[Auren Hoffman] Welcome to World of DaaS, a show for data enthusiasts. I'm your host, Auren Hoffman, CEO of SafeGraph. For more conversations, videos, and transcripts, visit safegraph.com/podcasts. 

My guest today is Henry Schuck. Henry is the CEO of ZoomInfo a $17 billion market cap B2B data company. Henry, welcome to World of DaaS. 

[Henry Schuck] Awesome thanks, Auren. I’m really happy to be here. ‍

[Auren Hoffman] Now I really want to dive into data businesses. And ZoomInfo is really one of the only billion dollar data companies that's been founded over the last 30 years or one of the few. And you started as DiscoverOrg in 2007. And at the time, there are already a ton of companies selling business contacts. Now, the way I think about ZoomInfo’s successes, you just decided you're going to focus on quality over some other metric on data. Is that the right way to think of it? Or is there some other simplistic way of deciding why you were so successful?‍

[Henry Schuck] Yeah, it's not the wrong way to think about it. I think when we found it. So the history is, I founded a company with a co-founder called DiscoverOrg, in 2007. And then put $25,000 on my credit card and my co-founder’s credit card. We grew the business profitably, through 2014, we brought on a private equity investor then continued to grow the business. And I'm sure we'll talk about that later. But when we launched the company, there were two things that made it sort of unique. Number one, you're absolutely right, quality was incredibly important, and a major differentiator. And so when we went out, and we were building our own data sets, and so it was like me and my co-founder and some other college kids sort of finding information and putting it into an Excel spreadsheet to be uploaded into a platform for use by our customers. I think a couple of things were unique there. Number one, we were collecting the information essentially in real time. And so the quality was really important. And we decided that we were going to make a big focus on quality, because there were a lot of sort of stale lists of data and non dynamic ways to keep information updated. And we said, look, our data is 95% accurate, we'll continue to stay focused on that. The second is we started in a niche. And so we started with it, we were collecting information on IT decision makers, and then we were selling that to software and staffing and technology and business services companies who sold to the IT decision maker. That really narrow focus, you know, it turns out, IT makes the vast majority of budgetary decisions within a company. They have huge budgets, and they're spending on all sorts of solutions. And so the market behind IT decision makers, and then people selling to IT decision makers is really large and really fragmented. You have Salesforce consultants and NetSuite consultants and you have staffing firms that focus on it and staffing firms. ‍

[Auren Hoffman] So if you're giving like advice to like a new data companies, would you say something similar, which is focus on high quality, but focus on a small, small amount of data, like a niche or breath or some? ‍

[Henry Schuck] Absolutely. 100%. If you can do something that's that serves... the key is what's on the other side of that niche? Who are your customers? Is it a big enough niche? Yeah, you know, you don't want to end up building something that's really valuable for 300 companies in a total addressable market. But if you can focus on a niche data element, and there's a large enough market behind that, who want to be consumers of that data. I would absolutely say that's the way you start a data company.‍

[Auren Hoffman] One of the things I like about ZoomInfo is it's very, at least from the outside, it seems like a very simple value proposition. Like SafeGraph, we’re a customer of ZoomInfo we we use the data. It's very simple. Like you give our salespeople high quality contact information and allows us to go reach out to those things. So it's a simple tool. And if it works, like we'll gladly pay for it, because it's making our sales process better. Right? Sometimes the problem with data is it isn't so simple, but you're in some ways very lucky that you can make it very simple. Is that right? Or do you think about it a different way?‍

[Henry Schuck] Yeah, totally. Look, it is very simple. Our sales cycles are sub 30 days and a lot of or in a lot of companies, we sell same day deals. And so we get a VP of sales or a CEO on the platform, they see it they instantly know the value that they're going to be able to get with the data and with the platform and you know they're signing $30,000 checks same day, they become customers. Yes, the value proposition is so obvious and clear. I think what happens is, as you mature as a data company, or at least as we've matured, well we've been focused on is building a platform and an application layer on top of that data. And so to be able to say, look, here's there are a number of different ways our customers use the data and a number of different tools and software solution that they either use the data inside of, or that they would like to have an integration into. And so when we look at that universe, we go, okay well, let's build the application layer for our customers to be able to take advantage of that data in their systems of record, in their systems of engagement. And then where their systems of engagement are or where there are opportunities within the application layer for us to own, we should own that application layer, because the data is a meaningful differentiator when it's plugged into that application there. ‍

[Auren Hoffman] You know, in some ways, there's these data data businesses that just sell data, which is kind of like where you started, right? And then there's these application businesses, sometimes application businesses have their own proprietary data, which makes the application better. How do you think about this kind of continuum of like data versus application and where you sit on those continuums? Because if you think of like Salesforce, a lot of your customers use Salesforce. Salesforce is an application, but you could have an application that also has things that could potentially compete with Salesforce. So where do you think about that continuum?‍

[Henry Schuck] Yeah. So first, I think it's very hard to start as an application company and become a data company.‍

[Auren Hoffman] Yeah, I think that almost no one's ever done that.‍

[Henry Schuck] I don't know it has, I don't think anybody, I'm not sure anybody has done that, probably. So I do think you can start as a data company and grow into picking and choosing the application layer, especially if you can do that through M&A. Like today, for example, we announced an acquisition of a website chat company called Insent. Website chats been around for a while, lots of sales teams use it. But we really fundamentally believe that when our data asset gets plugged into chat, it becomes significantly more powerful. And when we have an audience of sales development reps and account executives who are already on the other end of chat inside of ZoomInfo, if we're able to give them data and insights around the chat that they're having, it makes them much more powerful. ‍

[Auren Hoffman] Like, how do you think about that? That's a very interesting strategic thing. And you bought this website chat company, because you could have also done an opposite thing where you could have made a big deal with Drift and Intercom and they could have each paid you $5 million to do it. And they could have you could have powered those things. So how do you make a decision of instead of powering these other applications to own these applications? ‍

[Henry Schuck] Look, historically, I don't love BD deals, they're not my favorite types of deals to do. I do believe the data is a meaningful piece of IP that we have. And we're very careful with sharing that IP from a BD perspective. Now, if it's in a totally tangential space, or totally sort of left field space, that we're never going to really get into, that I have much less of an issue with BD deals. But if it sits around the go to market space, you know what I believe there's going to be a decent amount of consolidation and go to market B2B sales and marketing software landscape. And so if it's something that we have ambitions to be a part of, or to build, or to buy in the space, I try to not like go do a BD deal only to like, come back a year later and pull it out because we have ambitions to be in that space. So I'm pretty careful about it. ‍

[Auren Hoffman] When you think of zoom info, ZoomInfo is typically or dominant leader for business contacts. I don't know what percentage market share, but very, very high percentage market share, it's the one that everyone goes to. It’s kind of the clear leader. Whereas like, if you become a solution, you know, unlikely you'll have one that has 50% market share, maybe you got one that has like, sometimes the leader is 30%. And then the second place is 20. And the third place is 10. And, and an unlikely sometimes you could even have the leader. So whereas the nice thing about these data businesses is you can actually like have a winner take most type of market. How do you think about like moving into an application stack? And then of course you're creating like enemies of these other competitors is well, so how do you how do you think like, how do you think those things through? ‍

[Henry Schuck] Look, I think first we're a pretty good competitor. We're not like the type of competitor that creates a bunch fod and talks really badly about our competition. I like to believe we're a competitor that makes everybody else a little bit better in the spaces that we operate in. So I think that's the first thing. I don't think anybody we can compete with in the application layer, the data layer will tell you like, those guys are scumbags. You know, like, they just don't say that about us. We're good. We're good people. We're a good competitor. In fact, I had somebody recently tell me, he made a move. He's been in the industry for 20 years. And he told me like, I have a new sense of pride about the industry, I play in because of your team's success and your company's success. Because I often feel surrounded by a number of people who just are not people that others aspire to be. And I've got ZoomInfo in the marketplace, right? Like really proud of telling my family like, yeah, this is the industry I play in. So you look. So that's one thing I think the other pieces I think the other piece is we don't have to win in every space, right? I don't have to be the number one, every go to market software piece. And I appreciate competition in those spaces, too. And people are innovating and we're learning from one another. And so I don't have to be the best, I don't have to be the biggest chat software in the world, I can be a really great provider of chat software and a consolidated all in one end to end package and go out to market with that solution and win in a lot of spaces without having, you know, the most market share. And I think as long as I believe that the application layer that we're investing in is going to be there for the long term. And that the data is going to make a meaningful difference within that platform. And that our sellers can sell it, because on the business side, like we need solutions that our sellers can sell. And so if our sellers can sell it, I feel really good about getting into that space, whether I'm you know, ultimately the number one champion with the biggest market share or not, you know, I think you know, we want to be in those spaces. And over time. I think over time, what you see like Salesforce acquires Pardot. Pardot is like what the number four or five marketing automation player when they make the acquisition. And now it's easily like one or two. And it's taken time.‍

[Auren Hoffman] I had no idea. I don't know anyone that use it. Okay, that's good to know. Yeah, I know a lot of people.‍

[Henry Schuck] CPQ is another one, you know, like, the CPQ tools that they bought. So it's an interesting, Salesforce is an interesting one to look at in that respect.‍

[Auren Hoffman] Yeah. Okay. I think there's a lot of different ways to create a data business. When you get started, you kind of have like these humans, you mentioned, like college kids kind of doing QA and kind of assembling the data together originally an Excel spreadsheet. One of your old competitors, like at around almost exactly at the same time Jigsaw, they've kind of took this different approach by creating this like coop of salespeople where they're bringing that data together. And you both are actually really good strategies for acquiring data. How do you think of like one versus the other? And I now I know you do both. But how do you think of one versus the other and how to get started?‍

[Henry Schuck] Yeah, so I believe that coops or contributory networks are super valuable to data businesses. Anytime you can get customers or freemium users to provide data in exchange for more services or limited free access to your platform. If you can create a whole bunch of contributors in that way, you get a lot of raw data that you can do something with. Yeah, the issue with that raw data is that it's raw data. Like if I went to any of our customers’ CRM systems, I'm going to find 50% bad data in those systems. That doesn't do me any good from an end product perspective, but it does from a raw data and a signals perspective. And so what I need to do is be able to bring all of that data to a central place and then build machine learning underneath it to be able to predict what's accurate and what's not inside of that data and then only publish what's actually accurate. But in order for those machine learning systems to work they need to know which 50% inside of that CRM data or inside of that premium customers data is accurate and is not accurate. And so then you layer humans and to say this is accurate, this is not accurate, this is accurate, this is not accurate. And over time the system becomes smarter at being able to predict what's accurate and not and then publish just what's accurate.‍

[Auren Hoffman] Yeah, got it. That makes sense. Like at SafeGraph, we have data about something simple, like store hours of the McDonald's on 555 Main Street or something. And even if it was accurate before, it was open at 7am. Before it may not still be accurate. Now it might be open at 6:30am. And so we need to score and we're bringing this data from, I'd say hundreds of different sources all and that data may conflict. And same thing with your case like this, it might say the CIO of this company is two different people or something like that. As one tries to be the CIO and the different one is now it may conflict. And then we'll have like a human grade it. Of course, they can't create all of our data, I'm sure the same thing with you because you have billions and billions of data elements. Is there some sort of like, okay, we're going to create a small percentage, and then and then every week that comes into the algorithms, and hopefully, we're getting like slightly better at predicting all these things.‍

[Henry Schuck] Yep, that's exactly right. So every week, we will look at certain pieces of data, certain different sources of that data, and then we're able to then predict that data in the future better. So we may be able to say now, we've looked at 1000s of different data sources, and we say, look, this one data source is always incredibly accurate, it's 95%. accurate, so don't have a human look at it anymore. And then that just finds its way in directly into the pipe. And so that's what you're looking to do with those human researchers.‍

[Auren Hoffman] Are there other contributory data, contributory networks, or data coops, that you've studied that you're like, oh, like are they might be in different industries, whether it be Verisk, or Visa or other types of companies? And then somehow you've taken some of those learnings back into ZoomInfo?‍

[Henry Schuck] Yeah, totally. So first, I think Costar has done a pretty great job of this. Costar is in the commercial real estate space, they have a great contributory network with their brokerage teams, I think.‍

[Auren Hoffman] And just you know, for everyone else, like Costar, they have all these brokers that might contribute rent per square foot at some Manhattan office space or something. And that's really, really hard data to get, it's maybe not online, or you can't necessarily crawl that data. And they're getting all these different people entering it. And maybe no one person has the right answer. But if you get enough coming in, they can at least have a sense of the average is probably close to correct, right? The wisdom of the crowds and that point.

‍[Henry Schuck] Yeah, totally. And so they have all these brokers, they share information, they collect that information, and then they're able to predict the right lease square footage, or the right tenants in the building are the right, cost per square foot. Costar does a nice job with that. Coupa. Which that's an interesting one, because I was thinking when we're talking about the software company, the software company.‍

[Auren Hoffman] Right? No idea, okay.‍

[Henry Schuck] And I can't remember if Coupa started with data, or it started with the application. But essentially, what Coupa does is it brings together a bunch of people's purchasing decisions. And so there's a contributory network where every purchase you're making, is feeding a contributory network, and then they're able to provide you analytics on spend, are you spending more or less than a company of your similar size on these different types of services or companies? ‍

[Auren Hoffman] Say, like, for your SaaS tools, do you spend more or less setting a benchmark you and stuff? That's cool.‍

[Henry Schuck] That's super cool, really cool and a great contributory network and people view it as really strong. They view their contributory network as an incredibly valuable piece of the Coupa story. So I think that's an interesting one. Said Costar. Who else?‍

[Auren Hoffman] We probably all use stuff for salary benchmarking in our companies, right. We know that that's always a very useful service. That can be very, very helpful.‍

[Henry Schuck] Yeah, Glassdoor is a contributory network.‍

[Auren Hoffman] In some ways, every big B2C company, LinkedIn, Facebook, Twitter, right? They’re all there all data coops because yeah, that's how they that's how they work essentially. Right. Okay, that's that that's super interesting. And how do you get like in these contributory data networks? How do you get people over the hump? Because sometimes, companies are a bit hesitant to share that first party data. They want to know how it's going to be used. ZoomInfo has a great brand, so it’s a little bit easier. But when you're just starting, how do you get people over the hump to be willing to share that type of data?‍

[Henry Schuck] Yeah, look, I think first you start with data that feels like exhaust data data that's not really important to your customer, or is it is auto collected off of their system. So for example, one of the pieces of data that we collect from our contributory network and really where we started with the contributory network is bounced emails and confirmatory emails from marketing automation. Nobody cares about bounced or confirmation emails from their systems. And so we told our customers, when you integrate your marketing automation systems, one of the things we want you to share with us is the bounced and delivery confirmation systems, the whole community gets better.‍

[Auren Hoffman] That's so awesome.‍

[Henry Schuck] Yeah. And they're totally willing to do that share, you gain trust that way. And then you can move on to you can sort of move on to more, you know, call it more sensitive information, but information that they may be more guarded about because they trust the brand. They trust how you were steward of their data before, and they see the network getting better as a result of their contribution to it. But ultimately, you give them a choice, not everybody has to be a contributor to your network in order for the network to be really valuable. And so you build in controls, you build in a privacy center, that gives them the ability to opt in and opt out of sharing. And you give a lot of transparency into the information that you're collecting in a contributory way, and you give them total control over‍

[Auren Hoffman] One thing will be really useful. This is my free idea to you. What I would find useful sometimes when you're reaching out to a contact, I think certain people are very known to respond really, really quickly. Certain people might take like five days to respond. And that could potentially inform your drip. This email usually responds within 24 hours, this email user responds within seven days or you know, or something like that.‍

[Henry Schuck] Need a big network to be able to get that touch right data at scale.‍

[Auren Hoffman]  Yeah, well, you guys have that now, right? You're one of the few companies that may actually know that.‍

[Henry Schuck] My friend used to work at a B2B appointment setting company and to this point, he had a list that they had marked in their systems, a list of people who would always take an appointment. And so if it was like Friday afternoon, and you were trying to hit your quota, and you're struggling with the regular list, you would just go to the list of people you knew would always take an appointment with one of your customers, and you'd call them and they'd set an appointment. Having a list of people you know respond is super valuable.‍

[Auren Hoffman] Interesting. Now, Okay, back to Jigsaw. I remember, this is like 11 years ago, now when Jigsaw got bought by Salesforce is 2010. And at the time, I was thinking, okay, Salesforce is just gonna own business contact data, because they already had all the context, as you mentioned in Salesforce.com. And, and they just kind of keep the Jigsaw playbook and all of a sudden, millions of salespeople would have access to it. But in retrospect, like they didn't win, like, what, what happened in retrospect? And then take us back also, 11 years ago, were you like, super worried at the time? Or did you understand, okay, your playbook’s going to be different. And you're still going to run it out?‍

[Henry Schuck] Yeah, look, for for whatever reason, I wasn't particularly worried when Salesforce made the acquisition of Jigsaw. Jigsaw was in our space. But it didn't really like it wasn't an obvious competitor. And people were using us for different use cases than they were using Jigsaw. There were Jigsaw customers and DiscoverOrg customers. And so I remember seeing, by the way, I was young. So, I was probably a little bit naive, too young, luckily, to really understand sort of what you understood or and when that acquisition happened, which is like, oh, you know, Salesforce is gonna own the entire data space. Like, why would anybody buy data from him?‍

[Auren Hoffman] I mean, they even had the name data.com, right? They bought that domain name.‍

[Henry Schuck] Such a great domain, yeah, to like the best. And I was like, okay, that's, you know, you, I just didn't appreciate it for what it was. And so I just kept running the play, and people were still buying from us. And they still liked our data. People would bring up Jigsaw. But the quality in Jigsaw was so bad, that it was really easy to combat, you would just tell people like, yeah, you know, Jigsaw, the data is not very good. It's super out of date. Like, it's just not a very good system of data. And it actually like wasn't because there wasn't a lot of investment behind, making sure the data inside Jigsaw was accurate. And so people started having more and more bad experiences with the data there. And then never really took off. And I think that was a big reason why Salesforce ultimately sunsetted it last year was that the brand harm from a platform that was sort of so filled with bad data was just not worth him being in the space.‍

[Auren Hoffman] Okay. Now, another kind of data that we mentioned is LinkedIn in a way, right. And they don't seem to want to be a data company. Like they're not wanting to, like export their data. But to my vantage point, sometimes like LinkedIn is like a gateway drug to ZoomInfo. Like you start to understand, they're like, well, I need ZoomInfo. Like how do you see those synergies? And it's kind of like frenemy type of thing as well. How do you see that evolving over time?‍

[Henry Schuck] Yeah, look, I think obviously, LinkedIn is a great data asset, for sure. It's, you know, from a contributory network perspective. They've absolutely figured out how to get people to contribute the information about their jobs and what they're working on. And whether they're open to work or not. It's an incredible contributory network. And look, I believe that LinkedIn is a channel for sales and marketers, and obviously recruiters to engage with potential candidates, potential prospects, potential customers. But I believe it to be one channel, like companies don't go to market entirely on LinkedIn. And I don't think LinkedIn advocates that companies go to market entirely on LinkedIn, it does make sense to have it as a balanced approach to how you generate interest and top of the funnel demand for your products and services. LinkedIn should be a place where you do ad spend, where you connect with prospects and customers, either through email or really targeted ads or connecting with them. What I don't think is that it will in any universe be the only place you go to market. And so it keeps open all of these other marketing, automation, sales, automation, direct direct marketing, direct mail, direct phone calls to potential buyers, programmatic ads, Twitter ads, the ability to build B2B audiences in Facebook. And so there are all these other very important channels to go to market and LinkedIn is one of them. And then there are a whole bunch of other ones that were focused on power. ‍

[Auren Hoffman] It's interesting because these companies like LinkedIn, like their super powers are both a feature and a bug. Right? The superpower is you can interact with customers right there on their platform. But because of that, they never want to encourage you to not be on their platform, right? Because that might ruin. And of course, like, as you mentioned, LinkedIn is a great channel, but no one uses it as their only channel. It's one of it could be one of 40 different channels you use to acquire customers or find new customers.‍

[Henry Schuck] Yeah, I also think the other thing there is, I think the other piece about LinkedIn is, it is at its heart, a professional social network. You know, it's not advertised as a sales or marketing platform. It's a professional social network. And the idea that LinkedIn would take the data that exists in their platform, and then pump it into, you know, every company's CRM and marketing automation system will just cripple the network. And so there is like a line that they really can't cross. And they've been very careful to maintain their user’s privacy and user’s trust to make sure they don't trip that wire. So I think you'll always see them as a company that's married to their platform, and is not like letting their data filter its way through every company's CRM or marketing automation systems.‍

[Auren Hoffman] Now, let's dive into the data business. Because I think like me, you're super interested in looking at other data companies, in other industries. ZoomInfo has definitely been a super successful pure play data business that's been built in the last 20 years. There hasn't been a ton of others, maybe you'll disagree with me on that. In the end, the question is like, Is that going to change? Are we going to see an acceleration of more data businesses in the future? Because certainly, people are becoming much more data oriented, it's a lot easier for people to consume data than it was in the past or a lot more tools or Snowflake, etc. How do you think that's going to evolve?‍

[Henry Schuck] Yeah, it's a good question. I mean, I think if you look at data businesses that have gotten to, you know, let's just call it a billion dollars in value. Yeah, over the last 20 years. And you compare that to software businesses that have gotten to a billion dollars of value, it's like a tiny speck. ‍

[Auren Hoffman] It's like a one percent, you know, or something. ‍

[Henry Schuck] Yeah, maybe less. You know, for every, almost certainly less right for every 100 companies. For every 100 software companies that become a billion dollars in valuation, how many data companies are there? Less than one? I, honestly, I don't see a proliferation of them coming to market. I don't see very many new data companies that are anything but niche coming to market and gaining much scale. But your point is a good one. There are so many more ways to use data in all of your different sales processes, marketing processes, finance, operations, revenue operations, understanding your customer better. And there are more technologies that let you take advantage of that. There's so many things that we do today with Snowflake and with Solr and Elastic. Yeah, three years ago, if you four years ago, if you told us Hey, do this, we'd be like, I don’t know.‍

[Auren Hoffman] How am I gonna find these amazing engineers to help me do that right now? A good engineer plus snowflake could do what a great engineer could do five years ago.‍

[Henry Schuck] Totally. And so I do think there will be much more of an appetite for all sorts of different types of data. The question is, how many people are going to step up to the plate to provide that. You know, I do think ZoomInfo’s IPO really did open a lot of people's eyes to the fact that you can build a scalable data business, especially if you wrap software around it. And it can have a meaningful exit in the public markets. And so I think there are a lot more eyes, and a lot more dollars focused on these types of businesses. You just saw Similarweb go public, I think, two weeks ago and had a good public outing. And I think you'll see more companies relative to where we are today, come out as data companies, but I don't think it's going to catch in the next decade, I doubt it catches the same steam as software has.‍

[Auren Hoffman] One of the big transitions in software, starting, let's say a little bit more than 10 years ago was the cloud, right. And so it just became a lot easier for companies to buy software, you didn't have to have the integration, you have to bring in like Accenture to the integrated into your stack and everything. You could start at, you know, a $30,000 purchase or something not a $3 million purchase. And you started to see this massive, the number of software vendors of the average company like Best Buy or something like that went up like 10x in 10 years. So the dollar per software company went down. So maybe the total dollars only went up, let's say three or 4x or something. But you could see a similar revolution happening with data just because there's it's companies are just becoming much more data oriented. It's much easier for them to bring in data today than it was before. But you know, maybe, as you said, not exactly on that same speed. It is interesting, you said this, like companies are getting inspired by ZoomInfo. SafeGraph, when we raised our Series B, like the first slide was like, hey, maybe it wasn't a good idea to invest in data companies in the past. But look at ZoomInfo, like it's an incredible success story. And so, you know, we compared ourselves saying, okay, we're like ZoomInfo, but data for physical places. I'm sure all these other companies are trying to do something similar. Today, now, when you're building this data asset, like, you can optimize for breadth, you can optimize for depth, you can optimize for accuracy? As the company changes stage, how do you think which one is more important? How do you evolve that over time? How do you look for these adjacencies to move into and data, etc?‍

[Henry Schuck]  Yeah, so first, let me comment one second on the growth of data. Yeah, I do think one of the limiters here is there aren't a lot of people who understand data, and really understand how to work with data and build operations around data. So I do think that you're seeing more and more people take a data first approach in all of their operations. ‍

[Auren Hoffman] The title data scientist has gone up like 10x, in the last 10 years or something, right? ‍

[Henry Schuck] Yeah, or, or even you just need a lot more practitioners around data operations, revenue, operations, sales, operations, marketing operations, folks who really have a data focused lens on their businesses to really come up. You know, you need universities teaching this, you need people really understanding it, and then coming into the marketplace to deliver it to their companies. So I do think that's more evolutionary than it is exponential. So I still think there's time. On how do you focus on which data piece is most important or is it the application layer. I think for us, we wanted to have a really horizontal solution, we wanted to be able to sell our solution to anybody, to any company that sells to another company. And you know, we have HVAC maintenance companies. We have a pecan exporter in Georgia, who is a customer and then we have Fortune 100 companies who are customers as well. And so, you know, we wanted a horizontal solution that we could sell to anybody. And so we're really focused on making sure we get that breadth of contact and company information, and then pick our spots where we'd have breath. And so IT, which is this huge, fragmented market or Engineering, you want to be able to go deep there. You want technographics and you want projects and initiatives that are happening in it. And you want to make sure you go really deep on the CIO and the CTO and have IT spending models. That's a really important one, you know, people who buy pecans in Georgia, there just isn't enough TAM there. They're really deep. And so they benefit from having the horizontal solution, the horizontal solution, but if they want to augment that, you know, they either are creating their own data assets, that they're appending against ours, or, you know, insurance for an every company.‍

[Auren Hoffman] Every company is still taking maybe the ZoomInfo data, and then doing some sort of filter on it and trying to figure out who actually are their best customers. Because who know your own customers better than yourself, right? So ZoomInfo gives you this kind of like breadth, and then you got to narrow it down in some sort of way, or add to it or add on your messaging to it, etc.‍

[Henry Schuck] Yep. And I think that, you know, we would love to get to a place where, and we've built this with Salesforce, but we'd love to be at a place where we can bring in your first party data, whatever it is, wherever it exists, and let you marry it against the ZoomInfo data asset to build a bunch of segments and a bunch of different fields. Yes, I think that's incredibly valuable. And to the same point that, you know, ZoomInfo gets you started. But you're going to want to bring in your own data, your own first party data, your opportunity data, your CRM data, your marketing, automation data, to really be able to build segments that makes sense,‍

[Auren Hoffman] The way I see the data businesses, there's currently four categories of data, there's data about people, places, organizations and products. And ZoomInfo is kind of I would say, in some somewhat of a mix of people and an organization's kind of data, mostly people, like who are within organizations, and people data, in some ways is the most privacy sensitive in even though ZoomInfo is business context, I'm sure you've had to deal with a lot of different privacy things that have happened, and especially that has changed over the last 15 years. Like how do you see that evolving? In this kind of people data world?‍

[Henry Schuck] Yeah, so look, number one, data privacy is a big, big focus of ours as a company, literally, from our board of directors, to individual data privacy practitioners that we have in our company, we're focused on data privacy, and making sure that we're far ahead of any regulation and any competitor and anything in the industry. We really are leading the way from a data privacy perspective. For us. That starts with the type of information we collect. And we collect business contacts.‍

[Auren Hoffman] Which is definitely one of the easier ones to deal with on that front, you're not talking like medical data or something, right.‍

[Henry Schuck] 100%, I often give the example of like, you were walking down the street and you dropped your business card on the floor, and you realize 10 minutes later that you had dropped your business card, you're not going to sprint back to the place that you dropped your business card to pick it up out of fear, that's your privacy was going to be violated.‍

[Auren Hoffman] Often you’re handing them out like candy to try to get more customers and stuff. ‍

[Henry Schuck] Exactly. And so the information is not particularly sensitive. In fact, if you look at a lot of the privacy legislation across the world, they have specific carve outs for business contact information not being sensitive. Yeah, Canada's PIPEDA privacy laws specifically carves out business contact information as non sensitive information when used for B2B sales and marketing efforts. California CCPA has a B2B exemption. The GDPR has a legitimate interest for direct marketing, Fraft legislation at the federal level, and throughout different states have carve outs for business contact information. The Do Not Call list in the United States does not apply to business and to business phone calls. Yeah. And so there is a fundamental respect for business contact information and business to business sales and marketing motions around that information. That's been recognized by regulation regulators and carved out of a lot of their legislation. That being said, if we collect your information, we give you proactive notice of that. So we're very transparent. If your information is in ZoomInfo, you've received an email from us at some point that says, hey, we've collected your information. This is the type of information we've got. ‍

[Auren Hoffman] That's cool. And then you can even get people to update it, which would be nice. Is that right? ‍

[Henry Schuck] Yeah, we're seeing more and more of that. Even some more companies are coming to us and say, hey, I want to update my company information. I want to update my information on the platform. I had a friend from law school who emailed me said he just changed jobs, and he needs to update his ZoomInfo profile. So you give people control over their information. There's a publicly available privacy page our website, you can go see the information we've collected on you. If we have any, you can update it, you can remove it, you can add to it. So we're incredibly transparent. We give data subjects control over their information. And ultimately, I think that's what all of the legislation around privacy is focused on.‍

[Auren Hoffman] Now, when I try to study ZoomInfo, one of the things that really stood out to me is how effectively you've used acquisitions, and bought different companies, including the DiscoverOrg acquisition of ZoomInfo. And do you think it's easier for a data company to acquire another data company rather than a software company to acquire a software company?‍

[Henry Schuck] So I think if you built a great platform, that it is easier, because ultimately, it becomes a function of integrating data into your existing platform. You don't have to worry about whole UI change and all these other things. There might be some little UI tweaks you do to be able to better display the new data asset. But if you have a core platform, bringing the data into that platform is a lot easier than, you know, merging two disparate software solutions into one. That's a bigger challenge. But just data, I think that, you know, the RainKing acquisition was kind of purely data. the IProfile acquisition we did was purely data. The EverString acquisition we did was mainly data. The Clickagy acquisition was mainly data or purely data. ‍

[Auren Hoffman] Even ZoomInfo, before you acquired them, I think they acquired Datanyze. Right? And so which is kind of in that data world. ‍

[Henry Schuck] Yeah, ZoomInfo is super interesting, just because not only did we get an incredible data asset, but we also got an incredible engineering team that was building on next generation technologies and moved fast and innovated quickly. We got an incredible CTO as part of the organization that we inherited. And so we were really able to accelerate the pace of innovation as a result of that acquisition. And we were able to integrate the data and the platforms in seven months, which is, you know, very unheard of. And so, so yeah, I do believe that when it's just data, but you start with a really great platform, that you have an opportunity to make that acquisition much easier. ‍

[Auren Hoffman] And zoominfo was a cool company, because it's always a very entrepreneurial company. It's kind of like a venture studio, right? If you remember back in the day, like they, they took a employee at their company, Russ Glass, and they spun out Bizo. And they created a whole new company out of it, which is kind of cool, and usually unheard of. But they just had this kind of entrepreneurial flavor that most other companies didn't have.‍

[Henry Schuck] Yeah, or and you might be one of like five people in the world who appreciate the spin out of Bizo from ZoomInfo. But super interesting, right? Bizo was like an early competitor in the ABM space. So it helped people who do B2B do ads against the B2B audience that you see today being provided by Demand Base or 6sense or Terminus or Metadata are out there providing that capability. It was ultimately bought by LinkedIn. And then LinkedIn, just shut it down. Kind of like six months later.‍

[Auren Hoffman] I remember. Yeah. ‍

[Henry Schuck] My sense is it's because LinkedIn wants to be the only place that you can place ads against a B2B audience. And so they don't really need another competitor out there letting you do ads in the B2B space. ‍

[Auren Hoffman] I remember that very clearly, because Bizo was my customer at the time when I was running LiveRamp. And so we lost them when they shut down. Now, one of the things you guys have done effectively and would really want to get your thoughts on. When you done these acquisitions, you've done them generally with debt, right? Not with equity. And I would love your thoughts about when to use debt, when not to use debt, when can you use that when you're doing these acquisitions, etc?‍

[Henry Schuck] Yeah. So, you know, we always ran a pretty profitable business. And so if you're running a profitable business, you have an opportunity to use debt when you're making acquisitions. And you don't have to use equity and deliver most of the businesses you acquired also profitable. ‍

[Auren Hoffman] Were most of the business you acquired also profitable? So that also makes it easier as well?‍

[Henry Schuck] Totally. So if you're, you know, two things, one, most of the businesses we were acquiring were also profitable. They were also being run less efficiently than we were running. DiscoverOrg. ‍

[Auren Hoffman] You have a thesis about how to get them more efficient, okay.‍

[Henry Schuck] Exactly. And so we could come in, and we, you know, when we raise the debt, we said, look, this is us today. This is them today. Here's how we're going to bridge that gap. And within 12 months, we're going to significantly increase margins and continue to grow sales at the combined businesses. And so the debt markets can get behind that type of acquisition, they've seen a lot of private equity firms do this all the time. And so they have a strong conviction, if they can have a strong conviction in the motion, and they feel good about management's ability to execute against that motion, you can raise debt to make those acquisitions. So every time we had the opportunity to make an acquisition with debt, we would make that acquisition with data as opposed to equity because it dilutes less, right. I mean, I don't know if everybody understands the mechanics. But like, if I take $100 of debt at a 10% interest rate, in three years, you know, I paid $30. But if I take $100 of equity in the business triples in size, now I'm paying $300, to the equity holder. And so it makes a meaningful difference in a growing business.‍

[Auren Hoffman] Yep, yep. Okay, what advice would you give for companies that are thinking about other data companies? or thinking about acquisitions? Is it okay, you start with a tiny one first and get the muscle going? Or, you know, how do you think how should you think those through? ‍

[Henry Schuck] Totally start with a tiny one, first, get your muscle, we did a very small acquisition of a company called IProfile in 2015. It was a small acquisition, there weren't very many employees.‍

[Auren Hoffman] How big was ZoomInfo in like a revenue standpoint? 2015 or so ‍

[Henry Schuck] This was DiscoverOrg. But yeah, 35 to 40. ‍

[Auren Hoffman] Okay, so that was you're already pretty sizable before you even make your first acquisition. ‍

[Henry Schuck] Yeah, we're pretty sizable. By the time we made that first acquisition. Yeah, we just, we probably made every mistake you can possibly make in that acquisition, but you at least got in a room where you did diligence. And you asked a bunch of questions. And you thought about integrating a customer base, and you had communications that went out to that customer base, and you combined customer overlap. And so you had a framework to then go do a much bigger acquisition. And so after IProfile, we did ranking and the summer of 2017, which was we paid $280 million for it was about a 250 person business with $40 million of ARR. And that was a big acquisition for us. Yeah, they were across the country, there were lots of employees that needed to be integrated, we needed to do a bunch of customer overlap. We were sunsetting a platform. But we had gone through that before. And so at least you knew like, hey, here are the things we need to do.‍

[Auren Hoffman] Yeah. Interesting. Okay, then what is one of the things you've done is some of the acquisitions, you may have been essentially a direct competitor. And, and one of the cool things has happened is they end up lifting everyone's boats, right? Everyone benefited, the shareholders of those companies, the employees of those companies, etc. But I imagine it's a little tricky to even breach these M&A discussions with rivals in the first place. Like how do you start those out?‍

[Henry Schuck] Yeah, so you benefit tremendously if the other company is owned by private equity.‍

[Auren Hoffman] Okay, because I have to do something,‍

[Henry Schuck] You have to do something, they have a threshold for return, they want to make like 3 to 5x their money in three to five years. They're rational thinkers on the other end. And you're able to have rational conversations where you know, dollars make a difference, you know. They're looking for their return. And if you can hit their return threshold, they're happy to sell the business. And so we always started engagement at the private equity level, and the private equity shareholder, the partner level. And then if we could get agreement there, we went into the business itself. Now, both of you know, both ZoomInfo and RainKing, when we acquired them, they were no longer founder led either, they had brought in a professional CEO. And so the professional CEOs job was to make sure that the private equity firms saw a big return. And so they were happy to be a part of the motion too. I've also, like, with RainKing, we tried to buy RainKing from the founder years before we acquired RainKing. And it just like, you know, founders are emotional, and t's their baby, and they're paranoid, and it's much, much more difficult to get them to engage So if you have an opportunity to build a relationship with the founder at one of your competitors, you know, don't meet them in person. As soon as RainKing was sold, and they brought in a new CEO, I called him and said, hey, I'm gonna be in DC. And I just like made a trip to DC. Yeah, can we meet up for lunch and we met up for lunch. And we had a, we had a relationship before we dove into the M&A conversations, which made things easier. But ultimately, you want rational thinkers on the other end of the line, and you get that with investors.‍

[Auren Hoffman] Okay, interesting. Now, a couple personal questions before we go. Now, I heard that you filmed mini shows when you interview your daughter. Grace, right. And you've been doing it since she was like one year old? How do these work? And how did you get the idea?‍

[Henry Schuck] Yeah, I can't remember how I got that idea. I think I did it once and was like, wouldn't it be cool if I do this a lot. So it's basically Grace and I. My daughter's five. We get in front of a computer, we start recording on Quicktime. And it's basically a combination of me asking her questions about herself and her day. And then we sing a song that got that where I just say Grace, dada, Grace over and over and over again on my knee. And so now I have nearly five years, four and a half years of footage of us doing these Grace, dada, Grace videos over time, and I can go back and I can watch it when she's one. And I can watch it when she's three and five. It's awesome. And so the other thing I do is I send her emails. She has an email account that I started for when she was born. And so every once in a while, I'll hop in there and shoot her an email to tell her you know, I love her. ‍

[Auren Hoffman] Oh, so she can like read these later or something. ‍

[Henry Schuck] Yeah, so when she's a teen, I'll give her my email. ‍

[Auren Hoffman] Oh, this is awesome. Oh, what a great, man. I'm gonna copy that. Wow, this is like way better than the data company stuff. Okay, this is the last question we ask all of our guests. If you had to go back in time, what would you tell yourself in high school or college that would have really benefited the future Henry Schuck.‍

[Henry Schuck] So what I'm going to say would not have changed my direction. It would have made me a lot more comfortable along the way. But I would have told myself, you are good enough. You are good enough. Like it is okay. You didn't go to Harvard, or you didn't go to Stanford, it's okay that you haven't done it before. You're smart enough, you're gonna work hard enough, you're good enough to be great. ‍

[Auren Hoffman] At some point you like you had these like self doubts along the way.‍

[Henry Schuck] Yeah, you know, basically, most of the way I had these like self doubts about you know, is it just lucky? Is it just timing like, I'm not really an executive, all these people know better than me. I nearly gave up the CEO seat in 2013. In 2013, when we had a private equity firmmake an offer. And they asked me, hey, what do you want to do? After we make the acquisition, and in my head, I was like, well, you're gonna give me a bunch of money, I'll do whatever you want me to do. And so that's basically what I said, I'll do whatever you want me to do. And they're like, great, well, like, let's go bring in a CEO. And they started like, introducing me to other CEOs. And I was just basically resigned to the fact that I was not going to be CEO of the company anymore, but that there was going to be this great financial outcome. And that would have been, you know, I would have done myself such a disservice because I've had all of these incredible experiences running the company since then. ‍

[Auren Hoffman] What happened? Like, how did you how did that not happen? ‍

[Henry Schuck] Thankfully, yeah. The deal just didn't happen. And then the next group of people who came through the next private equity firms, they didn't ask the question the same way, they didn't ask, like, what do you want to do? They asked, hey, you want to continue being CEO? Right?‍

[Auren Hoffman] Yeah, they probably wouldn't have invested if you said no, right? Because they didn't want to go through the whole hassle of finding another CEO. ‍

[Henry Schuck] Yeah, and I didn't realize that either, you know, private equity firms don't want to buy a company and then go immediately do a CEO search. They'd prefer to have a strong CEO. So I would just tell myself, like, chill out, you're, you're good enough. You can be you can be great in the role. ‍

[Auren Hoffman] This is great. Thank you very much, Henry. Really appreciate it. Where else should people find you or follow you or etc?‍

[Henry Schuck] Yeah, you can find me on LinkedIn, where I contribute my business information. You can find me on Twitter or you can email me. I'm just [email protected].‍

[Auren Hoffman] Yeah, the great thing is your contact information is perfect on ZoomInfo.‍

[Henry Schuck] Yeah it is, you can text me if you have ZoomInfo. ‍

[Auren Hoffman] Oh, great. Thanks. Thanks again.‍

[Henry Schuck] Thank you, Auren. Thanks a lot. It was a lot of fun.‍

[Music playing]

[Auren Hoffman] Thanks for listening. If you enjoyed this show, consider rating this podcast and leaving a review. For more World of DaaS (DaaS is D-A-A-S), you can subscribe on Spotify or Apple Podcasts. Also check out YouTube for the videos. You can find me on Twitter at @auren (A-U-R-E-N). I’d love to hear from you.

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