On this episode of Okay, Computer. Dan sits down with David Steinberg, Co-Founder, Chairman & CEO of Zeta Global. They discuss David’s prolific entrepreneurship in the telecom industry early in his career (5:20), his long friendship with, and mentoring from, former Apple CEO John Sculley (16:38), what drove David and John Sculley to co-found Zeta Global together (25:09), the slump in the digital ad industry and how Zeta Global is successfully navigating it (33:25), the impact of inflation & soaring energy prices on businesses (40:42), and why David is so bullish on connected TV advertising (44:00).
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SHOW TRANSCRIPT:
Dan Nathan: [00:00:36] Current Ad. [00:00:36][0.0]
Dan Nathan: [00:00:38] It’s rolling, man. This is David Steinberg, chairman, CEO, co-founder, Zeta Global. It is listed on the New York Stock Exchange under the ticker ZETA. We’re going to get into Zeta. We’re going to get in your business. We’re going to end the journey to going public. You’ve taken companies public before, but not in this sort of environment. I’m assuming a little bit. I’m going to talk a little bit about that. And I would also say, David, before I welcome you officially to okay computer. [00:01:04][26.0]
David Steinberg: [00:01:04] That wasn’t the welcome. [00:01:05][0.7]
Dan Nathan: [00:01:05] That was kind of the welcome. [00:01:06][0.7]
David Steinberg: [00:01:06] Is a pretty nice welcome. [00:01:07][0.7]
Dan Nathan: [00:01:07] You and I met professionally, but I would say our relationship is primarily social, wouldn’t you say so? [00:01:15][7.3]
David Steinberg: [00:01:16] I don’t remotely think of our relationship as professional so. [00:01:17][1.5]
Dan Nathan: [00:01:19] bankers and this and that. [00:01:21][2.1]
David Steinberg: [00:01:22] Serious. We were in Vegas. We were putting on a show. [00:01:25][3.1]
Dan Nathan: [00:01:25] Yeah, no, it was good. But then you and I just quickly morphed our relationship into dining and cocktails and [00:01:31][5.8]
David Steinberg: [00:01:32] We tend to have very similar things. We enjoy food and wine and fun. [00:01:35][3.7]
Dan Nathan: [00:01:36] We’re cut from a similar ilk. I would say [00:01:38][2.3]
David Steinberg: [00:01:38] You’re cut from a bigger ilk than I am. [00:01:39][1.2]
Dan Nathan: [00:01:40] So that’s a fat joke, people. So David is he is on a keto diet, so. No, I’m just kidding. [00:01:45][5.8]
David Steinberg: [00:01:46] I am. [00:01:46][0.1]
Dan Nathan: [00:01:46] Are you really? [00:01:47][0.2]
David Steinberg: [00:01:47] Yeah. Yeah. [00:01:48][0.7]
Dan Nathan: [00:01:48] You’ve kind of talked to me a little bit about that. You do a little bit of the intermittent fasting, correct. And then you also just avoid carbs like the plague. And then is that also sugar? [00:01:56][7.9]
David Steinberg: [00:01:56] Yeah, well, there’s no more carb than sugar, but the six days a week I intermittent fast between 16 and 18 hours and eat a few carbohydrates is a can. You can’t say none, but I try to keep it to zero and then Sundays I sort of cycle the ketosis. I’m a big fan of tim Ferriss. And his book, The For Our Body, which has nothing to do with 4 hours a day, sort of. His brand is sort of like the primmer for how I built the diet I’m on. [00:02:26][29.4]
Dan Nathan: [00:02:26] Yeah, I’m working on the three hour body, so hopefully that one will take off once they get [00:02:30][4.3]
David Steinberg: [00:02:32] Good news is you are so handsome. Yeah. You can pull this new shit. [00:02:34][2.3]
Dan Nathan: [00:02:34] I mean, I really appreciate that. So let me is this a warm up for the Tim Ferriss show or no. [00:02:38][4.3]
David Steinberg: [00:02:39] Tim has never invited me on. So I you know [00:02:41][2.0]
Dan Nathan: [00:02:41] So it’s funny, I’ll be really honest with you. You know, we started this podcasting company Guy Adami and myself in the start of 2021. And, you know, I had listened to lots of different podcast. The first podcast I ever listened to was Recode Kara Swisher podcast, and I really got into that. Her access to people, the way in which she can get them to talk in ways that they just don’t want to talk about. So that was kind of fascinating. You know, I got a little into Bill Simmons. I really enjoyed the sports ones and the stuff. But what’s interesting to me, like some of these feel like they’ve just kind of gone off the rails. Like, I listen to Balaji Serve in on Tim Ferriss last year it was 4 hours, 4 hour podcast. [00:03:15][33.1]
David Steinberg: [00:03:15] Thats long. [00:03:15][0.0]
Dan Nathan: [00:03:16] We’re not we’re not going 4 hours. [00:03:17][1.1]
David Steinberg: [00:03:18] I was going to say, come on Dan [00:03:19][1.0]
Dan Nathan: [00:03:21] This is not like a sting podcast or anything like that. I was trying to figure out like what the attraction to that is. What we’ve tried to do is really digestible, kind of accessible, you know, sort of content. And so like taking a very complex man like you and breaking him down. [00:03:35][14.3]
David Steinberg: [00:03:36] To be like the TikTok of podcasts. [00:03:39][3.0]
Dan Nathan: [00:03:40] All right. Well, here’s the deal. Let’s let’s start with this. I want to get to Zeta Global. I have actually been very fortunate to get to know a bunch of your management team understand your product. I’ve actually had the pleasure of speaking at Zeta Live last year. I hope I get the invite. [00:03:51][11.8]
David Steinberg: [00:03:52] Yes, well, no, we just sent it out. The 29th of September will be zeta live 2. [00:03:56][4.4]
Dan Nathan: [00:03:56] I will be there. So I’ve gotten to know this company. But it’s funny, I was listening to you on that ice podcast. Okay. And you said we used to get this question, Zeta who? All the time. And I think it was really interesting the way you framed it. Not so much anymore. Now that you’re a publicly traded company of over a half a billion dollars in annual revenue, and I think you have a five year plan to get above a billion you have a market cap. [00:04:20][23.4]
David Steinberg: [00:04:20] Three year plan. [00:04:21][0.4]
Dan Nathan: [00:04:21] Okay three you plan, you put it out in 2020. There you go. [00:04:24][2.6]
David Steinberg: [00:04:24] We put it out in 2020 for 2025. It’s I don’t know if you checked. We’re about halfway through 2022 . [00:04:30][5.5]
Dan Nathan: [00:04:31] I guess the main point there is you are competing with behemoths, Salesforce and Oracle and Adobe. And so we’re going to talk about all of that. But what I find really interesting about you and I think oftentimes when you and I are together with other groups, we’re talking about like kind of shared history in markets, shared history investing. You’re not just an entrepreneur. You have been investing your own capital, a family office in public and private equity. So I want to hit a little bit about that, but I see you as a serial entrepreneur. And so talk to me a little bit about how that journey started, because again, you started a cellular company in 1991. Sterling was that it. I mean, most people only nnew of the big back phones back then are the ones that were built into cars. What itch were you scratching that soon out of college and doing that? [00:05:18][47.5]
David Steinberg: [00:05:18] Well, first of all, it’s great to be on the show. I’m a big fan of you personally and this show, so I appreciate it. But I became an entrepreneur for the same reason many of us become entrepreneurs. I came out of school in 1990. It was the Great Recession of that day. And I couldn’t get a job and. The truth of the matter is that when you come out of school and you don’t have a job, your opportunity cost on starting a business is very, very low. I originally started on the Hill and I was there for a short period of time working for Senator Kennedy and under Senator Biden on the Judiciary Committee. That was sort of a senior intern and legislative correspondent, and that was really cool. But I figured out quickly I would not be a good government employee. That was just not my [00:06:04][45.9]
Dan Nathan: [00:06:07] Drug test? No, I’m just kidding. [00:06:08][1.2]
David Steinberg: [00:06:08] Whole host of reasons [00:06:08][0.0]
Dan Nathan: [00:06:09] We can cut that. [00:06:10][0.5]
David Steinberg: [00:06:10] Well, you don’t have to cut it. The good news is, I would have passed. [00:06:13][2.7]
Dan Nathan: [00:06:13] Yeah. All right. [00:06:14][0.4]
David Steinberg: [00:06:14] As far as I’ll admit to on this podcast. [00:06:15][0.8]
Dan Nathan: [00:06:16] Really interesting, in 1990, we have not had this much in our nation’s history. That was the 10th year of a Republican administration. And you were working for Democrats. What was that like? [00:06:27][10.9]
David Steinberg: [00:06:27] Well, you know, that’s been my echo system for a long time. You would have called me back then, a liberal Democrat. Now you would call me an extremely conservative Democrat. [00:06:37][9.8]
Dan Nathan: [00:06:37] More to the center. [00:06:37][0.5]
David Steinberg: [00:06:38] Yeah. I’m like many people. [00:06:39][0.9]
Dan Nathan: [00:06:40] You were a bit progressive back then. [00:06:41][1.2]
David Steinberg: [00:06:41] No, my point is, my politics have not changed. But the definition of what you believe has changed. Right? Yeah. Because the extreme to the left and the extreme to the right have moved very, very far. My only point is now you could call me either a liberal Republican or a conservative Democrat. I find them to be very similar in the center. But I started working on telecom issues and I got interested in it. And I ended up in the insurance business for a very short period of time, which was really interesting. [00:07:10][28.1]
Dan Nathan: [00:07:11] And selling? [00:07:11][0.5]
[00:07:12] Yup. Selling insurance. Accidental disability insurance to self-employed people. Wow. That was a bit of a grind. Yeah. Did a little bit of door to door was was very interesting. I remember calling my dad, who was an Ivy League educated MBA accountant and telling him I was going to leave the hill to go sell insurance. And he told me I was nuts. I called my stepfather, who was a very successful entrepreneur who had not even finished college, and he said it would be the single greatest thing you could ever do. No. And worked out well. Taught me how to take no. Yeah. And move through it and and get to. Yes. [00:07:48][36.3]
Dan Nathan: [00:07:49] Well that’s important. I mean, people think of tech companies just filled with engineers in solving big problems, but they don’t get deployed unless people are there selling them in. Some of the most important people in tech organizations are those salespeople you think of, like a marc Benioff, the founder of Salesforce. Wasn’t he the biggest salesman Oracle ever had and was like, You know what? I can get engineers and I can build a stack, but I need great people to sell it, right? [00:08:12][23.2]
David Steinberg: [00:08:12] Yeah. I mean, listen, I forget the exact stat, but I think they asked a few years ago, they asked the Fortune 500 CEOs what was the attribute that was most responsible for getting to where they were? I think 490 of the 500 said sales. I’m sure there’s other answers, but that’s where I came out of and I ended up getting a gift certificate for a free cellular phone. And I went in to get my free cell phone and I asked the woman who was working, What do you do? And and she explained the whole business. And I literally walked out the door and said, I am in the wrong business. And a few months later, there was an interesting blow up with my then boss, who’s a great guy. We just we didn’t see something eye to eye. And I don’t think he thought there was any scenario that someone of my age making the amount of money I was making at that time would ever leave because he obviously didn’t know me that well. But I left and I started Sterling Cellular in my basement. [00:09:07][55.1]
Dan Nathan: [00:09:08] Well, all right. So that was a cellular leasing company to businesses. [00:09:11][3.2]
David Steinberg: [00:09:11] No, it wasn’t leasing. We activated cellular phones for cellular one on a B2B strategy. So we came at it with the premise back then that a cell phone would be an incredibly good investment for productivity. And we primarily focused on a sales force that could go business to business and we were very successful very early. Yeah. [00:09:34][22.7]
Dan Nathan: [00:09:34] And so obviously that was before there was a huge retail demand for these sorts of products, but it helped prove the concept. And I think it’s interesting as a a market participant, a public market participant, really, I entered the markets in 1997 or so. People forget they think it’s a dot com bubble. It was really the telco bubble. [00:09:53][18.1]
David Steinberg: [00:09:53] Well, that was the first bubble. Yeah. [00:09:54][1.4]
Dan Nathan: [00:09:55] I mean, without that huge drive for like fiber, it wouldn’t have been able to do that. So how did this new company, Sterling, so you were leveraging off of this B to B and this was going to be the early adopters in cellular. How did you guys progress over the course of the nineties and what was the outcome? [00:10:09][14.3]
David Steinberg: [00:10:10] Well, we ended up selling that business and doing well on it. And then I started Sterling Communications because obviously I had very limited naming capabilities and that business was heavily focused on retail. We ended up building a large retail footprint, and the way we built our retail strategy was was sort of a barbell effect. It was very large stores that had install bays to install phones and cars out the back in the front of the store. You had a retail distribution. And in the middle we had kiosks or desks where we ran salespeople. So that was one side of the distribution. The other side of the distribution is we were putting kiosks in malls. And it worked. And then we ended up selling that. And then I started Sterling Wireless once again. And that was a telemarketing business where we ended up with, quite frankly, a large number of telemarketers selling wireless products virtually to people at home, which was the bridge to what became my then company and Phonic, which became the largest seller, wireless phones on the Internet in the world. [00:11:14][63.8]
Dan Nathan: [00:11:14] Wow. So you just kept on moving throughout different stages of the cellular progression and then obviously again started in business, then went to retail, but then ease of use of actually onboarding retail customers. It’s funny, my first cell phone was in Dallas, Texas. Whatever the company was, what was Southwest Bell was. [00:11:32][17.6]
David Steinberg: [00:11:32] It was Southwestern Bell Mobile Systems, probably. [00:11:34][1.9]
Dan Nathan: [00:11:35] And it was an Okie. And I still have it to this day. Maybe I’ll put a picture of it in the show notes. It’s like this big and it’s got a massive battery in the back. And you know what they used to do? They used to send good looking women to offices [00:11:45][10.1]
David Steinberg: [00:11:46] We employed lots of them. [00:11:47][1.2]
Dan Nathan: [00:11:47] And I’m telling you, when this woman came in, in the conference, it was like the CIA office where someone’s in there selling something. And like all the guys bought cell phones, none of the women in the office. [00:11:56][9.1]
David Steinberg: [00:11:57] We had, we had what we also had good looking men. So we would send a team in of a good looking female and male. [00:12:02][5.4]
Dan Nathan: [00:12:03] And not you. [00:12:03][0.5]
David Steinberg: [00:12:04] Well, I didn’t make the cut. You know, I wish I. [00:12:06][2.0]
Dan Nathan: [00:12:06] You were the closer. So you had three iterations of Sterling. You sold them the first. What? You sold the AT&T? [00:12:11][4.5]
David Steinberg: [00:12:12] Actually, I sold all three to what is today called AT&T, but all three different companies. [00:12:16][4.8]
Dan Nathan: [00:12:17] Oh, wow. [00:12:17][0.2]
David Steinberg: [00:12:17] Like sold one to Southwestern Bell Mobile Systems. I sold one to Cingular and then I sold one, actually, in a management buyout to my then team. And then they sold it to Southwestern Bell Mobile Systems, DBA, Cellular one. So it’s sort of like. But but everything, you know, Southwestern Bell rolled everybody back up other than Verizon, it sort of became the two of them that became the old AT&T. [00:12:42][24.6]
Dan Nathan: [00:12:43] Yeah, I remember trading in the late nineties, all those clx. I mean, it was kind of interesting. There was this unbundling, the great unbundling, which at the time, if you were like a trader, these were very volatile sort of stocks. You know, people forget you hear about this crap, you know, now you have a publicly traded company or people will talk about a meme stock or this, and you’re like, there were meme stocks in the night. Remember Iomega? You remember some of these, see, like it all existed. They just didn’t have the ability. The virality didn’t exist among retail in a way, and by the time it got to retail, it was over. [00:13:10][27.4]
David Steinberg: [00:13:11] You didn’t have the trading platforms back then, which have really become ubiquitous today. And of course, the Internet has ultimately leveled the playing field as it relates to the dissemination of information. So back then, information was the key to all success in trading. Today, information can often be the key to failure in trading because of the fake information that can be out there. [00:13:35][23.8]
Dan Nathan: [00:13:35] And things could go viral on closed platforms, like, for instance, on Yahoo finance message boards. It could really build up there and a handful of people could trade off of that information or make decisions based on it. But it didn’t have the ability to really go viral in a verifiable way because we really didn’t have social networks in a way. And I just again, I remember being on a trading desk and hearing like in 1999, Hey, do you see this thing on Yahoo! Finance or something like that, but without an ability to verify it and it just didn’t have that sort of thing. So I think it’s interesting, but telco was at the center of that. All right. So you sold these businesses. So it was the only boss in your life other than Ted Kennedy, this guy who you had this dust up at the insurance company, is that like you got it? [00:14:15][40.6]
David Steinberg: [00:14:15] Technically, Ted Kennedy was not my boss. I reported to a guy named Thurgood Marshall Jr. Goody goody Marshall. He worked for, I believe Jeff Blattner or Carol and also Linick at the time, who then worked for somebody. I was I mean, to say I was junior and an intern was like, that’s what I was. But yeah, I haven’t had a boss in a [00:14:35][19.4]
Dan Nathan: [00:14:36] since your wife. [00:14:37][0.9]
David Steinberg: [00:14:37] My wife is my boss. That’s exactly what I was going to say. Kristen is is definitely my boss. She tells me where to be and when to be there. And then my my assistant team is my other boss. [00:14:47][10.2]
Dan Nathan: [00:14:48] So do you were you going from one thing to the next? Like one sterling to the next. Sterling to the next and then and then and phonic bang. [00:14:54][5.9]
David Steinberg: [00:14:54] Yeah. So when we sold the last iteration of Sterling. We were at the closing table and I said to the guy at AT&T, Listen, I’ll take a discount on the transaction if you let me keep the fulfillment facility, the distribution platform, and you give me a five year exclusive contract to sell wireless phones over the Internet. Now, you got to understand, in 1997, he thought I was a total idiot. He’s like, great. And that turned out to be a good contract for us, by the way, was a great contract for AT&T because we were so far out front of anybody else that they were able to really piggyback on our success. And listen, AT&T has been a great partner to me personally for many, many years. [00:15:43][48.9]
Dan Nathan: [00:15:44] All right. So talk to me. So in phonic, you take it public. In the late 90s. [00:15:46][2.7]
David Steinberg: [00:15:47] We did. We took it public. And it was a great success. In 2004, we were the second largest tech IPO behind this little company called Google. They fared better than us, to say the least. [00:15:58][10.6]
Dan Nathan: [00:15:58] All right. So let’s talk about your long history as a friend, as a partner, I’m assuming also as a mentor with John Sculley. Okay. So John Sculley was the former CEO of Apple in the early eighties. Steve Jobs was kind of transitioning out of an operator sort of role, the famous line. So Sculley was the CEO, president of Pepsi at the time, which was a massive, you know, very large still. It still is. Okay. So Jobs really wanted this guy and said what to him? [00:16:27][28.2]
David Steinberg: [00:16:28] They were standing in Steve Jobs new penthouse on Fifth Avenue that he was not even begun the renovation yet. It was empty. And Steve looked up over Central Park and then he looked John in the eye. And of course, John has told me this next day and said, do you want to sell sugar water for the rest of your life or do you want to come with me and change the world? [00:16:51][23.8]
Dan Nathan: [00:16:52] Yeah. Yeah. So that was the early eighties. And so we know that that was right before they introduced the Mac with that big 1984 commercial and everything like that. So at what point did you and John connect? [00:17:03][11.5]
David Steinberg: [00:17:05] Well not then. I was pretty young value, but no, John and I met I guess it’s about 22 years ago now. We were at a YPO conference, a young presidents organization, which I was a member now a member of Old Presidents organization. [00:17:18][13.3]
Dan Nathan: [00:17:18] I was going to say, you beat you beat me to it. [00:17:21][2.7]
David Steinberg: [00:17:22] I call it OPO. They call it YPO gold nowadays, but I call it OPO. And John was being interviewed by Larry King on a panel, and he came off and everybody was waiting to talk to John. I waited my turn and, you know, everybody was asking about Apple and Pepsi and all these. So I look at them, I was like, John, you know, I just seen this mini series called The Pirates of Silicon Alley. And did you get a chance to see that? And what did you think of the guy who played you? And he literally stopped what he was doing and he was like he said it was the best mini series at that time. Noah wild who had been on E.R., had played jobs. And Anthony Michael Hall. I can’t believe I remember this. I can’t remember what I had for breakfast yesterday. [00:18:08][46.7]
Dan Nathan: [00:18:09] From vacation. [00:18:09][0.2]
David Steinberg: [00:18:10] From all the vacation movies had played. correct. Yes. 16 Candles. Great movie. [00:18:15][5.9]
Dan Nathan: [00:18:16] He was Ross. Ross is really the thing that I agree [00:18:19][2.6]
David Steinberg: [00:18:19] Well he makes that movie and the roles in the end with the girl by the. [00:18:22][2.7]
David Steinberg: [00:18:23] So Anthony Michael played Bill Gates. [00:18:25][2.3]
Dan Nathan: [00:18:26] Okay. [00:18:26][0.0]
David Steinberg: [00:18:27] I don’t actually remember who played him that time, but he he stopped what he was doing. He was like the guy who played Steve Jobs must have channeled him. So to funny things happened. So we start talking and then he moves on to the next person. It just so happens one of my buddies, it was in D.C. that that event, which is where I lived at the time, and I got the nametags changed so I could sit next to John at dinner that night. So I sort of manipulated that. I never told John knows that now. I told him years later, he actually one time we were out, he was like, You change those name tags, right? I know you well now I was like, of course I changed those. [00:19:04][37.7]
Dan Nathan: [00:19:04] You just chatted him up the whole day. [00:19:06][1.4]
David Steinberg: [00:19:06] No, no. I had just founded in Phonic and I talked to him about my theory on technological innovation, how it moves through three different phase. [00:19:17][10.6]
Dan Nathan: [00:19:17] All right, let’s hear him. Lay them on me. [00:19:18][1.0]
David Steinberg: [00:19:19] You have the development phase, you have the monetization phase, and you have the commoditization phase. And if I was doing this on a whiteboard, I would write development, straight line monetization, straight line commoditization, and then you would draw a circle that would be halfway between monetization and commoditization. And I explained to him how that’s where product distribution can move from physical to virtual. You can still make enough money on the product that it’s worth doing, but it’s commoditized enough that somebody doesn’t. Need to touch it before you buy it. And at that point, almost all cell phones were being sold in a retail environment. And he looked at me, he was like, That’s so right. And I said, Well, I’m going to capitalize on that. I’ve started this new company. And he was like, You know what, David? The next time you’re in New York, you should come into my office. He was at 90 Park at the time. He was co office with Kodak, and I was living in D.C. So miraculously I was in New York that following Tuesday when he wasn’t available Monday, I was in New York Tuesday as well. If his assistant at the time had said Wednesday, I would’ve said, Oh, I’m staying over. But I went up and we were supposed to have a 30 minute meeting. I ended up leaving 5 hours later with John becoming the seed round investor and really became my mentor. And now today it’s really my partner and one of my best friends. [00:20:51][91.9]
Dan Nathan: [00:20:51] Okay, well, have you ever asked him? Again you and I have talked about him a bunch ofline and it seems like. [00:20:55][4.5]
David Steinberg: [00:20:56] Like I don’t want John to hear this and think I’m yapping. [00:20:58][2.0]
Dan Nathan: [00:20:58] no no that that was the first of many partnerships and business . [00:21:02][3.6]
David Steinberg: [00:21:03] we’ve done yeah three or four companies. [00:21:04][1.0]
Dan Nathan: [00:21:04] Which is amazing. The one thing you got to ask him, though, was he happy with Jeff Daniels portrayal of him? Because because that guy is a legend. [00:21:11][6.7]
David Steinberg: [00:21:12] No, the answer is categorically yes. In fact, he visited him on set. Yeah, it is. Great story. We do this used to do we’d haven’t done it the last two years because of COVID, but we used to do a big masters event every year for our big clients and stakeholders there. [00:21:28][16.5]
Dan Nathan: [00:21:29] Great I’ll see you there this year. [00:21:30][0.3]
David Steinberg: [00:21:30] If we do it this year, you’re on the list of. [00:21:32][1.7]
Dan Nathan: [00:21:32] Client or stakeholder? [00:21:32][0.6]
David Steinberg: [00:21:33] Well, no, but you could come be a speaker. [00:21:34][1.1]
Dan Nathan: [00:21:34] Okay. [00:21:34][0.0]
David Steinberg: [00:21:35] we had to convert it over to the Zeta speaking series at the Masters. So all of our big clients. If we didn’t do that, they weren’t allowed to come. [00:21:44][8.5]
Dan Nathan: [00:21:44] Are you a golfer? [00:21:44][0.2]
David Steinberg: [00:21:45] I am a mediocre golfer at best. I’m a good tennis player. [00:21:48][3.5]
Dan Nathan: [00:21:49] Yeah. Now I hear that about you. I’m not a golfer. I did go to the Masters in 2019. And I will tell you this, that is probably the best sporting event. It’s amazing in my life. [00:21:58][9.4]
David Steinberg: [00:21:59] It’s hard to explain to somebody how great an event the Masters is. But what we do is we take a bunch of houses, we big dinners, and John every year gives an incredible talk. And one year he talked about the movie and Jeff Daniels and how great he was. [00:22:15][16.3]
Dan Nathan: [00:22:15] Is he’s sick of talking about Apple because he wasn’t there that long. [00:22:18][2.6]
David Steinberg: [00:22:18] He was there eight years. He took them from 500 million in sales to, I think seven or 8 billion. He was the CEO when they did the 1984 ad. I think that people step over that he was there quite some time. [00:22:34][15.9]
Dan Nathan: [00:22:35] Well, you know, it’s funny because I read a couple of the jobs biographies and then again, maybe they were just a bit more generous to his legacy than they were to some of the stuff that went on there. Again, and I’m not asking you to opine on what he thinks. It’s a really interesting piece of history. And when I think about you as an entrepreneur, and especially in technology, I’m sure being able to leverage off of his experience is probably just amazing, right. [00:23:00][25.1]
David Steinberg: [00:23:01] John and his wife Diane are Kristen and my among our closest friends. They are both amazing. She ran a huge construction business before they married and they’re just a powerhouse couple. And I love being with both of them. And whenever I’m confused about something or call, I call John. And John now likes to joke, he said, I used to call him on all my questions. Now he calls me on questions. I call him on questions. We go back and forth on it. [00:23:29][28.4]
Dan Nathan: [00:24:02] Current Ad. Masterworks ad. Taboola Ad. Let’s talk about how you guys came up with Zeta, because this is the real deal right now. You are in New York City. You have this company that’s listed on the New York Stock Exchange. Also a good sized deal in a market in 2021. You guys went public. Talk to us a little bit about taking a step back. I met you in 2017 and I think you told me probably about four or five years we’re going to be going public. So you you had a plan. Then you had a five year plan then. [00:26:20][137.7]
David Steinberg: [00:26:21] So I like to always break businesses into one and five year plans. Yeah. I think a two or three year plan is too short. A five year plan without a one year plan is to pie in the sky. So, you know, as soon as we finish 2025 will roll out 2030. [00:26:38][17.7]
Dan Nathan: [00:26:39] But you’ll already have your one year plan in 2024 for it. So how does that change, though? Because, again, you’ve started companies from scratch. You’ve built them up, you’ve sold them, you see how they operate and a bigger entity and what you might have done differently. How do you do things differently when you are a private company on a way to being a public company? Because the shareholder base is changed, how you communicate with shareholders change. You have to deal with Wall Street, you know, in analysts and that whole apparatus. [00:27:06][26.7]
David Steinberg: [00:27:07] I think, first of all, the mistake I made last time was trying to do everything myself. So now we’ve got Chris Griner, who’s one of the world’s best CFOs, he and Scott, his head of IR, who’s also exceptional. He was at EMC and then Dell before joining us, really own that component of the business. Steve Gerber, our president and COO, who you know, and I focus on running the day to day operation of the business. And Steve Vine, who you also know when you’re having dinner with tonight, is our general counsel. And I like to joke really, you know, keeps us all on top of our game. And you could go all the way out to our chief technology officer. You know, Chris Momberg, our chief data officer, and he’s Gore, our head of our activations business, Will Margouleff, and Jeff Nemeroff, our Chief Information Officer. We just have an incredible and very deep team. The other big difference is I actually let them do their jobs now. [00:28:04][57.6]
Dan Nathan: [00:28:05] Now. All right. So this is something that you’ve done over time. [00:28:08][2.6]
David Steinberg: [00:28:08] I literally joke, when I was a super young CEO, I knew I could do everything better than everybody. When I became a middle aged CEO, which was in my mid-thirties, I felt like I could do it better. But I hired people to do the job and then I told them what to do. Yeah. As an old CEO at 53, I know that all of these people can do their jobs better than I can. But what I do really well is strategy, M&A and relationship management, and I try to focus on those things. [00:28:40][31.7]
Dan Nathan: [00:28:40] But think about this, and I would say that this is probably one of your biggest accomplishments with Zeta right now is that you’ve put together an all star team of operators around you right. [00:28:50][9.8]
David Steinberg: [00:28:51] It is literally the thing I am most proud of. It’s the team that we’ve built, how cohesively it works. And there is not one person on my senior leadership team that couldn’t be running another company. [00:29:04][12.8]
Dan Nathan: [00:29:05] Yeah, that’s amazing. All right. So one thing, though, just for anybody listening here who tries to figure out how we book gas here, I mean, I think, David, you just gave up our dirty little secret. I got to buy you a steak to get you to come on the show. Actually, what we do do is that you are going to get a bottle of Como’s tequila. And, you know, from our good friend Joe Marcese. [00:29:21][16.7]
David Steinberg: [00:29:22] Who I thought Joe was coming to. [00:29:24][1.3]
Dan Nathan: [00:29:24] Well he’s I think he’s in parts unknown, but everybody who comes on the pod, they get a bottle of Como as well. So there you go. [00:29:30][6.1]
David Steinberg: [00:29:30] I will happily take one. I like that I don’t drink a lot of tequila, but when I do, it’s comos. [00:29:35][4.4]
Dan Nathan: [00:29:35] There you go. All right. That’s a good plug there. Let’s talk about let’s talk about Zeta. What was the mission? [00:29:40][4.6]
David Steinberg: [00:29:40] So when I left my last company, we had built a very large marketing business inside of a platform called Wirefly, and we were spending a lot of money on advertising. And I realized how inefficient the marketing ecosystem was we needed at the time, I believe it was 17 or 18 different vendors to help us with our marketing and data vendors, analytics vendors, CRM vendors, activation vendors, all of that stuff. And when John and I first founded Zeta, the original vision was effectively threefold. One, we wanted to put everything a marketer needed in one place. Two, we believed that first party opted in data would be a differentiator in where the regulatory environment was going. And three, at that time, we believed that to truly use data effectively and make it actionable, you had to understand automation. Now, today we call that artificial intelligence. Back then, 14 years ago, we were using the vernacular automation, which then led to machine learning, which led to deep learning, which then led to A.I.. [00:30:56][75.6]
Dan Nathan: [00:30:56] So this is kind of fast. So oh seven you were already worried about data regulation? Yep. And this was basically a concern that you felt firsthand at your. [00:31:04][7.8]
David Steinberg: [00:31:05] It easn’t just regulation. It was that if a consumer had opted to receive an offer from you, they’d be more apt at receiving that offer. Right? And then the ability to begin to synthesize what people’s intent was was part of the original foundation of the business, because we felt like, listen, the single greatest business in the history of marketing is probably Google, right? Why? Because people literally tell Google what they want. I want a new car. Right. And you don’t get to a higher level of intent than that. We get pretty close now because what we’ve done is we’ve built you know, we’ve got our data cloud and then we’re ingesting trillions of marketing signals that we can identify to an individual. We then build an intent based score on what does that individual intend to do next? Do you intend to subscribe to a credit card, buy a new car, and if so, what color make model? Where are you going to do it from a geography perspective? And will you be credit approved for the product that you’re interested in or does somebody about to churn off a cellular platform? So has somebody begun the discovery process of buying a new wireless phone while they’re one of our client’s customers? So all of that then synthesizes down to a Zeta I.D number, and that ID number masks the personally identifiable information of the consumer. So what we’re doing is we’re building what’s called a consumer data platform or a CDP. Our client’s data goes into it. We match usually around 85, 86% of the data to our U.S. based data cloud, which is 235 million opted in Americans. And we import an average of 1700 data elements per person. We then remove their name, we remove their Social Security number, and we replace it with Zeta ID number one, three, five, seven, eight. And then the algorithm begins to do its work. It begins to look at what you’re reading, what you’re doing, your transactions, what your discovery is, what you’re clicking on, where you come from, where you go to. And it goes back to our client and says, Zeta ID number one, three, five, seven, eight has just hit a 60% probability of wanting to buy your exact product and there’s a 92% propensity to be credit approved. And if they say yes. We then begin a curriculum of contact to that Zeta ID number. One of the things I think a lot of people have not figured out Dan is that the CDP is a little bit of a Trojan horse because the clients learn all of this stuff about the consumer, but they have no ability to market to them unless they use the Zeta marketing platform. So all of the knowledge is wasted. If you want to make it actionable, you have to use us. [00:34:09][183.8]
Dan Nathan: [00:34:09] Yeah. All right. So this is interesting. So this was from your Q2 earnings call that was just, I think a couple of weeks ago here. You said as other vendors have lost their ability to measure with precision due to changes by large technology providers, marketers and looking for alternatives. And because we are not dependent on Apple’s IDFA tracking mechanism or third party cookies to identify individuals and measures business outcomes, we’re able to leverage our data and our software advance to deliver a better return on investment for marketers today and in the future. Right. So that was [00:34:41][32.4]
David Steinberg: [00:34:42] Well done that was well read. [00:34:43][0.4]
Dan Nathan: [00:34:43] Well, that’s Nick. Thanks, Nick for that was interesting about that. And I looked over your results. I was actually on vacation that week, but I kind of looked over your results. Then I knew we were going to be doing this a little bit and I thought, that’s really interesting because there’s so many data platforms right now that have literally been taken to the woodshed, right, by changes by these large platforms. [00:35:00][17.2]
David Steinberg: [00:35:01] Especially the mobile focused platforms. [00:35:02][1.3]
Dan Nathan: [00:35:03] Right. So talk to me a little bit about that because that must be something that really resonates with investors who are looking for these sort of platform investments, who’ve seen some of these. [00:35:11][8.2]
David Steinberg: [00:35:11] I’m not sure investors understand the implications of this yet. Right. So when you think about it, I think there’s this premise because a lot of the mobile focused marketing platforms have come out and said the reason they’re missing numbers is because there’s a systemic issue or a sort of a global marketing slowdown. Now, most companies that are focused on digital marketing did better than people expected. Google above expectations. Apple was well above expectations. Zeta was well above expectations. We grew revenue by 28 plus percent. We grew EBITDA by six. 3%. We grew free cash flow by 93%. And a lot of that is because in a downturn there’s always a massive migration to return on investment marketing. That’s happening in the backdrop of very large tech companies, sort of eliminating the mobile focused companies ability to build attribution models. Now, that might not sound like a big deal, but if you don’t get the feedback loop for the transaction, the algorithm becomes broken because it can’t learn what’s happening, right? So because at Zeta we’ve never used Apple’s IDFA and we do not use that third party cookie to identify people or build our attribution models. I like to say as the tide rolled out, we stayed at the same level and most of the other companies that are out there that focus on those things have dropped fairly dramatically. Now, I think we’re a case where the baby was thrown out with the bathwater, right? Everybody said, oh, they’re not going to do well because marketing is turning down. And quite frankly, not only did we beat Q2, we raised Q3 and we raised the year. [00:37:06][114.5]
Dan Nathan: [00:37:06] So just those results in that guidance, do they reflect what you’re talking about where marketers are actually recognizing the ROI on this? [00:37:14][7.3]
David Steinberg: [00:37:14] Yeah so what happened initially in Q2 is a number of our existing clients increased what they spent with us quickly. What we also announced and I want to be careful with what I can and cannot talk about. [00:37:30][15.3]
Dan Nathan: [00:37:30] No forward looking comments here. [00:37:31][1.2]
David Steinberg: [00:37:32] Exactly. In the second quarter of this year, we saw record RFP requests. So you should assume that if you’re seeing record RFPs, you would think those numbers would continue to ripple through. Yeah. [00:37:45][13.9]
Dan Nathan: [00:37:46] Yeah All right. Talk to me a little bit about thinking about in your career now. Okay. So you’ve been at the forefront of some big secular shifts in technology. What is it like competing with companies like Adobe and Oracle? I mean, these are companies that probably, you know, 25 years ago when you were just a young entrepreneur, they were still really big. Back then, Salesforce didn’t exist. [00:38:09][23.4]
David Steinberg: [00:38:10] I was going to say Salesforce wasn’t around. Oracle was fully focused on databases and Adobe was a publishing platform. But what I would say is it’s a little bit of a misnomer. I mean, they’re all incredible companies. And if I wanted a Salesforce automation tool, I’m calling Salesforce. If I need a financial services package or a proprietary database, we’re open source. But, you know, I would call Oracle, right? If I needed a publishing partner. There’s nobody to call but Adobe. Right. But when you look inside those businesses, most investors do not understand. We’re not really competing with them. We’re competing with ExactTarget, Salesforce bought. We’re competing with responses Oracle bought and largely has ignored and we’re competing with Neil Lane, which Adobe bought. So we’re not necessarily competing with the mothership, we’re competing with the clouds that they acquired to build that. And the truth of the matter is we were named by far Stripe also got to be careful how I say this. If you look at the Forrester Marketing Automation Report that just published, we are the furthest to the right and the highest in the leaderboard. And what they said was Zeta is number one, because we are the best at solving and simplifying complex marketing problems. I paraphrased that just a bit, I’m sure, but at the end of the day, we made the decision 5 to 7 years ago. Back to one of your earlier questions would be very difficult to make that decision today as a public company. But we made the decision as a private company to take our platform, which was good but antiquated. And instead of migrating or fixing it again, we decided to put it into maintenance mode. And we used about 400 of our full time engineers for three years and we built what is today called the Zeta marketing platform. So what does that mean when you roll out a completely new platform means you can put artificial intelligence as native to the application layer. Every one of our competitors, it’s outside of the application. Why does that matter? Because our marketing clients, as it relates to CTV programmatic online video, often have to make a decision in 1 to 3 milliseconds. If you want to crunch that much data that fast, you better not need to step out of your platform via API to another platform to see if it works. The other thing that Forrester noted was that we put data as native to the application layer as well. So our data cloud, which allows you to know everything you need to know when making a decision, is also native to the application layer. So not only do we have a great user interface, not only do we have a great reporting tool, but we’re able to do this stuff substantially faster than anybody else. And because everything we do is new, it’s 100% cloud based. [00:41:24][194.3]
Dan Nathan: [00:41:25] So it sounds like just kind of looking through those results and kind of hearing you talk about it a little bit, you guys are executing, I would say, very well in a difficult environment. So let’s talk about that difficult environment. You’re a CEO of a company. You have, what, over a thousand employees? [00:41:40][14.7]
David Steinberg: [00:41:40] Aabout 1500. [00:41:41][0.4]
Dan Nathan: [00:41:41] 1500. You’re all over the world. You have offices all over the world. [00:41:45][3.9]
David Steinberg: [00:41:45] Before COVID started, we had 26 offices on four continents . [00:41:49][3.4]
Dan Nathan: [00:41:49] Wow. And so let’s just talk about how you’re feeling now as it relates to, let’s say Zeta, but you hobnob with a bunch of CEOs. No, but there’s a certain sense for like what’s going on where we are. I think a lot of CEOs who, let’s say, did pretty well in difficult environment, which was a pandemic, which was the definition of a black swan event. No one saw that coming. And so there were people like you as a lead up into the dotcom or the lead up into the financial crisis. People were really nervous. They saw activity that was going on that was not going to be able to last for too much longer. But no one could put their finger on the point in which it was going to pop. So now you think about it. I think at one point in late 2020 when we had the vaccine announcements, we had a different administration, we had a lot of things started turning. I think a lot of people thought by mid 2020 this would be in the rearview mirror and it’s not. [00:42:43][53.9]
David Steinberg: [00:42:44] You know, I think people first of all discounted the value of the amount of money that the Fed printed. And the, you know, Congress passed. And listen, you’re pumping trillions of dollars. The reality is, as that created the inflationary environment we’re in today, which was compounded by the first ground war in Europe since World War two, you end up in a circumstance where it’s interesting. I think my opinion there’s some businesses that are having limited to no issues. There’s some businesses that are aided by what’s going on. When you look at a lot of the consumer products and retail. [00:43:30][46.1]
Dan Nathan: [00:43:31] Supply chain issues. [00:43:31][0.4]
David Steinberg: [00:43:32] Supply chain. Right. They’re getting they’ve got a multi-front war. Right. You’ve got, you know, whether inflation’s 9.3 or 8.5, it’s still the highest in 40 years and it’s largely driven by energy. And as you know better than anybody, nothing drives cost creep like energy. It’s not just energy. It’s certainly gas. Right. But getting goods to market becomes substantially more expensive. Chemicals become substantially more expensive, rubber becomes substantiall more expensive, building houses become subsumed. All of that goes up when energy prices go up, which lowers expendable income and disposable income and creates challenges there. What we’re seeing at Zeta is that’s causing marketers to focus more on return on investment than I’ve seen them focus on in many, many years now. We’ve been screaming about return on investment for ten years, and a lot of people haven’t cared. Now, all of a sudden they’re waking up. And you know, what I like to say is Machiavelli first said, never waste a crisis. Churchill has since taken credit for that one, but you can split credit [00:44:42][70.3]
Dan Nathan: [00:44:44] Again, digital companies that did not rely on supply chains or energy inputs or some of the stuff during the pandemic did very well. I think what has gone on over the last year is been that the valuations got pushed up and this is not on the companies, it’s not on their guidance, it’s not on bankers. It’s on what investors were willing to pay for a scarce group of assets. Right. [00:45:04][19.8]
David Steinberg: [00:45:04] But you also listen, if during COVID, I like to joke there were two sides of the trade, right on one side of the trade, you had people who owned Broadway theaters. On the other side of the trade, you had Zoom or Clorox. And Zeta we were sort of in the upper third of that trade. We were benefited by the downturn. But I want to be clear. I think we are going to continue to see the migration of analog and linear media to digital at the current or an accelerating pace. Last week, shockingly, there was a report that in last week there were more people who consume TV via streaming than via linear for the first time ever. At the same time, Netflix has publicly announced they’re going to move to an ad supported model. We very quietly mentioned on our call last quarter, our connected TV business grew over 200% last quarter. And we believe that Connected TV, which is also, you know, over-the-top TV and the other things, is the future of marketing. Zeta’s marketing platform, along with its data cloud, is purpose built to be able to identify people in any digital environment so we can target an ad to you while you’re watching a football game for a bottle of wine while your neighbor might want a Budweiser. [00:46:28][84.5]
Dan Nathan: [00:46:29] I actually been saying this for years. I think it’s going to be massive. You know exactly who is watching that thing. You don’t know that on linear TV. [00:46:36][6.5]
David Steinberg: [00:46:36] correct. That’s right. Now, but I also want to say again, we never share the consumer’s personally identifiable information, of course, with any enterprise. [00:46:44][8.7]
Dan Nathan: [00:46:45] I just mean from a targeting standpoint [00:46:46][1.0]
David Steinberg: [00:46:47] I know I’m trained to say that. [00:46:47][0.1]
Dan Nathan: [00:46:48] Yeah. Yeah. Well, listen, I want to follow up with Joe, maybe on the space you and I have talked a lot about. Joe. [00:46:53][5.4]
David Steinberg: [00:46:54] Joe’s very smart on this. [00:46:55][1.2]
Dan Nathan: [00:46:55] I think we should do another pod on that because I actually think some people are looking at like a Netflix and a Disney plus and what they have to do to kind of capture these people that are coming off of linear TV and these cable bundles. And I just think that this could actually be a boon for them in a way. So. All right. Well, listen, let’s save that for another conversation. I really appreciate you laying it out on Zeta. Congratulations on again executing. I think it sounds like very well in a difficult environment. So the next time you come back, we’ll have an update on your one year plan. You already guided up for the balance of the year here and then your history as an entrepreneur at a time where I was also coming out of school in the nineties and watching that trajectory is pretty fascinating. Not many of my friends did what you did is get right to being an entrepreneur right out of school. So your history as a successful one over the last 30 years is really amazing to me. [00:47:45][50.5]
David Steinberg: [00:47:46] Well, first of all, you’re way too kind as somebody who is incredibly successful in every medium you have ever approached. But other than that, the reality is that, you know, I really, really think highly of you. And, you know, as I said, I get invited to do a lot of podcasts. This is the second one I’ve ever done in my life. [00:48:05][19.7]
Dan Nathan: [00:48:06] Well, we appreciate it here and we hope you come back to. Okay, Computer. Thanks a lot. David Steinberg, CEO, founder, chairman of Zeta Global. Thanks again to our presenting sponsor Current and our supporters Masterworks and Taboola for bringing you this episode of okay Computer. If you like what you heard, make sure you hit, follow and leave us a review. It helps people find our show and we want to hear from you. Email us at contact at risk reversal AECOM follow and connect with us on Twitter at okay Computer Pod. We’ll see you next time. [00:48:06][0.0]
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