It's been quite a week for Zeta. Obviously, we announced our major partnership with OpenAI last night. We're super excited. My main man, Nate, who's here, joined us after years at Meta and Microsoft and the White House, came in and really championed that deal and helped us get it over the finish line. So, we're very, very excited about that deal and what we're doing as a company. But to me, the most interesting thing to happen to me in quite some time was the first time I got to meet Dan. And this is true because if you look at Dan and you look at me, you probably don't think these two cats are going to meet and become like best friends. We have different personalities. I dress a little more fashionably than Dan does, but you know, we'll forgive him for that. And we met, we were introduced actually quite frankly pretty recently and we've hung out a bunch of times since then. But the first time I met him, I was just blown away by how much we had in common and how quite frankly smart you are. Just really seeing around corners, understanding. I know it's very unusual for me to be nice to anybody and you're probably... I tease everybody, but you know, the truth is he really is a legend and he's been working with me on a whole bunch of stuff and helping me to get smarter about a lot of things. So when he said we should do a fireside chat at CES, I was like, yes.
So it was great. We have prepared effectively no topics. We've prepared no notes.
I was going to pick up a matching jacket, but you know, they didn't have it in my size. But in all seriousness, Dan, thank you so much for being here today.
No, first of all, thank you so much for having me and thanks everyone for coming, everyone that's watching as well. Look, I mean, I'm so excited because for me covering tech since the late 90s, I love finding tech companies where they're doing things that are special and I think a lot of the investors don't even understand what's really happening. I think when me and you started talking, really digging into what Zeta is doing and especially in the AI revolution, I'd almost say at the centerpiece of the AI revolution, but yet so many investors not recognizing obviously OpenAI and we'll talk about that, a huge step there. But I think I'd start there, like walk through, you know, a lot of times people say, are you an AI company to any tech company? Are you AI just because you have AI 30 times in a PowerPoint or you say it 30 times? I remember when AI first hit and people always ask me what was the seminal moment and I always say the launch of ChatGPT, right? Because that was the day that AI went from science fiction to boardroom conversation. The next two quarters we would play drinking games at Zeta, how many times people would say AI on their earnings calls. The problem was we were faced halfway through the calls. But to your point, everybody just pivoted to the narrative of AI very quickly.
And to that point, let's talk about Zeta and just really understand for people that don't follow it as closely when we talk about data and at the epicenter where you guys are, because I could argue to some extent you've been doing AI really from the beginning if you actually start to think about it, you could just connect the dots like right there.
Yeah. I mean, so we started 17 years ago on the premise that controlling very large pools of first-party data would become very valuable. We then moved into automation. Then it became machine learning and we were doing very complex machine learning. And then in 2017 we really pivoted the entire company. We figured out what most people don't understand yet, which is putting an AI module on top of an antiquated platform doesn't actually work. And what we had to do at the time, Dan, you would have loved this. So, we have two big private equity partners. I go in, we're making, you know, pretty good money at the time. We called ourselves a customer life cycle marketing platform at that time where we would do acquisition and retention and so on and so forth. I went into a board meeting and I said, well guys, we're going to go from making, you know, pick a number, 50 million a year in EBITDA, which is a lot of money back then, you know, now it's a good month, and literally I told them we're going to make no money for the next three years. I'm going to take 400 full-time engineers and we're going to rearchitect our entire platform to make AI and data native to the application layer. So foundational.
How much silence in the board when you said that?
Silence. Like literally, I would tell you, and you know me well, those who know me really well, I'm really about consensus as an individual. I just sort of... I started my first company when I was 16. I was the youngest guy in the room for the first 20 years I ran companies. I am now universally the oldest guy in any room I go into. And to me it's sort of like, well, you know, I'm happy to have Brian here or Barry here because he's older than me. But the reality is that I sort of say the truth lays in the middle. Right. So we went into this board meeting and we had no consensus. We had one side that was really upset. Another side was like, 'Listen, we can do this.' And I told them, I said, 'Listen, we're never going to become the company we want to become unless we do this.' Because the way I saw it in 2017 is we were at the time ingesting so much data that to run a comprehensive report would take days. And we needed an answer in a millisecond. The math didn't work. Now we're probably ingesting, you know, 10, 20 times more data today than we were in '17. And we're able to process, you know, millions of data points and come up with a solution and an answer in a millisecond, which is really how we've made this leap to return on investment for our clients.
Right? Because if you're not able to bring in the right amount of data, how do you know who to serve which advertising? How do you know who's likely to churn? How do you know which message to generate to which person? And to that point, like it goes back to your journey to where we are today and obviously we'll talk about Athena and we're talking about OpenAI and everything, but now like when you go, you're here, you know, 30, 40 meetings, constantly meeting with customers. Now walk through, like you walk into a customer, you walk into a CIO, what is it about Zeta, the actual, like the mousetrap, you know, the secret sauce that separates?
Well, first of all, let me start by saying when we meet a new prospective client, I say to them, for every dollar you spend on our platform, I will return you between $6 and $7. That is off the charts. Our average competitor is less than half that, but we aspire to 10 times, just to be clear, and we think Athena is going to help us get there. But I start with that because if you think of the marketing ecosystem, Dan, it's really interesting. So, you've got this whole funnel, right? You've got this marketing funnel that's been used forever that goes like that. And very large enterprises start at the top of the funnel because they're really big and they need to really drive velocity into their business. And then you have all these insurgents who start at the bottom of the funnel and they're really focused on performance. But what happens to them is they start getting bigger because they're winning and then all of a sudden the bottom of the funnel is not driving the velocity, the growth they need. So they start to move up the funnel and then the big guys are trying to move down the funnel and everybody ends up in the middle. So this middle funnel for marketing is where Zeta really thrives and it's white space for most organizations. And if you think about it, our ability to drive a massively superior return on investment to our competitors is what fuels our business.
And especially when you think about the intersection now, marketing and AI and where we are, and maybe even talk, so let's just talk about the OpenAI partnership obviously announced last night. You know, so significant. Talk about how that is maybe a game changer for you guys going forward and then we'll start there.
Yeah. I mean, let me start by saying we think that OpenAI is going to be the definitive company of the artificial intelligence generation. I wouldn't sleep on Google. But I think OpenAI is going to be the pure play definitive. So to be able to do a partnership with them was really exciting for us. This was about how do we get to true native with OpenAI? How do we put them at the heart of Athena? And the only way to have done that was through a partnership because, you know, we're not like buying their API. Like we've literally merged this together and they are going to become foundational to Athena, which by the way, as we roll Athena out to all of our customers, will fully integrate into everything they're doing with OpenAI.
Well, and that goes to the step process, right? I mean, Athena, when it launched, now OpenAI, I imagine like every customer conversation that you're in, Athena has to be there.
So, I will tell you, we did a series of demos today and we have Roman who's on our team who's really, really exceptional. He helps to lead the work and he does the demo really well. I walked into three meetings today. Every single person was like, 'This is going to change the game.' And if you look at the quote from the UFC WWE people, they've been using it. We have a lot of clients. We called it our special access program. So, Athena is being used by clients today. It's now in full beta and it'll be fully available by the end of this quarter, but everybody who's using it is just blown away by it. And one of the things I think a lot of people do not understand is how are we able to develop such a comprehensive conversational platform so quickly?
Because I think that is a big question, right? The question is like, oh well, okay, we're going to launch this, they're going to launch this. Why with Zeta?
Yeah. Everybody's like, who the hell are you and how did you do this? Right. A lot of it goes back to when we started with AI in 2017. When OpenAI launched, that's when AI went from science fiction to boardroom conversation. So every board of directors is asking every CEO, what's our AI strategy? Every CEO is asking every CIO, CTO, CMO, what's our AI strategy? And we were there. So if you look at our business, our growth rate is substantially higher over the last three years than it was in the three years prior to that at scale. And a lot of that is because we had built the products that worked. So let's go back to... Yeah, we built it all in house. What I would say is why are we able to build a conversational super agent when other larger enterprises are still on sort of version one of the agentic platform? It goes back to a product we built two years ago called Zoey. Zoey was a conversational interface, a voice interface that allowed our clients to talk to the platform. Now, I joked it was like using an old CB radio. You'd say, 'Zoey, what does my platform utilization look like today?' And then Zoey would talk back and you'd have to wait and if you talked at the same time. But here's what we saw. First of all, we started the UI early around voice because we do believe that conversational AI is going to remove the friction between the consumer and the platform and we believe that voice would be one of the killer apps for quite some time. The other thing we saw, Dan, which was really interesting, customers who adopted Zoey spend between 200 and 225% more on our platform than customers that didn't adopt Zoey. So, I'll give you a great situation. I was in with a multinational enterprise today. We're going through it. They're literally asking questions. They're blown away by it. The woman is looking at the poor sales rep who's sitting in there trying to pitch her on it. And she's like, 'Well, what is this going to cost me?' And I guess, bad on us, he didn't know. So, I looked at her and said, 'It's free.' And she was like, 'Wait, what? You're telling me you're going to give me this for free?' I said, 'Yes, and I'm telling you that once you start using it, you're going to spend three or 400% more on my platform.' That's the key to it.
But why? And we fight about this through, so internally there is a contingent of people who want us to charge for this.
Sure. And I'm the guy saying no because if you think about, so what am I going to charge? Let's say I charge $99 a seat, $500 a seat, whatever you charge. So this year at the middle of our range, I'll round here, you know, we'll do about 1.25 billion. We've already told the street we think we'll do 1.7 billion next year. That's our first announcement. And you know, the reality is we've beaten and raised 17 quarters in a row as a public company. How much can I drive the needle at $500 a seat? Because it's a seating strategy.
That's it. I mean, that's at the core. That's it. When you think about Athena, it's a seating strategy. And with OpenAI, I mean, this is really now putting you on, it's really on the global map as a seating strategy. When you think about data and where everything's heading, that you are now at the epicenter, right at the center.
And when I told her that, she was like, how fast can I get it? And I think what we're going to see is, you know, I believe we're going to continue to grow this company on a compounded organic growth rate of greater than 20% for many years to come. And I think, you know, we've already done it, I think, five years in a row, maybe four out of... there was a little blip in COVID. If you take COVID out, which we grew that year, it's many, many more years than that of 20-plus% organic compounded growth rate. I think Athena is going to continue that at a minimum for many years to come. Not because we're charging $500 a seat, but if you look at our business, last year our net retention rate was 114%. How do we take that up?
Yeah. And what, like, so far with like the beta program or, you know, what so far has surprised some of these customers? Like, because you obviously have like a who's who rolodex. You know, everyone. So as you've talked to some of these, like, what's been the feedback that's maybe surprised them?
The thing that's surprised people and, you know, quite frankly me, is how easy it is. Like everybody's like, at first I thought it was going to be really complex. Was I going to have to learn certain prompts? Was I going to have to roll into it? The customers that are on beta have a little diamond type thing, right? It's a little diamond in the upper left-hand corner. They click the diamond and Athena just says, 'Hi.' And you just start talking to it. The other big differentiator that confused people at first is when Athena answers your questions, it gives you the answers in the platform on your screen in real time. So Athena's not just giving you answers. She's actually doing all of the inputs to the platform to get the output that is the answer so that you can visually see it in front of you in addition to being told the answer.
So let's walk through like that example. So let's say like I'm a customer, I'm a Zeta Global, I get Athena, now I start using it for free. Let's walk through scenarios in terms of like cross-sell, upsell. So give me like just some, you know, high-level examples of like, I'm a manufacturing company.
Well, let's say most of our customers are facing consumers, right? So let's go with... You could say to Athena, 'Athena, I would like to lower my marketing cost by 4% but increase the number of customers I'm generating by 17%. How would I do that?' And Athena will give you the answer on the targeted audiences, how you would activate to it, and how you would do it. You could then say, 'Athena, please activate to that, but I'd like a report every hour on the return on investment emailed to my inbox because I might be out and I might not have access to the UI, but every hour you're going to get a report.' Now, here's where the cross-sell begins. Athena can then say to a customer who does customer acquisition, 'By the way, I was looking at your existing customer base and it looks like these 2.2 million people have tripled their likelihood to churn based on their online usage patterns over the next 90 days. Would you like to save them?' And you've just gone from one use case to one Zeta, which is our multi-use case strategy. So today for us to sell a one Zeta customer, we come in, it's a big strategy conversation, it's how do we start the flywheel where the data that informs customer acquisition informs retention which informs monetization which in turn informs acquisition. Athena cuts through all of that with real-world answers.
Awesome. So, let's talk about like regulated industries, right? I mean, that's like such a...
Well, and that's what we're excited to work with you guys on, right? So, you know, what you guys are doing, and I know Kevin's here, I think, from Orbs. You know, this whole concept of AI is going to do everything is great and we're all in on it and we believe ultimately agent-to-agent will be what happens except in highly regulated industries. You look at health and wellness, you look at financial services, you look at insurance. Our clients, which are some of the biggest players in the world in that, are currently challenged with their regulatory environment as it relates to automation and AI everywhere, which is why we're partnering with you guys to help oversee that and have a human help from a regulatory perspective in those industries.
Yeah. And I think from our perspective, we're so excited, you know, at Orbs because with all the other enterprise companies that we could have partnered with, it's really, you're really the only ones in the sweet spot that makes so much sense for this, you know, to really go after the industry because to some extent, you've talked about it, like when you think about Athena and you're literally pointing it when you say that. That was great and I appreciate the color. This is the Dan Ives hat because I will tell you, David, he had phenomenal like trucker hats when Athena came out and I'm like, David, these are unbelievable, but I'm just not wearing like a... came out with the pink one, so appreciate it. So when you think about like industries and you look at like Athena, let's talk through like there's so many opportunities. Like how do you sort of segment it? Like when you think about, like, you know, for those to sort of look at your traction 2026, like what are the industries specifically like that you're looking at, like you're kind of salivating being like, those are the ones that we are really going after?
I, you know, it's interesting. We operate in 15 approximate verticals. No one makes up a disproportionate percentage of our revenue and I sort of always joke that in any year one or two of them might not be doing great, two or three of them are hyperscaling and then, you know, sort of growing. We've really been scaling across greater than 10 verticals over the last couple of years and I just think that's going to continue. As it relates to AI and as it relates to Athena, I think the more complex the sale is, the better our platform can deliver.
Interesting. Because... Yeah, just dive into that.
