FYI - a new short report was published today. https://thebearcave.substack.com/p/problems-at-zoominfo-tech…
9 Likes
His main criticisms revolve around “forced renewal” language in the customer contract. In my experience recommending ZI’s product to others, it is definitely more vendor-friendly than customer-friendly, but these terms are not terribly unusual for the industry.
I’m using a competitor of ZI and despite their customer-friendly “cancel any time!” clause, it’s been 4 months and they haven’t processed my multiple requests to cancel. It took 2-3 months to reduce my Salesforce license count recently. This is just… kind of how renewals work in this industry sometimes.
It’s a bit of a known secret in the Revenue Ops community just to be aware of the cancellation policy when signing up for ZoomInfo. This info may sound egregious to those outside of the industry and make a compelling case for a quick short.
Overall I’d say it’s a valid criticism of a way they could do better business. But not serious enough to justify shorting.
The second point he raises is potentially more of a concern, however:
The Bear Cave has found that ZoomInfo’s data collection practices are much more aggressive, and potentially illegal, compared to its dozens of competitors. Upcoming legislation and ongoing litigation may add to the company’s headwinds.
However:
Again, having actual experience with ZI and its competitors, I can’t say that ZI is more or less aggressive in its data collection than compared to its competitors. They’re all pushing the boundaries in some way as far as ethical data collection.
I am concerned about any potential illegal practices they engage in, although he doesn’t specify his allegations in the free preview of what I read. I’m not convinced he’s uncovered something big here as he would’ve focused on the illegal practices more rather than just mention them as an afterthought.
As far as upcoming legislation, yeah any investor should know that more GDPR-like legislation is all but guaranteed at this point. But ZI has navigated that legislation in the past and will probably continue in the future. But yes, they’re headwinds as we should expect more privacy protections moving forward.
If there’s significant interest I’d be willing to pony up and buy his report to dig deeper. But for me, ZI is currently my smallest position and it might be exited entirely soon anyways if SNOW’s upcoming ER shines for me.
ZI’s price has recovered entirely from the short attack in the time it took me to read and write this so the market seems to be brushing it off as well.
30 Likes
“It’s a bit of a known secret in the Revenue Ops community just to be aware of the cancellation policy when signing up for ZoomInfo. This info may sound egregious to those outside of the industry …”
Inside or outside the industry, these types of policies and procedures are the very types of practices that any smart business should not only stay away from, but work to eliminate from their industry entirely. It seems that with such animosity that ZI raises from former clients, the word of mouth alone should put them out of business in short order.
If you own shares of ZI, you owe it to yourself to Google “Zoom Info Reviews” or “Zoom Info Complaints” to learn what your company is doing to small business owners, and what it is costing them. I planned to list the first line of several complaints, (they’re amazing!) but there are too many. There are not only large numbers of complaints, but the number of types of issues are vast and include about every task a data-based product or company could possibly do wrong. And then the complaints of completely fake data, oh my. And data about non-clients that is false or outright lies, that never gets corrected in spite of repeated attempts.
I have been a holder of ZI stock for several months, and somehow it has performed better than most of my tech companies. As of tomorrow I will no longer be an owner, and I will be in a hurry to forget I ever heard of them.
If you think this news is fake, or complaints are false or even just exaggerated, please do yourself a favor and read just a few reviews from various sites. Like this one, where 35% rate ZI as Great, 65% rate them as Terrible, and none in-between: https://uk.trustpilot.com/review/zoominfo.com
I’m ashamed that I invested in ZI in several tranches, feeling more and more confident in the company each time, but never looked into customer reviews. I normally do, in smaller companies that don’t have “universal” reputations. But I missed it this time, and during a market dive, no less. Shame on me. But I live and learn, over and over, and this is hopefully where progress is made and lessons are learned. But there is a cheaper way to learn than to make a serious mistake*.
- Learn from mine. By the way, you’re welcome, friends.
As always, judge for yourself to decide what’s real. But don’t ask me! I already forgot the company’s name. hmm…What sere we discussing again?
7 Likes
If you think this news is fake, or complaints are false or even just exaggerated, please do yourself a favor and read just a few reviews from various sites. Like this one, where 35% rate ZI as Great, 65% rate them as Terrible, and none in-between: https://uk.trustpilot.com/review/zoominfo.com
These are just 35 reviews where users are more motivated to comment if they had a negative experience. There are many holdings of ours where reviews are bad while the investment is great and vice versa. Don’t get lost in vanity metrics, soft KPIs or anecdotal reviews etc.
Follow the numbers which matter. Keep it simple.
8 Likes
Raptor,
You bring up valid concerns. We should expect a best-in-class Saul company to have glowing reviews. In an ideal world we’d have accurate and unbiased NPS and this should rightly factor into our investment thesis. But we don’t, so sometimes as a proxy we end up looking at sites like TrustPilot.
And yes, ZoomInfo sucks on Trustpilot! You linked the UK site, but on the American site they had a 3.0 rating with lots of complaints like you mentioned.
Did you look at our other companies’ ratings on TrustPilot though? Here they are in descending review scores:
- MNDY 4.3
- CRWD 3.7 (only 1 review?)
3) ZI 3.0 - S 2.8
- NET 2.4
- BILL 2.3
- DDOG 2.2
- SNOW (not yet rated??? how??)
- MDB (not yet rated)
ZI is the 3rd highest in the holdings. DDOG, NET, and BILL are littered with the exact same types of complaints you mentioned about ZoomInfo. This seems like a site where people just go to complain about renewal processes, which I mentioned, is kind of shady in the entire tech industry, but not necessarily a thesis-buster. And ZI doesn’t seem that bad comparatively. Every one of our companies, except maybe Snowflake’s consumption model, has probably screwed over a business with their renewal-friendly language and a renewal team that “forgot” to cancel the contract. Like I mentioned, I’m dealing with that now with 2 separate companies, one being Salesforce, the titan of cloud SaaS companies. Unfortunately this is just the darker side of the tech industry and how serious they are about locking in those NDR% $$$s for us as investors. And it’s not even that dark… ZoomInfo requires a 60-day cancellation notice before renewal where most other tech companies require 30-day notice. That’s not exactly a ZI thesis-buster.
If we’re going to look into customer reviews, I’d recommend a site more like G2. Be aware that review sites can be gamed by a smart company, but let’s assume all our companies are gaming G2 equally. Here are the G2 ratings:
- MNDY 4.7
- CRWD 4.6
- NET 4.5
- SNOW 4.5
- MDB 4.5
6) ZI 4.4 - BILL 4.4
- ZS 4.4
- DDOG 4.3
- S (company not rated but individual products are)
ZI coming in at the middle of a tight pack here amongst excellent company.
If anything we need to be looking deeper into DDOG’s complaints, lowest of both sites! Based on what I’m seeing on DDOG, I could cobble some complaints together and write my own short report on them. Maybe I’ll do it and sell it to the value hounds who keep trolling our board recently 
The other review site I do slightly trust is TrustRadius. And did you happen to see this press release today?
ZoomInfo Earns TrustRadius Top Rated Award for Sales Intelligence Software for Fifth Consecutive Year
Company Also Recognized with 2022 Top Rated Awards in Market Intelligence and Intent Data
May 19, 2022, 9:00 AM EDT
VANCOUVER, Wash.–(BUSINESS WIRE)–ZoomInfo (NASDAQ: ZI), a global leader in go-to-market intelligence solutions, today announced that it has been recognized by TrustRadius with the 2022 Top Rated Award for Sales Intelligence Software, Market Intelligence Software, and Intent Data.
More than 1,200 verified TrustRadius users have recognized ZoomInfo as a leader in the Sales Intelligence Software category.
“Our customers continue to trust ZoomInfo because they see firsthand the positive impact it has on their business,” said ZoomInfo President and Chief Operating Officer Chris Hays. “The launch of our modern operating system RevOS this year has enabled us to deepen our relationships with customers and help their business grow quickly.”
Verified users shared how much value they receive from using ZoomInfo:
“ZoomInfo is a must for my office, I use it daily! It allows me to source and cross-reference our existing contact list of companies and their staff along with organizations to whom we are seeking to connect. It streamlines the research process and saves me time in my hectic day!” – Stephen McDermott, Executive Sales Director at Global Heroes
“ZoomInfo is absolutely amazing! I have used a lot of lead generation search engines and ZoomInfo is far above the rest. They are very user-friendly, have tons of access to correct information, and are a great company to work with. Everyone at ZoomInfo is very knowledgeable and friendly. I am a huge fan of ZoomInfo!” – Nelson Colon, Training Sales Manager at BICSI
Since 2016, the TrustRadius Top Rated Awards have become the industry standard for unbiased recognition of distinguished business-to-business technology products. Based entirely on verified customer feedback, they have never been influenced by analyst opinion or status as a TrustRadius customer. TrustRadius uses a criteria, methodology, and scoring to determine Top Rated winners.
To me it just seems like this short report has cherry picked some bad reviews to sell a negative image of ZoomInfo. Based on the replies I’ve gotten here and off-board, I’ll purchase the report over the weekend and open it up for discussion here to see if it has any merit.
I appreciate the discussion around this short report though and welcome any additional contributions.
49 Likes
Another short report on ZI.
https://wolfpackresearch.com/research/zoom/
“ZoomInfo (ZI) 1 is a SaaS provider that supplies its subscribers with detailed information on potential contacts. ZI claims 95+% of the contact information it sells customers is accurate,2 giving ZI an advantage over its peers.3
ZI would like investors to believe that the secret to its success is “proprietary insights”4 gained from investments in AI, ML, and “human-in-the-loop solutions.”5 However, the real secret sauce, according to a high-level former employee (“Former Employee A”), is the CEO’s college roommate, a real estate broker by trade, who created SGN Database LLC (“SGN”).
ZI uses SGN as a pass-through entity to obscure its purchase of (reportedly stolen)6 granular data on millions of LinkedIn users for pennies on the dollar from a shadowy entity called OxyLeads, which came under scrutiny in connection with an enormous data breach of hundreds of millions of user profiles.7
Our opinion is based on extensive investigative research, including conversations with three former ZI employees, a current employee of Oxyleads’s successor, Coresignal, and experts with relevant knowledge of the industry. This research has revealed key pieces of evidence that raise significant questions about the legitimacy and legality of ZI’s (secret sauce) data acquisition practices…”
4 Likes
Thanks Jonwayne for finding and contributing that.
This short report alleges that ZI’s secret sauce is so much better than most of its competitors because it engages in illegal data scraping. The evidence provided is pretty damning.
In my opinion, ZI’s secret sauce has always been powerful. It was either the result of an absolutely excellent product, or shady/illegal practices in the data collection world. This seems to point to the latter.
While I can forgive a company for 60-day renewal terms instead of 30-day, I can’t get behind a company that relied on illegal practices to fuel its hypergrowth engine.
I now think the shorts are right on this one.
1 Like