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With Scott Orn

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Scott Orn

Scott Orn, CFA

Shensi Ding - Merge API co-founder presents a case study on product-driven growth

Posted on: 10/20/2021

Shensi Ding

Shensi Ding

Co-founder - Merge API

Shensi Ding of Merge API - Podcast Summary

Shensi Ding, Merge API’s co-founder, explains how her team’s needs led to a startup with product-driven growth.

Shensi Ding of Merge API - Podcast Transcript

Scott: Hey, it’s Scott Orn at Kruze Consulting and welcome to another episode of Founders and Friends. And before we start the podcast, let’s give a quick shout out to Rippling. Rippling is the new cool payroll tool that we see a lot of startups using. Rippling is great for your traditional HR and payroll. They integrate very nicely, but guess what? They did another thing. They integrate into your IT infrastructure. They make it really easy for when you hire someone to spin up all the web services and their computer. Which sounds kind of not a huge deal, but actually we did the study at Kruze. We spent $420 on average, just getting a new employee’s computer up and running, and their web service up and running. It’s actually a really big deal. It saves a lot of money. And the dogs are eating the dog food. We see a lot of startups coming in to Kruze now using Rippling, so please check out Rippling. Great service. We love it. I think we have a podcast of Parker Conrad. You can hear it from his own words, but we’re seeing them take market share. So, shout out to Rippling. And now to another awesome podcast at Kruze Consulting’s Founder and Friends. Thanks.
Singer: (Singing). It’s Kruze Consulting, Founders and Friends with your host, Scotty Orn.
Scott: Welcome to Founders and Friends podcast with Scott Orn at Kruze Consulting. And today my very special guest is Shensi Ding of Merge. Welcome, Shensi.
Shensi: Hi, I’m excited.
Scott: Yeah. Thank you. Well, we’ve known each other for a while. You’ve been a client for a while and I’ve gotten to know you. And I really like what Merge is doing, so I wanted to have you on the podcast so you could talk about it.
Shensi: Awesome. Yeah, I’m super excited to be here. We’re huge fans of Kruze, completely dependent on you guys. So really excited to be here today. And I also listened to quite a few of your podcasts as well.
Scott: Oh, thank you. Thank you so much. Well, maybe we can start off just by you re-tracing your career and how you had the idea to start Merge.
Shensi: Yeah, absolutely. So, it’s kind of a co-founder story to be honest. Merge wouldn’t be here also with Gil as well. But Gil and I essentially met freshman year of college, both studied computer science, all the same classes, group projects, social group, a couple of spring breaks too. And after school we obviously kept in touch, but kind of went our separate ways. So, I ended up staying in New York, onto investment banking, moved out to San Francisco, joined [inaudible] investment team, and then running a company called Expanse as the CEO. Gill, [inaudible] Software Engineering, he’s a really, really great engineer, went to LinkedIn, then went to a company called Wealth Front and then joined a company called Canvas as the founding engineer, and eventually became head of engineering. So, we were in totally different industries. I was in cybersecurity. He was in recruiting. Really, really different. But for some reason, both of our companies kept running into the same exact problem of having to build a ton of integrations with different competitors in the same category. So, in the cybersecurity space, especially our product, we had a lot of issues that would show up in the product that needed to get exported into ticketing services. So ServiceNow, Jira, we didn’t have any integrations. The only way to export the issues was to download a CSV and re-upload it every time there was a new issue that popped up. And this wasn’t really sustainable. So, our sales team kept asking our executive team and our engineering team to start building integrations because customers were going to other competitors, and it was coming to become a really big problem. So, we ended up hiring a full team of engineers just to focus on integrations. And it took them a really long time to build one. At the same time, Gil in the recruiting space, as they started moving on market to larger and larger companies, wasn’t sustainable for recruiters to be writing the first name, last name, LinkedIn for every single candidate that they wanted to export to their applicant tracking system. And so, he had to build his integrations in-house and it was a huge mess. Not only was getting access to the API in the first place, a really time-consuming project, but designing it, and then also scoping it, and then building the initial integration, and then maintaining it was oftentimes even more time consuming. So, what Merge really tries to solve is the entire integration’s life cycle. So, obviously helping with that initial build, we do add new integrations at no additional cost. And then maintaining the integrations for all of our customers. So, if any APIs change, any updates, we handle that for our customers. If there’s any edge cases, our customers don’t even need to know about that. And then, anything related to end user errors surface in our products, so that customer success teams can go in and resolve the issues instead of engineers.
Scott: It’s really amazing. So, for us, if you’re looking at all the different HR payrolls systems, there’s a bunch of them out there that our clients work on, but Merge can actually deliver us one single API integration to all of those different payroll systems. Right?
Shensi: Yeah. And you normalize it so reading and writing data back is always in one format. And yeah, it’s especially really helpful in different categories where more modern products construct items in a little bit different way. So, applicant tracking systems have applications now. Before, it was just candidates. So, we construct that so it’s always consistent across all platforms.
Scott: That’s amazing. So, was this shared pain… You and the cybersecurity world and Gill at LinkedIn… Was it over a beer or something like that where like, “Hey, I got the same problem as you. Maybe we should do something about this?”
Shensi: Yeah, actually. So, we would get weekly sweet green dinners back in the day, and we would just talk about work, what was going on, how things were going. And one day, we met up and he just looked really bad and I was like, “What is going on?” And he was just like, “It’s this greenhouse integration. It’s been taking up my life. I’m no longer in any meetings. They just moved to computer.” It’s like a conference room so he could just focus on the integrations all day and all night. So, I think after that, we were like, “Okay. This seems to be a really big problem because Expanse is having a very, very similar issue as well.” So, we did a ton of research, talked to a hundred different companies in very, very different industries, and it’s just very clear that it’s very, very consistent across all industries. And it’s getting worse, especially with fragmentation.
Scott: Yeah. It is getting fragmented also with the ability to spin up. A SaaS company can spin up pretty quickly now, and maybe they’re not the super high-end solution right out of the box, but they’re a meaningful… I’m thinking of Zendaya versus Help Scout or some of the other… That’s where SAAS is going right? Even more fragmentation, so your service becomes even more valuable. It’s really amazing.
Shensi: Yeah. I hope so.
Scott: And then tell me… I forget who your venture capitalists are and how do you guys… You two sat there and wrote the business plan and figured out what you’re going to do, and then went out and just started executing on it?
Shensi: Yeah. Well, we definitely wanted to gain the conviction, the idea before we went full time. We both had jobs that we really, really loved. We loved our teams. So, we wanted to make sure. Even though we felt like it was a problem, we wanted to make sure. Would people buy this? Was it actually going to be a [Ten-X 00:06:36] solution? After doing a lot of research, we quit. And then we started building. So, I actually hadn’t coded for five years. So, Gill spent a lot of time investing in me and making sure I was able to contribute to the company as a software engineer. So, we started building prototype. I learned React.
Scott: No way. That’s amazing.
Shensi: Yep. Learned Jago framework too. And so, we were able to get a prototype up and running, so that when we started fundraising and pitching investors, they were able to see what the long-term vision was going to look like.
Scott: Yeah. That’s amazing. I think I was probably one of those 100 phone calls that we did, maybe six months ago. Gil’s a really, really nice guy, too. You guys are like peanut butter and jelly together. You guys work together really well, and very complimentary of each other. So, it’s super, super cool. And then you were like, “Okay, people are going to pay for this. So, let’s raise some money and get going?”
Shensi: Yeah, because we knew we wanted to invest a lot in the product upfront. B2B integrations are really high stakes, as you’re probably aware of too. [inaudible] values are a lot higher. They have to be a lot more robust. And if people are paying you more money, they can’t break. So, you can’t have a scraped integration that just fails every single time, and you have to re-authenticate every single time you want data to update. So, we wanted to do a lot of research, make sure we invest in scalability, that we were really feature rich so if there were any edge cases that happened we were able to support it. And it was totally worth that. So we raised four and a half million from NEA with Scott Sandell joining our board. It was a huge honor for us, especially because I remember when I was interviewing at Expanse, I saw that Scott was on their board and I was like, “Wow.” And so, this is really [inaudible] that he’s now joining our board as well. And so far, he’s been a really great partner for our company. He’s given us a ton of advice from everything that he’s seen previously.
Scott: That’s great.
Shensi: Yeah. It’s been awesome.
Scott: That’s really cool. And I see you on LinkedIn and it seems like you’re hiring people constantly and things are going really well.
Shensi: Yeah. I mean, we spend a lot of time recruiting. Gil and I personally try to spend 50%, 60% of our time recruiting. It’s really so important. And if you hire really good people, it takes care of itself. I feel like, your team’s really good to you, so you don’t have to worry about that as well. So yeah, it made a big difference.
Scott: Hey. It’s Scott Orn at Kruze Consulting. And before we get back to the podcast, quick shout out to ChartHop. ChartHop is one of my favorite new SAAS tools on the market. And, basically, what ChartHop does, is it puts your org chart in the cloud. And I always like to say, it brings transparency to your organization. And so everyone in your organization can see who they report to. They can see the full org chart of company and how their group relates to other groups. It also has a lot of information on the individuals in the company. So, you can click on the ChartHop profile and just get where people live, their experience, slack handles, all this kind of stuff. And it’s just a really great tool. The other thing is ChartHop has started doing some cool stuff around compensation and budgeting planning. And so, you can actually start seeing what the cost structure of the company will look like during certain kind of scenarios. So, I’m loving ChartHop. Check it out, charthop.com. We use it at Kruze. We really like it, and I can’t recommend it enough. All right. Back to the podcast. That’s amazing. So, maybe we could go through some of the key verticals that you’re building the APIs. I mentioned payroll and HR, but where are you seeing… ATS was definitely an area that we… We’re on Lever, but Greenhouse, there’s a few of these core SaaS products. Where are you seeing demand for your tool?
Shensi: Yeah. I mean, it’s really interesting because a lot of companies need multiple categories and the demand has come from unexpected places, and with different use cases that we didn’t really expect. Sometimes, I’ll go into sales meeting thinking that someone wants our HRS API and they want our ATS API for a new product. Sometimes people are interested in one category at first, and they eventually want all three. So, demand has been quite… it’s really interesting because now that this is an option for a lot of companies, now they’re starting to think of different ideas that weren’t possible before. To be honest, a lot of our customers are super integrations heavy, where it would’ve been so time consuming for them previously where it would’ve been hard to work in their core product. So, you do see us opening up possibilities for additional companies. Especially as we expand to additional categories too. But yeah. I mean, demand has been pretty consistent across all three categories, which has been amazing.
Scott: And so, the three are what? HR payroll, ATS. Did I miss one?
Shensi: One. Oh yeah, and accounting. Yeah [crosstalk]
Scott: Oh, I didn’t know you’re doing accounting. That’s amazing. I didn’t see that.
Shensi: See that. Oh, sorry. Yeah. It’s our newest API, but it’s been getting a lot of interest.
Scott: That’s amazing. It’s such a network effects centric business, right? Once a development team is comfortable with one of your products, they’re going to flip right over to your other two.
Shensi: Totally. And especially over time when we expand to a lot of different categories, no matter what API, in whatever category that a developer integrates with, they’ll know exactly what they’re doing when they’re integrating with Merge. So [crosstalk] more sense to integrate directly with Merge versus with any other API provider. Because they’ve already done it before.
Scott: I love it. I love it. That’s amazing. And I know you guys have really good traction, so it’s fantastic. Maybe take a second to… You and Gil from a two-person company to… I don’t even know where you are right now… But what was the shift for you? Or was it challenging to go from someone who’s developing software all of a sudden to then moving back into more of a management role? How did you handle the super hands-on mode to now, spending all this time recruiting and actually building the company?
Shensi: Yeah. I mean, we’re not quite transitioned yet, to be honest. I was adding an integration yesterday. So, we’re still doing-
Scott: That’s good though. You’re staying in touch with your customer. [crosstalk]
Shensi: Yeah. It helps to stay humble too, so I can understand the pain points. So, I want to always be continuously adding integration so I know what’s going on with it. We got Gil still making develops changes and stuff too. [crosstalk]
Scott: I was doing [build.com 00:12:18] for some clients last night. It’ll never go away. You’ll always will be doing a little bit of that stuff.
Shensi: Yeah. So, it’s moving more towards that direction, but it’s not quite there yet. But yeah, so far, it’s definitely been a little bit different from us coding all day, all night in a corner, to now, having to be customer-facing. We’re always talking to customer… Either existing customers or new customers… Or doing research for additional products. Yeah, so it’s definitely been a little bit more of a team thing versus IC, just working on our products. But it’s been really awesome. Our team is so good. Every single person is a Ten-X contributor, which I feel like is super rare for a company. But it’s been really great.
Scott: How was the experience working at Silver Lake? Did that help you know how to talk to investors? Because you and Gil have totally different backgrounds, or experience. Did he explain stuff to you and you explained stuff to him? How did that partnership work?
Shensi: Yeah, so absolutely. Obviously, he’s the expert with engineering, and then also what architecture looks like, and also security. He’s very, very conscious of security and all that has been extremely useful. He also did actually a lot of sales too at Canvas. So that perspective was super helpful. Yeah, but fundraising, having that experience, and seeing pitches before helped me a lot. And also understanding [inaudible] analysis. So. as we start expanding to additional categories, how we value what the ROI is, also thinking about how we present the company. Because you can’t only present like, “Okay, this is what we’re going to do forever.” It has to be like, “This is what the long-term vision is.” Also, knowing what is important, what information do they expect, how much is too much in the weeds, what do they understand, too. We have noticed when we get too technical, it’s kind of gets drowned out. So [crosstalk] understanding what the level is, is always really helpful.
Scott: Oh, that’s really cool. And then looking back on it… I always like this question… was there a moment where you looked at each other like, “Oh yeah.” Was it a customer signing up or someone paying you more money than you expected? What was that moment for you?
Shensi: Yeah. I feel like this is so arrogant, but it was a month after we came out of Stealth that we had self-serve, honestly, we were just getting so many signups without us. We didn’t have any marketing, we didn’t have any sales people. Just me and Gill. And we were getting so many signups where we were just like, “Wow, we really picked the right idea.” And all the research- [crosstalk]
Scott: People just signing up without even having talked to you?
Shensi: Yeah. And people also… When we were in stealth… Would find us too. Which, just showed that the market was really attracted to the solution.
Scott: Yeah. Yeah.
Shensi: And so we were just so grateful that we did that research before and we really built it for this use case. Because I felt like it made us really prepared for answering and thinking about any things that our customers would need. But yeah, it was honestly a month after self-serve, we were like, “Wow. This is great.”
Scott: I love it. I love it. Maybe you can’t talk about this, but are there other verticals you’re eyeing after you perfect the accounting vertical? Where do you want to go next? What do you think is interesting?
Shensi: Yeah. I mean, there’s a lot of articles that I think are super interesting. I think productivity / ticketing tools are probably going to be next.
Scott: That is music to my ears.
Shensi: I know. Yeah.
Scott: Yeah, yeah, yeah, yeah.
Shensi: We think the use cases for that are quite expansive. So, we’re pretty excited about that. And we also think CRM is going to be extremely interesting too. CRM is extremely complex though, because each instance is a little bit different. But we already kind of accounted for that with our ATS integrations, and so we’re pretty ready. But we want to invest a lot in the product and making sure it’s really, really [crosstalk].
Scott: That’s amazing. I love it. I love it. Well, I can’t keep you too long because you’re a busy woman, which I totally understand. But maybe you can just kind of talk about how to get in touch with Merge, if people want to work with you. If they’re a very savvy accounting firm that wants to do some integrations, how do they reach out to you? Or any startup that’s doing this stuff. And maybe articulate just how… I’m sure you’ve done studies on this… But how much time people will save not building these integrations from scratch.
Shensi: Yeah, absolutely. So even if you have existing integrations, you probably don’t want your engineers working on maintaining them, when they could be working on your core product. So, if you’re thinking about adding new integrations or you’re sick of maintaining your existing ones, reach out to us at hello@merge.dev, or you can just go on our website, merge.dev, sign up for a demo, or contact us in any way. We’re always available on Twitter, LinkedIn. You can reach out to any of our team members too. We’re always available and we are happy to show you a demo, show you what we got.
Scott: I love it. I love it. Well, thank you so much for coming by. I really appreciate it. And I look forward to doing a follow up podcast in 18 months, and you having eight categories, and you’re the Walmart of integrations. Like, “We got that, we got that, we got that, we got that.” So, thank you so much and congrats. And congrats to Gill on both your guys’ progress.
Shensi: Yeah. Absolutely. Thank you so much for having me.
Scott: All right, Shensi. Thank you.
Singer: (Singing). It’s Kruze Consulting, Founders and Friends, with your host, Scotty Orn.

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