59: How David Steinberg Bounced Back With His Second Unicorn Startup
We constantly read about the billion dollar valuation start-ups referred to as unicorns. My guest tonight is on his second company valued at one billion dollars that has also gone on to achieve unicorn status. David Steinberg is the CEO and co-founder of an analytics and big data start up called Zeta Interactive. He’s experienced both the rise and fall of tech start ups first hand. He’s had it all, lost it all and got it all back again.
Can you tell us about your first venture with InPhonic?
InPhonic was originally created to help people buy, activate and understand wireless phones and plans on the internet versus going in a retail store. The company grew very rapidly. In 2004 we were honored by Inc. Magazine as being the number one company on Inc 500. That’s also the same year we took it public. We found when you grow a business organically from 500 thousand to 400 million in a few years you have to put certain processes, procedures and other things in place and we did not put all those proper procedures and processes in place and ended up having some logistical issues.
The biggest mistake we made was borrowing a lot of money to buy our stock back in 2007. When the market crashed in late 2007 we were a byproduct of that crash. It was a great company with great people but the wrong capital structure and we allowed it to grow too quickly. We took a lot of the lessons we learned at InPhonic and moved them into what we’re currently doing at Zeta Interactive.
I love the fact that you’ve taken everything that you have learned and bounced back with a second unicorn. Can you tell the listeners what made you want to get back in the ring again and what lessons you have learned?
Even though we have grown very quickly at Zeta (from not existing seven years ago to about 300 million in revenue this year) we’ve grown much slower than my last company. We’re also much more heavily invested in processes, procedures and very high end people earlier in the maturation of our business versus later.
For anyone listening who hasn’t heard of Zeta Interactive can you give an overview of the services it offers?
What we do is called customer lifecycle marketing. We help very large companies create new customers, maintain the ones they have and sell the ones they have more products and services. We do this by taking their CRM data and combining it with a database of 350 million active people that we have and other publically available data to build audiences and solutions stats.
Didn’t you buy eBay CRM division last year? What did that entail?
We did buy eBay CRM business. eBay made the decision over the last couple of years to streamline down to their core business. They sold Skype and then they spun out their entire enterprise division of which the CRM group was a part of. It was important because we’ve always looked at this as a wealth balance business but over the last few years, our business had become much more focused on customer acquisition and CRM. Buying eBay CRM division really put the business back into balance. About 40 percent of our revenue comes from CRM and 50 to 60 percent comes from helping companies create new customer acquisition.
Can you tell me about your work and experience with the technology at Zeta and how businesses will use it to their advantage?
Seven years ago big data didn’t even exist. It was data collection just to write reports. Then it became about big data. The evolution is what we call fast data. The ability to take big data, map it, analyze it, and create an action in a millisecond. That is the future of fast data and we’re already doing that. Most of that revolves around machine learning where we have a number of patents and patents pending around the machine learning components of big data and fast data. We believe companies who don’t use this won’t have the proper relationship with their customers to maintain them in the long run.
What’s next for Zeta Interactive?
We’re working on a number of different projects. We’re going to continue to grow our core business and products. Ultimately our goal is to continue to drive as the number one player in this customer life cycle marketing space.
What advice would you give to anyone listening who is embarking on a startup adventure for the first time?
Your first start up is always the most interesting. I jokingly say you want to get as many of your mistakes out of the way in the first one as you can. That being said being an entrepreneur is much more challenging than people think it is. You often feel like you’re going it alone. Make sure you bring in the people who can do the things you don’t do well early.
For anyone who wants to know more about Zeta Interactive, what’s the best method for reaching out to you guys?
I think the best method to finding out about anybody is starting at Google. You can also go to www.zetainteractive.com. We’re always anxious to talk to Chief Marketing Officers about what they are looking for and how we can help them. We also like to talk to up and coming technology companies that might have great technology that we can wrap into our marketing cloud. There are different methods for contacting us on our website.
Check Out Neil’s Column at INC. called Tomorrow’s Tech
Please also see check out the related article from my column: How David Steinberg Bounced Back With His Second Unicorn Startup