Episode 9: Unifying the World with a Single API: Shensi Ding of Merge

Don: I'm joined here by Shensi Ding, co-founder of Merge, the unified API for all B2B integrations. Merge disrupts how product teams deliver customer-facing integrations. Thanks for coming on the podcast, Ms. Shensi. I appreciate having you here. - Shensi: Thanks for having me. ➢ Don: First and foremost, who is Shensi Ding? - Shensi: I am in New York City. A co-founder of Merge. Gil is my co-founder. We've been best friends since freshman year of college, and I love integrations. That's it. There's nothing else to it. ➢ Don: Amazing. For those who are less familiar with the space than I am, what is Merge and what exactly do you guys do? - Shensi: We build what is called unified APIs that allow developers to integrate once to offer a full category of integrations to their customers. We currently offer five different categories: HRIS, ETS, Accounting, CRM, and ticketing integrations. ➢ Don: It would be really helpful just to understand a little bit more about the founding story of Merge. First, can you share a little bit about the inspiration behind the idea? - Shensi: As mentioned in my intro, Gil and I have known each other for a long time, and many years later after school, we both ended up at startups in San Francisco. They ran into the same problem of having to build a ton of integrations with different competitors in the same category. - We're actually in very different industries. I was in cybersecurity and he was in recruiting tech. For some reason around 2019, especially with so much VC funding happening, with so many different SaaS companies being formed, both of our companies had to build a lot of integrations. If we didn't have these integrations, our product wouldn't sell. - It was extremely, extremely frustrating, not just for the presale side, but also for the engineering side and also for the partnership side, and also for the post-sales team members as well. - Because of this and how we realized that we were in very different companies—but learning is the same problem, fundamentally—we wanted to figure out if we could find a solution that would solve this problem for all companies. ➢ Don: Where exactly did you and Gil ultimately meet? It sounds like you were on pretty parallel paths, but at what point did you come across one another and land on starting this company together? - Shensi: I'm sure we met at some party freshman year at Columbia, but we both studied computer science. We were in all the same classes and group projects. Gil is one of the best software engineers in our class. Obviously, in a lot of group projects, I would always be like, hey, Gil, do you have an extra spot for me? We just stayed good friends throughout school. He was just such an amazing friend and kept in touch after. - We were on the student council together, too. Back in the day, we thought that was cool. We were planning all these student council events, but we were the class president and vice president together. He was always someone who when he would say he would do something, would do it. That meant a lot to me, and also showed a lot about what it would be like to work with him. ➢ Don: No kidding. Looking back at that time, could you envision yourself starting a company with Gil, or is that something that materialized much later once you got into the working world? - Shensi: I think materialized much more when I was in San Francisco and we ran into the problem. I don't think I ever forecasted starting a company. I originally thought I was going to be a software engineer by studying CS, and then I moved into finance because I was in New York City and I felt like that was a big gap in my knowledge. From those two separate paths, I didn't see myself going into being a founder until we ran into this problem. - Don: That competing interest you're describing between finance and tech is something that I've personally faced. Can you talk a little bit about your decision to go into finance and how you ended up working in tech? - Shensi: I started coding when I was around 12 years old, and I was really into it. I loved building apps, I love building different things, and I loved trying to find the most optimal way to build something, too. I thought that was extremely rewarding. - When I went to school, I felt like what I was working on was either a really small project or it would be like one small project for a long time and I just didn't feel like it was the right career path for me. I think I also didn't meet the right companies because I was in New York City. - At the time in New York, tech wasn't the hottest industry to move into. I think that also really impacted my point of view and perception of tech. I regret having that impact on me because I think I would have gone to tech a lot sooner versus going into finance first. - At the same time I felt like not knowing how companies operated and how to look at financial statements, was a big gap in my knowledge and I didn't understand that point of view. I couldn't tell if an idea was a good idea or not. - I felt like if I went into banking and I learned the fundamentals of finance, then I would be able to combine the two skill sets that I already had into something that could be more generalist and potentially useful in the future, although I wasn't quite sure what that would be. It was very hard for me to move into finance because I studied CS undergrad, and ironically, it has been a very helpful background now, especially when we were at the seed stage where there wasn't much to do, but build. ➢ Don: I can relate to that. In terms of your and Gil's experience before founding Merge, you were at Expanse, Gil was at Jumpstart, and it sounds like you both kind of fell on this opportunity. You identify this opportunity, this need in the market for integrations. - Was there a particular aha moment? Clearly, there was a need in the market but was there a particular moment when you realized that you needed to do this, you both wanted to leave, and start this company? Just double-click a little bit on that inflection point in taking the leap. - Shensi: I don't think there was an aha moment. I think it was an accumulation of a lot of data that pointed in that direction. When we first thought of this, it was a big problem, but we didn't have the right solution. - To be honest, what we started with was very bad. Everyone we talked to acknowledged that this was a big problem, but they weren't quite sure if our solution was the right one. We had to pivot and move that idea around a lot before we quit our jobs and before we started building anything. We just talked to a lot of people. - We also talked to over 100 companies and people at every single function. We talked from presales to partnerships, to post-sales, to software engineering, to VP engineering, to VP products, because we wanted the opinions of all of these different personas. When we finally came up with the idea of building a unified API, we started getting great feedback and also started getting great indications of what price point we could sell this product at. - There was no one point where we were like oh my gosh, this one person has given us the validation that we need. It was an accumulation of okay, over time we were getting more and more positive feedback, and then finally I was like, okay, we just got to do this. I quit and then Gil was like, oh shit and then he had to quit too, so we got started. - It was great because we just had a time when all we did was just code. We were just coding and spending a lot of time together just discussing what the product is going to look like and prepping for that initial seed fundraise. ➢ Don: It makes a ton of sense to me. How much time do you spend in that due diligence phase? - Shensi: Six or even months. It was a long time and we were still full-time at our previous jobs. This is also a period when everyone had to meet in person. We were meeting with people for coffee in person all over San Francisco while we were at our current jobs. We had to sneak in before work or after work just to try to meet with people and get as much feedback as possible. ➢ Don: A lot of the listeners on this podcast are considering launching their startup. Can you speak to your view on the importance of this due diligence phase before taking the leap and starting your endeavor? - Shensi: It's so important because it collapses the amount of time that is required for finding product/market fit. You can try to find product/market fit by just asking questions and getting feedback on whether or not someone would purchase something. You can also spend six months building something instead and then show up bringing the market, but then you've also wasted a lot of time as well. - I think having that research base where you have the data, gives you conviction, and the direction that you're moving towards. It's so helpful for making you execute faster once you have that vision of exactly what you need to build. ➢ Don: Has that persisted in your DNA to present day? Obviously, you've come a long way since that initial diligence phase. Is that something that you're still doing when you're launching new features and new products today? - Shensi: I think much faster just because the amount of conviction that we need to build a new feature is just a lot lower than the conviction that is necessary to start a company. Now, whenever we get an indication from multiple customers that they want a feature or they want something that can solve their use case, we go back to them and we're like, okay, this is what we're thinking. Would this work for you? - If they confirm that's the case, then we build it. We don't try to build it immediately and try to make sure that it solves them. We solve whatever they're trying to solve. We try to get confirmation from them first. But it is a lot less due diligence is required now. ➢ Don: Maybe pivoting the conversation a little bit to the present day. You guys have enjoyed a ton of success. You've raised a lot of capital. You've added dozens of new team members and attracted hundreds or potentially thousands of customers, it sounds like, based on some recent LinkedIn post. Congratulations on all of that. - I'd love to understand how you spend your day-to-day now. It was really interesting to hear about the initial phase. A couple of years later, how are you spending your days? - Shensi: It goes through phases and it still changes a lot. Two months ago, I was mostly in product mode and we were just focusing on new categories. I was building integration so I could get back into it. I was also coding so I could see what was going on in the code base. That was a very different phase. - Then I was back into sales and trying to figure out what was going on with the new categories. How do you continue having repeatability with selling something newer as well? Then I was also trying to figure out how we move our product more enterprise. It was becoming more high-level as the team grew bigger. - There's also a point where my team was like hey, Shensi, you just made a huge bug. Please don't do that again. I was like, okay, clearly I'm not contributing anymore. - Now I spend my days either talking to partners, talking to customers, talking to prospects, also reviewing our sales and pipeline, what that looks like, talking to our managers, and giving them advice. I'm also noticing that are there any gaps in the company and team. Where do we need to fill in a role? I still do a ton of recruiting. It's a lot more varied. - TLDR, it's a lot more varied now what I do versus what it was like three months ago. And the three months before that, I was only doing sales. I was like 90% just doing sales. We've gone through a few phases and right now is probably the most varied point of the company's journey where Gil and I are doing so many different things. I expect that will also continue to change as we continue to hire people and fill in some more gaps in the company as well. ➢ Don: How do you identify where the biggest gaps are in the business where you need to plug in and dedicate a relatively higher percentage of your daily activity? - Shensi: I try to read as much information on what's going on. A lot of what I'm doing is looking into what's going on with customers, what's going on with our outbound motion, and what's going on with our PR. Are we getting them approved and pushing them out? What's going on with feature development? What's the pace of our building and launching new things? It's just getting educated on everything that's going on. - As I'm doing that, I see any gaps that are happening, and I hone in on the managers with Gil to see what can we do to improve this if something is not the way that it should be. ➢ Don: I'd like to double-click a little bit on recruiting. From conversations I've had with you and Gil in the past, it sounds like you spend a lot of time recruiting. You've had a ton of success with it. Can you just talk a little bit about your outlook on recruiting from a very high level? Then I'd love to double-click a little bit on the early team. - Shensi: It is the most important thing that a founder can do because it is the number one way to curate what your culture looks like. In the end, you can't change who someone is, but what you can do is select who enters your company and how that impacts your team. - From the very, very beginning, Gil and I have been very careful about how we curated who we introduced to the company. All of our team members are kind, good people who genuinely very much care about Merge and we do not make any exceptions for that. It's not okay to hire someone who's an asshole, even if they're a top performer because it impacts the team and their morale. It's also not great to hire someone who is a low performer, even if they're a nice person because that also impacts the team morale and how everyone perceives their other co-workers and what their workload looks like compared to everyone else's. That's not fair either. - We try to make sure we're hiring top performers that (again) are kind, good people. It does mean that it's a lot of [...], it's a lot of interviewing, and it's a lot of talking to people too, and trying to hone in on getting the data points so that you can have the intuition on whether or not someone is going to care when they end up joining Merge. - Gil and I interview every single team member, whether it's an intern, whether it's a more senior person. Every single team member, we interview them, because it's really important that we gatekeep who joins Merge. ➢ Don: What do you look for in your first, I call it, a handful of hires? I'm curious if that has changed at all to what you're looking for today. - Shensi: It actually hasn't changed and a lot of it is whether or not they will give a shit. That's the number one thing. If they don't give a shit, they're not going to change. But if they give a shit, it's up to you to give them the proper experience once they join the company so they continue caring about the company. If they don't give a shit, they're never going to change. - That was the number one thing that we really interviewed for and we were so lucky, especially with the first few team members on how amazing they have been with continuing that ethos of every single team member that ended up joining. It has really created a consistent culture across San Francisco and New York City. - We've never had any regretful termination because of that. In two and a half years, no one has quit where it was a regrettable termination. We've been very lucky because of that and how picky we've been for who ends up joining the company. ➢ Don: For those of us who love to implement a similar strategy, how exactly do you determine whether or not someone gives a shit before they join during the interview process? - Shensi: We have some inherent things that are filters for that. We are 100% in person, five days a week, in San Francisco and New York City. If you don't live in one of those two cities, you have to move, and you have to be willing to come into the office every day. That's the default expectation. - That is a filter, too, because you're not going to be able to sit on your bed. You're not going to be able to coast. You're not going to be able to go to Tulum for a month. You're not going to be able to sit on the beach and work. You have to be in the office, and you have to be creating connections with your co-workers. - You have to be intentional about what the next step is for your co-career and the fact that you want to join a hyper-growth company and you want to know your co-workers and be close to your co-workers, too. That is why our retention is so high. That's an inherent filter, too, because (again) people have to show a level of commitment, that they're interested in doing for two, three, or four-plus years. - Another filter is we set expectations early in the interview that it's going to be a lot of work. We're not trying to grow a company that just flails and gets acquired. We're trying to build a huge company that goes public. That means a lot of time. It also means a lot of hours. It also means that if a customer is not happy on the weekend, we have to hop in and do something about that. - Because we set those expectations upfront and early with team members, it does filter out a lot of candidates. The ones that do go through that funnel are extremely engaged because there aren't that many companies that are 100% in-person that have this dream of creating a huge company. Out of a sea of remote companies, that's where Merge stands out. ➢ Don: That makes a ton of sense to me. Do you find that you've lost out on any talent? Or maybe that's fine because it's a filter? There is another side to that story. When you're making this decision to do five days in-person to have this work-hard mentality, are you concerned that you'd be shrinking the talent pool and potentially missing out on some talent? - Shensi: Yeah, but then we didn't care because, again, we really knew exactly what we wanted. Missing out on those people totally fine for us as long as it meant that we were curating the team that we were hiring and adding to this company because it was going to be the foundation for all future team members forever. We're still 55 people, still 100% in-person. ➢ Don: Wow, very cool. Let's shift a little bit to fundraising. You've had a ton of success raising capital. I'd love to dive into your fundraising experience a little bit if that's okay with you. To launch the business, you raised multiple rounds of capital. Could you just walk us through from seed to the present day, I believe it is a Series A company? I think you might have been in the market recently on a new funding round but don't want to put the car ahead of the horse. - We'd love to understand your fundraising journey and where you are at the present day. - Shensi: We raised the seed around two years ago, and then we raised our Series A last year, and then we actually just finished off our Series B, which is very exciting. - Don: Congratulations. - Shensi: Thank you. I was super excited about that. We've also been very lucky with who we've partnered with so far throughout this journey. We're very fortunate as a company. ➢ Don: Amazing. Can you talk a little bit about raising seed capital and how that differs from raising Series B Capital? - Shensi: It's so different. For seed, I view it as a great way to introduce yourself as a founder to the market. For the seed round, Gil and I met with every single VC fund that there was out there because it's really an introduction of your company out there. If they happen to know another company that might need a vendor like yours, it's a great way that you're already top of mind. - I viewed it as a great marketing opportunity as well for us, but it was very, very different. Back then, we just had a prototype, we had customers' anecdotes, and we had us. A lot of the buy for the seed round was who we were and how we could sell the story. - For the series B, it's metrics, it's data. You need real revenue, and a lot of it was customer back channels and what customers said about us. It's a lot more like the flow of time versus a snapshot in time. Everything that you've done over the past few years to your customers to help them or hurt them will always come up during those conversations. Backtrails are one of the most important parts for these later-stage rounds. ➢ Don: For our listeners and for your understanding, we're recording this podcast ahead of the announcement of Merge's Series B, and we'll wait until after the PR goes live. - Shensi, if you're willing, I'd love to just double-click a little bit on that fundraising experience, specifically for our Series A listeners who are contemplating a Series B. How did you go about vetting prospective Series B partners and how do you ultimately land where you did today? - Shensi: We were very lucky that we did have some ongoing relationships with a few VCs. We've been meeting with them every couple of months whenever I was in San Francisco since Gil was based in San Francisco, just to get an update and keep in touch. They would also help us a lot with customer introductions as an indicator of what they were like as potential partners. - That was very helpful because it was a lot more time before we started fundraising then we had had for a Series A round. Again, fundraising back then was just so much faster. I think it was a lot more time than we normally would have spent like in the previous years when the market was so hot. - But because of the current market conditions, we just had some more time and because we already knew them and they've been so helpful to us, we just knew these people who were discussing the round a lot better. It just made it a lot more of a different fundraising situation. - Whereas for people we already knew, they already knew some more metrics, they already knew what the company was like, and it sped up what the expectation process was like too, in the fundraising round. - It was basically like, okay, we ended up getting a surprise indication of a preemption. We started talking to the people we already made contact with and it created a pretty speedy process for us. - Metrics were the number one thing that everyone still cared about, especially given the market conditions. We were very fortunate that our head of finance and operations was always a huge stickler about that, so our sales efficiency metrics were amazing. We were really really set and primed to fundraise. ➢ Don: For those in a similar position, how much time would you advise allocating to actually raise the Series B round? Then personally, how much time did you and Gil have to dedicate to raising that capital and closing the round? - Shensi: We originally had been set to allocate around 4–6 weeks in September for a fundraising round, but because we had gotten preempted, it reduced again the education time that was necessary with new partners or existing partners. We kept it really tight with only people that we already knew. Because it was a lot more of a small circle of who we were in contact with, it just shortened the process. It only took around two weeks or so. - Don: Great, and then what do you intend to use the capital for? Is that a big part of the story here? How to use the capital to drive growth or otherwise? - Shensi: We were able to prove a lot with our Series A funding. With the Series B, a lot of it's going to be scaling up that motion just because we were able to prove that out, and now we just have to keep repeating it and keep repeating it and growing as quickly as possible on the revenue side. - We also want to keep growing on the product side as well. We have a lot of new ideas for what we wanted to do, but that does require hiring a lot of our people. Now with the funding, we're able to be a lot more ambitious with our hiring goals, too. ➢ Don: It sounds like a really exciting time. Congrats again. In the last segment of this podcast, we like to get a little bit vulnerable with the founders that we meet with. I know from personal experience and from discussions we've had with a dozen other founders in this podcast that building is hard and you have to keep your physical and mental health in check in order to endure and thrive on this seemingly never-ending rollercoaster ride. - I wanted to double-click a little bit if you're willing, maybe willing to share some of the problems or one problem that keeps you up at night, if that's relevant to you. - Shensi: It's similar to an aha moment. It's everything so it's not just one problem. Anything could go wrong and I think just having all of the accumulation of everything that could potentially go wrong is a lot. I know that's not the best answer you're probably looking for, but really, anything can go wrong. - I think it's best to stay scared of everything versus just one thing because it's usually the one thing that you think is going to happen doesn't end up happening and it's something else so I try to stay scared about everything. ➢ Don: Then what do you do maybe in your personal life to cope with that stress or staying scared of multiple different things simultaneously? - Shensi: My HRV is very low and my boyfriend is very concerned, so I'm trying to get it up. I exercise every day. I'm trying to eat healthier. I'm starting to try now with my appearance because there was a period when it was dark and I just couldn't do that. - I also need rest on the weekends. Before, I didn't believe in that, but now I'm seeing a lot of value in just having one day to really decompress and just not do anything and not even talk to people and just recharge. I've been doing a lot more of that proactively and that's helped a lot with distressing. Because as much as I want to work every single day, all day, all night, I found that I do need that one day to reset. Otherwise, I'm not as productive creatively in the next few days. ➢ Don: It sounds like you've done a really good job surrounding yourself with the right people at Merge on the job. Has that been important to you outside of work, on the weekends, or in your personal life? How has that helped you get through some of the tougher times? - Shensi: It's been so helpful because I think one of the best things you can do as a founder is to just trust your team to do what they need to do and not micromanage them. When I hire someone, I just trust them, and I really don't have to monitor them and see what's going on, and it also alleviates the stress that's happening in what you're worried about all the time. If you just trust your team members until they prove otherwise, it creates a more productive environment. Also, Your team members feel more autonomous as well. I think hiring the right people again all comes back to that. ➢ Don: Yeah. Looking back on your journey over the past handful of years now, is there anything that you would go back and change? If you could give any advice to a younger version of Shensi, maybe before raising the seed round, is there anything you would tell yourself to help get here faster or do something potentially differently? - Shensi: Yeah, I think I knew pretty quickly that finance wasn't the right route for me, but I wanted to do it just because I felt like it was the right path. I think if you feel like it's not the right path for you, you should just stop doing it. - I ended up doing it for three years, even when the whole time I didn't feel like that was the right thing. I should have just been a software engineer and I should have just ended up doing that, and I didn't. I think now it's something I regret. I could have just jumped into tech a lot faster. ➢ Don: How quickly did you realize during that finance stint, within those three years, that this isn't what you want to do? - Shensi: I think after the first year when you hit that learning curve of like, okay, now I know how to do everything, I know how to do DCF. I know all this. I think once I got past that point, I was like, okay, I got what I needed out of this, but I feel like the next step has to be private equity, so I did it. - I just stuck it through for that second year just so I could do it and then I did private equity. There I was like, okay, it's not the right fit for me. Once I joined a company, I instantly knew that was the right thing for me and that was the feeling that I should have tried to get immediately. ➢ Don: Awesome. It seems like things worked out for you in the end. Looking back in the context of everything that you shared with us today, would you do it all over again if you had the opportunity? - Shensi: I probably would have compressed the finance part a little bit more, and joined a startup sooner or joined multiple startups before Merge got started. But everything happens for a reason and occasionally I do have value from who I met and when I was investing and also what I learned in banking. Then I'm like, okay, that was helpful. Everything happens for a reason. - Don: Awesome. Shensi, this is a really valuable session. I appreciate you sharing your time with me with our listeners. Thanks for joining and excited to follow the progress, and looking forward to the announcement of the series B. - Shensi: Thank you so much. Thanks for having me.