ZoomInfo's software, business enterprises are 'tale of two universes': CEO
ZoomInfo (ZI) is noticing accelerated growth in its non-software customers as the software space faces several headwinds. ZoomInfo Founder and CEO Henry Schuck sits down with Yahoo Finance Executive Editor Brian Sozzi at the Goldman Sachs Communacopia & Technology Conference to discuss the data company's growth outlook across segments
"All the other industries, we see a really steady path to growth, growing north of 20 percent in those non-software companies," Schuck says. "We're continuing to just stay focused on driving customer success and customer value for our customers. Make sure that the software companies, the non-software companies, they're getting a lot of value out of our product and that we're investing in them seeing a real return on it."
Schuck discusses AI's role in powering data collection as well as his leadership experiences at ZoomInfo Technologies.
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Video Transcript
BRIAN SOZZI: Yahoo Finance's still stationed at the Goldman Sachs tech and media conference. Lots of talk about AI, the future of media, software, hardware. But for right now, we're gonna talk some software with Henry Schuck, ZoomInfo CEO. Henry, weren't we just hear a year ago?
HENRY SCHUCK: Was it?
BRIAN SOZZI: Yeah, it feels like time flies in this crazy field. Talk to us about the state of your business. I mean, the market reaction was tough to that latest earnings report. But things seemed OK.
HENRY SCHUCK: Yeah, look, I think when you look at our business, it's kind of a tale of two universes. On one side, we have 35% of our customer base is software companies. And software companies are in a tough cycle today. The other 65% of our business, nonsoftware, is growing 20% a year.
And what we see in software is you have these companies that were kinda like going down the highway at 90 miles an hour. And then all of a sudden, they pulled the handbrake. And their whole business models changed. When I talked about one of our customers in their earnings call was this customer, they had 40 salespeople. They were growing 40%, 50% year over year.
And they said, look, we're gonna have hundreds salespeople over the next two years. We're gonna buy 100 licenses. And when they bought 100 licenses, their investors came in and said, look, you have a business growing 40% a year. It's losing money. Over the next quarter, we need that business to grow 10% and actually make 30%, 40% margins.
That's a very different business. And so instead of having 100 sales employees, they went down to 20 sales employees. And you see that over and over and over again in the software space. Everywhere else in the business, all the other industries, we see a really steady path to growth. So growing north of 20% in those nonsoftware companies.
We're continuing to just stay focused on driving customer success and customer value for our customers, make sure that the software companies, the nonsoftware companies are getting a lot of value out of our product and that we're investing in them seeing a real return on it.
BRIAN SOZZI: How do you reignite that growth? Is it just sending a message out to the salespeople, get on the phone, sell these guys? What do you need to do?
HENRY SCHUCK: I mean, look, we should be in the best place ever to be able to drive, go to market efficiency, and go to market growth. That's literally what we do. And what you see in our business too is on the new business side, we've been relatively strong business side, particularly relative to software or on the customer business.
And so we feel really good about our ability to drive demand. We're seeing tremendous demand on the new business side. And so the sellers are out there they are calling.
BRIAN SOZZI: No sales guy. Salespeople, sometimes they're trying to get the upsell. They're not trying to go out there and get the new business. I used to sell.
HENRY SCHUCK: Yeah, we actually at ZoomInfo, we split the sides. And so you have reps who are focused on New business. And then you have reps focused on growing the business.
BRIAN SOZZI: When does this loosen up? What is your visibility into 2024 in terms of that enterprise demand?
HENRY SCHUCK: I think the thing that we're looking at most when we look across our customer base is what is the health of an account look like? How much are they using our platform?
How often are they using it? How are they integrated into their multiple different systems? How are we talking back and forth between CRM, and marketing automation, and Snowflake, and Databricks, and to really assess the health of those accounts?
And then we're looking at each of these accounts from an account management and customer success perspective. We're saying, hey, we're gonna treat this account that's red. They haven't fully provisioned, or they're not using it the same way. We're gonna go in there. And we're gonna triage that account. We're gonna make sure they know all the capabilities of ZoomInfo.
We're gonna run another training, another onboarding to make sure that when they come up for renewal, when their cycle comes up, that they're getting tremendous value out of ZoomInfo. So we're looking at our business from a health of account perspective.
When we think about the enterprise portion of our business, our million dollar cohort of customers, customers who spend over $1 million a year with us, that grew 40% year over year. And so our big deal motion is still running. And it's running really well. We continue to feel really good about that. And so again, there's these pockets of the business that have real headwinds.
And so as software gets its feet underneath them again, I think what you're gonna see is companies are gonna sort of in a panic-driven motion cut a lot of spend and then realize after they've cut a lot of spend, they still have a requirement to grow. And when they see that, they're gonna invest in ZoomInfo. They're gonna invest in other platforms that really drive their revenue. And right now, I think they're just getting accustomed to this new operating environment.
BRIAN SOZZI: What's your 2024 AI roadmap?
HENRY SCHUCK: Yeah, so I think of AI and we think of AI in two ways. We think of it, one, as driving simplicity in the way that you build your product, the way that your customers use your product. And so we've seen a number of different places in the platform where something that would take 37 clicks can now be done in one or two or three because you power AI behind it.
We're seeing our customers use natural language search. So instead of clicking you know chief information officers at health care companies in the United States with over 100 employees, they can just right, tell me the chief information officers I should be engaging with today.
And the I can do all of that triangulation to make the user experience much more seamless. And so we're really investing behind that because obviously the more simple the user experience, the easier it is our customers-- for our customers to get value, the more value they get.
The second way we're thinking about it is, today, there's this new-- I'm sure every single person who sat in this chair today, Brian, you got to ask about AI. And they are thinking about AI.
BRIAN SOZZI: Every single person.
HENRY SCHUCK: Every single person. And they're all CEOs or CFOs of large companies. And so what we're seeing happening is those CEOs are coming down into the go-to market organization. And they're saying, hey, what are you doing with AI? I want you to be using AI to engage with customers, to respond to customers, to write emails for salespeople.
Of course, we should be using AI and LLMs and generative AI to drive our customer acquisition motion. So all of a sudden, those VPs of sales, VPs of sales ops, VPs of marketing are going, OK, how do I use gen AI? And the first place they go to get the data to put into the LLM, to put into the gen AI is their CRM data.
And I've been sitting here and in a number of different places for the last two decades saying, the data in your CRM is not good enough to be leveraged by your salespeople. It's not good enough to be leveraged by your ops people, your business intelligence people because there's no infrastructural element that keeps data about companies and people. You got a promotion this last year. That doesn't just magically show up in somebody's CRM like it does--
BRIAN SOZZI: Well, it should. I wish it did. Everybody should know-- everybody should know I got promoted.
HENRY SCHUCK: I'm trying to make sure that when that promotion happens, it immediately reflects inside of your CRM through ZoomInfo. But to leverage generative AI and go to market, you need a solid data foundation. And you just can't do it unless that data on companies and people at those companies is accurate and up to date.
And once you get that, you can do all sorts of great things with generative AI. And so what we're focused on is how do we power that data infrastructure so that companies can take advantage of gen AI in their go-to-market motion?
BRIAN SOZZI: We have another minute, right? You good?
HENRY SCHUCK: Sure.
BRIAN SOZZI: I'm asking all founders here about their views on leadership. A founder is very special. They create a big business in many cases. Certainly you fit into that mold. How do you take your passion for the business and try to build it into your team? And do you get frustrated? Or how do you deal with it as a leader when you don't see that same passion in return?
HENRY SCHUCK: Yeah, so it's a great question. Look, I think number one, I have to be visible all over the organization. And it's really easy. My days are very busy. I can walk in on a day and have 16 meetings 30 minutes after 30 minutes. And then nobody really gets to see me, except for once a quarter on an all hands or something like that.
And so I'm really intentional about setting up round tables where I'm talking to new employees, existing employees, where they're getting an opportunity to ask me questions, where I'm being really transparent with them. And they can see my passion for the business, my passion for the future. They know I'm playing a long game here. And they get a feel for how I run the business.
But the more that I can be in front of them, the more then I can be talking to them, walking the halls. We bought our employees back three days a week. I feel really great about seeing them in the office again. And they get a feel for the culture that I'm trying to build, that we're all building together. I think that's really important. They have to have face-to-face visibility with me, like some of my employees will talk to me less than you've talked to me over the last year. And that shouldn't be the case, right?
BRIAN SOZZI: No, it shouldn't really should not be the case at all. Point well taken. All right, ZoomInfo founder and CEO Henry Schuck, always nice to see you. Thanks for always making time for Yahoo Finance. We really do appreciate it.
HENRY SCHUCK: Of course, thank you, Brian.
