The news that hit the B2B data industry this week of DiscoverOrg acquiring ZoomInfo has many people scratching their heads about the upside and downside of this acquisition and what it means for the marketplace.
So you can imagine the conversations we’ve all been having at LeadGenius, especially our most vocal leaders, Prayag Narula, Founder and President, and seasoned data CEO, Mark Godley. When we put these two into a meeting room to discuss the merger of DiscoverOrg and ZoomInfo, they were chomping at the bit to talk over one another about all aspects of the acquisition and how it impacts the B2B data space. Instead of writing a traditional post where we wax eloquently about LeadGenius’ thoughts and opinions on this subject, we dropped a record line onto a phone bridge and captured Mark & Prayag’s true, unfiltered opinions. Below are some of their excerpts. Proceed with caution! Let’s get started:
Question: Is this acquisition good for the data industry?
There is always a tendency to freak out when an acquisition of this size happens but, in LeadGenius’ opinion, the merger is a good thing! In fact, this elevates and validates the data industry as well as the AI industry – the last mile of AI is good data, and finally, the world is starting to see how valuable quality data is to every aspect of our personal and business lives.
The biggest positive outcome is that it brings much-needed publicity to the B2B data industry. After a decade or more, we are finally seeing $100 million or more acquisitions of companies that exclusively deal in data – likely creating a company with a $1 billion valuation. This transaction validates that data is going to be a big, big part of businesses in the future.
I think this merger, and the larger B2B data vendor consolidation underway can be positive from a data buyer’s perspective. I constantly hear feedback from customers with regard to their frustration in the marketplace due to an overabundance of vendors; making a multi-vendor strategy very complex, difficult to manage and confusing. So this merger, along with others over the past few years, creates the potential for the unification of disparate data into a ‘single vendor’ approach for buyers. Let me make one thing clear…a ‘single vendor’ approach is not necessarily a good thing for LeadGenius in the short term, but could be perceived as positive from a buyer’s perspective.
Question: How can this merger go wrong?
40 years ago Dun & Bradstreet became the Goliath and failed to innovate which opened up a clear path for DiscoverOrg to take them on – a classic David and Goliath tale. I would hate to see that cycle repeat itself again. And I have high hopes this will not happen. I think of DiscoverOrg is driven by a smart CEO who thinks long term. I have high hopes they will not make the same mistake that D&B made.
I think there are a few ‘black swan’ like futures that could end up making this merger a big mistake. If you look back on the last 10 years of mergers in the B2B data space, I would argue most have been colossal failures. And although Henry Schuck, CEO of DiscoverOrg, is one of the most impressive business people with which I’ve worked in 30 years and I would never actively bet against him, there are a few circumstances that could make this merger regrettable.
- ZoomInfo’s major data acquisition methodology is legal but some believe is ethically challenged. If you think about the concept of consent transference, their community model could come under scrutiny if data sharing and privacy laws that are getting serious in the consumer sector extends to the B2B arena. The question we have to ask is – Is ZoomInfo’s community model, or any data harvesting method that is not completely transparent in its methods, a potential B2B version of Cambridge Analytica?
- Both companies are mostly focused on a business model that is predicated on new data and ever-expanding data as the most important element of a sales and marketing data strategy. It’s consumption oriented. But what we see at LeadGenius is that most of our clients already have a lot of data, but need to update, cleanse and get better, more unique information within their target accounts. So one could make the case that their business model is grounded in the last century’s business problem of data scarcity versus our current environment of abundance. But we’ve now gone from abundance to blindness as companies are drowning in waves of data. The future is really about bringing clarity to that blindness, and it’s about less but better data. I think this fundamental change runs the risk of challenging their business and pricing models quite dramatically.
- If we get into the weeds, the value of the specific fields of data that these companies are aggregating and selling is dropping pretty quickly. If I wanted to be bold and controversial, I could make the case that using the phone for initial outreach, a big driver of ZoomInfo’s value given their direct phone number database, could be obsolete in a matter of just a few years. And email might be worthless in as little as three to five years. If these shifts in ‘data value’ happen, will DiscoverOrg be able to pivot quickly enough to maintain their dominance? Think landline versus cellphone. Windows versus Chrome. Blockbuster versus Netflix. I could see this same fundamental shift as illustrated in those three examples happen in the B2B data space very quickly.
Question: What should buyers do right now?
One thing that is almost certain of is that DiscoverOrg will want to position itself as a one-stop shop for any kind of sales or marketing data. Anyone who has purchased data knows that that’s probably not the right way. We live in a world of best in class software integrated together and it’s also very true for the data space. We certainly don’t position LeadGenius as a one-stop shop. We work best when we partner with or recommend other data vendors to our customers and then help them evaluate and consolidate different vendors. We do this because that’s the best thing to do for the customers.
So, if you are a current ZoomInfo or DiscoverOrg customer it’s more important than ever to be thoughtful about your data strategy. Customers often feel pressured against wanting multiple data vendors for their data strategy, especially from their existing vendor. Don’t feel pressured and trust your gut.
First, don’t panic or make any radical changes to your current strategy. Find someone in your network that used RainKing two years ago when they were acquired by DiscoverOrg and ask them what happened. Although I’ve heard of a few strong-armed pricing renewals, most buyers I know have been happy with how they were treated as RainKing was incorporated into DiscoverOrg. I suspect this is your best litmus test as to what will happen with ZoomInfo.
Second, get excited for what will surely be a new wave of innovation and scrappy upstarts that come to challenge the new 800-pound gorilla. We are in the middle of a multiyear B2B vendor consolidation and once that pendulum gets too far to the consolidation edge of the arc, it’s gonna come swinging right back. So be open to talking to smaller, lesser-known vendors to see if they have something unique to offer. There are still a lot of data vendors doing amazing, innovative stuff out there.
Lastly, call/email LeadGenius, of course! We don’t compete directly with either ZoomInfo or DiscoverOrg and have a huge amount of respect for where they play. Where both of them are pure data vendors, you might benefit from the work we do, which we describe as a data service. We usually complement a company’s existing data strategy rather than end up facilitating a rip and replace approach