00:21:46]The first part of the CDP example is a Fortune 500 company gives me 100% of their first party data. You think they're going to give 100% of their first party data to a third party large language model?

[00:21:58]>> Very hard to imagine that.

[00:22:00]>> Zero chance. Two, the 550 million opted in firstparty data people in our data cloud, we've never fed them into a large language model and we never will.

[00:22:14]They're solely used to train our models.

[00:22:19]>> So even though we partner with Open AI, which I assume we'll talk about in a few minutes, they never see our data.

[00:22:26]Our data is 100% proprietary. So now all of a sudden you've got this massive layer of intelligence where we become the operating system for our clients marketing ecosystems. This is the one thing nobody understands about our business. The reason we're at 120% net retention rate is because almost nobody fires us. It's because we create this massive layer of intelligence. Now then what do we do? We use that to create a 600% return on marketing spend which by the way with Athena I think will get to a,000% return on marketing spend. So when people start looking at us and saying, you know, you're going to be disintermediated, I'm like, dude, we grew 30% organically last quarter, 50% total. We are the disintermediator, not the is. And I I I think that like I'm old, right? So back to >> I love you. Where were you when my kids around calling me old? I remember the dot bubble. There's a lot of differences here, right? I mean, back in the day, the.com guys had no money.

[00:23:36]>> Yeah.

[00:23:36]>> Now you've got guys who generate billions of dollars in some cases a week in cash flow.

[00:23:42]>> And we all wondered what they were going to do with the trillion dollars they had on hand. Well, now we know they're giving it to Nvidia.

[00:23:48]>> Yeah.

[00:23:48]>> But, you know, when you think about that, >> if you think about the dot period, I remember when the narrative was the internet is going to destroy Walmart. The internet's going to destroy JP Morgan Chase. The internet's going to destroy FedEx. I didn't even get that one at the time, but they sent it. In all three of those cases, those companies adopted the internet and are juggernauts today. It's going to be the same thing with AI. Companies that have proprietary data that create intelligence, they have to adopt AI or they're going to be dead.

[00:24:27]So what did we do at Zeta last quarter?

[00:24:31]We announced 75% of our new code generated was automated, >> right?

[00:24:38]>> We're above Google.

[00:24:40]We developed an internal workflow management tool. We're not selling it, but an internal workflow management tool called Spade. I don't know where we come up with these numbers. It's an acronym or names. I don't even know what it stands for, but what I know I know what it does. An entry-level programmer goes to Spade and says, "This is the code I want to program." Spade decides which large language model is best to design that code at the lowest token utilization. So it might say for security, use Claude. It might say for general coding, use GPT. It might say for publishing coding, it might say use Gemini. And we're sort of using cursor as part of the foundation for Spade.

[00:25:19]Once the code's generated, it goes to another program that we lovingly named Zappy or Zippy. Zippy. Zippy QAs it automatically. It then goes from Zippy to an architect. So now remember, you've never touched an engineer. You're starting with an entry-level programmer and now you're going to an architect.

[00:25:38]The architect checks out the code, pushes one button, it goes generally available. We're now cranking out products in weeks that would have taken us years >> two years ago.

[00:25:52]So, we're adopting it. If you look at our growth, this year will be our fourth year of greater than 30% organic compounded topline growth.

[00:26:05]>> 18 straight quarters of beats and raises.

[00:26:08]>> 19. Don't beat me out of my last quarter, Aid. Come on. Can't take them anywhere. Well, that that's it's it's it look a huge accomplishment.

[00:26:15]>> Wall Street really perception is reality and the perception of an earnings estimate beat is oh they're doing well.

[00:26:24]>> Yeah, >> you can come in line with expectations which you that's your job as a public but you really have to beat it and doing that every quarter pretty exceptional.

[00:26:31]>> Yeah. Beat exceed and raise we've done it 19 quarters in a row. But the point I was going to make on on what I was saying, and thank you for bringing that up, uh, was four years in a row of greater than 30% compounded organic growth, greater than 50% compounded Ebida growth, and I can't even give you the number on free cash flow. It's off the charts on a compounded basis. I think we grew at 78% last year alone. We only grew headcount by about 10%.

[00:26:59]in those same four years on a compounded basis.

[00:27:03]So I and I think we're now entering a period where we could exit this year with fewer employees than we started the year. Now that doesn't mean it's the same people because the people who get you to where you are don't always take you where you want to go. And the way I explain it to my senior execs is guys, let's pretend we're a professional football franchise and we are at the salary cap. If you want another player, >> someone's got to go.

[00:27:31]>> You got to free up cap. Well, no.

[00:27:33]Sometimes it's two or three people a minute.

[00:27:35]>> Yeah.

[00:27:35]>> Because when you move from sort of engineering to architects, you got to take out two or three people to get there. But you might pay them three times as much. They might do 10 times the work because of Spade and because of Zippy. Zap >> how much is token budgets coming into the conversation now >> people ask I would tell you I would expect token budgets will be sub onetenth of 1% of our opex going forward the next big thing I mean it's you know I this is going to sound counterintuitive but but I feel like I'm going to say what I said in 2017 today on a new topic large language models are not necessarily going to be the winners I think inference models are going to be where the true intelligence is created.

[00:28:22]>> And everything we've ever built at Zeta are our own proprietary inference models.

[00:28:27]>> You're doing the inference yourself.

[00:28:29]>> That's what we do, >> right?

[00:28:30]>> So, you're literally taking all of the data you need to make one decision with an agent and that agent makes the decision. I don't need the entire internet to decide if you are an active market for a platinum card and will be credit approved for it. Now, I might need your credit card transactions. I might need your credit score. I might need a bunch of web behaviors. But that might be 30 or 40 different data elements.

[00:28:54]I'm not trying to write poems. I'm trying to, you know, create a,000% return on marketing spend for our clients. So that's why our token utilization is so low. We really only consume tokens when we uh are using Spade to do our internal coding.

[00:29:09]>> So you have 550 million people's first party data. Is there a plan to get that to uh billions and is that through more acquisitions or licensing because I would imagine the more people's first-party data you have more valuable the platform becomes.

[00:29:22]>> Yeah, for sure. I mean listen to put it in perspective the only other companies that have even greater than 500 million opted in first party data sets are all worth well over a trillion dollar and and Amazon.

[00:29:34]>> Yeah, >> we're we're fourth like we have I I think we're bigger than X to put it in perspective from a first party data perspective. I we we don't have the type of interaction rates that that X does, but but nor do we want them. But the the reality is that the data cloud has grown every year since we've been public and I think it'll continue to grow and we will continue to look at opportunistic acquisitions that we think can meet our five pillars of M&A and we look at I we probably look at two or 300 deals seriously before we pick one.

[00:30:11]>> Can you go into the Marold acquisition if you don't mind for a minute?

[00:30:15]>> No, I'm happy to. and just explain real quick at how that's going to be accreditive and how that's going to really supercharge the entire platform of Zeta.

[00:30:23]>> Yeah. So, if you look at our first quarter, I mean to put it in perspective, not only did we deliver 29% organic growth, I believe the street had us at 23 or 20 uh yeah, I think 23. But Maragold massively overd delivered. To put in perspective, the street had us at a 36 to 37% growth and we grew at 50%.

[00:30:45]Uh, Maragold was a rollup of enterprise software companies that they had, you know, quite frankly at the time borrowed money very cheaply on a variable basis and that money ended up getting more expensive for them and they ended up needing an exit for that asset. The the five main assets were Cheetah Mail, Cheetah Digital I should say, uh Saleth through Celligent, the loyalty program, and then a personalization engine. The funniest thing about this deal, Steve, is I tried to buy Cheetah Digital three prior times for more money than I paid for all of Barold.

[00:31:30]>> Oh, how funny is that?

[00:31:32]We also tried to buy sale through twice >> and you got them all rolled up in one >> one beautiful little package. So they tried to sell us the whole thing which included another five or six small business uh assets which are great. We just don't want to be in the small business space. We focus solely on very very large enterprise. So uh Cheetah Digital uh which is I think one of eight Forester rated marketing automation platforms. I'll remind you we are number one. Uh but uh I think they were in the midcategory. I doubt they'll make it next year now that we own them, but uh we'll see. We're going to effectively merge their platform totally into ours.

[00:32:10]We'll take out meaningful expense. It'll be very accretive from a an operating margin perspective. Saleth through which is the number one email service provisioning business for publishers.

[00:32:21]We've merged that together with live intent which we bought a year ago which we massively overd delivered on as well which is the number one monetization engine for publishers in messaging and in a postgemini open AI world publishers traffic counts are plummeting.

[00:32:40]>> Yeah.

[00:32:41]>> Live intent and sale through and then discuss are three of the biggest traffic drivers to publishers in the world. We've combined them into one entity we call our publisher cloud and the cross-selling has been much faster than we expected because we're going to people who are you know live in 10 customers and saying you should use us for ESP and commenting and they're like great and it's been very exciting.

[00:33:05]Celligent gave us meaningful footprint in Europe for the first time and as we think about our journey to become one of the very few uh software companies that can get to 10 billion a year in revenue uh Europe's going to be important right we we we'll we'll be there and and and up until recently uh international had been two or three% of our revenue last quarter I think it was nine uh and then the crown jewel was the loyalty program because today in our data cloud we get pretty much every credit card transaction in the United States on Visa Master American Express but we don't get the skew level data >> the loyalty program has the skew level data on everything everybody buys through those loyalty programs. And we're doing loyalty now for some of the largest companies in the world. And now we don't share that with other entities.

[00:34:00]Like one company's loyalty though, now we're putting that loyalty data into the CDP to train the algorithms. And the return on marketing spend is already above our t long-term target for those companies.

[00:34:13]>> How how big can Zeta become? Uh we believe we can build a10 billion dollar business at a 30% operating margin with the vast majority of that falling to free cash flow. It's not going to take us a few years. It's going to take us a long time. Although I like to say it took us 18 years to get to our first billion a year in revenue and we'll double that in three to four years.

[00:34:34]>> When I look at Zeta, I think about their critical success factor as owning the back end, owning the data, which is the differentiator against your competitors, which I'm not going to name their names.

[00:34:44]Everybody who asked me this question already knows their names. And when I look at it, I think about exactly what you said about net dollar retention.

[00:34:53]Because if you're providing 6 to 7x ROI on the marketing spend, that is going to incline consumers of yours to spend more because they're getting such a huge bang for the buck, >> right, on the enterprise level. And that should actually drive net dollar retention up because if you're spending for every dollar you're getting six to seven back.

[00:35:17]>> Let's let's not get ahead of ourselves.

[00:35:18]But but but the reality is we had 120% net retention rate last year. We guide to 110 to 115. In the first quarter of this year, if you do the math, we're well above 150. Exactly. But but but you can't.

[00:35:33]>> So how does your partnership with Open AI help compound that?

[00:35:40]>> Well, today it's really interesting.

[00:35:45]First, we were super excited about partnering with OpenAI to build Athena, which I think is the future of our business. And I think Athena is the way we get to 10 billion. And and I I think it it truly makes us the operating system for our clients uh you know marketing and ultimately business intelligence and and on what I would what I would say about helping them in the ad space which I think is really interesting and is going to be a very large opportunity for us. It's not just that I think we're the only platform helping them and bringing all of our enterprise clients into their ecosystem for chat GPT.

[00:36:23]We're now plugged into their API for GEO, which gives us another big leg up in our GEO component of our business. We are, I believe, the only company in the world, but let me let me rephrase. We're the only company I know of in the world that is fully integrated into Chat GBT, Google's ecosystem, Meta's entire ecosystem, the open web, connected TV, messaging, email, social, all the way through. We can build one reporting infrastructure with attribution through all of that.

[00:37:02]So when we talk about return on investment, it gives the algorithm another really good place to target deterministic individuals because we're going to know who people are deterministically inside of all of our partners.

[00:37:17]So the OpenAI partnership I I would imagine you think is kind of expanding the AI uh native part of the platform and just bringing more >> because they're AI native and we're AI native it just moves so much faster like what most people don't understand is the vast majority of the web you have a publisher the publisher chooses a supply side platform we own a demand side platform they handshake in the handshake They hand us certain information and our system in a millisecond has to make a decision. Do you want to serve an ad or not, >> right?

[00:37:53]>> Okay. The SSP is super slow. Most of them, I mean, I shouldn't disparage all of them, but but but most of them are super slow. So, our entire goal is to go direct to the publishers, which is why we built the publisher cloud. And by the way, we're now plugged into a lot of publishers directly because the SSP system talking to the DSP system is just it's a handshake, right? It's by by nature of a handshake, it's going to be slower than if you're going native to native for AI.

[00:38:20]>> Open AI, we go direct. Meta, we go direct. We we directly integrate the Zeta ID into the meta ID. Uh we connect the Zeta ID to the Google ID. And it's it's sort of a differentiated thing.

[00:38:34]Whereas most of the other DSPs that are out there sort of made war with social, they made war with Google. They took all their traffic.

[00:38:45]>> Well, because they just that was their pitch, >> right?

[00:38:48]>> They suck. We're great. Go with us. Our whole pitch is we don't know the best place to target an individual. The algorithms do.

[00:38:58]>> Yeah.

[00:38:58]>> So, if you're not opening up social and you're not opening up YouTube or or or other stuff like that, you're actually hurting your clients in my opinion. But we don't care because we're not just a DSP. We have a connected TV business. We have an email service provisioning business. Uh we have a social media platform that directly integrates into pretty much all social platforms. Those are all direct integrations uh that we've built you know over many many years. So to me once again the more optionality you give the algorithms the better the return on investment.

[00:39:37]How much do you think about a recession that would hurt advertising budgets and what that would do for Zeta?

[00:39:42]>> So, arguably with our return on investment, a downturn is good for us.

[00:39:47]>> And by the way, the crazy thing is we've been doing this now for, you know, since in our in the form we are today since pretty much late 2020. We've had a couple down cycles in there, right? Uh we grew >> Yeah.

[00:40:00]>> in all those years even year of co now we didn't grow 30%. But we grew when all of our competitors were massively contracting. And I, you know, in any business, money flows to the highest return on investment. This is sort of business 101.

[00:40:20]>> This is not marketing. This is not AI.

[00:40:22]This is just that's where it flows.

[00:40:26]>> Our biggest problem for years was nobody had any idea who the hell we were.

[00:40:31]>> No. So if I walked into a pitch or we walked into an RFP process, I would spend 50 minutes of the first hour explaining who Zeta was, >> right?

[00:40:43]>> I called it Zeta who. So what did we do?

[00:40:46]We started Zeta Live. We went public. We started doing a whole bunch of stuff around Williams. That was >> Come on, baby. That was fun. Tom's my guy. He's the best. We've announced Kevin Hart for this year.

[00:40:57]>> Oh, that'll be great. We have, by the way, this I can't tell you anymore yet, but it's it's it's gonna be Zeta Live this year.

[00:41:06]I never thought I would say this because Tom is so awesome. Serena's so awesome and every last year the Chain Smokers.

[00:41:14]We did a rave on the aircraft carrier and launched a thousand drones and had people were stopping on the west side highway >> to watch the concert the Chain Smokers were doing and we had a thousand drones spelling Zeta over the Hudson River that nobody knows >> the government was shut down then.

[00:41:33]>> All right. It was Yeah.

[00:41:34]>> And that is a federal permit. The only way we got it done was we had to go right to the White House.

[00:41:40]>> Wow.

[00:41:41]>> And we we didn't get approval till that morning. We were really stressed about it. And now I've got that picture up.

[00:41:47]Everybody thinks it's superimposed.

[00:41:50]Everybody thinks that's like put up there by AI. I'm like, "No, that's real." This year I think we have a chance of topping it. But those are the things we've done. So sort of on this journey, we've gone from Zeta who we then went to why Zeta and then it was like, "All right, we've heard of you.

[00:42:08]Why you?" We're now at Zeta now. How do I get Zeta into my stack? How do we test this? How do we go? I mean, I'll tell you, we've closed three of the five biggest deals in our corporate history in the last few weeks.

[00:42:24]>> Well, I was going to say if you're living 6 to 700% return, like every big enterprise on the planet should theoretically want to be at least interested in a six to 7x return on their dollar.

[00:42:37]>> But, but remember, you still got to get in front of people, >> right?

[00:42:39]>> Right. And now what we're doing is we're heavily investing into getting in front of people, right? And it's working. Once again, we just completed our fourth straight quarter of accelerating growth.

[00:42:52]Uh yeah, you can't do that forever. But I I think with Athena, we are a 20 plus% organic growth rate company for many many years to come.

[00:43:04]>> That's very exciting from somebody who cares about financials as much as I do.

[00:43:08]>> Yeah. And by the way, financials are outputs. I mean, you know this, Steve.

[00:43:13]>> The input is, are you solving your customers problems? Are you creating a superior return on investment? And are you executing well?

[00:43:22]>> When you're creating a 6 to 700% ROI, you're solving a problem.

[00:43:27]>> Yes.

[00:43:27]>> Otherwise, they wouldn't be spending money with you.

[00:43:29]>> That's right. That's right.

[00:43:31]>> David Steyberg, CEO of Zeta, thank you so much for taking the time to be here today. Okay, we got a couple rapid fire for you to get to know a little bit more about who David is.

[00:43:40]>> Um, >> I'm scared for you to ask one of these questions now. Let's go. This is great.

[00:43:45]>> Favorite food. Let's start with that.

[00:43:46]>> Oo. Uh, steak.

[00:43:50]>> Medium or medium rare?

[00:43:51]>> Medium rare.

[00:43:52]>> Thank you.

[00:43:53]>> Okay. I used to be a medium well guy.

[00:43:55]You transitioned me to medium. So, >> by the way, Luggers.

[00:43:58]>> See?

[00:43:58]>> Okay. No, no, no.

[00:43:59]>> I'm not going there. Luggers is still the best. Can you tell him that his take that Peter Luger's is bad is like it's not bad. It's overated. It's not a bad embarrassing. But here's my question.

[00:44:09]What's better?

[00:44:11]>> I think Benjamin's overall.

[00:44:12]>> So, first of all, Benjamin's a good friend.

[00:44:14]>> I love Benjamin.

[00:44:16]>> There's two of them.

[00:44:17]>> Such a >> Well, there's actually not two. There's Benjamin Prime and then there's Benjamin.

[00:44:22]>> Yes.

[00:44:22]>> You don't even know you're Benjamins, bro.

[00:44:23]>> There's two. They're right next to each other.

[00:44:25]>> Well, they're back. They back to back, right? So, and then they have one in Westchester, which they also call Benjamins. And then they had a seafood place for a little while. Benjamin's is great. I would say it's a pick them between Benjamin's or Wolf Gangs.

[00:44:39]>> I had Wolf Gang.

[00:44:40]>> Who's the best? Hold on. Who's the best in Manhattan? 33rd Street. That's the only one I would go to.

[00:44:45]>> 30.

[00:44:45]>> Have you had Luggers in Vegas?

[00:44:46]>> Of course. I had Did I have I had it on Saturday.

[00:44:49]>> Really?

[00:44:49]>> So, no. Friday this past week. I canled the lunch. I went to Luggers with two of my guys. We shared a hamburger. We got a steak. We got tomatoes and onions. And then of course I didn't eat dinner. I was sick the rest of the day. But uh I I I love Benjamin's. I love Benjamin. I think everything they do is amazing. I think it sucks they stopped making the fresh potato chips at the bar, but Luggers is better.

[00:45:16]>> Okay. CEO you look up to >> or you have looked up to?

[00:45:20]>> Jamie Diamond.

[00:45:20]>> Jamie Diamond. Love it.

[00:45:22]>> D or or David Solomon. Both huge fan.

[00:45:26]>> Uh favorite movie? Interstellar.

[00:45:30]>> That's >> finally something you've seen.

[00:45:31]>> That's a great movie.

[00:45:33]>> By the way, everything Christopher Molo% >> is I I By the way, I I I sort of joke I have a like a weirdly high IQ. I'm incredibly intelligent. I do not understand Tenant.

[00:45:46]>> Yeah, >> I've watched that movie 10 times.

[00:45:49]>> I just It's a great movie. I like love the film. I just don't get it.

[00:45:56]>> Favorite musician?

[00:45:57]>> Billy Joel.

[00:45:59]Hey, and last question. Uh, David, you've got a lot of retail investors that have invested in your company that produce due diligence every single day, uh, about the company. Uh, Nick, Ronnie, Davis, good friend of mine. Um, these people really believe in the mission of Zeta. What do you have to say to the retail investors that continue to advocate for the company?

[00:46:18]>> Listen, I I'm here for a reason. We we we love the people who love our company and and listen the the work they do is actually not just good for us from a financial perspective from the sharers.

[00:46:31]Uh it's really good for client development, >> right? Because when our name is papered all over X, when when CMOs go there, they see us and they start asking about it. So listen, I wouldn't be here today reading a contract while I was walking over here in the street almost getting killed twice if I didn't care deeply about this segment. But we also care deeply about the institutional segment.

[00:46:56]And and you know, we're working very hard on that. I was at the JP Morgan Tech Conference on Monday in Boston. Uh flew from Vegas late Sunday, woke up at 6:00 a.m. local time, which did suck. uh started meeting super early and then went all the way through dinner. We hosted a dinner in Boston and then flew back to New York after dinner.

[00:47:18]>> What's Billy Joel's best album, your opinion?

[00:47:21]>> You're going to not agree, but I may. I think Song's in the Attic.

[00:47:24]>> Probably my number two. My number one is probably Stormfront.

[00:47:27]>> Yeah, Stormfront's great, but but I I I just I was a kid. I was heavily dyslexic. I was heavily ADD. My parents were going through a very difficult divorce and I remember sitting in my room listening to songs in the attic just again and again and again.

[00:47:50]>> David Steinberg, CEO of Zeta, thank you for taking time.

[00:47:52]>> So much for coming. Appreciate it.