Merge's Unified API Bet in the AI Era | E2033

Summary

Podcast Summary: Merge’s Unified API Bet in the AI Era | This Week in Startups E2033

Date: October 25, 2024
Host: Alex (standing in for Jason Calacanis)
Guest: Shinzi Ding, Co-founder of Merge

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Overview

This episode of This Week in Startups dives deep into API complexity, SaaS integration, and how Merge is aiming to become the universal unifying layer for B2B data in an increasingly fragmented and AI-driven business software landscape. Alex interviews Merge co-founder Shinzi Ding about the company’s founding, product evolution, the state of integrations today, AI tailwinds, growth strategy, and the future of API-centric businesses.

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Key Discussion Points & Insights

1. The Problem of API Fragmentation

• APIs are table stakes: Every SaaS company offers APIs, but the explosion of unique, custom APIs has made integration costly and labor-intensive.
  • “Companies like Twilio just a couple years ago nearly turned SaaS on its head by offering their products via an API.” (01:37, Alex)
• Integration becomes a bottleneck: Lack of integrations led to lost deals, as customers prioritized features like seamless data flow across tools.

2. Merge’s Founding Story

• Shinzi and co-founder Gil met at university in New York, with Gil excelling in technical execution and Shinzi gravitating toward finance and business.
  • “Gil would always do what he said he would do. And that's super, super, super rare.” (03:38, Shinzi)
• Both experienced integration pain first-hand: Gil as a head of engineering forced to build integrations solo, Shinzi as chief of staff witnessing lost revenue and mounting engineering overhead in maintaining integrations.
  • “If we didn't build these integrations, we couldn't close deals...but building these integrations were going to be super expensive....It's not like you can just build it and let go of it.” (07:47, Shinzi)
  • “They built it into the wrong API because some API providers can have multiple APIs for different functionality. They spent three weeks on it, ripped it out. I had to do it again.” (09:34, Shinzi)

3. Why Merge, and Why Now?

• Market shift: Existing tools like Zapier, Workato, and Tray.io put the burden of integration on the customer, not the vendor. But as software fragmentation exploded (companies now average around 200 vendor tools), expectations shifted toward vendors delivering these integrations natively.
  • “With Merge, it's free distribution and again, we're helping create an ecosystem around their product.” (29:05, Shinzi)
• Merge’s core idea: One API (with category-specific data models) to integrate with thousands of SaaS products, reducing roadmaps for vendors and complexity for customers.

4. Product Deep Dive

• Normalized Data Models: Merge’s API normalizes data within categories (CRM, HR, recruiting, etc.) so that adding a new provider (like Salesforce, Oracle, Workday) is easier and onboarding new customers is fast.
  • “Every source of truth, the data model is very, very similar...fundamentally there are core common models that everyone just boils down to.” (15:34, Shinzi)
• Integration Observability: Merge provides visibility and debugging tools for customer support and engineering, surfacing errors, API behaviors, and customer-side misconfigurations.
  • “We actually call it integration observability...We built a lot of tooling in our dashboard...so you can search like for Alex's name, if Alex came through or not.” (24:50, Shinzi)

5. Building the Integration Ecosystem

• Evangelizing Early: Gaining partnerships with large providers required intense networking and explanation, especially as a 5-person startup.
  • “You have to do what you have to do to get in front of the C-suite.” (17:56, Shinzi)
• Now a Distribution Point: Merge has become a must-have for smaller software vendors seeking exposure and seamless integration for their customers.
  • “All these companies will come to us and they'll be like, hey, I'm a 50 person CRM company and I really want them to integrate with us. So can you please build an integration with us so that our logo will show up on their website?” (29:05, Shinzi)

6. AI Era and the Impact on Merge

• AI = More Data, More Integrations: The AI boom creates strong tailwinds for Merge, as AI products crave wide, deep, proprietary data sets—often requiring piping in data from multiple SaaS tools.
  • “We've been seeing a lot more companies going from using mostly just one or two categories to all seven categories...the more data you have, the better the insights you have.” (35:07 & 35:10, Shinzi)
  • “As my CRO says, it's always good to be lucky. So we have been very lucky.” (35:21, Shinzi)
• AI Experimentation: Product Blueprint lets users suggest new integrations, leveraging AI to map documentation to internal schemas, though sandbox/account complexity remains a blocker.

7. Go-to-Market and Business Model

• Pricing: Merge offers generous self-serve plans (three free accounts, $650 for up to ten). The real value is often much greater, especially for enterprise customers.
  • “For $65 seems to be like it's priced at roughly 1/1000 of the potential value for them.” (47:44, Alex)
• Distribution strategy: Heavy investment in events, in-person meetings, and thought leadership; go-to-market has become more sophisticated, but education is still needed.
  • “This was a big year of experimentation...we've just been meeting a lot of people in person now.” (46:09, Shinzi)
• Efficient Growth Philosophy: Despite raising significant capital ($74.5M to date, $55M Series B), Merge remains capital-efficient, with much of its Series B unspent.
  • “Just because merge was going to be an expensive business to build...I would much rather just never have layoffs.” (39:02, Shinzi)
  • “We've always been pretty careful about it...not definitely not spending all of it.” (38:35, Shinzi)

8. Financial and Operational Maturity

• Early investment in finance and operations (hiring a CFO-equivalent at employee #10) positioned Merge to navigate uncertain markets, pricing evolution, and customer expansion more effectively than peers.
  • “If you hire a really good finance team, they can be revenue generating for you...strategic in how you expand to different products, regions, cost compensation...” (37:02, Shinzi)

9. Growth Metrics and Customer Profile

• Substantial Growth: From 2,500 companies in 2022 to 16,000 self-serve organizations by late 2024, with ~400 enterprise customers. Mix has shifted from small startups to larger enterprise clients, with financial services now in play.
  • “We have like, I think like 16,000 self serve organizations on the platform...Free, free and paying. We have around like 400 enterprise customers...” (41:33, Shinzi)
• Enterprise Upmarket Motion: Most revenue growth is in the enterprise segment, with large deals pulling up ACV.

10. The Future: Beyond APIs, Toward Data Infrastructure

• Merge’s ambition is to be the universal B2B data interchange, not just “Merge API.”
  • “That's why we hate when people call us Merge API, because it's really just merge...Eventually, wherever your customer's data is, we want to be able to pull it and export it in whatever format that you want.” (52:44, Shinzi)

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Notable Quotes & Memorable Moments

• On the challenges of early integration building:
  “Some API providers can have multiple APIs for different functionality. They spent three weeks on it, ripped it out. I had to do it again.” (09:34, Shinzi)
• On opportunity cost and maintenance:
  “Once the integration is live, the engineers actually had to keep helping answer customer success questions... then a lot of the times it's end user error.” (10:24, Shinzi)
• On the AI boom:
  “The more data you have, the better the insights you have.” (35:10, Shinzi)
  • “The AI boom, even though it is not exactly what you guys have been working on, it is providing a nice tailwind to the business.” (35:14, Alex)
• On being a distribution platform for vendors:
  “If you're like a new source of truth and you're trying to compete with like HubSpot or Salesforce, it's really hard to get that roadmap time from every single vendor...with Merge it's free distribution.” (29:05, Shinzi)
• On capital efficiency:
  “We always wanted to be really conservative...haven't even touched our Series A by the time we had fundraise...I would much rather just never have layoffs.” (38:35 & 39:02, Shinzi)
• On merge's long-term vision:
  “We hate when people call us Merge API, because it's really just Merge, because, like, wherever your customer's data is, like, we want to be able to pull it and export it in whatever format that you want eventually.” (52:44, Shinzi)

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Important Timestamps

• [03:38-07:39]: Merge’s founding story, integration pain highlighted.
• [13:23-15:34]: Why Merge? Gaps in existing integration solutions and the vision for a unified API.
• [16:31-17:17]: How many SaaS tools do businesses actually use today? (Spoiler: easily over 100)
• [24:50]: "Integration observability" and product reliability as a key differentiator.
• [29:05]: Merge as a distribution channel for upstart SaaS vendors.
• [33:38-35:21]: The impact of AI on Merge’s business; AI companies need more integrations and unique data.
• [37:02-39:02]: Early investment in finance ops, cost controls, and lean scaling strategy.
• [41:33-42:59]: Growth metrics: from startups to enterprise, 16,000 orgs on platform.
• [46:09]: GTM experimentation: events, education, and IRL meetings.
• [47:32-49:15]: Simple, transparent product pricing and value discussion.
• [52:44]: Merge’s ambition beyond APIs: data movement infrastructure.

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Conclusion

This episode provides a rich look at why SaaS integrations matter, how seamless data flow underpins next-generation AI products, and how Merge is methodically building the bridge between hundreds of business software tools—while scaling efficiently and eyeing a long-term infrastructure play that could outlast any one product cycle.

Shinzi Ding’s candid, precisely detailed answers underscore both the gnarly engineering and business tightrope needed to pull off a company like Merge, and the potential for it to become one of the foundational B2B infrastructure companies of the next decade.

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For More: Listen to This Week in Startups, E2033: [Podcast Link]
(Merge’s story starts in earnest ~02:34, API evolution and vision from ~13:23, business/finance from ~35:26)

Transcript

[Alex]

Have startups come to you and said, hey, we really want you to integrate with us because then we will get our name on your site, our logo will be in your materials. Are you a distribution point for companies themselves instead of just something that people add on to let them talk better.

[Shinzi Ding]

Amongst each other all the time, which I, which I love. Yeah. So all these companies will come to us and they'll be like, hey, like I'm, you know, like a 50 person, like CRM Company and I saw you these customers and I really want them to integrate with us. If you're like a new source of truth and you're trying to compete with like HubSpot or Salesforce, you know, it's really hard to get that roadmap time from every single vendor that is integrating with HubSpot and Salesforce. Like they might not want to spend that time integrating with you, but with Merge, it's free distribution and again, we're helping create an ecosystem around their product.

[Alex]

Is it free?

[Shinzi Ding]

It's free right now? Yeah. Right now, yeah. Well, just do it because it makes our product better.

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[Alex]

Hey everybody, welcome back to this week in Startups. My name is Alex. I am Alex over on X. Now, APIs, or application programming interfaces are the software intermediaries that allow two pieces of code to talk to one another. If consumers use GUIs or GUIs to interact with software, well, software uses APIs to interact with more software and they have become incredibly big business. Companies like Twilio just a couple years ago nearly turned SaaS on its head by offering their products via an API. With pricing often set to hinge on usage instead of a flat rate. Today, offering an API is table stakes. But as the number of APIs has exploded, so too has the complexity of working with so many different software products, data types and points of integration. One startup Merge is tackling the problem with its own API that offers access to a lot of other APIs. So please welcome to this week in Startups, It's Merge co founder Shinzi Ding. Hey, Shinzi, how are you?

[Shinzi Ding]

Hi. Good to be here.

[Alex]

All right. I'm not going to lie. I wrote that before we started recording. How did I do?

[Shinzi Ding]

Oh, I thought that was awesome.

[Alex]

Ladies and gentlemen, you are all welcome to bask in my presence.

[Shinzi Ding]

You're a natural podcaster. I mean, yeah, your voice was. Yeah, it's kind of weird actually seeing the video component because I'm so used to just hearing your voice.

[Alex]

Yeah, well, what's funny is no one's a natural podcaster. You just end up doing it so much you lose all of your inhibitions and like, self doubt and then you just ramble for a while and then chills come out. It's easy. Anyone can do it. So, Shenzi, I wanted to have you on the show because I had heard a lot about Merge because I was very interested in APIs, I think, as everyone was back in the 2000, 2021, 2022 era. But a bit like no code to a degree. They became this thing we all talked about and then it, the talk kind of faded away, used them. And so it seemed like a good idea to kind of, I don't know, just sit down with you and talk about the state of things. But I want to go back in time to start because the founding story for Merge, I think, underlines pretty well the problem that you're going out to solve. So can you take us a little bit back in the past and just quickly run through how you and Gil, your co founder, started the company?

[Shinzi Ding]

Yeah, absolutely. So I'm, I'm actually in New York City right now, as you can probably tell from my janky background. But it started in New York City. So Gil and I both went to school in New York. Uh, we were studying computer science. We were in all the same classes, group projects, social group. And we were just essentially just really big nerds. Uh, we were actually on engineering student council together, class president, vice president. And it was the start of a really great friendship because all throughout college, you would have different class assignments and you'd really find out, like, the quality, like basically whether people would do what they say they said that they would do. And Gil would always do what he would, what he would, what he said he would do. And that's super, super, super rare. Was something that I remained to, like, think a lot about and also remember, especially when we Decided to start a company much later on. But we ended up our different. Going down different paths. Gil was like a really great software engineer. I was more okay. I mostly did it for fun. I think it was like intellectually stimulating, but it wasn't something that I was going to be uniquely good at. And I did feel like one gap that I had was understanding the business side. And I had no idea how to evaluate whether a company was good or not, whether an idea was good or not, how to understand financial statements.

[Sponsor Announcer 2]

And.

[Shinzi Ding]

And I really wanted to learn that. So I went into investment banking in New York City at Credit Suisse rip. It was a great two years. Really started understanding how to read financial statements, how to read 10Ks, and it taught me a lot about businesses. But I really wanted to go back towards tech, so moved to San Francisco, joined Silver Lakes Growth Equity Fund and reconnected with Gil. He helped me find my first apartment, got my first car, and I realized that investing was not close enough to actually operating. Um, a lot of times, yeah. And I'm sure, yeah, it's just really not quite the same experience. I would read a financial statement or like a C model and just like, oh, just increase revenue and decrease costs.

[Alex]

And why doesn't everyone just do that? Gen Z. Come on.

[Shinzi Ding]

Exactly. And we would go to some of the board meetings and I just didn't really understand why that was so hard to do. And so I really wanted to actually work at a company, understand what it was like to do that. And I interviewed at a few startups and I found a company called Expanse back then called Kadium, and I joined as the chief of staff to the CEO.

[Alex]

Pause there, because this is, this is off topic, but I really think that the chief of staff role is not particularly well understood outside of folks who have either had one or been one. So just for everyone out there who's heard. Chief of staff, what does it mean?

[Shinzi Ding]

Yeah, I mean, in essence, you're basically the CEO's bitch. I know. Like, there's no other way to word it. You just do whatever they want so that the company can be successful. And I think it's quite popular in situations where, like, there needs to be a guarantee of execution. And my hot take actually is I don't think that if there's a chief of staff, usually I think there's actually an operational problem at the company because it means that you can't guarantee that when you hand something to someone that it's going to get done. And so a lot of my job was just like, Making sure things got done and like, you know, documentation and like random, like I did like random recruiting stuff. I like helped out because hiring his executive assistant, but it was all just like random things and. But the essence of it was just making sure that when he wanted something to get done, it got done.

[Alex]

The joke about this is I'm so glad we invented the term Chief of Staff so that way men cannot be secretaries without using that title. And I thought that was hysterical. But anyways, chief of staff are very useful and if you ever work near a CEO of a company over, I don't know, 15, 20 billion value, you'll run into them. They make sure everything works. They're essentially the CEO for the CEO is the way that I think about it.

[Shinzi Ding]

I think so, but probably less strategic. It was more execution oriented and. But I will say the one benefit of it was I got a ton of exposure to the CEO and Tim is, I don't know actually I think he was in this week in startups a few years ago because I prepped him for the meeting or I prepped him for the interview with Jason. And um, yeah, he's just brilliant. Like every single thing he knew about politics. He had a PhD in cyber warfare. And especially in like 2018, 2019, it was a really interesting time to be learning about tech and politics and also how it impacted, you know, different global dynamics. So yeah, it was just a really interesting experience for me. And he every time the company would run into something that was potentially detrimental to the business, he would just figure out a way to solve it. And that was, that was really cool to see.

[Alex]

But it was that expanse during this time of your work life that you noticed that essentially integrations were becoming increasing sticking point for the business.

[Shinzi Ding]

Yes. So one benefit of being chief of staff was I would join a lot of executive meetings and also sensitive meetings. And every executive meeting we would end up talking about things that were causing us to lose deals or and what competitors were better than us at. And starting after like the first year or so that I was at the company, integrations kept coming up as a reason why we were losing deals. And we prided ourself on having the best products. Like we were really proud of that and we were really confident in that fact. But our competitors that had a less high quality product were able to win just purely based on features like specifically integrations. And our sales team started really like just yelling at us, being like, we need more integrations, why don't we have any? This is so table stakes. Let's just start building them. And since I was on the finance and operations team, I was really seeing it from a PNL perspective. If we didn't build these integrations, we couldn't close deals. And that was going to hurt us on the revenue side. But building these integrations were going to be super expensive because we would have to hire San Francisco engineers and it would really impact operating expenses. And then even if we tried to move to a lower cost area, which we ended up trying to do, it's still a lot of engineers and you have to permanently maintain those integrations and it becomes a permanent line item that you can never get rid of. Because there is a, I mean, there is a maintenance component to integrations that a lot of people don't think about. It's not like you can just build it and let go of it. You have to continue maintaining them. And so from a P and L perspective, I was like, this really sucks. Like, no one's really solving this problem. I don't understand why this is so hard and is really building these integrations that difficult. And it was really fortunate that at the same time, Gil, my co founder, he was head of engineering at a recruiting tech company. And they were pretty lean. They were series A stage and they had like 10 engineers or so, but they, everyone was busy. They didn't have enough engineers. And so he ended up having to build the integrations for his company.

[Alex]

By himself.

[Shinzi Ding]

By himself. Because there was just no. Yeah, there was just no one else. And, uh, because of that, he actually had a really deep understanding of why it sucked so much. And I asked him, I was like, why it can't be that hard. Like, I, like, I was a software engineer. Like you just like read the stuff. And he was like, well, first off, we had to get access to the API and we had to get a partnership. And that took a while. Then we had to get access to a sandbox account. And that cost us some money. Some API providers are nearly impossible to get access to because they're closed gardens. And so you, you might end up waiting years to get access. And then once you actually get access, then the product manager and the design team has to figure out what this integration looks like and what that workflow could be. And then they built, started building the integration. They built it into the wrong API because some API providers can have multiple APIs for different functionality. They spent three weeks on it, ripped it out. I had to do it again.

[Alex]

And then once, by the way of engineering, time is a lot of dollars. Like it's not just three weeks. It's an enormous amount of money and opportunity cost. That's a lot.

[Shinzi Ding]

Yes, exactly. And then actually to finish the full end to end correct integration, it took six weeks or so. They were a lean Series A team and Gil is brilliant and he, you know, he worked really hard and fast and it still took six weeks. But what he said was the worst was that actually when they went live at the integration, the engineers actually had to keep helping answer customer success questions because customer success team members would get questions from recruiters who were their customers being like, hey, like I gave you an API key, like why isn't my data syncing? Or like why is Joe's name missing from this candidate? Or like, why is my resume not uploading? And a customer success team member isn't going to know all the answers to these questions. And so they're going to escalate it to the engineering team. So the engineering team ends up having to allocate a percentage of their time continuously to help customer support troubleshooting. And then a lot of the times it's end user error, like they gave you an API key that's incorrect or someone got fired and the API key no longer works.

[Alex]

Right.

[Shinzi Ding]

And all of this was really just not handled by any piece of software at all.

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[Alex]

Okay, so you're sitting in meetings noticing that deals are going out the window because you guys didn't have the right integrations or as many as you needed. Even though your product was better, your co founder actually had to go out and build a bunch of these things. Seen kind of upfront the issue, clearly you guys both saw the pain point, but you couldn't have been alone. And to me, what Merge has built and we'll get into unified APIs in a second is such a reasonable and smart solution to this. Why hadn't anyone solved this already? APIs weren't new when you founded the company. The problem wasn't new. So how would the market not close this gap?

[Shinzi Ding]

Well, at the time there were some really, really popular companies like Trade I.O. and Zapier and Workato that were just super, super prevalent. And I think the belief at the time was that the onus of building integrations is actually on the buyer and not the vendor. So was still pretty common for Expanse, for instance, to sell to, I don't know, some Fortune 5 like AT&T or something. And then AT and T purchases Expanse and then they also purchased Splunk and then they also purchased mulesoft or Workado or Trey, and they connect Expanse and Splunk and then you now have three pieces of software to make two connect and it's just kind of a pain and you have to maintain that integration forever while also spending like thirty to a hundred thousand dollars on Mule software or Tray. So that was just a really common workflow. And we would talk to and Gil's company at the time would actually try doing that a few times. Like they'd be like, oh, like we don't have an integration with like Workday, for instance, so you should buy Tray. And that would end up still blocking the sales cycle because it's an additional amount that you have to spend. But at the time it was still common and software wasn't that fragmented and it was still pretty common for companies to just purchase like a whole suite of like Oracle software or like Workday and like SAP, and then you just wouldn't really need integrations. So I think integrations just weren't that common at the time still. So that's when no one really thought about it. And I think even if they did think about it, they were like, well, you can still use a workflow provider to kind of do what you need to do.

[Alex]

I see. So essentially at the time, software was less fragmented. People had existing solutions to a degree, but as you found out, they weren't enough. So you went out and you founded Merge. And the idea, if I'm, if I boil it down to like the absolute nub, is that Instead of having 6,000 different APIs to integrate with things, why not have one API that is the, the conduit for all the other APIs. It brings them all together into one pipe, essentially.

[Shinzi Ding]

Yes. And one nuance is so technically is one API because the credentials are the same and the pagination and rate limiting is all the same. But we do have different objects or data models per category. So for instance, like opportunities are unique to CRM and you can't, you can't, there are no opportunities in HR systems. So it's per category. There are normalized data models.

[Alex]

Yes. And that allows you to, I presume, have more total partners because if you have normalized data fields, then it's easier to probably link in new sources of information.

[Shinzi Ding]

Yes. And fundamentally within every single source of truth, the data model is very, very similar because people just, humans just want to simplify and think about things in a similar way. So among like Salesforce and HubSpot, like there are stages and there are opportunities and like they might word it different things, but fundamentally they are the same thing. Same within recruiting systems, there are candidates and there are applications and there are stages and notes. Like there are some in some API providers might be missing some of these components, but fundamentally there are core common models that everyone just boils down to.

[Alex]

So I want to touch a little bit more on the people need integrations to land sales because you mentioned software fragmentation. And to me that sounds like so many different companies out there have a different mix of software solutions that trying to sell them something new is going to be essentially impossible unless you have every single, you know, incoming port, if you will. So how many like pieces of software do companies have today? How many are they trying to tie together? I don't quite understand how much of this is a day to day issue for companies.

[Shinzi Ding]

So I think the number now has increased around like 200 or so. I saw like a recent report in like the vendor Procurement about like, how much software, like each company has. And for us at merge, like we're 110 people. We have, we have like a ton of software providers that we use.

[Alex]

Oh, I'm sure.

[Shinzi Ding]

Yeah. And we expect every one of them to just sync data with each other. Like it's a huge pain to have to download a CSV and re upload every single time there's a new update. That's just going to be impossible, especially if millions of rows of data are getting updated every day or every second. Like, that's just not going to work. And because the expectation now of the buyer is so high, like there's so many different vendors out there. Like, why would you choose a vendor that you then have to do that manual work for? You just want to purchase something that just, you click a button and it seamlessly syncs with all of your other vendors so that all the data is consistent across all of them and there are no data silos.

[Alex]

That makes perfect sense to me. But I'm curious about the people you partner with. I mean, for example, you guys announced very recently that Merge is now officially a paylocity partner. Is there any tension between you guys providing a unified API and individual companies that offer their own API and perhaps them not wanting to be aggregated politely into someone else's service and instead have more of a direct connection to customers?

[Shinzi Ding]

So when we first got started, definitely, and it took a lot of evangelism, I think I reached out to like someone I hadn't talked to in like 6 years to like get in contact with like a private equity firm that was on the board of like one HR platform that was a closed garden. And then I ended up meeting, reached.

[Alex]

Out to an old friend who. Wow, that's a, that's a very 10.

[Shinzi Ding]

I wouldn't even call him a friend. Like I did, but I had to. You have to do whatever you have to do. Oh, that's true. But you have to do what you have to do to like. Because in the end a lot of partnerships is about like networking and just shooting your shot. And so at the time we were five people. There was just no way I was going to be able to get a partnership with this like, you know, 10,000 person company unless I really did whatever I could to get in front of like the, the C suite. And so, yeah, so that's what we had to do. And it took a lot of evangelism. But that became one of our best partnerships because the cpo, CTO and CEO all like felt and understood what mergers trying to do and we were trying to make it easier for them to have an ecosystem around their product. The dream for every source of truth is to do what Salesforce has done. Like, it is impossible to not use Salesforce because every single sales ops tool is built on top of it. And if you don't build on top of Salesforce, if you don't use Salesforce and you're kind of screwed because there's just so many tools that are around it. Like, sure, you can use like some of these really long tail providers, but it makes it really, it makes it harder. That's why like even regardless of whether you're in recruiting or HR or help desk or ticketing or project management like you want, companies get built around you because then you become a source of truth and you're critical and it's really hard to turn.

[Alex]

Yeah. And if you want an example of this, think about. I think the company was Encino, which was the first Salesforce platform company to go public. So they built an entire public company just on top of Salesforce's platform. And that's great for Salesforce because more data, information and business flow through their operations. Ergo, Mark Benioff get another 5,000 people to Dreamforce to ruin the city slightly more quickly.

[Shinzi Ding]

I thought it was fine.

[Alex]

I'm sorry. I lived in SF for a long time and like, there would always be this weird week when you go out to the bar and then you would get there and it'd be a little sign up front that said close for Dreamforce private event. And you would just hate those people because that's your bar. How dare they?

[Shinzi Ding]

Honestly. Okay, so when I lived in San Francisco and I would and it was Dreamforce week, I felt the same way. But then now I'm like, old. And I went to, I went to Dreamforce and then I went to Imagine Dragons and I was like, wow, I've officially aged because this is like the most fun I've had.

[Alex]

All right, look, Imagine Dragons is not great, but they did have some bangers for League of Legends, so I'll take it. I'm not going to. I'm not going to judge. Speaking of nerdy things, Yes, I do know the soundtrack from League of Legends and which bands made the songs.

[Shinzi Ding]

They have a lot of bangers. Yeah, I forgot too, but they have a lot of bangers.

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[Alex]

So you founded Merge back in 2020, which is not that long ago, frankly. I know in technology terms it's a couple of cycles, but companies at the time, I presume, were a little bit skeptical because you were a small company, as you said. How fast did that change? How fast did you guys go from, you know, going through friends and around back doors to being able to knock the front door and kind of get a deal done? Because you have a lot of integrations. I hope it's gotten easier.

[Shinzi Ding]

It was really, really hard and it kind of sucks because now, of course we see a lot of copycats who benefit a lot from the evangelism and the education that we did back then. But it was really, really tough because a lot of people were skeptical that we would be deep enough that we would be able to solve their use case. And also, I know a lot of people, there's a lot of composable software, but like, every single time there's a new idea for some type of composable software, you still, people are still skeptical. Like, and I felt like what we were doing was very similar to convincing people to move from on prem to the cloud. Because a lot of people felt like, no, like, I want this, like in house. Like, I feel like I can uniquely be good at it and I would really have to convince them, like, no, like the only thing that can be different is you're worse at it. Like, you're not going to be uniquely better at this it's something that is just not your core competency. And other things that are really tough were just like the business model. Like we had to really understand what to do. It's, we're not a transactional like API. Like I think with like Stripe and like Twilio, it's a little like okay, one transaction or like one, like one email, one text message. So it's a little bit easier to figure out like what pricing looks like and what. And customer support might be a little bit easier. But for us, like all of it was so different and like the closest comparable we had was plaid. But even still it was different because they were consumer, mostly consumer focused and we were B2B exclusively. B2B.

[Alex]

Yeah.

[Shinzi Ding]

So yeah, a lot had to get, a lot had to get figured out. And the customer buy in process was really tough in the beginning.

[Alex]

But that's kind of the value that you guys offer. One thing that APIs do is they abstract away complexity. So this is why people love Twilio. You could just use their API, send SMS messages anywhere, you didn't have to know anything about telephony. They handle all that complexity. And in the case of Merge, you guys have gone out and talked to all the accounting providers, all the HR providers, etc. And done all the work to get this set up. And that forms essentially your moat in a way. But if people can follow up based on the work you've done and copycat you, does that, to keep the analogy going, does that drain the merge moat?

[Shinzi Ding]

So the benefit of Merge is actually, so you know how I was talking about earlier how there's like a long maintenance period and it's a huge pain. So there's a maturity curve for every single integration and also every single category that we have. And so one of the benefits of us being first and us just having so many customers onboarding, and every single time our customers and their customers onboard, we find out more edge cases for what can happen in these integrations. Because API documentation is always hard coded, like it's just not always updated. And response bodies from APIs can vary wildly. Like, sometimes you think something will come back as a number, but it actually comes back as a string. And then boom, tomorrow it's an array and you're just like, what the fuck? And it breaks your code. But for us, because we have so many customers onboarding, we just have so many data points of what those edge cases could be. And so by the time our customers onboard onto a really gnarly, like, enterprise integration, they're Much less likely to run into a bug than if they had built it in house because the first time you have a customer onboard, you're going to run into a bug. There's just no way it's going to work perfectly.

[Alex]

So what I was prepping for our chat today and I was thinking about the ability for Merge to see data in motion just because of how many different pipes you guys have running between different products. And I was curious if there was a kind of a data observability element to this. And I wasn't going to bring it up because it seemed a little bit off kilter, but you just made the point for me. Can you talk about how Merge is from my view, kind of like a second order data observability firm.

[Shinzi Ding]

So I actually. We actually call it integration observability because it's specific to. Yeah, specifically like integrations and also the customer support side. So actually a lot of times, once the integration is live with our customers, customer support teams mostly interact with Merge and our support team. The reason why is because we want to make sure that every single piece of data that is flowing in Merge and out of Merge is visible to our customers. Because we are specifically focusing on B2B. It's just the stakes are really high. Each end user can cost millions of dollars and so it has to be extremely reliable. You have to know everything that's going on and there you don't want anything to be like what is going on under, underneath the surface. Like we want it to be very, very clear and transparent. And so we built a lot of tooling in our dashboard. Let's mostly focus more, not for more non technical people. So like we have every API request, you can modify scopes and what data you want flowing in and out is fully searchable. So you can search like for Alex's name, if Alex came through or not. You can store it. Like all of this information is very visible. Same with like, there's end user error. You can see it very easily in the dashboard. It's kind of like simulating what people would use datadog and Sentry for when they were building integrations in house. Because you would need to use both components in order to figure out what was happening with your integrations. But engineers would have to look at that and with Merge it can be a customer support person.

[Alex]

Okay, I just realized we've been talking for like 25 minutes and I have to move this towards business stuff in a second.

[Shinzi Ding]

Of course.

[Alex]

Two quick. Sorry. I love learning and I'm learning a lot. So thank you. I want to talk about two quick things before we move on. One is this product called Blueprint and it's a way that you guys are allowing people to essentially it seems like crowdsource integration recommendations. What's the idea there?

[Shinzi Ding]

Yes, to be honest, is mostly us just playing around with AI when just us playing around with AI and seeing how potentially our customers could be able to contribute to our integrations down the road. And it worked like it was pretty cool. Like we were able to get documentation and then we would be able to generate like initial mappings. It's obviously not going to be perfect. A lot of building integrations is unfortunately very subjective. It's not objective and so AI isn't quite there yet.

[Alex]

Got it.

[Shinzi Ding]

But it was really good for us to be able to see, okay, maybe we might be able to expedite part of the integration build with, with AI, but it's not like a full blown product. It one day maybe, but right now it was mostly just like for us to experiment with it and see if our customers could start helping us out.

[Alex]

And did they?

[Shinzi Ding]

Yeah, they actually did. So a lot of people started submitting different integrations. It was also helpful for us to gather interest in which ones. Unfortunately, the main blocker for building integrations is sandbox access. It's not documentation. So even if you have a great, there's great documentation out there and you feel like you know how to map it, if you don't have a sandbox account to like test route and like modify the UI and see how the response bodies change in the documentation, the integration is not going to work really. Or you it might be okay, but you'll run into edge cases. So that's the blocker. Even if we get documentation.

[Alex]

Why is sandbox access hard to get? Because by definition sandboxes are safe environments. Ergo they shouldn't be risky to let people tinker with with. So in my view the bar should be very low to get access to them. And yet several times today you mentioned that sandbox access is an issue. What's going on there?

[Shinzi Ding]

Because it requires a pretty advanced partnerships motion. So for instance, like if you, because you need to be able to issue an account to, to a partner and not build them and understand that the purpose is purely for testing.

[Alex]

Isn't that just a button you click like do not charge click and then like this, this sounds like something the software could solve.

[Shinzi Ding]

A lot of categories aren't self serve. Like for instance, like HR tech is just not self serve. Like usually you End up having to sign and like if there's payroll information you need to, you know, actually process the payroll.

[Alex]

Okay, that would be, that would, that would be funny. I got paid 47 times today.

[Shinzi Ding]

Yeah, I mean some categories are really great like ticketing and help desk Cat, like it's just always self serve and so that's very easy for us to get a Sandbox account. But for instance like getting our Salesforce sandbox like took a while if you need to just like you had to like fill out a bunch of forms.

[Alex]

I'm shocked that Salesforce was a process that a company known for its bureaucratic efficiency and lack of unnecessary layers and VPs. So really briefly, merge, definitely when you add a new integration, you make a big deal out of it. It's, you know, it matters quite a lot. So the Paylocity one from earlier have startups come to you and said, hey, we really want you to integrate with us because then we will get our, our, you know, our name on your site, our logo will be in your materials. So are you a distribution point for companies themselves instead of just something that people add on to let them talk better amongst each other all the time.

[Shinzi Ding]

Which I, which I love. Yeah. So all these companies will come to us and they'll be like, hey, like I'm, you know like a 50 person like CRM Company and I saw that you, these customers and I really want them to integrate with us. So can you please build an integration with us so that our logo will show up on their website and then all of our customers will be able to benefit from using that product. Because if you're like a new source of truth and you're trying to compete with like HubSpot or Salesforce, it's really hard to get that roadmap time from every single vendor that is integrating with HubSpot and Salesforce. Like they might not want to spend that time integrating with you, but with Merge it's a, it's free distribution and again we're helping create an ecosystem around their products.

[Alex]

So Starter comes to you. Hey, hey, hey, hey. You know, we are a 50 person up and coming CRM firm. We would like to be listed and we kind of take part in the Merge ecosystem. And you say, how much is it free?

[Shinzi Ding]

It's free. Right now? Yeah. Right now. Yeah. Well, let's do it. Because it makes our product better.

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[Alex]

To me, someone coming to you asking for access is usually the point at which you can extract some value. And so I presume right now there's more value in not charging them cash.

[Shinzi Ding]

I think one day. But right now I still really want to just make sure we have the most comprehensive list of integrations.

[Alex]

Okay.

[Shinzi Ding]

And it's definitely been on our mind, like we've experimented a few times with it. But right now I just want us to have the best product. So. And that means just having the most integrations and the highest quality integrations and product.

[Alex]

How far are you on getting to the point in which you go like, okay, cool, we have all the big integrations we need. Now we're going to go chase the lost edge cases. But we've done 80% of the work.

[Shinzi Ding]

Never. Because there's different regions and there's. And the world is just getting more international. So for instance, like, a lot of our customers are moving to different regions, like whether it's Europe or Latam or Southeast Asia or Japan. And so there's an unlimited number of integrations that you have to build. So never.

[Alex]

So I don't know, not to be rude about it, but like, are you guys getting faster and better at building these integrations or is that not something that you can actually accelerate given how much you depend on other companies offering access to sandboxes and so forth.

[Shinzi Ding]

Oh my God. Yeah, it's the only thing we do. And so that's one of the benefits of it being the only thing we do.

[Alex]

Now you make me feel silly. I wasn't sure if you could speed up the process because you mentioned these other roadblocks, but. Okay.

[Shinzi Ding]

Yeah, because it's the only thing we do. We focus so much on like making. Creating efficiencies with like how we test. Testing especially is the part that takes a lot of time. But yeah, we spend a lot of time on just like making that faster, more efficient and like higher quality for our customers. And then also whenever we make modifications for maintenance, it's also very fast as well. So it's like mostly what we do is just making sure we're able to move very quickly. But Merge overall is not just like a technically difficult product to build, it's also like an operationally difficult company to build. So we from the ground up, because we knew we wanted to be cross category, we knew we wanted to be like international, we just really wanted to make sure from the beginning we were building the foundation and avoiding as much tech debt as possible.

[Alex]

Well, and you guys had security on the mind early on, if I recall correctly. You guys had like SOC 2 compliance, like out the gate.

[Shinzi Ding]

Yes. And that's all credit to my amazing co founder. Yeah.

[Alex]

All right. Now one more product question before we talk about Money Merge for AI Build your AI features with LLM ready data. My question was, is the merged AI product for companies to ingest their own data to a single point so that they can train their own AI features, or is it for companies that have many customers that have different integrations to bring that data in to make an AI feature for their customers?

[Shinzi Ding]

So the latter. We never ever do any internal use cases. Like the price point just doesn't really make sense for us. But yeah, we have a lot of companies that have gotten started in the past few years, especially with the AI boom, that want to be able to have more customer specific data in their products so they can provide insights for like whether it's AI search or like AI SDR or like, I don't know, some, you know, you name it and they'll use our integrations to help enhance their product insights and also capabilities.

[Alex]

And how big of a demand point has that been for Merge lately?

[Shinzi Ding]

So honestly it's so it's been really, really prevalent in the S and P segment. Like we just see a lot of companies just getting founded pretty much like 100% of companies are all AI, it's a little bit harder to tell in the enterprise segment because you can't, like, everyone's just adding AI to their products. You can't tell if it's like, AI specific or a product that has, like, a little bit of AI. But on the SME segment, it's like super, super, super relevant.

[Alex]

The way this has been explained to me and the way that I've learned it is the more unique data you have to build your model, the better it will be, the more differentiated it will be, and the more of your own data you have inside of an AI predicated application, the smarter it will be, the more you can do with it. Ergo, unique data is this incredibly important thing. If everyone's moving towards using more AI, does that mean that the total throughput of information across APIs that merge touches is going up incredibly quickly? Because it seems like it should be.

[Shinzi Ding]

I mean, that's what I think. So we've been seeing. We've been seeing a lot more companies going from using mostly just one or two categories to all seven categories or. And asking us for more.

[Alex]

Seven categories of integrations with Merge.

[Shinzi Ding]

Yes, exactly. Yeah. Because the more data you have, the better the insights you have.

[Alex]

Essentially, the AI boom, even though it is, I mean, not exactly what you guys have been working on, it is providing a nice tailwind to the business.

[Shinzi Ding]

Yes, yes. As my CRO says, it's always good to be lucky. So we have been very lucky.

[Alex]

Better, dude. Better lucky than good is one of those things that I've learned is more. I've learned that lesson again and again and again as I've gotten older. And so shout out to you guys for being both. All right, now let's talk about money. So according to Crunchbase, Merge has raised 74.5 million. Last round was a $55 million series beat October 22, and PitchBook had that listed at a $315 million post money valuation. So that's a couple. Two, in fact. The obvious question is simple. Are you guys raising more money?

[Shinzi Ding]

Not right now. We've been really efficient and to be honest, we haven't spent most of our money from our Series B. One thing that I really invested on early on, just because of my. My finance and operations background, was I wanted to have a really good finance team. And so one of my old co workers joined us as employee 10 and she's. She was just like, tiger moming all of us about, like, not spending too much money and being really efficient. Especially in this current market. So not right now. And we have. We have a long Runway right now with how much we're spending and she's actively making sure we're keeping her cash in check.

[Alex]

Is she like a CFO equivalent?

[Shinzi Ding]

Basically, yeah.

[Alex]

Okay, so you have a CFO equivalent and you also have a CRO and you've only raised three rounds of capital. That is pretty darn early for a startup of your size.

[Shinzi Ding]

We only have one C suite or one CRO. Everyone else is a vp.

[Alex]

Oh, okay, fair enough. But I mean, you have definitely a more. Forget the titles. You have a much more mature finance op than most companies do at your size.

[Shinzi Ding]

Oh, for sure. Yeah.

[Alex]

For the founders who listen to this, that's the main audience. For a twist, just explain how you went about that. Costs and benefits. I think people would love to know what an early investment in the office of the CFO broadly does.

[Shinzi Ding]

So I hired Alexia when we were 10 people because there were just. There were a lot of operations and accounting things that I just wasn't going to be uniquely good at. And I also knew I wasn't going to be super strategic there too. We were starting to enter a phase where we might want to have more advanced pricing. At the time we were just like flinging numbers around to customers and that. That just wasn't going to scale. And I knew we needed to be really thoughtful about it. And if you hire a really good finance team, they can be revenue generating for you and really strategic in like how you expand to different products, like how you expand to different regions, how you're thinking about like cost compensation. And so we hired her so that she could really own all that. And she ran lean through our Series A. And then she started expanding her team after our Series A.

[Alex]

After your Series B or Series A?

[Shinzi Ding]

Series A. So then she had two people. She didn't. She didn't really expand to three people until Series B. But then we hired also a VP of Rev Ops and then also a two Rev Ops team members because our sales team started expanding a lot as well. In general for a Series B company, our finance and operations team is definitely pretty loaded. But I think just given how complex like our operations are, it's really been an advantage for us. And we have deep insights and understanding of our sales motion and where like, like Pipeline and just like what the company looks like when you raised that.

[Alex]

Last round, that $55 million round that, by the way, Excel led that, if I recall correctly.

[Shinzi Ding]

Yes.

[Alex]

Yeah. Okay. It's a big round. I mean, 55 million, even for 2022 was relatively outsized. Were you guys at the time intending on being very conservative with that new investment when you raised it?

[Shinzi Ding]

Always. We always wanted to be really conservative. Like with our Series A, we were really, we actually hadn't even touched our Series A by the time we had fundraise. We've always been pretty careful about it. We knew we wanted to make some investments in some strategic areas with that $55 million, but not, definitely not spending all of it.

[Alex]

Why were you guys so early to the what if we didn't burn a bunch of cash startup movement? Because it feels like you raised a. A typical round and then did non ar typical things with it. And that's an interesting dissonance to me.

[Shinzi Ding]

So the company that I used to work at, Expanse, they were pretty lean too. Like they got to, they got acquired at a billion dollars, like 200 people. And they mostly focused on like really large enterprise customers. And now that I'm thinking about like how, how it ran, it was pretty efficient and they didn't, they didn't spend a ton of money. And I think because that we had a benchmark for what metrics might want, might want to look like. And we started in June 2020 when it was really hard to fundraise and like no one believed in us. True, true, true, true. We just, we just knew also merge was going to be an expensive business to build because everyone has to be technical. We're building in San Francisco, New York City and I would much rather just never have layoffs. And I really wanted to make sure that like as much as possible I could protect the team and just like hire slowly and make sure that everyone is really good and have fewer better people. But it's also hard because we're like, we're an in person company and that automatically limited a lot of what the pool looked like. So it was always going to be slower for us to hire. Like we would never even if we wanted to. Like 2x tomorrow. That could just not happen. That would just not be able to happen.

[Alex]

That's actually the funniest thing I've heard in some time. If you are an in office company, your hiring rate may be slower because your candidate pool is more constrained. So if you want to save money by not hiring people, return to office. Jason's going to love that. As I had. That's like half who's been talking about this show lately is like returning to office. I refuse. But I do respect every company's right to make their own decision. It's funny though, to hear you talk about this merge was going to be expensive to build lots of technical talent. We're in New York, we're in San Francisco, we're in person. Which means you have office expenses and yet you hadn't spent your Series A by the time you raised your B. You still have lots of your B two years later. It's funny to me that you manage this when most people don't seem to be able to spend less and keep growing. Here's an example of you guys pulling it off. It's just rare to hear this actually work, I guess out in the market and not in a blog post.

[Shinzi Ding]

We have a really good team and I think also just because like my team, we're so close and that's probably from just like to be honest, being in person, they feel comfortable calling me out like, hey, like we invested a lot in this, like we need to stop investing more in it or like, oh, like right now, like where expenses are like this, we like hold up, you know, I mean like they, they, they forced me to be really thoughtful and I think because we're so tight as an executive team, yeah, we can really call each other out on things like that.

[Alex]

For everyone out there is listening and thinking, oh my gosh, they haven't spent a lot of money. Surely this company hasn't grown much. I went Back to the TechCrunch coverage of the Series B and you guys have said that at the time your air annual recurring revenue had grown by 30x in the last 12 months. And then at the time, 2500 companies now use their service to integrate SaaS apps. So I'm curious, in the last couple of years, how has growth been?

[Shinzi Ding]

It's been really good. So we've obviously seen, we've, we've obviously tried to recompose what our revenue looks like a little bit just because when we first got started it was a lot of like micros and B and smaller companies building on the platform. But right now I think we, to be honest, I haven't checked the numbers because I don't look at this as much now, but we have like, I think like 16,000 self serve organizations on the platform. Free, free and paying. We have around like 400 enterprise customers on the platform and also the size of them are just increasing. Yeah, it's been a really transformational past two years and that Series B that we raised really allowed us to like take this focus more on investing in that future and what we wanted the company to look like and also just making sure the product. We could focus on product quality rather than continuing to expand the tam. Because one limitation with our space inherently is just there's TAM constraints. Like when you first get started, you decide, am I going to go broad or am I going to focus just on like one or two categories? And if you focus on one or two categories, you just. There's not enough companies out there. You can't outbound enough companies and you can't get enough revenue and then you die. But if you go broad, then your product super shitty and then you'd also die. So yeah, the raising the money was just really great for us to be able to just double down on quality, make sure existing like because we already expanded our TAM enough and just making sure our customers were happy.

[Alex]

So essentially you expanded your TAM by going broad, having more capital, add you to, then go deep where you had gone broad and therefore you're not spread too thin.

[Shinzi Ding]

Yes. And we had kind of like alternated. Like we first we went really deep in like two categories and then we went a little bit broader, then we went deeper and then we went broader and deeper. And then we also had the benefit of just being first. So we had time.

[Alex]

Yeah.

[Shinzi Ding]

Overall, like just. We've been spending a lot of time on like making sure it's been like efficient growth, especially just because the market, we don't know where things are going. And I just really want to protect the team and make sure there's a good outcome versus like over fundraising and overspending and being like it. We ball like, I don't want to do that. This is the only company for me, like I. This is it. So I really want to make sure I'm like being responsible, so.

[Alex]

But I want to go back. You very politely dodged around my question by saying growth has been good. Talk to me about 2023. How is this year looking? I presume you didn't 30x your air again?

[Shinzi Ding]

Oh my God. Yeah, of course not. Yeah, definitely not. It's been really, really good. We've like doubled the number of logos that we've had. We've expanded a lot of our like product offerings and there's some really big logos that we're hoping to close in Q4 that we just never would have even had conversations with last year.

[Alex]

If those new deals land in Q4 like they are hoping they will, how much does that pull your ACV up?

[Shinzi Ding]

A lot in the enterprise segment, but probably not overall.

[Alex]

Well, I mean, yes, because you have lots of smaller customers, but in the Enterprise segment, would it be like a double digit percentage increase in acv?

[Shinzi Ding]

Unclear. I. Yeah, unclear.

[Alex]

Okay, so. Because one thing that struck me was back when you raised the Series B, you guys were talking about going more upmarket and I was really curious to see how well that's gone. So is the majority of merge revenue today from the enterprise segment?

[Shinzi Ding]

It's growing a lot. Yeah. When we first started, 0%. So like none of them will use us like at all. Like that'd be chaotic. Like why would they ever use our shitty little product? But now, yeah, it's been really exciting. We've, we've increased the percentage quite a bit.

[Alex]

And then, you know, in the enterprise segment, compared to the these kind of micro enterprises you were talking about earlier, are they in the same kind of overall business categories or has going to market also opened up a new, a new kind of like industry sector mix to the company?

[Shinzi Ding]

Definitely different industry sector mix. There's certain companies that we'll just never be able to sell to. Like I can never sell to like Chevron or like Target probably unless they have a B2B SaaS component. But yeah, like financial services are now open to us and that just was not possible for us for.

[Alex]

So, you know, right now you guys have capital, you have, it seems to be a pretty strong product market fit and the economy seems to be okay. Have you thought about changing up the way you guys approach cash and just trying to grow a lot faster?

[Shinzi Ding]

No, because I really want to make sure that if I spend, if I spend X, I know exactly what's going to come out of it. And it's not super clear all the time, especially with this current market. So I'd rather us just be a little bit more conservative and spend X. And I know like it's probably going to be around. Yeah. Versus being like, okay, it's going to hit C. So I'd rather just make sure we're being smart with money.

[Alex]

But thank you for saying that because I wanted to talk about your go to market approach because I was going just literally reading back through historical merge tweets and one thing that hit me is you guys are pretty active, so you sponsor product school. I'm just going back to this. You went to SAS stock and then if I went through, there's just tons more events and so forth. You guys are out there. Really.

[Shinzi Ding]

Yeah.

[Alex]

Well, I presume you're exhausted, but like the approach seems to be, be present at industry events and kind of going around. And so I presume that the ROI on literally pressing the flesh has been good.

[Shinzi Ding]

So this was a big year of experimentation. And a part of this $55 million was for us to be able to experiment with the go to market motion. So part of that was going to be events and us going to different regions and us just like meeting more customers in person. So. Yeah, definitely. And part of the. Yeah, we've just meeting a lot of people in person now.

[Alex]

And I presume that in person stuff does a little bit better when people understand what you're building. So I presume unified APIs have become well known enough that there's less education required in person.

[Shinzi Ding]

No, there's still a lot of people who have no idea. Yeah. And also like every time I go to a wedding, someone's like, what is this? And then I have to spend like an hour explaining to them. So most people don't understand it and that's totally fine with me. But I just want to make sure that it is potent and that's why some of the in person interactions help a lot.

[Alex]

Wait a minute. At weddings you talk about what your startup does.

[Shinzi Ding]

Oh my God. Yeah. It's like I go through like a due diligence process every single time I go to a wedding. Like.

[Alex]

You should do what I do at weddings, which is slowly find the back wall and then attach myself to it and then don't move for three hours. It works every time.

[Shinzi Ding]

Okay, noted for the next time.

[Alex]

All right, I want to talk about pricing really quick and then I want to do just a quick reflection. So I was just trying to figure out how you guys go about pricing for Merge. And in the first of your three tiers you get three free linked accounts and then it's 650 for up to 10. And a linked account, I believe is a customer endpoint integration into the API, correct?

[Shinzi Ding]

Yes, pretty much. So it's a connection. So for instance, if your customer is Lyft and they're connecting their workday instance through Merge, that's one connection. And then you have another customer that's also that's using Oracle, then that's the second connection.

[Alex]

Okay, so Lyft connecting to, let's just say Oracle through merge for $65 seems to be like it's priced at roughly 1/1000 of the potential value for them. Why is it so inexpensive?

[Shinzi Ding]

Yeah, I know. So we probably need to adjust the pricing a little bit. But the thing is that we at first when we launched pricing, it was based on volume and it created a lot of complexities of the sales cycle. And Also what we noticed was a majority of the linked accounts were smaller and the, and so we were accounting for like the, the few instances where it would be really huge and allowing that to sway what the pricing looked like. Ve just looking what the most, what most of the pricing looked like which is why we just simplified it. So it's true, it is a steal for a lot of companies that are mostly selling to enterprise. And a lot of this enterprise companies will also make like money off of the integrations as well because you can. And for SMBs, yeah like the pricing is a little bit more expensive. We have to work with them on pricing too.

[Alex]

But I love leaving value on the table, providing a great experience for customers. I'm actually really in favor of that. I think it's a great way to go about it. But how do you decide as a business when you might be leaving even more on the table than you might want to?

[Shinzi Ding]

Yeah, I mean that's always the question. Right. And we do have a platform fee as well for the professional and enterprise plans. And so if you are a company selling to enterprise you can't use the self serve plan. It's just there's not enough security features like you need more support especially if you're selling to enterprise and you don't know the nuances of workday or SAP. You really need more support. And so you're gonna be on the enterprise plan which has a platform fee that varies just based on the company size and then that also that helps lean out the cost. Yeah.

[Alex]

One more question about, about customers. There's been a trend that I've been tracking mostly through public markets of software companies reporting pretty poor net retention rates. Over the last eight quarters things have come down from 130% to 105, 160 to 120, etc. Has that compression of ability to upsell customers impacted merges growth rate?

[Shinzi Ding]

So not that it actually impacts us more when our customers aren't doing super super well and especially if you're selling mostly to S and P then if they're not doing super well because we're PR based on the number of connections, so if they have fewer customers then we can't charge them as much. Also a lot of our customers would acquire each other, especially this year and last year. But the move up market has helped us a lot with that. Like the NRR for our enterprise segment is just completely different from our S and P segment. So we're, we're just pretty lucky that we ended up making that strategic move earlier. On.

[Alex]

Okay, now if you're not going to raise more capital and you're growing quite a lot, eventually you're going to reach scale. So I'm thinking merge. IPO Q2, 2027.

[Shinzi Ding]

Oh my God, I wish, I wish. I don't know.

[Alex]

Seriously, if you, if you guys end up some, some sort of horrible Frankenstein, super late stage series G company, I'm going to scream because I know it feels like you have tailwinds, you have good growth, you have good product market fit, your team seems good. Like if you can't go public eventually, then literally startups are so broken, we need to just rip all the papers up and throw them and start over again. That's my vibe.

[Shinzi Ding]

I mean that's the dream. And I firmly believe that all tech companies that go public and also just all companies that go public eventually become M and A shops where you have to strategically purchase other companies and just like, you know, combine them in a way that is beneficial to the customer. But there are a few bets that we want to make that would be beneficial for us to do as a private company. And I don't think public, I don't think. Yeah, I don't think the stock market would like treat it super well. So I'd want to make sure that we make this bets before we end up doing anything like that. And we're still 100 people, so we're far from that right now.

[Alex]

But no, there's actually, there's no minimum personal requirement to go public. So really no, you could go public with two people. I mean spacs are essentially just zombie cash that's been floated. Right. So I mean the question is, you know, do you have like 150 million trailing revenue? No. But will you by 2027? I don't know. I've never seen a company say we grew 30x last year. Here's our series B. Haha. Like that's that. That is a very impressive result and I'm hoping it's, it's kept going because you know, I would love to see you drop new numbers soon.

[Shinzi Ding]

I know you love numbers. I've been listening to you for a while.

[Alex]

Well, numbers explain what's actually going on. Okay, last question that I promise I'll let you go. We were talking about AI earlier and tailwinds that are off and so forth. Has anyone tried to buy you guys lately?

[Sponsor Announcer 2]

No.

[Alex]

Really? I'm shocked because I feel like some company in the AI data space, like databricks would be hovering.

[Shinzi Ding]

Yeah, no. And to be honest, I don't think we'd be super down for it either. I think the opportunity for what we're building is just too big, and it would really be a shame. I really feel like what we're building is like the infrastructure for the next generation of the Internet because just data is so important, and I don't think it would be a good. I don't think it's worth it, especially where we are right now.

[Alex]

If you're going to become the data, you know, interchange for the Internet, if you will, especially on the business side of things, do you eventually drop the. The API focus and maybe get more agnostic about types of data in motion?

[Shinzi Ding]

Oh, my God. Yeah, Alex, that's what we're doing.

[Alex]

Okay. What does that look like?

[Shinzi Ding]

I can't share all of it, but yeah, I mean, we're. That's why we hate when people call us Merge API, because it's really just merge, because, like, wherever your customer's data is, like, we want to be able to pull it and export it in whatever format that you want eventually. But yeah, for instance, like, now we have CSV upload. We built some on prem integrations too. We have soft P. So world should be our customers. Oyster.

[Alex]

Well, I should have started with that question, but since we're out of time, I have to let you go. But thank you so much for coming on. I really do appreciate it. And the next time Merge does anything, you just call me up and we'll have you back on.

[Shinzi Ding]

All right, sounds good. Thank you so much for having me.

[Alex]

My pleasure. All right, everybody, live news coming up. Lots more twists to come. Make sure you're subscribed. My name is Alex. We're out of here. Bye.