The Achieve Podcast - Zachary Hedges (Customer Model AI)

Welcome to the Achieve Podcast, the show where we highlight the leaders, creators, and entrepreneurs who are building meaningful businesses and shaping their industries. My name is Jesse Warner. I will be your host today. Today we're excited to have Zachary Hedges, who is the CEO and co-founder of Customer Model AI. Zach, it's a pleasure to have you on the show today.

Well, thank you, Jesse. Pleasure to be here. I appreciate everybody watching.

So our audience can get to know you a little bit, give us a quick backstory of your business. What do you do? How did it all get started?

Sure. So I'll give you— I'll start with my history. Um, I started building websites and doing digital marketing at 13 years old. I started my first multimedia company at 15. That was over 25 years ago, so I'm not a young buck anymore, but I've been, uh, I'm kind of a Swiss Army knife of digital marketing. Uh, I've done, you know, everything from programming, video editing, design, branding, you name it, you name it, I've done it. Uh, by the time I was about 26, 27 years old, I had built my agency to where I had Fortune 500 clients, Pfizer Pharmaceuticals, Fidelity, Hard Rock Hotel, as well as hundreds of small businesses. Um, so I have worked at the enterprise level all the way down to the solopreneur. And, um, about 2015, I got real enamored with with, well, actually in 2011, '12 with marketing automation technology and decided to shift out of it being an agency and building my own tech. Went ahead with some partners, raised money, built marketing automation technology, ran that for 5 years, had about 30,000 outside sales professionals on the platform. And then in 2018, we started building, excuse me, yes, 2018, 2019, we started building technology that automated content. Before generative AI and all this kind of stuff, we had content automation technology, push-button marketing systems. And then we, about 4 years ago, really started to get deep into enterprise consumer data. So these are, you know, all of the big data companies that, you know, have hundreds of data points on every consumer. So we started leveraging that data and doing customer modeling. And then we started to realize that last year that we had been doing this at the enterprise level, but nobody had really built a software that can just do it instantly and, you know, SaaS-ified it or brought it to the masses. And so we decided last year, my team and I, to build this product called Customer Model AI so that we can automate customer models in real time so that businesses can stop guessing, making marketing decisions based on guesswork, and start using data-backed decisions. On how they should market, what channels to use, because they finally really understand who their ideal customer is. So that's my background, 25 years in marketing. I've done it all. And Customer Model AI is a new, a new product out in the marketplace, different from most these days. So, yeah.

Well, first of all, congratulations on the growth and success of, of your past companies. And then you got a new— is this a new company or just—

This is a new company, kind of like Slack, you know, where it was a part of our automation technology, which we still sell and have clients.. But we were like, man, this little component is actually its own, needs to be its own tool, needs to be its own product cuz it just needs to stand alone. So that's what we did. Very much like Slack and others, other examples of that, you know? Yeah.

Yeah. So you kind of, you had your core business, you had another product, decided, hey, let's go spin off another company. Yeah.

On that.

Um, you know, uh, sounds like you've gone through maybe a little bit ups and downs, a few different businesses. Talk to me a little bit about how your business has changed as it's grown and What did it look like when you started versus what does it look like today?

Well, I mean, if you're talking about agency-level work, it started off with small mom-and-pop clients, you know, especially back in the early 2000s. It was build me a website. You know, now it's become big enterprise, multi-year relationships, big enterprise contracts. We're coming in and doing automation and all these kind of things. But we really shifted into data and customer modeling. You know, what we've really found is, is that so much of marketing, obviously based on past experience and most, is trial and error, right? It's throwing up, throwing something against the wall, hoping it sticks, split testing and learning. And, you know, for businesses that don't have the wherewithal or budget, you know what I mean, to really go through that process, it could take 6 months or a year of trial and error, losing a lot of money on paid or whatever the channel is to perfect a channel or to learn that, you know what, this channel isn't the right channel. We want to solve that. And that's what really— that's what 25 years of being in the streets doing marketing assignments at every level has taught me, is that no matter what you go into, if you do not have the data behind it, you're really just throwing up stuff against the wall and hoping it sticks. So that's what— that's what I found for the most part. I mean, I've had every up, up and down, you know, that you can imagine, Jesse, from, you know, building software and having to You know, it's not, if you're in the software game, it's not Field of Dreams, you know, you don't build the stadium, they just show up and everybody's in the stands buying, you know. So, I know I've experienced it all, big months, small months, you know, all of it. So, no, it's been a fun, it's been a fun ride for sure.

And how big is your current team now?

We have about 8 full-timers and then we have, you know, an outside sales team. So, it's about 12 of us right now. I've had teams up to 30. Uh, I've had a— I used to have a dev team for many years. It was 15 people deep, and I found that you, you can do more with less, which is really good people. And now with technology and automation, I mean, if used right, it's, it's incredible. So yeah.

So Zach, obviously come from background of marketing. When you look at sales marketing outreach for your own company, where are you seeing the traction? What's working and maybe what's not? For your business?

Um, you know, we've run cold email marketing automation programs for some of the largest companies in the world at scale. I've sent over 20 million emails. I've done marketing automation, lead scoring, been an expert in that. Obviously built our own systems. I gotta be honest, you know what I found is the biggest blocker to success, especially with service-based businesses? It's the sales culture within the business. A lot of times it's not necessarily implementing technology. Yes, technology is important. Having these marketing automation systems, having the emails, having all of that. What happens when the lead comes to the salesperson? Do they, are they reacting in time? Right? Close rates close when you got a hot lead ready to buy. The longer you wait, the close rate goes down. What I found in working with so many companies, big sales teams with hundreds of people in a room, is how well is that sales team member there, how well can they leverage the technology, the CRM systems, how fast do they react, and what kind of sales culture do they have? Really, to be honest, is the, is the, in my experience, whether a company wins with these programs or not. I usually like to say with a lot of my clients, it's front of house and back of house, like a restaurant, right? The front of house is you're bringing people in, you got the maitre d', people are liking it, but if the kitchen can't cook the dishes, the kitchen is bad. It doesn't matter how great your marketing is. It doesn't matter how great the fluffle is, the backend. So a lot of times I find that, yes, you can, you companies can find a winning strategy. Oh my God, winning strategy, generating leads, KPIs are great, everything's great, but then they don't close enough. There's not enough ROI. And then it'll usually dig deeper in its culture. It's the sales team, it's how well they react. So to really, that's my answer to that question. Yeah.

You feel like that's true at your own organization?

I think it's hard. It's hard to find salespeople. And a lot of times when you find really good salespeople that are more experienced, they already— especially like maybe an older generation that, you know, they got, they got a lot, they're really good. They're like, I don't want to do the dirty work anymore. I don't want to pick the phone and call somebody who didn't fill out a form and schedule it on. You know, I'll talk to them if they schedule it on my calendar. I don't want to do the dirty work anymore. Let's let the automation do that. And there's an automation can only get you so far, right? Automation is going to tell you, hey, out of these hundreds of people, here are the people most likely to engage with you based on the lead scoring, the nurturing, whatever the case may be in the data. A lot of them don't, you know what I mean? And so you just have different people, different phases of life, completely understandable. Maybe they've been in sales a long time. They're past that. They're just closers, you know what I mean? So that's why, again, front of the house, back of the house, and the culture. Culture eats strategy for lunch. I don't care what business I've worked in. I don't care what strategy or how big your budget, if your culture is not good, it's hard to grow. It's hard to scale.

Obviously, you've been involved in automation for a number of years. Sounds like you've even built some of the tools to help with some of that. Right now, AI is everywhere. You know, it's gone past a little bit of the, hey, what is it? How do we use it? Into now it's just a part of your, your life and, and workflow. Talk to me about how your company is using AI to grow and, and to actually do the things you, to help you accomplish that.

Yeah. So I use AI in like literally all facets of my business. I, I keen it to like the example I like to use for somebody like me who already can do all this stuff. You know, obviously I'm different than most. I got all this background. I can do all this. It's like Mario with the mushroom. You know, like he was, you know, he eats the mushroom, he goes super big. You know, he's powerful and he's jumping around.

That's how I feel on AI.

Right? Like any tool used incorrectly, it can get you bad results or weird results or wonky results. But putting in the hands of, of marketers, putting in the hands of, of, of some of your expertise, if you leverage it correctly, you can 5x or 10x your productivity. So for me personally, huge, absolutely a game changer. As far as how we're using it in our business, I've been using artificial intelligence for over 8 years prior to generative AI. I don't know if you guys remember the IBM Watson days. You see IBM Watson. We used to use AI then to analyze and do a lot of analytics and do a lot of that kind of stuff when it was really good at that. I mean, obviously, it's great at that now, but before it was generative. So I've always been a, a, a believer in AI. I've always seen the future of it. How we use it at Customer Model AI is we have essentially an AI data scientist. We've taken all of the great models, we brought them together, and we allow our clients to upload a list, instantly model it with consumer-grade data from some of the largest data providers in the world, huge companies we have access to, and then we apply those data points and we use AI to do all of that data science work, right? There's only about 14,000 data scientists. Most of them work at the biggest enterprises in the world. It's an expensive thing. It's got to go to college, got to be— gotta have a math background, etc., etc. So most small businesses, most of the businesses probably watching this would— if I said data scientist, they wouldn't know what I meant. You know, it's not, it's not a, it's not a, um, some— it's not a Somebody you're going to go hire, right, right at $200,000 a year, right? It's just most are not going to do that. So we wanted to use artificial intelligence so that we can bring that, that type of level of sophistication and that level of complex data scientist, uh, type level work right inside of an app and deploy it easily for, for our customers. So yeah, big proponent of it, um, use it all over the place.

As you try to scale, what, what constraints popping up? Time, people, systems, capital, leadership. Where, where are you seeing constraints in your growth?

Well, we're a new company. We just soft launched in May. Obviously, it's not our first rodeo. We've launched other companies. Typically, you know, it's being patient, right? Especially when, when you wanna build something organic. Organic takes time, whether that's blogging, podcast. It's a consistency of work. That doesn't always—

we're all—

it's human nature to be immediate. I did something, I need some results now, you know what I mean? And that I still— and knowing that, I still face that, right, with some of my strategies. I have to remind myself, you know, these strategies take, you know, 90, 120 days, right? Again, you build it, they don't come. You got to go get them. And let's be honest here, the average consumer, no matter how great of a piece of technology, a service, whatever you're selling, nobody cares. Right? You got to con— you gotta create trust. You gotta go out there, create the trust. You gotta educate them and you got to nurture them over time. And it's used to be 7, 8 years ago, it was 7 touches to close. Now it's 15, maybe it's even more. So you just gotta put the work in and you gotta stay steady. Um, and you can't give up too easily on a strategy because you're not seeing immediate results, right? If you truly believe in that, you'll put the work in and you'll see a compound effect over time. I've seen it with some of the clients. I've seen clients, um, I have one client built a Substack newsletter to $3 million a year on Substack, and they did it all one podcast. He did 125 podcasts in his first year, didn't have big marketing budget, got on the podcast, podcasted the podcast and the podcast, and he built that initial following, got them to his newsletter, $3 million a year business. So again, you don't have to have a big budget to do it, but you gotta have the wherewithal to stick with it.. And I have to remind myself, I've been in this 25 years. I gotta remind myself all the time cuz I'm like, why didn't that work faster? Why didn't this happen faster? You know what I mean? And, uh, rather than just throwing it away and being like, it doesn't work, it's been 6 weeks, you know, you gotta look at it and, and, and go, no, this is a, it's the long game with anything.

A little bit of, bit of grit, little patience, perseverance.

Yeah.

Uh, let's talk about the next stage of growth. I know you're just starting. So you've been through ups and downs throughout your career, but what are you most excited about? Talk to me about the future a little bit.

You know, I feel so passionate about companies understanding who their ideal customer is and making the data-backed decisions rather than guesswork. I feel like that in the marketing space as a whole, this has really been reserved for the largest companies. The enterprise companies that got big budgets and they can just sit here and mess around with data scientists, look at data and, and use it. And a lot of smaller businesses, you know, you say data and it's just like foreign to them and it's a concept only reserved for the big boys. And so, you know, the passion is, is to be able to take something complex, make it instant and make it digestible and useful for any client of any level of, of marketing background or, or data background. I feel like that, that is Even using AI, I think people get that confused. Oh, well, the, the, the model is so super smart. It'll just write everything and do everything and know everything. It knows things in a, in a high level, but unless you feed it, it's like garbage in, garbage out, right? The better ingredients I give the AI, the more data, the more insight, the more that I can give it about my business, where my business is at, the, even the campaign data. Push your campaign data in there. Push all your datasets in there. Because the more it can analyze, the more it understands, the better it's gonna guide you, write content, or whatever you ask. And so we want to be a provider of that. We want to be able to show people who their ideal customer is. I mean, we pull, we have over 800 data points on over 300 million consumers and 120 million households. This stuff is insane. Everything from they like red wine, their habits, family life. I mean, we have all of that. So when you can understand that and then push that into these systems, your results are gonna be even 10 times more powerful. And so we, you know, we feel like we have a swim lane, an opportunity being sort of a, not the first to do customer modeling, but the first to make a product out of it. We can't find anybody that's done it this way, at least from what we're, you know, from our research. So we're excited about bringing that. We're excited about doing our own education, bringing people and whether you're single solopreneur or big enterprise company, we can make this easy, more cost-effective, and provide more value with this type of data. So, so that's what we're excited about.

Yeah. And data right now is everything, right? It's AI, all the data centers, everything exploding around data and how to use it. Let's look, let's look back at your journey for a minute. Talk to me about some of your wins and mistakes, maybe like what, what lessons are standing out to you?

Well, in 2018, we built a content automation platform that was for organic social. So literally, you, you would put in all these assets. We used AI to analyze, but we actually had a block building methodology where you could just break down content. Think of it like Lego pieces, right? Breaking content, little Lego pieces. Then our automation would take those pieces, build social media, build email, things like that. I started off organic. And because I was like, oh man, every— because working with so many hundreds of small businesses and doing organic social media is like the, the worst thing for especially a small business, right? Especially at that time. Now it's different. Generative AI has made it easier. But back then it was $200 a post. And so we thought, oh, we could, we could build a product that could solve that problem. I should have done paid, Jesse. I picked the wrong channel. You know, I picked the wrong channel. And I realized 2 years later, like, I should have done this for paid, you know what I mean? Versus organic. And so sometimes even with all my expertise, I'm looking at my own development wrong, or I'm applying it to a certain aspect when I, I should have applied it to a different aspect. Um, I would say the number one thing is being able to pivot. You know, we've done well, we've, you know, I mean, we, we've made millions of dollars in revenue. We've done all that kind of stuff. But we're, you know, our goals are, you know, the next, you know, the next unicorn, the next this, right? The next acquisition, the next this. There's all these stories in between that, you know, you read in the papers, you see these, these young folks doing incredible things, building incredible companies, which seem very fast, but there's lots of different versions of that story with every other companies in between. And so we've, we've, we've, you know, been on that wave, the ups, the downs. And then when you have technology like generative AI come in and it revolutionizes so many industries and so many in the world, you gotta pivot again. You know what I mean? You gotta look at it and go, okay, Now everybody's got content automation. Now everybody's got delivery, you know, Vibe Coding, build apps in half the time now, right? So you've got to look at it. You got to be able to pivot and not get too consumed with your baby. This is my baby. Oh, I built it. Oh, I developed it. It's this, it's that. If its parts are working, take those parts and move. If other parts aren't being able to pivot. That's what I think I've learned and, and, you know, what I try to remind myself. You know, as I continue on my journey, you know.

Zach, any final thoughts or advice that you give to other leaders who are on a similar journey to you?

Um, you know, obviously don't be scared to fail, you know. Um, sometimes even if you set out with a big goal, even getting halfway there is still an accomplishment, you know. It's not always the glass half empty, half full. I have to remind myself sometimes that too, you know, because you set out big lofty goals and you're not there, or you're not there in the way you want to be there, that doesn't mean you haven't accomplished a lot. So being proud of the wins, understanding where I can be better, and then being willing to be better. Listen, I've got more knowledge than most marketers. You know, I can sit across most marketers and it's hard for them to, you know, be able to like, you know, not out-talk, but you know, their, their level of expertise versus mine. It's not a cocky thing, but I have to rem— I also, I also am humble enough to go, you know what, there's a— there's certain levels of marketing that I didn't spend a ton of time in. I dibbledabbed, I did little parts. I'm gonna bring in an expertise and I'm willing to listen, you know, even though I know where my expertise is, right? And I think that's hard for some CEOs and other people to be able to just kind of let go, you know what I mean? And that's another lesson I learned. There's some aspects of your business, even if you feel very knowledgeable in, you got to sometimes let go. You got to let others take, take control. You got to create culture. Let people own certain aspects and, and give them the, the depth to do their job. And obviously over time, if they're not, you know, as a CEO, you'll, you'll move on. But, you know, uh, too many of them I've seen, having worked with so many companies big and small, they, they can't get out of their own way. You know, they gotta, they gotta micromanage everything, they gotta do everything. You know, everything has to sort of have their stamp. And so I've tried to not be that way. I've tried to empower folks in certain areas and let them do that, do, you know, do what I hired them to do.

So, well, Zach, thank you so much for sharing your story, your insights with us today. Really enjoyed, uh, hearing from you. I'm sure you have way more you could share. For those who are listening, if you want to learn more about what Zach and his team are building, uh, I invite you to go to their website. Their company name is Customer Model AI, and the website is customermodel.ai. So go there, check it out, uh, bringing data to smaller and medium-sized businesses, really bringing that data science there onto some big things. So, uh, again, big thank you to our sponsor as well, uh, Achieve Fractional, which provides fractional executives for growing businesses. And that'll wrap up today's episode of the Achieve Podcast. If you enjoyed today's conversation, follow our show, share with other entrepreneurs. And again, thanks for listening. Zach, thank you again for joining us.

Thank you everyone. Appreciate it, Jesse.

Hey, we'll see you all in the next episode of the Achieve Podcast.