The 20th consecutive ZETA beat and raise wasn’t the news in Q2, as we got used to their perfect execution at this point.
Demand for Athena, the recently released voice-based OS, is confirmed to be strong:
Since Athena’s launch for enterprise customers 130 days ago, more than 40% of our super-scaled customers are already monthly users. And together, they’ve generated thousands of campaigns using Athena. And customers who comprehensively adopt our AI, using it for audience creation, activation and other means, contribute a disproportionate share of revenue. This shows up in several ways.
For those who have worked in a B2B software sales role, the extraordinary result of this will be clear. When you launch a new product, it normally takes months to get someone to buy in for a pilot, and it can take years before the related sales have a meaningful impact on revenue.
Nobody likes to be the first, unless the ROI is crystal clear and provable.
Zeta, in less than 6 months, has been able to get almost half of its biggest customers to try or use it.
Athena is having a great impact on engagement too:
Over the last 60 days, Athena’s voice users are interacting with the platform at a 500% higher level than non-Athena users.
This is great for two reasons. The first one is the obvious one: higher ROI, as more users are able, as explained by David several times, to use the platform better and deeper, getting more juice out of it. This ultimately turns into higher retention, more spending on utilization fees and eventually buying new features.
The less obvious one is that as the UI becomes less relevant, the value accrues more and more on the ROI which the system delivers, and for which Zeta is recognized as the leader in their domain.
This is also a further tailwind for Zeta’s M&A strategy: buying a new company and integrating it into the value proposition is easier and easier if the UI is not a thing.
Zeta Business Intelligence
But let’s go to the main point of my article, which is about Zeta Business Intelligence and its partnership with Palantir.
What was once called Business Intelligence is, in my opinion, where 90% of software value will accrue within the next 5 to 10 years.
Software, UI and UX, once the bulk of a software company’s value, will be worth almost nothing, as they can already be generated almost for free.
Ecosystems (customers, partners, distribution, ...) still matter a lot, I do agree on this. But let’s keep them aside for a moment.
What products should they be moving into retail? How do they use co-op dollars and marketing dollars to get better shelf space and how to create deeper and more meaningful relationships with the end customer? So it starts with the business intelligence around a retail use case, you then end up identifying meaningful opportunities for them to move inventory around geographically, which retailers they should be doing more with, maybe which retailers they should invest less with, and then we end up being able to market to the end user to drive them into the retailer on behalf of the product and vice versa.
These are the kind of questions which, if answered in an accurate, data-driven way, can really move the needle.
When a decision is strategic and not only tactical, the consequence of such a decision is spread across the organization and the supply chain, and the difference between making a good or a less good decision is measured in millions of dollars.
Zeta understood it for a long time, but what is changing now is that they are enlarging the pie, because it is becoming clear that the utility of ZETA’s marketing ontology is not limited to marketing. It can deliver tremendous value if paired with an ontology of the rest of the business, by answering questions which extend beyond the marketing domain but which require information from the Zeta domain to be answered.
This is David Steinberg giving an example during the call:
And if you look at this very large sports league that is using us, we were in the room with them and their CMO and they’re like, listen, how do we better negotiate our streaming rights with the two partnerships that are coming up for bid and how can we equate viewership and mind share for their—they own multiple products, multiple leagues that are owned by one holding corporation.
How do we help them to better show it’s not just who’s watching it in that moment, but it’s the halo effect that comes for the broadcaster by having them on? And we were able to put together a solution in hours that came back and they believe will result in millions of dollars of incremental revenue to them on the renegotiation of those streaming contracts. So it then becomes a flywheel because then we get part of the marketing for those streaming rights. So it really becomes a major flywheel in and around the company...
And what is the best way to accomplish an extended ontology, which is worth much more than the two single ontologies taken alone, if not joining Zeta’s ontology with the king of all ontologies?
And here we are, a partnership between Zeta and Palantir, which was announced in June.
As it should be clear to everyone by now, Palantir is becoming the new OS for businesses which aren’t joking, and Zeta understood it so clearly that it re-architected its Data Cloud on top of Palantir’s Foundry and adopted its ontology.
Our partnership with Palantir significantly expands Zeta’s enterprise opportunity. Palantir provides the ontology, governance, and enterprise AI infrastructure that large organizations require. Zeta contributes proprietary customer intelligence, proprietary data, identity, decisioning and activation. And we have reached two important milestones in this partnership already. Our data cloud was fully integrated with Foundry as of July 31. And we have already received multiple agreements for our initial combined sale with several other meaningful opportunities in flight.
said David Stainberg.
I believe that the ROI the two companies can provide to customers is not even comparable to a standard software company, and we are already starting to see the first proofs of it coming in. These are still two initial combined-sale engagements and test cases, so the sample is tiny:
The two deals we closed were at a 100% hit rate. Met with two, closed two.
A 100% hit rate even though on two opportunities is simply insane.
Conclusion
The surprises from Zeta are unlikely to end here. I expect more over the coming quarters.
On April 28 I opened a position in Zeta at the price of 18,26 $ per share, as I shared in real time in the Business Ontology community.
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Lorenzo