She cold messaged 50,000 engineers—then grew to $10M+ ARR. | Shensi Ding, Founder of Merge

Pablo Srugo (00:00:00):
How fast did you get to a million from the time they turned things on?

Shensi Ding (00:00:03):
I think it was like seven months.

Pablo Srugo (00:00:04):
Where does it take you to go from ten to a hundred you think?

Shensi Ding (00:00:06):
Scale, then you need a really good team. You need people making really good decisions. You need to move to enterprise. It's a very different type of company. It's all about the leadership team then. You can't as the founders, just will your way to get to there and we really did. We really willed our way to get to $10 million. We lost a really big deal to a competitor that had copied us and it was a big logo, and it really hurt us. That was very painful for us, we got them back, they're a customer now. So yeah, don't fuck with Shensi, we get them back. Yeah, okay, this is a controversial take but I'll say it.

Previous Guests (00:00:41):
That's product market fit. Product market fit. Product market fit. I called it the product market fit question. Product market fit. Product market fit. Product market fit. Product market fit. I mean, the name of the show is product market fit.

Pablo Srugo (00:00:53):
Do you think the product market fit show, has product market fit? Because if you do, then there's something you just have to do. You have to take out your phone. You have to leave the show five stars. It lets us reach more founders and it lets us get better guests, thank you. Well, Shensi, welcome to the show.

Shensi Ding (00:01:10):
Thank you so much for having me.

Pablo Srugo (00:01:11):
I'm excited to have you. Actually, I've heard about your company several times.

Shensi Ding (00:01:14):
Oh, really?

Pablo Srugo (00:01:15):
Well, it's one of those several problems that is pretty classic, right? Integration, it's like who's building software today that doesn't need to integrate with something else?

Shensi Ding (00:01:23):
I'm biased, and I totally agree. But I still always get a little bit of a shock whenever anyone's heard of us.

Pablo Srugo (00:01:28):
Yeah, so I'm curious to actually hear how it all started and why. So you've raised, what? $75 million today? Is that right?

Shensi Ding (00:01:33):
Yes, exactly $74.5 million but it's close.

Pablo Srugo (00:01:37):
Who's counting, yeah. So, okay, $75 million and you started in like 2019, 2020?

Shensi Ding (00:01:40):
We started in 2020.

Pablo Srugo (00:01:42):
It was a pretty crazy time to start something.

Shensi Ding (00:01:45):
It was, a lot of things have changed since then and I feel we have always. We've gone through multiple challenges throughout, it's like year one COVID. Year two, tons of fundraising and lots of money. And then year three like everyone's dying, and then it just goes on, and on, and on. So but yeah, it's been really exciting seeing how the company and the team has been able to adjust to all the different things that have changed. It's also been really great just being able to launch great new products and also being able to see a lot of our customers succeed in this current time too.

Pablo Srugo (00:02:12):
You know, it's so funny how that happens. There's just so many things that have to go your way for a startup to work and the last thing you imagine. Like I've got a company, my portfolio is doing really well but they're in the car space and when they started. It was, you know, supply chains and you just couldn't get cars, and then it was the interest rate, and then it was the Trump stuff with the trade war. And it's just, none of these are the things that I would have said, are going to be the reasons why we're going to have challenges in year three. You know what I mean? It's just insane.

Shensi Ding (00:02:38):
I know, it is really insane. But yeah, I think now we've been increasingly more just accepting that everything is just going to be changing a lot faster. It's no longer the same way. It's not the same way of company building that it used to be in the 2010s. Things are just changing much faster and much more drastically. So we just have to be able to adjust.

Pablo Srugo (00:02:55):
I'm curious to hear, what's your background? What are you doing before 2019 that leads into this startup?

Shensi Ding (00:03:01):
So my background is in software engineering. I started coding when I was in middle school, I was a huge loser and nerd. And so I was just coding in my dark bedroom in the suburbs of Boston. I went to college studying computer science and that's where I met Gil. My co-founder and best friend.

Pablo Srugo (00:03:15):
What do you build? By the way, in middle school? Are you building games? Is that?

Shensi Ding (00:03:18):
Oh my god, the lamest things. Random websites, like over and over, and over again with slightly different designs.

Pablo Srugo (00:03:23):
Were you one of the ones that at least you got paid for this or it was just your own thing?

Shensi Ding (00:03:26):
I never got good enough to do that. So I wasn't able to generate any income, but I did make a lot of great fan websites for all my favorite bands.

Pablo Srugo (00:03:33):
There you go.

Shensi Ding (00:03:34):
Yeah, and I was able to make different headers and website templates that I was really excited by, but now in retrospect are actually very ugly. But it still taught me a lot about coding and at my high school. Actually, we were very lucky. We had a computer science class. I was able to learn a lot there too, but it was more oriented towards game design. But it was still really fun to do and meet a really great teacher. So yeah, I just really loved coding. So I went to college, studied coding. I met Gil, my best friend there and my co-founder now. And we ended up going our separate ways. He went straight to San Francisco. I stayed in New York and actually ended up moving into finance. Back then in 2015, tech was not the same way it is now. It wasn't as prominent in New York City. A lot of people who were studying engineering at Columbia were very focused on moving into finance and my whole orientation was around like, okay. I grew up coding, my mom's a software engineer, I want to do something a little bit different and I also didn't feel like I was the best software engineer ever. And if that was going to be the case, then I would probably need to find my other. Some other niche that I would be able to be uniquely good at. Another thing that also really bothered me was that, I always felt like because I didn't understand the business side, people could talk down to me. People would always be able to be like, oh, well, you don't understand business models. You don't understand like financial statements and because of that, you're just don't get it. And I really wanted to fill in as many gaps as possible, just so that I would be able to talk smartly about things and so did investment banking really wanted to learn the fundamentals of business, and had a great experience there.

Pablo Srugo (00:04:57):
But you'd say it was more of the look. Because obviously, usually I would say. When you're in New York and you go to finance, especially investment banking. It's basically the money that's probably the number one. But do you think for you it's the learning that was the number one motivator?

Shensi Ding (00:05:09):
Yeah, I mean, I had confidence in myself. I felt like if I was going to be really successful, the money thing would work out one day. I just had to really make sure that I was able to get the skill sets to become successful and yeah. I really knew nothing about business and it was really hard to get that job. Because I had a CS degree, which is really interesting but back then it actually really hurt me. People didn't feel like I would be able to have the skill set to be a good banker.

Pablo Srugo (00:05:30):
Interesting, and so how long did you work in that IB for?

Shensi Ding (00:05:32):
I was there for two years and then I moved to Silver Lakes Growth Equity Fund, in San Francisco. So I was more tech focused. It allowed me to move to San Francisco, where I would be able to just be around more people in tech. I thought it would be a good way for me to move back towards tech and just see if I would want to move towards operating. And it was, I was able to see a lot of great pitches, I met a lot of founders, I also made a lot of friends in San Francisco and really became immersed in the industry. And it made me realize I don't think finance was the right way for me. I really wanted to move into operating and with the people that I'd met in college, and also in San Francisco. I was able to get a really great job at Expanse as chief of staff and CEO. And it got me my idea for Merge.

Pablo Srugo (00:06:10):
Sorry, which company was this?

Shensi Ding (00:06:11):
Called Expanse, back then it was called Qadium. We actually rebranded to Expanse while I was there. But we were acquired by Palo Alto Networks for around $1 billion in 2020.

Pablo Srugo (00:06:20):
Okay, what did the company do?

Shensi Ding (00:06:21):
So they did a tax service reduction. So they were able to scan the internet, look for any potential risks, like risky IP addresses on the internet and help agencies, and also Fortune 500 companies find any potential vulnerabilities. And yeah, it was really cool. I learned a lot about both politics and tech. And the CEO was super smart, I worked with him directly and got to learn a lot from him there.

Pablo Srugo (00:06:43):
What was your role in that company?

Shensi Ding (00:06:45):
I was chief of staff.

Pablo Srugo (00:06:46):
And do you go directly from that to starting Merge?

Shensi Ding (00:06:49):
I did, yes.

Pablo Srugo (00:06:50):
Walk me through the origin story and then I guess re-partnering with Gil. How does this idea come about?

Shensi Ding (00:06:55):
So I'm at Expanse, I'm working and one thing that just keeps coming up is integrations. We were reaching a point, where we didn't have any integrations and we were starting to hear it a lot from our sales team. Some of our sales team members were really becoming frustrated, because we were losing deals to our competitors. Just purely based on integrations. Even though we had a better product, we were still losing these deals and it didn't really feel fair. And so we wanted to try to figure out how we could bridge the gap as quickly as possible. We tried building an API, so that people could build their integration between us and whatever technique service that they used on their own. That didn't really help and, then we tried using CSV upload and download, and trying to make that as flexible as possible. That also didn't really help and then we hired a contractor to build our integrations for us, and it was just really horrible code. So we ended up just tossing it away and it didn't really go anywhere. So then finally we ended up hiring a lot of engineers purely to focus on integration. So it took them six months to build a single integration. So overall a really frustrating experience, but I was sitting in the executive setting. So I could see how it was really impacting us from a P&L perspective. It was hurting us both on a revenue point of view and then also from a R&D expense point of view. And no one was really solving this problem properly. So I was getting dinner with Gil, we would just talk about work and at the time he had just moved into a head of engineering role at a recruiting tech company called Jumpstart. Which had been backed by Sequoia and one thing that he was saying was a big issue at his company, was integrations as well. But because he was in the engineering team, he was noticing that it was becoming a really big pain point for their team from a work point of view. It was really hard to get access, they ended up having a lot of bugs and customer success was always asking them for answers to questions. And they would always have to continue getting off of their current work in order to help provide that support for customers. So, seeing it from those two different angles and us just talking about work. We started thinking there might be something there, but we weren't quite sure what the solution was.

Pablo Srugo (00:08:36):
I guess just to summarize, maybe like. I mean, on the go-to-market side, it's obvious. I mean, if you don't have the integration that the customer wants and somebody else does. You're losing that deal and then on the product side. If I'm understanding, it's not just developing but it's the maintenance of the integrations. It's the support. it's the bugs, it's the fact that if something changes on their side, you've got to somehow support that change on your side and so it's just, and then they just stack. Because you start with one or two, it's manageable. Then you got 20 and it's complete chaos.

Shensi Ding (00:09:00):
Absolutely, yes.

Pablo Srugo (00:09:01):
And so you're seeing this problem from both sides. What do you do next? How do you go from there to kind of quitting and going all in on this idea?

Shensi Ding (00:09:09):
So it definitely wasn't immediate and that's something that I really don't recommend doing. I don't recommend just being like, okay, I kind of think I have an idea and I'm just going to quit. We did a lot of research. I was doing a ton of reading on like what companies were out there, what were the existing options, what we felt like they weren't solving. We also booked a lot of meetings with different companies.

Pablo Srugo (00:09:26):
Were there competitors on this integration as a service companies already?

Shensi Ding (00:09:30):
So there were some companies like Zapier, Workato, Tray, that were doing workflow building. So what would happen is you would buy product A and you buy product B, and then you'd also buy Tray or Workato, and connect the two. But that wasn't ideal based on what we had known in our own companies and there wasn't anyone just connecting the bridge between, company A and B. And so what we wanted to do was just help that direct connection versus requiring a purchase of a third company every single time someone wanted to use both tools. So we did see a few companies that were kind of doing it, but not really. They were pretty small or pretty focused, or doing some kind of embedded workflow like Hybrid that wasn't really great either. It would still require the customer to do a lot of the work, it wasn't going to be permanently scalable and it would also just run into a lot of edge cases, and wouldn't really handle the long-term maintenance. And, so Gil and I, we just talked to a lot of people who are using those products as well. Trying to understand what is still the gap? What are still the issues? Why is this not working for you?

Pablo Srugo (00:10:24):
Did you get demos of those products yourself, as well? How deep did you go in trying to understand those products?

Shensi Ding (00:10:28):
So, I don't really believe in doing that. I actually think it's unethical, but there's a lot of things online and if you're a really good stalker. Which I am, you can view, you can find anything, you can really find anything. Everything is on YouTube, everything is on a podcast, you can hear everything that is available out there and if you aren't. Then you're not doing a good enough job. So, I don't believe in doing that and I've actually had other companies do that to us as well. But you should just do your research on your own and you can get pretty far. If someone does have a self-serve sign up, that's different. But taking a demo just for the purpose of snooping, I think is a little weird. I mean, of course it's business but we just didn't do that.

Pablo Srugo (00:11:01):
Got it and so you did, what you did. Plus you spoke with their customers to kind of get a sense of what the limitations were from their perspective.

Shensi Ding (00:11:07):
Exactly.

Pablo Srugo (00:11:07):
And that led you to. I mean, that kind of crystallizes your belief that this is not solved.

Shensi Ding (00:11:13):
Exactly, we tried to go through a few different ideas. Some of them were not great, some of them were just slightly better options of what was already out there and it wasn't worth quitting for that. And then finally we decided, okay, I think a normalized data model, one API that you integrate with once and you're able to just, read and write data back in the same exact format. That actually fixes the problem. It's not an O of N solution, it's an O of one solution, it actually is multitudes better than what is out there. It's a huge pain, very difficult to do but if it's done well. Then it actually can be a lot better and also difficulty. And the more painful it is, it's actually a moat. So we started using that idea, then talking to people and trying to see like, okay, it's actually better than what you currently have.

Pablo Srugo (00:11:53):
And so the pitch is just integrate with Merge and then we have all the integrations. Kind of, you get them all for free.

Shensi Ding (00:11:59):
Exactly, in a category.

Pablo Srugo (00:12:00):
When you have that idea you go out and you like. How many of these conversations are you having and what are you looking for besides. Because you know there's the blanket like, yeah that's great. That sounds cool you don't really know like, does that mean you're gonna switch? Does that mean you're actually gonna buy? How far are you taking it?

Shensi Ding (00:12:13):
We had a hundred conversations. So I would cold message random people, I would look for people in product, design, customer success, founders I would really reach out to anyone I could. Trying to, literally anyone that had an integrations page and see if they would be able to give us feedback. So the way to get whether or not it's real, or not. Is you ask how much would you be willing to pay? Would you actually be willing to switch off of what you're currently doing? How much better is this than what you're currently doing? And if there's anything that you think could be better, what would it be? But we're about to launch our second product and we're going through the same exact motions. To be honest, I don't think that many people are like, oh yeah, this is great, we're going to use it. Most people are like, oh, this is good or this is not. If there's totally unengaged, that means it's not a good fit and that means that you are not solving the problem that they have. And then you should find out what is the problem? Why am I not solving that? What is the gap between what you need and what I am providing? But you should be building what the customer wants and figure out what that gap is super helpful. So if they're not engaged, it's actually more helpful for you than if they're just like, oh, yeah. I'm super excited, I'm going to use this.

Pablo Srugo (00:13:12):
What did you hear through those hundred conversations that gave you conviction? Was it like extreme, yes, this is exactly what I want? Was it someone more nuanced?

Shensi Ding (00:13:19):
It was extreme annoyance at the current way of, how they were doing things and how if this worked, it would be much, much, much better. There was a lot of doubt for whether or not we can make it work and more of the feedback was that there was doubt that we can make it work, versus that this would be much better.

Pablo Srugo (00:13:33):
Just on the technical front, like really a lot of risk on that side?

Shensi Ding (00:13:35):
Yeah, that it was just going to be hard and it was going to be very painful, and it is. It really is.

Pablo Srugo (00:13:41):
They were right.

Shensi Ding (00:13:41):
They were right! But again, if that was really what the doubt was. Then that means that it could be much better.

Pablo Srugo (00:13:47):
So is that then the moment? When you kind of jump in with both feet?

Shensi Ding (00:13:51):
Yes, I think when we started getting really excited about the problem and the fact that we could be the right people to solve it. I gave notice, I gave six months notice and I told Gil, hey, I quit.

Pablo Srugo (00:13:59):
Six months.

Shensi Ding (00:14:00):
Yeah, well, I was chief of staff and I was really close to my founder. And I wanted to make sure I was doing right by the business. So I gave six months notice and I told Gil. I was like, hey, I quit and he was like, I don't know if I can quit. Because I'm head of engineering and then when it started getting towards the day he was like, okay, I need to just like jump in and do this. I was like, I agree and then we did it. We just hunkered down. It was June 2020. So peak, peak, peak COVID.

Pablo Srugo (00:14:22):
Did you second guess it? Because I guess you would have given notice like Jan 2020 and then COVID happens. Do you rethink your strategy?

Shensi Ding (00:14:30):
I actually didn't. I'm honestly pretty delusional, so I actually didn't. Yeah, I think if I had been less delusional, then this probably wouldn't have happened. But I've always been a little delusional. So I think it's okay.

Pablo Srugo (00:14:39):
Did you factor it in? Or you thought it would be better somehow, or neutral, or it wasn't even a part of the equation? 

Shensi Ding (00:14:43):
I didn't give a fuck, I didn't care. It just didn't matter to me. I was like, we're already on this track, we're going.

Pablo Srugo (00:14:51):
What were you doing during these six months? Were you moving the ball forward on Merge? How did you balance that?

Shensi Ding (00:14:57):
We continued booking more meetings. I felt like there was no limit to how many meetings we could book. I also wanted to make sure that I was able to get back into coding for the team. Because I hadn't been coding for five years and then I knew that we could move way faster if both of us were coding. So I was rereading, I was trying to get familiar with it, I was playing around with VS Code. Just trying to get back into it. It wasn't going to be the same as actually doing it, but I wanted to be able to contribute.

Pablo Srugo (00:15:20):
And you're doing meetings like discovery calls? Or trying to pre-sell? What are you trying to get in these meetings to that point?

Shensi Ding (00:15:26):
Both.

Pablo Srugo (00:15:26):
You did like a hundred or so, and then in that six month period. How many more did you do? And what'd you get out of it?

Shensi Ding (00:15:30):
Oh, I mean, so it also includes those six months too. But we started tapering off a little bit more. Because then it became more of, okay, now we know what we're building. We need to do more research. Yeah, so it was mostly just, okay, now we have the idea. This is how we're going to execute on it, what do you think? You ended up building something similar in house probably. So what are things that you learned from this? Like how? What can we take from you? We also started having a little bit more conversations with former founders to get advice on this as well. We started being able to be ready, like, okay, what do we need to know for the first year? What is fundraising for the seed like? How do we end up prepping for this? Like company formation, we started trying to figure out who our lawyer would be. So it was those things where we started prepping, but we were working a lot at our previous jobs and so we didn't have a ton of time. So we were moving the ball, but it was still slower than if we had been full-time.

Pablo Srugo (00:16:14):
When did you do your first round? Your pre-seed or seed round?

Shensi Ding (00:16:16):
I think we raised it in August.

Pablo Srugo (00:16:18):
How did you set that up? Walk me through that process.

Shensi Ding (00:16:21):
Yeah, so another thing that I've been doing during the six months from when I gave notice to when we were prepping was, I was reading a lot about fundraising. There's so many materials out there and I really wanted to make sure that. Because I was technically the non-technical co-founder, I needed to be responsible for prepping us for that and I needed to be responsible for making sure that it went smoothly. So I did a ton of research on that and we met with all the different. We also prepped all of our connections too. So I was like, okay, we're going to fundraise at this time and once we're ready, I need your introductions when we can have that. And so we first met with people that we were more. That we would feel a little bit more comfortable with, that we wouldn't be super nervous about the pitch and then over time we met with more, and more people. But I really view this seed as the debutante ball and you meet with everyone that you can. So you're introducing yourself to the industry as a new founder, as a new company. So yeah, we met. We did the same pitch every single day to different people. We would do follow up meetings with them and do the same pitch over, and over again too. And we would get a lot of questions, and each time we would debrief on that pitch like, what went well? What didn't go well? What we could have done better? And then we would do it again.

Pablo Srugo (00:17:19):
How long did you run fundraising for?

Shensi Ding (00:17:21):
Three weeks.

Pablo Srugo (00:17:21):
And you were all in on fundraising during that time?

Shensi Ding (00:17:23):
A hundred percent. We thought we would be able to do other stuff, but it is not possible. If you're really all in.

Pablo Srugo (00:17:28):
You said you read before doing this, you learned a lot about it and then you went out, and do it. What were some of the things that you learned during that process? Both theoretically and then practically from actually going out, and raising a seed round?

Shensi Ding (00:17:39):
It's a lot of games and marketing. And I thought I understood that, but it's so true. And it's basically a proxy for how good you are at sales. And so you need to be prepped for how you market yourself and your co-founder, how you market yourself as a team, why you are uniquely positioned and also you just need to be extremely confident. It is just something you have to be proud for and there's a lot of things that also people don't put in writing. But you hear from your friends who are in VC, like, how long you take to respond to things, how often you open their emails, it's little things like that. Where it's kind of like a dating game and there's a lot more to it than just being like, okay, please invest in me, like, please. Yeah and there are resources that allude to that, but you have to you just have to hear that explicitly, like just don't be stupid. You need to do your research and prep. Don't just go into it thinking it's gonna work out no matter what. Like you want to meet with a thousand people. That's just such a waste of time. You really need to just nail the fundraise, get the money, and then immediately start building again. Because building is what's more important than fundraising and fundraising is such a distraction.

Pablo Srugo (00:18:40):
We have tens of thousands of people who have followed the show. Are you one of those people? You want to be a part of the group. You want to be a part of those tens of thousands of followers. So hit the follow button. How'd you go and get the intros? Which is often the hardest kind of part?

Shensi Ding (00:18:55):
So I think there are several different ways to do it. I think what was lucky, was that I had worked in investing. So I had my old co-workers who were still in investing and I could use them for other connections. I also had friends who, were really early at certain successful startups and they were able to connect me to people. Because I was chief of staff, I also knew the investors in our company, at Expanse too. And my old CEO was really helpful in making me a lot of introductions too. And that was one of the benefits of joining Early Stage company. I could use his network and he was able to help me a lot too. So I think if I had been like an outsider, then I think joining an accelerator would have been super helpful. But because we already had a lot of those connections, we didn't really need it. There obviously are a lot of tangible benefits to doing it, but we just used our industry connections.

Pablo Srugo (00:19:37):
It's crazy though, how much the gamesmanship of fundraising really does matter and especially earlier on. I mean, later on there's a lot of real numbers behind it and so, you know, it's just the story piece will always matter. But even if you're not good at fundraising, if you have an epic, like a hundred million dollar a year business. People are going to throw money at you. But at the beginning, it's almost all like, you mentioned confidence. You mentioned all these subtle things, like when to answer really fast, when to actually not answer really fast, you know how to message different pieces. Because part of it is, VCs like myself. You can't really know who's going to be huge and so you almost have to pick up on all these cues. That you assume might be correlated with, or also drive FOMO, like a momentum. All these things kind of come together and usually that's what drives a short fundraising process that also gets you the amount of money in terms you want.

Shensi Ding (00:20:25):
I think it's also a good proxy for street smarts. That was something that I reflected on later on as well. I think if you are able to hustle, get those connections and try to figure out how to position yourself in the best way. Then later on when you're doing sales deals. That's way harder, I actually think. I'm getting to be $1 million and then $10 million, and $100 million. This is way harder to do than getting a fundraise and so you have to be street smarts to do that. If you can't execute on your fundraise, if you need to fundraise, then it's going to be really hard to generate revenue too. Because you have to be able to navigate those personal relationships.

Pablo Srugo (00:20:53):
How much did you raise in that round?

Shensi Ding (00:20:54):
You raised $4.5 million.

Pablo Srugo (00:20:55):
Okay, and then what did you do after you had it? Did you hire a bunch of people? Did you put in the bank? What was the strategy?

Shensi Ding (00:21:01):
Oh my god, yeah. We really focused on hiring. We have a really big product, it's very technical. There's a shit ton of things to build and, Gil and I were spending all day, all night and weekends coding. But it wasn't fast enough and in order for us to onboard our first customers. We knew we needed engineers and we also wanted to have a beautiful product. We had to invest in design and so we spent all of our time recruiting. Every single day, we spent so much time outbounding. I don't even remember the exact number of engineers that I outbounded. But I think it was like 50,000 or so, it was crazy.

Pablo Srugo (00:21:28):
Wow.

Shensi Ding (00:21:28): 
We spent a lot of time outbounding engineers. Because we just knew no one's going to randomly apply to Merge. We have to source them, we have to reach out to people, we have to try to convince them to join the company.

Pablo Srugo (00:21:38):
How much was your internal network? Especially Gil, if he was head of engineering?

Shensi Ding (00:21:42):
Useless, it's not. That's just not, some people have found it to be super helpful. We didn't end up finding it to be super helpful. Because there's non.

Pablo Srugo (00:21:47):
Interesting.

Shensi Ding (00:21:48):
There's non-competes and then also the people that end up wanting to join you. When you're starting a new company. Sure, I can hire my friends but do I want to? You know what I mean? It's kind of weird and then also we were doing it during COVID. And we knew we were going to be in person. We were going to be an in-person company from day one and not everyone was willing to do that.

Pablo Srugo (00:22:07):
How did you guys do that?

Shensi Ding (00:22:08):
Yes, we wore masks and as we got bigger, COVID got better. 

Pablo Srugo (00:22:10):
Right.

Shensi Ding (00:22:10):
We all got the vaccines pretty early on, actually. As we started getting bigger.

Pablo Srugo (00:22:14):
What drove that? I mean, a lot of people had different ideas and stuff. And a lot of people knew or thought it never would work, but to be that determined that early on. What was the thinking? About not even trying out remote?

Shensi Ding (00:22:25):
So Gil and I, we were working together. Every morning I'd bike over to Gil's apartment in San Francisco and we would code, and it was so much fun. And we were moving so fucking fast. And because we were moving so fast, I was like, there has to be special magic to working in person. And then we would do a few days where we would be working remotely, and the progress was just significantly slower. And we just wanted to be able to scale that as much as possible, and we were open to changing our minds. If it turns out that everyone is going to be remote forever and it wasn't going to be possible to continue this team culture being in person. One day we would change but again, as we started doing it. It was really hard.

Pablo Srugo (00:22:57):
But even for a rockstar engineer that just happened to be somewhere else, you just. You wouldn't do it?

Shensi Ding (00:23:00):
I wouldn't give a fuck. No, because you wouldn't be successful at Merge. It doesn't matter if you're a rockstar engineer, because you wouldn't be a rockstar engineer at Merge.

Pablo Srugo (00:23:07):
What do you think now having done it for so long. You talked about this magic, what do you think happens? When you're in person that makes, I would think especially small teams. Maybe it's larger teams too, work better?

Shensi Ding (00:23:16):
You care, you actually give a shit. If you're working remote, I don't care if Joe from Alaska is not working. I don't care if he doesn't answer my question for like seven hours, but if I'm in person. I'm sitting next to Joe and I'm like, hey, why is this button green? He has to respond to me sooner and then I'm also annoyed if he doesn't keep up with the company in the same way that I do. I mean, so there's accountability and also I'm friends with Joe. So I care about Joe being successful and Joe cares about me being successful. And then we care about the company, and the team in general. So you just care more if you're in person.

Pablo Srugo (00:23:47):
How many people did you hire in that first? I don't know, six month period or so?

Shensi Ding (00:23:51):
We hired five people. It was a pretty small team.

Pablo Srugo (00:23:54):
It was a lot of outbound, but it was going to be a small team. It wasn't like you needed to go to twenty or something.

Shensi Ding (00:23:58):
No, not yet. We, and then I think by the time we raised our Series A. We had gone to like twelve or thirteen people.

Pablo Srugo (00:24:02):
You know, when you build a normal product. You have to have this, the MVP idea. You put something out, you have an idea and then you go back and forth. Was that the case with this? Or did you kind of know? Like, if you build it, they will come sort of thing. It needs to be, cause it's a technical product, right? So I'm just curious, how much back and forth was there? And how much was it just like heads down, get it to this place and then we ship.

Shensi Ding (00:24:19):
It's probably seventy percent heads down. Let's get it to this place. We really knew what baseline we needed to get to. But there were nuances that we didn't expect and that our customers were able to give us feedback on. And that helped us really fill in that last remaining gap between like, okay, this is something that's pretty good, and this is something that I would actually use.

Pablo Srugo (00:24:36):
Can you give an example of that? Is it super technical?

Shensi Ding (00:24:38):
This is like a really stupid example, but so we have Merge Link. Which is the pop-up where someone authenticates and our first version, Gil and I designed it. And it was fine, it works, it was usable and our first customer, Drata. This guy, I love him but he was like, this is kind of ugly. Can you make this better? And this is something that works, right? It literally worked, but it was ugly and it matters. Because it's appearing in all of our customers' products and we were like, you're right that is ugly. But it's the last thirty percent that doesn't. He gave us feedback on, that we didn't have to do and it works. But we should do, because it actually makes the customer want to use it and so we did make it less ugly, and now customers do use it.

Pablo Srugo (00:25:16):
There you go, that's a good story. Talk to me about the go-to-market side. Hiring is hard, building is hard, but it's kind of doable hard. At least most of the time. Go-to-market is the thing that sometimes just doesn't at all happen. How did you structure it in that first year or so? How did you get your first few customers, for example?

Shensi Ding (00:25:32):
It's just brute force outbounds, you have to outbound. Anyone who is too lazy to outbound, you're just not going to make it. That's just not, you just got to get over that. You have to be embarrassed, you have to do all these really awkward things. We just have to cold message and cold email, and cold LinkedIn everyone to try to get them to take a chance for you. And I'm doing that still.

Pablo Srugo (00:25:50):
That was you? That was just you doing that?

Shensi Ding (00:25:52):
Yes, just me doing it.

Pablo Srugo (00:25:53):
Okay.

Shensi Ding (00:25:53):
Yeah and I'm still doing that to this day. It's one of the things you as a founder can uniquely do. So just man up and do it. I hear all these people who are bitching about like, oh, outbounding. Like it's your job. So you need to get over it. Whether you're recruiting, whether you're doing sales, whether you're trying to get a partnership. You have to be willing to outbound.

Pablo Srugo (00:26:10):
Who was your first customer, for example? And how'd you land them?

Shensi Ding (00:26:12):
We got Drata and it was from a LinkedIn message.

Pablo Srugo (00:26:14):
Cold?

Shensi Ding (00:26:15):
Cold.

Pablo Srugo (00:26:15):
Maybe just tell me about the whole process. You go out, you cold outreach and they sign right away sort of thing? Like, it's smooth process? How did that play out?

Shensi Ding (00:26:22):
No, so I messaged Troy, the CEO of Drata and I was like, hey, I saw you need to HRS integrations. We are blah, blah, blah, whatever, you know, the pitch and he was like, sure, send me an email. I'll like send you an intro to our CTO and we book a meeting with the CTO. And he's like, why would I use you guys? And we were like, because we're going to be better. And he was like, I just don't trust that. And we were like, no, we promise we're not. It was all vibes, it was a complete vibe check. Which is fair because we had really nothing, we barely had a product but yeah. He really was just like, if you guys die, we're screwed, so don't fuck this up and then he was also like, don't screw me. I need high quality. I've already used another vendor that didn't work out. I need you to not screw me. And we were like, okay, we will not do that, we will not do that and they didn't pay us for the first two months. Because we wanted to prove ourselves to them. We wanted to show them we would do whatever they wanted, and we would really make sure that they were happy. We also signed on, I think, two other customers at the same time and we did the same exact thing for them, too. So before we signed our first contract with them, we just showed them that we would do whatever they needed and we would be the best team. We would have the best product and that we would be reliable.

Pablo Srugo (00:27:25):
You had just three customers for two months, and you just kind of rolled with them until you figured the product was at the right level?

Shensi Ding (00:27:31):
Exactly, because yeah. The first few months when they signed on, it was chaos. Like nothing works. So you have to get through that period.

Pablo Srugo (00:27:37):
When you're talking to a company like these, do they already have integrations? How do they think about bringing you on? Do they replace the other ones? Or they keep them but use you for new ones? What's the kind of story?

Shensi Ding (00:27:47):
It's actually both and so sometimes they'll have like one or two integrations. And they're just like, Oh my God, this sucks. We need someone else to handle the rest and they'll end up using us. And sometimes it's like we have existing integrations. We don't even want to deal with them anymore. Please take over all of them and then sometimes it's like we're launching a new product. We don't have anything. We want to just move fast and we'll use you. So, and it can also be a combination of all of them, but we've definitely seen all of them. And whatever someone decides to do, like long term. If they decide like, okay, we want to bring some of them in house, we'll help you out too. Our goal is just to be the best partner.

Pablo Srugo (00:28:16):
And how many integrations did you have back then? How did you choose what to integrate into?

Shensi Ding (00:28:20):
We had like ten and all of them were from me signing up for random shit. I signed up for an Australian HR provider that had a free trial. I would just try to get free trials everywhere. So if there was a one-week trial, I would sign up for it and we get API access. If there was a free trial somewhere else, I'd use that. I used our own accounts so that we could test and build it out too. I tried to ask our lawyer to see if they could get us a sandbox. We really did everything we could. I used this guy I knew from college where I hadn't talked to in eight years, to get in contact with the board of a company that then got me in contact with the CEO, got me then in contact with the partnership team. It was really whatever we could to get access to those first few. But yeah, it was very painful.

Pablo Srugo (00:29:00):
How do you manage that? Because that's your value, right? If you go to a customer and you have ten integrations and it's not the ones they want. It's kind of useless, right? How did you manage that Venn diagram of the integrations you could get and the ones that. Actually, those three customers especially needed?

Shensi Ding (00:29:12):
I mean, there's no way to manage it. You just have to bust your ass, try to get as much access as possible.

Pablo Srugo (00:29:17):
Did you ask them like, hey, which ones do you need? And then you'd go back, and kind of get those?

Shensi Ding (00:29:21):
No, I knew what they needed. They needed everything we didn't have. So it just didn't matter. I just needed to get access to anything, it's like cyclical. We need enough traction on the customer front to get access to more API providers and the more API providers, would get us more customers and that's exactly what happens.

Pablo Srugo (00:29:33):
When do you feel like the product is working? What timeline is this now?

Shensi Ding (00:29:37):
It's around April 2021. We start having fewer issues, the customer is happier, we're feeling more confident outbounding companies and having them see the product, and try it out. And they're not running into huge issues. They're not officially signed customers, but they're starting to try it out. And we're feeling like, okay, we're feeling a lot of pressure. Like, okay, it's like time to go and then we launched self-serve. So anyone can self-serve sign up and we start blasting ourselves on LinkedIn. And, I start outbounding. Purely focusing on outbounding, taking sales calls from 9am to 9pm and just trying to get as many customers on the platform as possible.

Pablo Srugo (00:30:09):
It was all outbound? Or did you run top of funnel marketing stuff like that as well in those early days?

Shensi Ding (00:30:13):
No, I didn't know that shit. I didn't know any of that. It was all outbound.

Pablo Srugo (00:30:19):
And when? Remind me, just so I understand the timeline. When did you raise your Series A?

Shensi Ding (00:30:22):
We raised our Series A around mid-2021. I think it was probably like end of 2021.

Pablo Srugo (00:30:27):
End of 2021. So six months after this April, like things are working.

Shensi Ding (00:30:32):
Yes, exactly.

Pablo Srugo (00:30:33):
What did growth look like? I'm just, I guess I'm curious to see the pull. Okay, the product is working, let's go out and just make it happen. And then, end of 2021, was it everything you dreamed for? Was it much slower than you wanted? You know what I mean? How did things go?

Shensi Ding (00:30:46):
I mean, it went really well. But I will caveat that it was 2021. 

Pablo Srugo (00:30:47):
Yeah, right.

Shensi Ding (00:30:48):
So it was not a normal fundraising process. I think we finished in like a week. So it was not normal, but it did go much faster than I expected. And yeah, we grew really, really fast and we were getting a lot of traction.

Pablo Srugo (00:31:02):
This is, the one week you're saying? Like the Series A raise took a week?

Shensi Ding (00:31:04):
Yeah, okay, this is a controversial take but I'll say it. I think you should not collect revenue and not onboard customers until you know that you are going to get a million of revenue as quickly as possible. And so yes, we had our first few customers like onboarded. They weren't paying us, but we also actively weren't trying to collect that money. Because I knew we didn't have enough pipeline for us to hit a million really quickly and it's very stupid. And it's a very like vanity metric, but it is important. You want to be able to show momentum and the team feels that momentum too. And so we didn't actually try to charge them, and get that money until we were like, okay.

Pablo Srugo (00:31:37):
Oh, so you kept onboarding customers, getting them to use it, whatever and it was just kind of free for now.

Shensi Ding (00:31:42):
Exactly.

Pablo Srugo (00:31:43):
When did you turn on revenue? Was it after the Series A?

Shensi Ding (00:31:45):
No, it was after the seed.

Pablo Srugo (00:31:46):
After the seed, okay. So somewhere in between that time when you felt like you've had enough, you're like, okay. Now you can kind of pay.

Shensi Ding (00:31:51):
Exactly and I feel a lot of companies don't use stealth enough. Like they immediately try to just come out of the gate, immediately collecting revenue and immediately trying to get feedback. But having customers is a burden in some way and you need to realize that you're not going to be building towards a bigger vision. If you're getting pings from, again, Joe at 9pm, right? So you want to use that stealth to collect customers and in a controlled way. So that once you're out, you can immediately get to a million or whatever metric that you're looking for as quickly as possible.

Pablo Srugo (00:32:18):
How fast did you get to a million from the time that you turned things on?

Shensi Ding (00:32:21):
I think it was like seven months.

Pablo Srugo (00:32:22):
So then you can say zero to a million in seven months. You can do all that stuff, you can show the charts and then the fundraising becomes easier. And it's just builds the momentum that you need.

Shensi Ding (00:32:27):
Startups are all about momentum. 

Pablo Srugo (00:32:29):
Yes.

Shensi Ding (00:32:29):
It made it easier for us to hire people. It made it easier for us to get other customers. It made it easier for us to post stuff on LinkedIn.

Pablo Srugo (00:32:37):
Talk to me a bit more about go to market. I'm curious on the tactics side, like you did the outbound stuff, just demos, demos, demos. What did you figure out between then and now? What sort of tactics started to really work or is it just ramping up outbound and just now. It's instead of just you doing outbound, you got however many people doing outbound and that's really all it is.

Shensi Ding (00:32:53):
You have to do a ton of outbounds. I mean, there's no way around it and there's also no excuses. There's so many AI agents. Like back then what I did, I hired a college student as our intern for the summer and he sent outbounds as me. I was basically just like, here's the list of criteria. Go through Crunchbase, find these companies and outbound as me. And then as they would respond, I booked the meetings with them. My goal was to make sure my calendar was completely booked every single day. So that I could practice, my co-founder could practice, and that we'd be able to generate pipelines from moving people through the funnel. But now there's AI agents.

Pablo Srugo (00:33:22):
Do you remember some of your ratios back then? Like no shows or SQL to close, or demo to close. Things like that?

Shensi Ding (00:33:27):
No, I don't.

Pablo Srugo (00:33:28):
No idea?

Shensi Ding (00:33:28):
No idea. So we were not sophisticated. It was all blood, sweat and tears. And my co-founder and I, we still think to get to $10 million. You just have to work really hard. That's really it, it really, it sucks and it's a lot of pain. But you can just work your way to $10 million.

Pablo Srugo (00:33:44):
What does it take to go from ten to a hundred, do you think?

Shensi Ding (00:33:46):
Scale, then you need a really good team. You need people making really good decisions, you need to move to enterprise, it's a very different type of company. It's all about the leadership team then. It's you can't, as the founders, just will your way to get to there and we really did. We really willed our way to get to $10 million, which was really exciting. But to get past it, it's a completely different process.

Pablo Srugo (00:34:04):
When did you start spending real money on top of funnel marketing? That's always a question, right? Should we invest in brand now? Should we do performance now? Should we do marketing? Should we just go sales? When did you kind of start transitioning towards that?

Shensi Ding (00:34:15):
It's a really good question. I think it was when we got our first real VP marketing, around like a year and a half ago. We were spending some money on like SEO and paid ads, but it wasn't very advanced and it was very light. Just like light experimentation. But when we got our real VP marketing, we spent a lot more on on it. Events became super important and we started doing a little bit of out of home. And we started doing podcasts, advertising, top of funnel just became way more important. And also it's very easy to lose a lot of money on marketing. And so you do need to have someone with some experience, and you also want to have someone who's interested in measuring that. And prior to that, we just were not advanced enough to do that.

Pablo Srugo (00:34:47):
One of the things with integrations, it's funny. Obviously every company I invest in has to do integrations and yet I find, obviously not every company is using Merge. But also not every company is using some sort of integration provider. A lot of them are still doing integrations themselves.

Shensi Ding (00:35:00):
Yeah.

Pablo Srugo (00:35:01):
Why is that? When customers say no to you, besides you don't have the integrations I need, which that's obvious, but if you do, like why is anybody still building their own integrations?

Shensi Ding (00:35:08):
I think there's a couple of different reasons. If it's a very simple integration, then it might just be faster to build in-house and if you only need one. Then you probably don't need an expensive provider, right? You can just try to hack it together. You might not need that much maintenance, because it's very simple. But if you're starting to need to build the second, third, fourth, and fifth within a category. And it's starting to take a toll on your team. And it starts becoming more complicated. There's going to be more maintenance. You're going to run into more edge cases, your customer support team is going to have more questions. It's at scale where it starts to become an issue, and that's when you need something like Merge. In addition, I mean, there's also categories we don't support. So if there's integrations that we don't support, you kind of have no choice. Which really sucks, right? I wish we could solve this for everyone, but there are certain categories that are very niche or very industry specific. Where we just don't solve it and so you're forced to build in-house. There also is kind of an old school pride in it. There have been some situations where we've talked to companies. Where they're like, no, our founder believes in we build this in-house and we can be uniquely good at it. And obviously I'm biased, but that is just fundamentally not true. There's no one who is that much better at their cloud provider, like everyone just uses AWS. Why would you buy and maintain your servers in-house? If you're going to use AWS or GCP, like it just doesn't really make sense but again, there's a chasm for us to cross. We're crossing it, we're making moves, we closed the top bank, one of the top AI companies, top consulting firms, but there is a chasm for us to cross and we're getting there. But we're still very much trying to convince the industry that this is the new way to go.

Pablo Srugo (00:36:29):
Is there anything about the depth of integration. Where people might think like, oh, but we want to do this and that, and they won't support it? Or is that just not a real thing?

Shensi Ding (00:36:37):
Sure, there are some nuanced use cases. But if you're a big enough company or if you're a company that's doing a use case that we see. We'll build it, we're very open, our API is continuously changing and there's also workarounds too. So for instance, if there's an endpoint that is specific to NetSuite and no other accounting company has it. But you really need that for IBM that's about to become a customer of yours. You can still do that through Merge and we're still handling ninety-nine percent of the work. But I think a lot of people have this perception, that it's super rigid. That you can't get access to data outside of our common data models, and it's just really not true. And so, yeah, that's something that we always try to highlight in demos. We try to understand the use case and our sales team is very technical. And so they can really try to understand, okay, what are the gaps? Is this a product thing that's on our end? Or is this something that you can just do with our product pretty easily? Or is this something that might not even be possible? Because we've also noticed that a few times too. Where someone will come to us wanting a magical use case, that we've seen many companies try to do and fail at. And we'll just try to help you in that way.

Pablo Srugo (00:37:30):
Let's stop it there and let me ask the last kind of three questions, that we always end on. The first one is when did you feel like you had true product market fit?

Shensi Ding (00:37:37):
I felt like it after we hit a million.

Pablo Srugo (00:37:40):
The second one is, was there any time during the last five years. Where you thought things might just not work out and the company might fail?

Shensi Ding (00:37:47):
Yes, so when we were early on. We lost a really big deal to a competitor that had copied us and it was a big logo. And that company ended up using that logo for every single takeoff, and it really hurt us. That was very painful for us. So I think that was a time where we were like, okay, this might not work out.

Pablo Srugo (00:38:05):
Why'd you lose it? The price or something else?

Shensi Ding (00:38:07):
Just, you know, if they were earlier. They use some investor connections. We got them back, they're a customer now. 

Pablo Srugo (00:38:11):
There you go. 

Shensi Ding (00:38:12):
Like, don't fuck with Shensi. We get them back, but it really hurt us in the beginning and again, all those little details matter in the beginning.

Pablo Srugo (00:38:20):
And the last question is, if you had like a piece of advice for an early stage founder. What might that be?

Shensi Ding (00:38:25):
You just really need to be willing to work a lot. I know that's something, that some people just don't acknowledge or think is going to be true, but you're going to have to make a lot of sacrifices and you're also going to just have to deal with people not liking you. And it's something you just you have to deal with. I mean, if you're not willing to do either of those things, then it's just not going to work out.

Pablo Srugo (00:38:40):
How hard did you work or do you work? What are your days like?

Shensi Ding (00:38:42):
So I do nine to nine. I'm in the office and after I'll like hang out with my husband for like an hour. And then I'll code again, check my Slack. On weekends, I'm definitely online. Some weekends I'm working a lot more. Some weekends I work a little bit less. There are times where I can tell my decision making is not as good and that's when I need to de-stress a little bit. But then some weekends I'm like, okay, there's just too much to do. I need to work a lot. So this upcoming weekend I'm going to be working the whole time.

Pablo Srugo (00:39:05):
Has that changed over the last five years? Or it's just been constant?

Shensi Ding (00:39:08):
It does go in ebbs and flows. There are certain times where the company needs you more. Actually, Zach Perret from Plaid, he said this to a founder. He was like, there are times where it's a little bit less busy and you're going to be alarmed. Like, why is it not that busy? And I have had that. I'm like, whoa, what's going on? But then it gets really busy again. So whenever there are those times, you just need to be like, okay, it's one of those. But it always comes back and I've seen that several times now. So I'm like, okay, whenever it is a little bit less busy. Because my team's fully wrapped up, or we just hired a bunch of people and everyone's trained. I just need to kind of get used to it. Because then something's going to totally ruin my life, in the next week. So I had to enjoy it.

Pablo Srugo (00:39:40):
Perfect, well, we'll stop it there. Thanks so much for sharing your story with us. It's been great.

Shensi Ding (00:39:43):
Cool, awesome. Well, thank you for having me again.

Pablo Srugo (00:39:46):
Wow, what an episode. You're probably in awe. You're in absolute shock. You're like, that helped me so much. So guess what? Now it's your turn to help someone else. Share the episode in the WhatsApp group you have with founders. Share it on that Slack channel. Send it to your founder friends and help them out. Trust me, they will love you for it.