SaaS Interviews with CEOs, Startups, Founders
How this DevOps Tool Plans to Break $1m in First 9 months
19 Jul 2021
Chapter 1: What problem led to the creation of Merge?
When we realized that we both had this problem in two very different spaces, but a very similar problem, we did a lot of research nights, weekends, and found this spanned so many B2B categories. And so we decided to launch Merge, which is a platform for unified APIs at the B2B space.
You are listening to Conversations with Nathan Latka, where I sit down and interview the top SaaS founders, like Eric Wan from Zoom. If you'd like to subscribe, go to getlatka.com.
We've published thousands of these interviews, and if you want to sort through them quickly by revenue or churn, CAC, valuation, or other metrics, the easiest way to do that is to go to getlatka.com and use our filtering tool. It's like a big Excel sheet for all of these podcast interviews. Check it out right now at getlatka.com. Hello, everyone. My guest today is Gil Feig.
He's the co-founder of Merge. Now, previously, he was the head of engineering at Canvas. He's led projects at Wellfront and LinkedIn, and he's a graduate of the Cumberland University. He now lives and works in San Francisco. Gil, you ready to take us to the top? Yeah, let's do it. All right, real quick. So talk to me a little bit first.
When you leave an engineering role at a company, it either means your equity is vested and you're good going, you want a new thing, or you got bored and just wanted to leave. Which one was it? Yeah. I think I've always wanted to start a company and the timing was right. The problem was there. You know, Canvas was a great place, but the timing was ready and I always wanted to do it.
So I decided to make the leap. So talk to me about the current product you're building and ideally tie into the discovery of the problem via your director of engineering role at Canvas. Yeah, absolutely. So what we're building here are unified APIs.
And so you integrate once with us and then you can offer your customers 20, 30, 40 different integrations in HR, applicant tracking, accounting, and then more categories on the way. And we came to this idea, me and my co-founder, after experiencing this exact problem at both of our past companies.
So my co-founder, Shensi, had the cheapest staff to the CEO at Expanse, a cybersecurity company, and they had to build out a ton of ticketing integrations. She saw it from the business side. And then as leading an engineering team, 15 people, I was spending my nights and weekends working on these integrations because it was just so much work. It was a lot of support. They were constantly breaking.
And so... When we realized that we both had this problem in two very different spaces, but a very similar problem, we did a lot of research nights, weekends, and found this spanned so many B2B categories. And so we decided to launch Merge, which is a platform for unified APIs at the B2B space. What year was that? So we started Merge last year.
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Chapter 2: How does Merge's unified API platform work?
Are we talking like a hundred grand a month? I mean, what's sort of the range of where your pricing comes in at? Yeah, yeah, yeah. It'd be closer to the former. So it's, you know, again, it really varies, but it's on the order of a couple grand a month for our enterprise plan. Or it's not quite enterprise. It's more of like a plan where you require support and customer onboarding.
So really, if you're, you know, a B2B company starting to onboard really legitimate customers, that's when you might consider moving to something like that. And have you successfully upgraded any of these initial customers to that $1,000 a month price point or no? That's sort of the next step. Oh, yeah, many. Oh, great. Okay, great. Take me back to customer one. This is always tough for founders.
Who are they? How'd you find them? Yeah, so it was kind of, I would say our first five to six customers onboarded at all around the same time. And it really was word of mouth at the beginning. Ultimately, we started using a lot of marketing. We go for virality with a lot of things like that.
We're really big on social and all of our, you know, if we build a new integration, it auto generates all of our marketing content and posts it across social. So we're really going that way. And that's resulted in a lot of our later customers coming in. But yeah, early ones were some friends, then that spread through word of mouth to non-friends.
Now I would say we're quite close with all of our customers, especially our early ones. And then we really, we did kind of view them as design partners, but we also know that integrations are business critical. So there wasn't a lot of room to really make mistakes. So it was sort of like, they give us feedback, but we made sure that things were perfect before ever launching things.
Yep, now this is always an interesting question too. I mean, did you do some early consulting before you fully developed the actual productized version of this last year or no, you went straight for the SaaS revenue? Oh yeah, no, we went straight for the SaaS revenue. We were fortunate enough to fundraise early and we spent six months just building up
platform we didn't have a single integration and then in january alone we added 20 integrations because all of what we built is around being able to really quickly add integrations but also keep them up to date make sure that nothing breaks we did have an api break on on a sunday at 3 a.m because they had a breaking change that they released automatically.
And it broke hundreds of companies' integrations with them. And fortunately, our on-call got paged. And our postmortem says it was fixed by 3.06 AM. So we're pretty proud that we can react really quickly as well and not expose any downtime or issues to our customers. How many total integrations do you have today? I believe currently we have around 45 to 50.
We add, I would say, probably about two to three a week. And we're going to continue increasing the rate that we're adding them. And is that just a function of you hiring more engineers to build this out? Yeah. So fortunately, engineers and non-engineers are able to build integrations here because of a lot of the tooling we've built.
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Chapter 3: What metrics indicate customer activation for Merge?
Whoa, that's interesting. How the hell do you come up with a price valuation when you're almost pre-revenue? Yeah. I mean, this is what we wanted. My co-founder was really, really insistent on doing a priced round and I agreed. And so we decided we wanted to go that route. Why is that? I mean, is there a strategy there? Why do you want a priced round? Yeah. I think just the uncertainty of a note.
We just didn't want to end up in a situation where we were kind of screwing ourselves over. Interesting. Would you recommend to your other founder friends launching companies to only do price seeds or would you still recommend a convertible note to the cap? I mean, I think there's pros and cons to both, right? It's really easy to just get a convertible note done. There's not too many terms.
You can move really quickly. For us, our price round was a lot of legal. It was a lot of time, but ultimately we're really happy with it and we have no regrets. What's your team size today? How many folks? Yeah. So we're currently 12 full-time. And then we have year-round interns as well that have become part of the team and they contribute quite a lot. Highly recommend that for early startups.
Do you pay them or are these free? Oh no, of course we pay them. We pay them all. We're not just, yeah. You're not an evil free intern founder. We're not evil, no. All right. How many engineers? We are currently, so it's interesting. We're currently five full-time engineers, but 10 of us can code. So 10 out of 12 are coders. My co-founder was computer science, but went into finance.
She's now a full stack engineer and truly incredible. Six months, full stack engineer. And then our designer, also an engineer, also was in finance, also an accounting guru, but also an incredible designer. He's designed everything you can see on our site. So yeah, we really are picking rock stars. We have an awesome team.
Have you spent any money on sort of paid marketing yet or it's all just organic word of mouth? All organic, all word of mouth. I think we ran like a $200 trial on paid marketing. And we decided we were going to hold off until we have a full-time marketer, which we hired. So we're excited about him as well. I want to move into product.
There's a lot of other companies in this space, whether it's flat file attacking it or Zapier, more for the marketer that's trying to do this and you're sort of for the engineer. But before we get into that, real quick, I always like to ask this question. How long do you think it'll take you to break a million dollar run rate? End of the year, by the end of the year. We feel very good about that.
We feel very good about that. Okay, very cool. I would ask you what your growth rate was from last year to this year, but it's going to be massive because we're talking small numbers here, right? I mean, all revenue started in the past two months. We came out of stealth two and a half to three months ago. Oh, wow. Okay, good. So you think you'll go from nothing to $83,000 a month in mid-December?
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Chapter 4: What pricing models does Merge offer to its customers?
Yes. That's great. Very cool. So let's talk tactics real quick. You know, Snowflake's IPO was massive. And a lot of people said, you know what, Snowflake actually isn't a SaaS company. They actually priced purely off this usage metric. You're sort of doing this interesting test right now where you have, you know, one cent per API call, but also like a flat fee.
Do you see a world where you're moving only into one of those? In other words, more like Snowflake, where you're only charging that usage fee and is SaaS going to become irrelevant down the road? Yeah, no, I think we're always going to have two models.
It's just unrealistic to expect a really small, even pre-funded or like early seed startup to front so much money for integrations when they might only onboard one or two customers. They really want to validate. And so while we don't view that as like, again, we view that as pre-sales and it really is a way for someone to kind of evaluate and onboard.
So ultimately, yes, we do want to convert everyone to a fixed flat rate. We also want to give them the certainty. Like we found that customers like that. They like the certainty of it. We don't have a limit. We can just onboard as many customers as we want, sync the data as often as we want. We don't have concerns around it.
And we are also experimenting with it with the one cent per API request pricing model. But there always will be a usage based pricing as well. Yeah. And how many API requests are you processing per month right now? Oh, that's an interesting question. I can tell you since launch, it's been hundreds of millions. I would have to get you a more accurate number on that.
I mean, that is your key growth metric, right? I mean, imagine you look at that pretty frequently. Yeah, it is a key growth metric. We do, you know, if say someone's onboarding and they're on, you know, like an enterprise plan, we'll comp it while they're figuring it out. You know, a lot of things like that. But overall, yeah, that is a key growth metric.
We are going to start moving towards instead of API requests because it can be kind of unpredictable. Certain platforms might require you to make tons. We're going to be moving more towards a flat rate. So you don't have to worry about like the nuances of one platform requiring more API requests than a different platform. Interesting.
The other thing I want to chat about, let's talk about legacy players in this space. Flatfile is interesting. They're raising a lot of money very quickly. Basically saying, listen, if you rely on data from your customers and a CSV upload, use this to quickly do it to map data. You're saying, hey, if your customers don't have a CSV upload, just use our API integrator.
Let them connect directly to the API. How do you think about yourself compared to Flatfile? So we are actually very close with Flatfile. We are a customer and their CSV upload is embedded within our platform. So when customers are going through that linking flow, they can actually come in and select from the different ATS platforms or HR platforms. And then the last one is CSV.
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Chapter 5: How did Merge acquire its first customers?
And we're all API based only. So we're built from enterprise from the ground up. We're built to scale up to enterprises. So all API based, no scraping. We're not doing things like that. And then again, a lot of the management tools as these issues come in.
Actually, for reference, at Jumpstart, we would have, sorry, now Canvas, we would have issues come in and I would go into my spreadsheet and take a day off of engineering days for each issue. Because it was a context switch, they had to dive deep into the logs, figure things out. So all the tooling we built is to help manage that. Customer success can handle customer issues, not engineering.
Interesting. Very cool. Okay, last question. Obviously, when you're launching a company, one of the hardest conversation is founder equity. There's two of you guys. How'd you have the conversation? Oh, Shenzi and I have been best friends since college. It was an easy answer. We respect each other massively. We've worked together forever. We did an equal split and we're really proud of that.
So now you each own like 40 or 37, 37 and Scott and NEA have caught like 10 to 15%. He's the tiebreaker, huh? Yeah, it's something like that. What was your guys' last disagreement? Not with Scott, but you two as co-founders, maybe a product decision. Oh, this is so interesting. I think, yeah. I don't know if I can think of our last disagreement. I would say we get along on a lot of things.
I would say we occasionally disagree on certain factors, but ultimately we're very good at deciding who cares more about a specific issue after maybe a short argument. So I would say there's been nothing that's so memorable that I could bring it up. Do you know what I mean? And that makes sense. Let's wrap up with the famous five. Number one, favorite book. Oh, favorite book. Oh my God.
This is a tough question. I would say, honestly, it's a lot of the Silicon Valley books more recently. Like I really loved Secrets of Sandhill Road recently. Yep. Number two, is there a CEO or founder you're following or studying? A founder that we're what? A founder you're personally following or studying. Oh, um, yeah, many. Let me think here. We really respect the founders of Plaid.
So yeah, I would say them, both of them. Number three, what's your favorite online tool for building a business besides your own? For building, we love full story. Is that a good one? That's a good one. Number four, how many hours of sleep do you get every night? We think sleep is incredibly critical. I aim for at least five, but usually go for six to seven. At least five. Gil, come on.
If you think sleep's critical, you got to be getting seven, eight, nine, right? Depends on the week. Fair enough. Fair enough.
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Chapter 6: What challenges did Merge face during its early development?
How old are you? How old am I? I'm 28. 28. Last question. Well, actually, what situation? Married, single, kids? I imagine single, right? I'm single. Yeah. Okay. No kids. Last question. What's something you wish you knew when you were 20? Um... Take time to enjoy and learn your job early on. I think that I was always in a rush to move on to the next better thing.
And I think I should always be spending time living in the moment. Guys, there you have it. Merge.dev. Again, integrate fast, integrate once. It's a sort of one API for HR, payroll, recruiting, accounting platforms. They just launched their paid plans two months ago. Already call up sort of 40 or 50 customers paying sort of $500. to over $1,000 a month.
They think they are on track to break a million dollars in AR by the end of the year. We'll see what happens. Gil, thanks for taking us to the top. Thank you so much.