Shensi Ding has already raised $75M for her tech startup. Even though they chose to get started in the middle of the COVID crisis. Her startup, Merge, attracted funding from top-tier investors like New Enterprise Associates and Accel.
In this episode, you will learn:
- The importance of company culture
- How fundraising changes as you progress through different rounds
- The future of Merge and integrations
For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
The Ultimate Guide To Pitch Decks
Moreover, I also provided a commentary on a pitch deck from an Uber competitor that has raised over $400 million (see it here).
Remember to unlock for free the pitch deck template that is being used by founders around the world to raise millions below.
About Shensi Ding:
Shensi Ding is the co-founder of Merge. Her initial experience is in investment banking & technology investing, plus her role as the Chief of Staff at a startup and what this experience taught her about running a company. The aha moment that led Shensi and Gil to work on Merge and how they got started.
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Connect with Shensi Ding:
Read the Full Transcription of the Interview:
Alejandro Cremades: Alrighty hello everyone and welcome to the dealmakerr show. So I’m very excited with our guest today I think that they we’re all going to be enjoying very much listening about building scaling financing racing money on a downturn to I mean you name it. So I guess without farther do let’s welcome our guest today. Shenxi ding welcome to the show so you grew up in Boston so give us a little far walk through memory lane. How was saying live growing up. You know going there around quincy market fenway park you know and all those goodies. Yeah.
Shensi Ding: Um, hi Thank you so much for having me.
Shensi Ding: And.
Shensi Ding: Oh I think it paused for a second or you’re freezing or am I am I free. Oh okay.
Alejandro Cremades: You’re good. You’re good by the way by, but by the way we’ll edit this but just so you know the audio and the video is going to be picked up from your own computer. So don’t worry if I freeze or if anything happens from my end. Okay, we’re going to have engineers piecing this and and everything is going to be coming out of our own computers. So don’t worry.
Shensi Ding: I oh okay, that sounds good. So oh okay, that’s sounds great. Okay, awesome. Yes, so I grew up in Boston and went to school there. It was very boring and so it allowed me to experiment a lot with different games.
Alejandro Cremades: Okay.
Shensi Ding: And I actually taught myself how to code at 12 just because there was literally nothing to do because it was so cold. Um, and my parents really encouraged it I I built a lot of websites I did a few internships like building different websites for different. You know, research centers and I had a great time playing around with it and so naturally when I went to college. Um I decided to study computer science and that’s actually where I might gil my co-founder.
Alejandro Cremades: So so you went to ah to New York city to study computer science at Columbia and 1 thing that they that really stood out for me is that you did not go into like the whole you know. Tech world and and and and push for the engineering side of things you wanting to investment banking out of all things why investment banking. Okay.
Shensi Ding: Yeah I loved coding and I really enjoyed the problem solving for it. But I always felt like a big gap in my knowledge was understanding if a company was a good business or not I wasn’t able to read financial statements I didn’t know how to evaluate a company. And I also didn’t understand what people were talking about in the wall street journal or New York Times whenever they were talking about company performance and I felt like that would be detrimental to my career, especially since I wasn’t the best software engineer in the world I was pretty good I wasn’t a gill gil was known in our in our college as like being one of the best software engineers in our class. And so I think because of that I was I was really interested in filling in those gaps and so I worked really really hard to break into finance and interestingly it was actually harder to break in because I didn’t study econ um, like as my major um, got a great job and learned a lot from those 2 years I actually focused on industrials investment bankking. Um, but it really toyed the bread of butter of financials evens and you know lbos dcs I alert a lot too and I also got a great workout tech from it too.
Alejandro Cremades: So let’s talk about then about you were talking about good companies. You didn’t know what what? what? A good company looked like or or how to read? you know this stuff I mean what does a good company look like what did you learn from from that experience.
Shensi Ding: Yes, a good company is able to have a unique positioning in the market and a good company is able to generate returns I Also learned a lot about like market forces understanding if a company was going to get destroyed over time because it had no moat. Um, and it taught me a lot that I that naturally now I Just now I think about and a lot of people have to like read up on it but it just became so ingrained like creating presentations about why this company was special and going through financial statements picking up little details about what that meant about each company that has to this day helps me a lot with. Thinking about Merge. Um, and how we can make merge more sustained like a long term sustainable business as well.
Alejandro Cremades: So at what point do you realize that perhaps the finance or perhaps investment banking is not for you.
Shensi Ding: I started reaching a plateau and I wasn’t really learning as much I also felt like it wasn’t something that I was really passionate about and I wanted to find that thing when I was going to be really passionate about and so I thought I I moved to San Francisco after doing investment banking to work in tech investing and. I was surrounded by like people who were in tech I also was meeting founders like every day because they were coming into pitch pitch our firm and it was so interesting seeing how passionate they were about their work because I just didn’t feel that way about finance and so I started recruiting for different startups really wanted to break in and see if that might be the best fit for me. And I got a great job at a company called back then kadium now called expans and then also now acquired by Apollo Alto Networks um as achivasap the Ceo and I loved it. It was so clearly the right fit for me and the right industry for me. And I’m so grateful that I got that opportunity because I love my job and I love coming to work every day and I love doing what I do now.
Alejandro Cremades: And that company actually got acquired for 800,000,000 so I mean quite ah quite ah, incredible outcome. So I guess what did you learn too about the full cycle of a company because at this point you know you’re part of um. Ah, startup you know Hypergrowth Business you know not so much on the investment banking side of things or the tech investment side of things but more like on the operational side being able to see you know the full cycle of a building scaling racing money and then reaching the finished line. So what disibility would you say that that gave you.
Shensi Ding: I think it showed me how I literally didn’t know anything about company building up until I actually joined a company and I became mortified about the dumb questions I used to ask founders when I was investing I was like oh my god why do I even like think that I could advise or like say any of these things because it was just such a different perspective. And it really taught me that it’s not that easy to just change a number or assumption in a model you actually have to like be on the ground and see what’s going on. Um, and I I learned a lot about how every single department was super important I also learned the value of having really smart people working on a team towards a mission. The company I learned a law also from the founder. The Ceo was just such a great storyteller I was so well read and very persuasive and because of that he was really able to pull the company toward success.
Alejandro Cremades: And while you were there. You started to see like some of the issues around integrations. So what were some of those issues that that you encountered. Yeah.
Shensi Ding: Yeah, so we were in cybersecurity space and we would detect different potential risks and we would create like an issue in our own product. But unfortunately we didn’t have any integrations at the time. So the only way to export these issues was to download a Csv and reupload it into whatever remote system that our customers were using. Ultimately, this is not very scalable since there would be thousands or even millions of risks that could potentially pop up and so our customers started asking us for integrations and prospects did as well. There was a point where a lot of our sales team was getting really blocked by the number of integrations that we had and our competitors were waiting some deals just purely based on. Um that feature. And I think what was really fortuitous was that at the same time. My my cofounder gill. Um, he’s actually head of engineering at a diversity recruiting company that needed to build a lot of ats integrations and even though he was head of engineering he was actually building these integrations because they just didn’t have the engineering resources and so we were just grabbing dinner. Like you know are usually week leadeds at speed great. We were just talking about why he looked like shit he looked really bad and so I was like what’s going on. He was telling me about where I and he was like all these integrations are killing me and I was like oh my god we had the same problem and I think just talking through like why was such a big problem for his company and why it was such a big problem for our company. But. Yeahre very different angles I was seeing it from a p and l perspective and we had to hire a lot of engineers just purely to focus on these integrations and it took a lot of time. We even tried contracting it out horrible code how to rip it how to throw it all away.
Shensi Ding: Also very expensive and he just really hated the experience because there’s so many edge cases and it wasn’t that easy people would always think that building an integration just required just you throwing some code in like launching the integration then you were done but the maintenance was much more time consuming and so I think learning that full spectrum from both ends was just very very helpful.
Alejandro Cremades: So when you decided to start merch or doing that process you did interview a lot of people and to really get that to seek that that validation. So.
Shensi Ding: That’s how we decided to start march.
Alejandro Cremades: What were those interviews like and and what were some of those questions and and what were the results that you ended up getting that you’re like okay I think that they we got to go for this first.
Shensi Ding: We reached out to a lot of companies I think we reached out to we met with probably around a hundred companies and people from every single department because we really wanted to understand how their role was impacted by integrations. All these all these meetings happen from cold. Like pull messages. We didn’t really know that many people at all these different companies and so we just had a shooter shot message a lot of people randomly and also back then in San Francisco you had to meet people in person like you couldn’t really meet someone on Zoom or do a call you had to go get coffee with them and so we got coffee with a lot of different people that. To this day I’m still so grateful for because they taught us a lot and gave us a lot of great advice. Um, so like even now decisions that we have made like in our early days have like made a material impact because of the advice that those people gave us and also a lot of them now are customers. Um, and so the reason why we decided that this was a good idea and the kind of validation that we got was. How much money they would be be willing to pay the fact that we didn’t have a product they they wanted to give us advice and wanted to make us successful and also the fact that people were just like this is such a good idea like if you built this this is this is really going to work. But obviously there was a lot of skepticismism too. I think a lot of people were thinking like is this really possible. Why like. Why do you guys? think that you’re going to be able to solve this in a scalable way and it gave us a lot of um ammo to really want to prove them wrong which was also very very helpful too. It’s it’s great to have both of that so that you’re really encouraged to be successful. Yeah, ah yeah, so.
Alejandro Cremades: So what was that day like when you and Jail were like let’s go. Let’s give our notice. Let’s do this thing.
Shensi Ding: Funny story and I probably wouldn’t recommend this for other founders. But um I quit and and gave notice and and then I told Gil I was like hey I quit so you’re gonna have to quit too and he was like dude. Why did you do that. But I was like I I was like I really think that like this. We can solve this because we we came up with the solution. We knew the problem we want to solve like the other details we can figure it out. But um, yeah I just did that and it was so worth it because the timing I felt like if we missed this window. It was going to be too late if we didn’t solve it. Someone else was going to. And I really wanted to make sure that we took our shot that way we could um and then we did it like right during covid so started the company like may June 2020 we never pivoted never built anything else. This was the only thing we ever wanted to build and we were just working in gills apartment. It coding all day like. Working together like talking to customers recruiting people. Um and it was really awesome because it was allowed us to have a lot of deep focus because there was nothing else to do like you couldn’t party couldn’t see your friends. You couldn’t really do anything all you could do was just focus on your company and that was really magical.
Alejandro Cremades: So for you guys, What ended up being you know for the people that are listening to really understand it. What ended up being the business model of merge. How do you guys make money.
Shensi Ding: Yes, so we have a platform fee and then we add usage on Top. So We are very fortunate now to serve over 5500 companies on our platform in just like the 2 years that we’ve been out of stealth and so we have a great generous free plan for SAndBs that want to get started I Want to test quickly. Um, and then and then when they decide that they need more features. They want more security they are starting to sell to Enterprise they can upgrade and work closely with and you have an account manager that can help work with them very closely to make sure that every every detail is perfectly taken care of.
Alejandro Cremades: And also I mean they the 2 of you really took it on you to learn. You know some of some of the good stuff rather than relying on anyone else or delegating early on which I think is a great idea and part of this. You know. For example was really pushing sales I mean you you took sales up on yourselves. Ah, really went all the way up to 750 k and at that point you know is when you brought someone in to really pay lead that so how was that thought process and out what point do you realize? hey maybe we need to get someone else to to take this on.
Shensi Ding: I mean I think it just extends not only to sales but everything too gil and I also built the product in the beginning we weren’t planning on hiring someone to start building it for us I relearned how to code so that I could build the product because I didn’t understand what was going on the codebase. How could I possibly try to tell someone else like. Instructions on what they should be doing once we hired someone I also wanted to make sure that I understood what it was like to build the integrations and maintain them too and so I would understand the nuances of them when we did go through sales motions too. Um, later on. But yeah gil and I we did a lot of sales meetings. We hired this really great team member who did a lot of experimental outbound for us. Um, like the summer of 2021 and we ended up booking like to like oh actually it was Twenty Twenty no twenty twenty one and we ended up booking like hundreds of sales meetings and Gll and I almost died I think it was meetings from like 10 a m to Nine Zero P M and every day I just looked so bad I think it was to the point where like 1 of our team members was like. Hey the worse Jetsy looks the better. It is examine means she’s in more sales meetings but it it really got our like reps in because day to night I was just practicing seeing what was working what wasn’t working Gil was doing the same thing and we really started honing in on what was effective and we would give each other notes to and I also felt like if we didn’t understand like. Who to talk to how to talk about the problem what they cared about how can you? ah again, possibly try to hire someone and try to make them do the same thing and so I thought it was very very important for us to have that experience but also sales as a founder is persistent in every part of the role you’re selling your investors when you’re trying to fundraise you’re selling candidates when you’re when you’re trying to hire them.
Shensi Ding: Um, you’re selling your existing team members for why this is the best opportunity every day when you’re working with them too and then of course you’re selling to prospects when you’re trying to convince them to use the product. So I think it’s very important to like understand that script practice it and hone it into.
Alejandro Cremades: So Let’s talk about then storytelling and selling as you were saying because it’s all about getting people excited about the future that you’re living into whether as you were saying is investors employees Future Employees. What have been some of the biggest key lessons around selling. Or storytelling that you’ve learned you know during this journey.
Shensi Ding: Um I think show some enthusiasm I’ve been shocked from some of these demos and founders that I’ve met and like seen where there’s like oh yeah, this is what I’m building I’m like how are you supposed to excite someone if you’re just like if you’re not that excited about it and so I think what gil and I really have.
Alejandro Cremades: Ah, yeah.
Shensi Ding: Um, as founders that has helped us a lot with both recruiting and sales sales is how enthusiastic we are about this product and I love integrations like I Really love this problem and I think about it all the time and I think it’s really fascinating. But I think for a lot of people who. Try to start a company and they aren’t really sure of the idea they’re not that excited about it I think it’s hard to sell it if you’re genuinely not that excited about it. So I think the most important part of storytelling is having a like having a compelling story through the enthusiasm that you show. Um as you’re telling it.
Alejandro Cremades: And as you’re thinking about team members too and and and we’ve been touching on this I know how important culture has been for for the 2 of you and.
Shensi Ding: Ah.
Alejandro Cremades: And basically you have also been part of every single interview. How many employees do you guys have now 75 people I mean that’s quite a ah few people in there. So so why did you take it on you to be part of every single meeting. Why was that so important in.
Shensi Ding: Um, we now have our own 75 people
Alejandro Cremades: And I guess what was the most important question that you would typically ask people. Yeah.
Shensi Ding: So we have a very distinct culture and it’s not for everyone and I think because of that it’s very important that guilt and gil and I also have a very strong vision for the feeling that we want to have in our company when we hire a new team member. It doesn’t matter how how amazing someone is at their job if they’re an asshole and it doesn’t matter. How? um like it doesn’t matter like how fun they are if they’re also not committed to the team and they’re bringing everyone else down too and so we’re really trying to make sure that we have like a very distinct like profile that joins the company and and energizes everyone else around them. Um, and because gill and I did a lot of sourcing like I think we sourced like that. Sort of people I think we sourced around like 50000 software engineers when we were like trying to find our initial team we have seen a lot of profiles. We’ve also talked to a lot of people and I think having that that the data collection of people we thought were going to be stars and 10 x team members versus people who were clearly not going to be someone fun that would be to work with or would not be like. Ah, strong contributor to the team. It allowed us to now be able to go into an interview chat with a person really gets to know them understand their wants and needs and they also their life story determine whether or not they would be successful here and it’s been very very effective because I think we just have so many data points and it’s really hard to replicate that especially as like. Like a new team member who’s becoming who’s becoming used to interviewing for the first time it is really hard to be able to train that too over time. Obviously we want people to be able to do it at the same degree but especially at the early side on the early side of of your company journey. It’s important to make sure that that early foundation.
Shensi Ding: Um, is really curated.
Alejandro Cremades: So let’s talk about you know, let’s keep on this path of ah of on this topic of recruiting. Let’s go. Let’s go on recruiting investors. How much capital have you guys raised today my god 75000075 people 75 is their lucky number. Ah now.
Shensi Ding: If.
Shensi Ding: We Race around 75,000,000 Ah, yes.
Alejandro Cremades: Now now now Now. Let’s talk about this because you guys raise raise the money during Covid two and I believe this was one of the few investments that some of these firms like for example, excel were actually doing So What was that journey like in. And why did you think that they they were the ones? yeah.
Shensi Ding: I know we’ve never quite gotten our timing right? So we raised our seed um like August Twenty Twenty so right when covid started and everyone is just really nervous about investing in companies and people were starting to get used to Zoom Investments we raised our seeipt from nea um a year later we got a little bit luckier and the marco is more like normal and. Zoom meetings were better. We raised our series a from addition and then more recently our series b we raised that August Twenty Twenty One sorry August Twenty Twenty Two peak of the market downturn for tech we raised our growth round and that was a wild journey. But I think 1 thing that we were very fortunate in doing and also having was. A team that was really focused on making sure that this was a good high quality business or how of finance actually joined us as I think like employee 9 or 8 and from the very beginning. She was very very disciplined in making sure that our spend and also our customer acquisition cost and. Um, our snm spend per dollar of revenue generator was going to be really high quality and that we were building not just the business that was growing very quickly. But also again, a high quality company There are so many businesses out there that I think just do not have the right fundamentals and it’s really hard to scale that it’s also hard to change the company’s Dna um later on. Um, and so I’m just really proud of the company that we built and so that’s why last year um I believe excel only invested in us for their growth ah like for out of their growth fund and then prior year prior to that they had around 23 24 investments
Alejandro Cremades: So I mean you’re throwing in here like some incredible names I mean any a a excel I mean great gray people. So you guys were coming you. You guys were not coming from the startup world. You know you were coming from investment banking. You know you did another company before and and I’ve saw that.
Shensi Ding: Great.
Alejandro Cremades: I saw that you even had you know some employees of that company to you know investing you know on the business which is great and the same thing with with with Gail so what was that process of.
Shensi Ding: Well I I wouldn’t say that we did both come from startups and we worked very oh we knew the investors from the last companies we did. Yeah.
Alejandro Cremades: Oh so you know the investors already got it. So So what was that? So What was that process then like of of really building the network or even Better. You know since you already know these people from from before. What was that push of activating them to jump in and and and to really ride this journey with you.
Shensi Ding: Well I mean I think it was important to have worked at startups before this too. So Gil he was a founding engineer that startup before and he knew the investors of that company quite well just from being an executive and for me as the chief of staff I also got to know the board members quite well from working so closely to the Ceo and. Also assisting with investor relations. Um, so I think like just working really hard and then also showing them what you had and having really great back channels that went a really long way for that initial seed investment where people aren’t sure if you’re gonna pivot later people aren’t sure if the yeah original idea that you think of is gonna work. Um, so. I think just like making sure that you have a strong strong back channel is because the only thing that they’re really investing in the beginning is you as a team.
Alejandro Cremades: And I guess say in this case as you guys were going from C to series a to series B How did you see as well. The um, the level of expectations you know shift.
Shensi Ding: I Think yeah I think the difference between series a series B was quite drastic. The amount of due diligence that came into Series B was just a lot more information and also expectations were higher for the type of data that you were able to provide. Um, thankfully we had a really strong finance and operations team that was able to have collect all that information and also already had it organized but it’s a pretty stark difference and I think that it was something that did surprise me Um, because yeah, because for series a especially at the time when we did raise it. It was definitely a little bit more.. It was still more betting on the team versus like oh is this company just scaling now.
Alejandro Cremades: And I guess you know now Incredible Journey You know with all these people all these great investors. You know that are part of of this journey I Guess if you were to go to sleep tonight and you wake up in a world where the vision of merge is fully realized.
Shensi Ding: All of.
Alejandro Cremades: What does that world look like okay.
Shensi Ding: Yes, So every company that needs integrations instead of building that in-house they’re using us. Um, not only that but I can’t share much but there’s other other things to who that people would be using us for as well. Um, that are related to Apis. Um I software. Yeah. But we have a lot of exciting features that we and products we want to launch but we’ll see when that happens.
Alejandro Cremades: So I Guess I Guess say you know a lot of exciting stuff in store that you know you’re all you’re you’re living everyone you know, really you know, excited about what’s coming I Guess as you are you know testing all these new initiatives and and really deciding on whether or not you know. Which one of them makes sense. How do you go about it. How do you go about? hey you know maybe this is the direction to go you know with this initiative or maybe not this initiative. Let’s go with this other one. What what does that process look like okay.
Shensi Ding: I always think it’s better to lead with action versus just like analysis paralysis I think a lot of times especially like in like the past few years people are like oh well, you can just like you know hack your way to product market fit. But I think a lot of it is just like you need just put something out there to hit to hit it doesn’t hit. hang. You need to figure out like how to fix it. But I think a lot of people are like oh I can use the spreadsheet in order to figure out what product market fit is you can’t really do that means like actually have something out live that someone can test. Um, so that was really important for us. We’ve always really tried to like lead with action and the only way sometimes to have the data because there is none is to. Launch something and then be able to collect the data. Um, so that’s always been something that we’ve really pushed as a company is just lead with action. Get something out there and then we’ll have some more information later.
Alejandro Cremades: Product Market fit. So what did product Market fit at what point do you really experience? Did you guys experience? Product Market fit.
Shensi Ding: Yeah, when our product literally was not working sometimes and people still wanted to use it I was like Wow I can’t believe it and obviously our product is not in that day and these are like the very early days but I remember like back then I was like Wow like you. There’s just so much work to do it like I. Like this this customer like really wants like us to make these changes. Um, but they still wanted to use us. They didn’t want to build an in house and I think that was when I realized like I think there’s really something here.
Alejandro Cremades: So if I was I mean we’re talking we were talking about the future earlier. Ah but I want to talk about the past but doing it. You know with a lens of reflection. So if I was to put you into a time machine and I’m able to bring you back in time.
Shensi Ding: No.
Alejandro Cremades: Bring you back in time you know perhaps to that moment where you were you know wondering you know what? what the future would be. You know where were perhaps to bring a solution you know to a problem that you were encountering perhaps during those chats that you were having with Giil imagine if you were able to go back in time and and have a chat with your younger self and perhaps with gil there too. And you were able to give each of you. You know the same piece of advice and that will be a piece of advice before launching a business. What would that be and why given what you know now.
Shensi Ding: I think the advice would be do what your gut is telling you because there have been several points in our company journey where we made several decisions on what our company direction would be what our company culture would be and people wanted us to change it. And this would happen every month or every week and we would say no and it was really hard to say no, it’s it’s always easier to just say yeah like I’m just going to do what everyone else is doing I’m just going to take the easier route but we didn’t and it was really painful and sometimes we were like oh should we change our minds. And I’m really glad that we did it because our gut was really telling us that like it’s really hard to unwind like what you what some of these decisions would be um and I’m glad we didn’t because I’m so proud of where we are currently and that only would have that only happened from us saying really really really strong and staying stay the course. And it start. It’s been from like what the product like who’re selling to what the product looks like um what we were building who you would hire where we would hire them and I’m I’m really glad we saved the course.
Alejandro Cremades: I Love it now for the people that are listening should see that would love to reach out and say hi. What is the best way for them to do so.
Shensi Ding: Yes, you can always reach out to me on Linkedin um, or email me at chadsky at merge.dev I’m always available. You can also always sign up for free if you’re curious and learning more about merge. But yeah I’m really excited to share more about merch to you all.
Alejandro Cremades: Amazing. Well since it thank you so much for being on the deal maker show today. It has been an honor to have you with us.
Shensi Ding: Thank you so much for having me.
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