Re-founding a Company for the AI Era | Shensi Ding, Merge

25:22Yeah.

25:23Turner Novak:Yeah. It was pretty good. Yeah. I didn't work at a factory. I worked at like a Froyo store where I was getting like verbally abused by this like Korean lady. A coworker or a customer? She's a coworker. But I was like in high school and it was like$8 an hour. And I but every time I like I love me. I was like, oh, my God, this is so cool. I'm like making money. But like standing was really like standing for that long was something that like really i like really like came into like my memory forever i was like wow i like love sitting um and so um now like i when i have a desk job i'm just like this is like fucking awesome like air conditioning yeah i love sitting i love like not burning any calories like i just like moving my fingers like it's just like i'm so i'm so lucky and i like it and i like it yeah yeah and then i I kind of went on this, like, I don't know, like arc where I was like, there was like the job portal at school where you could like apply for internships.

26:19Turner Novak:And I was like, oh, my God, I can make like 10 bucks an hour, 12 bucks an hour. So I just kept doing more internships every semester. I'd get a new one where I made more money to the point of I think my last semester I was making like 22 bucks an hour. Wow. Which is, I mean, yeah, it was like a 21-year-old, 22-year-old kid. And then this was obviously, this was in West Michigan in Grand Rapids. So there's not like a Google where you can make like hundreds of dollars an hour as an intern. But it was like pretty awesome. I was making more than my parents were making. That's cool. In college, which is like.

26:50That's really exciting, yeah.

26:51Turner Novak:It was kind of crazy though because you like, I don't know, it's like the most amount of money you've ever had. Like I was getting paid more money every week than my mom had like ever had in her bank account like at any point in life. Yeah. It's crazy. Well, on this vein of sitting in the office, air conditioning, a lot of founders hire an EA or multiple. I actually know someone I met, they have four EAs. How do you feel about having an EA? You don't have an EA. This episode is brought to you by Monaco. Monaco is the first revenue engine built specifically for startups. Monaco's AI-nated platform replaces your legacy CRM and sales point solutions.

27:32Turner Novak:It has everything startups need all in one place. Monaco helps build your TAM, generate demand, run outbound, capture every interaction, manage pipeline, and automate follow-ups all in one tool. They pride themselves on an effortless onboarding, white glove activation, and get you to value in days, not months. And the product practically runs itself with built-in agents that are always working for you. Start growing your revenue faster with Monaco. Try it now at monaco.com. i don't yeah um okay so i used to be a chief of staff and so i have like and i used to manage an ea so i have a lot of experience like understanding what the workflows of an ea and a chief of staff are yeah um i think if you have like a big company and you're very successful and you're very busy traveling a lot yeah get that ea get that chief of staff yeah if your company is like 10 or 20 people and this is different for vcs by the way vcs have like a very busy schedule where they're traveling a lot and like have a lot of meetings but a lot of founders like you're coding like you should be meeting with customers like there's like Calendly and there's like Google Calendar you don't really need an EA it's it's kind of like a vanity thing it also slows down like the time before booking like a meeting with a customer when you're so small and like you really need to just get that on your calendar immediately um and also it just means you're like not really fast at your computer uh like you should be able to learn how to like respond to emails fast you should learn how to like respond to your team and like book things on your calendar and like book travel like it's a good skill set to know how to be fast at your computer um it's definitely a hot take but yeah like if you're like really fast your computer like you can go for a long time without an ea i eas are very like good eas are a huge game changer totally agree but like a lot of these people that i'm seeing with eas and chief of staffs and like some kind of like fucking founders associate at the same time like what are you what are you doing then like what what are you like are you really that important that busy where you need someone to do all these things or are you just like really fucking slow at your computer yeah is there does there need to be like a formality though like let's say i'm i'm a customer yeah i email you or something or whatever the interaction is and you say you need to be really fast like do you what if you just like lowercase not a full sentence just like yes like what's what's this like spectrum of you need to make sure you're like being fast and quick people but then like the formalities of like making sure you're presenting things like is that part of the EA, like it like makes you seem more legit maybe?

29:56Turner Novak:I don't think so. Because also, I don't think so. Because like if I'm, so I've also, again, I've interacted with many different EAs. If the EA is like really bad, it makes you look bad. Yeah. Like they don't respond for a day. Yeah. Or if the EA is like a total bitch and like, or like you said, sorry, you said like your availability and they just like totally ignore it. And they said like, it's another thing. It's just like, it creates friction. And especially if you're in a situation where you like really want to meet with this customer or like you really want to meet with this like important partner and you're like you have not hired well or like your ea is not like representing you all that can really hurt the relationship um and so yeah it's just better to have that in your control it's another mental load like that you end up having to like um hold on to and like think about continuously i mean i think a lot about it too is like i i try to actively not schedule a lot of meetings and not schedule a lot of things so i feel like when you outsource it to someone else there's like less sacredness around it versus for me like if i'm going to spend time talking to you so like set up a meeting like i really want to talk to you and like i i don't do you know 10 hours back-to-back meetings all day i guess maybe i'm in a position where i don't have to but i'm like i don't really want to do that you know what you can do with an ea though you can have the ea blow someone off and make it seem like it's not you that is true i guess it's a shield yeah it's a shield interesting i mean that's why a lot of VCs hire associates because you can just be like, oh, man, I'm traveling.

31:19Turner Novak:I'm just slammed. Here's Shenzia on my team. Find the time to chat. Oh, another thing about needing an EA, it's like if you don't know shortcuts on your laptop, you don't know how to go to the beginning of a sentence or switch tabs without touching your mouse, you don't deserve AI or an EA. At minimum, you should know how to go between Slack channels with shortcuts. Oh, yeah, that's fair. Actually, I don't actually know. I don't use Slack a ton, so I've never had to learn the shortcuts. It's just like using the shortcuts for Chrome. Like is like Control-J or something? Yeah, exactly. Control-K.

31:52Turner Novak:I mean, Superhuman is a VC. I know all the shortcuts. Yes. I think Superhuman has added so much value for the people who never would have learned shortcuts, like ever. Oh, yeah. But yeah. Well, it's like the whole – because you did investment banking? I did. And not to brag, but I'm on the Trading the Street leaderboard. Are you really? For formatting. Okay. Yeah. And so people who don't know, there's like Olympic level competitions of like how fast you can build an Excel model without using your mouse. Yeah. And you can get really fast. Yeah. So you're basically saying like using AI is just like using shortcuts.

32:26Turner Novak:I think so. Yeah. Well, obviously like to a different level, but I just think that like shortcuts are mentality. Like if you are using shortcuts, your mentality is like I need to be like really productive and I need to be really fast at like whatever I'm doing. Yeah. So obviously then it extends to like AI. Like I just expect people who are good at shortcuts are probably thinking like, okay, how do I use AI? Yeah, that's fair. I mean, that's smart. So then personally, how do you use AI maybe like inside of Merge? Like what kind of things have you done that maybe these are super obvious, maybe they're not that obvious.

32:57Turner Novak:It's unique to you guys. And then personally, like how do you leverage it to get more done? So I don't have anything personal outside of Merge. That was like a stupid question. I mean like as a CEO. I joking. I joking. i mean there's some people that's like you know they're like oh like where should i travel like organizing like what should i watch with a it's like level one yeah um yeah so for okay so i mean it's basically just like anything that i see at the company that i'm just like why is this taking so long well i'll just be like we i'll just build it or i'll have someone else build it or i'll like give a very detailed prompt on exactly what to do um so yeah one example is like so we have these like dinners that we used to organize for our customers and partners.

33:39And we would do like one or two a quarter because it was just such a pain in the ass to coordinate. Like it would require like our whole team to go through LinkedIn, like find who to invite. They would invite them and they would have to update the sheet. And then we'd be like, oh my God, the dinner's not full. Everyone would freak out. You gotta like organize the dinner too.

33:55Turner Novak:Like communicate with restaurants of like availability. Like that's also a lift. And the seating chart, like there's just so many things like for the dinner that was just like, okay, we can only do like one or two a quarter because this is just too much time. And what would always happen because we couldn't fill the dinner is that, and I didn't want to be like embarrassed. I would end up spending like all my time, like the two to three weeks before, like going through my LinkedIn, like who's in New York, like who's in San Francisco, like who have we talked to recently and like inviting them manually.

34:20And so I hated that process because it was something that I always needed to get involved in and we just like couldn't scale it. But the ROI then was so high, like people love these dinners and we would have such a good time and like I love seeing our customers. Yeah. And so one day I was just like, you know what? I'm just going to spend like two days. I'm going to build like a dinner bot. And so now what this bot does, it doesn't do everything. Like the taste of the restaurant, like I can't do that. Like it can't decide like what's a good restaurant. Like you know what I mean? Like McDonald's.

34:45Turner Novak:Yeah, yeah. Chipotle dinner. Or like fucking like$30 ,000 dinner. Like, you know, right? So it like, so, but it will serve as like, here's the top restaurants. Like maybe do an outreach. Triple by, triple C I think like doesn't have an API either. So we can't automate that part. So I do fill out a form, but whatever. Once the restaurant is picked, does like the calendar invites, It looks through Gong for every single person we've met with before. It goes through our Salesforce and Apollo, goes through our customers and contacts at those and who's in the city. It just sends the invites as me. Then when they respond, it syncs the updates and responses.

35:14Then before the dinner, it sends the reminders. The day of the dinner, it reminds my sales team to send notes to the people who are going so they know what to talk about, does a seating chart. We went from having one or two dinners a quarter to now, I think we have three to five a month. Cool. Yeah, and it's awesome.

35:29Turner Novak:It's like 10x your dinner throughput. but yeah, and it's been so helpful for us. So that was something where like, I just like decided to build it out to like help the team out. And it has like had a pretty material impact, but yeah, I think like me having that experience, like building my own agents and like knowing when I can tell people like what to do. And if someone's like, Oh, this is too hard. I'm like, it's just not like, I know what you need to do here. Uh, versus if I didn't know that I'd be like, okay, then it would just be the end of the conversation. Yeah. Uh, I think it's like a good framework where you're just like, um, you can use AI to do anything that takes a long time.

35:59Turner Novak:And the thing I always do is, any like i use ai a lot for the podcast like for all like the prepping and then all the post production stuff and anytime i change something i always just say like hey i change this just like do it the right way next time like figure out what i did different and just fix it and i mean that's a pretty so i feel like what do they call it now looping they call it product like if you're using ant to do loops yeah like build everything yeah yeah do you guys do that yeah a lot yeah it's like and what's your extent like are you do you do any ai coding oh i only ai code you only like it's the point where like i'm on an airplane this is really bad it's the point where like on an airplane there's no wi-fi i'm like fuck i don't know i didn't wi-fi on my flight here today oh really i just what'd you do there's some music oh i played um i have a game on my phone called slay it's kind of like risk oh it's just like a slave it's called slay That's so true.

36:54Turner Novak:It's a game from like the early 90s I played as a kid. Yeah. That I found on my phone. You can sponsor the podcast if you like love playing this game. It's a free game. Oh, it's for you. And I don't know if you can even pay for it. Oh. How long is the flight? It's like a, it's just like an hour. Oh, from Michigan? From Detroit, yeah. I think it was like maybe an hour and 15. Oh, really? I didn't know it was that close. It just depends. Yeah, sometimes it's closer to two. Sometimes it's closer to one and a little bit. Yeah. Well, welcome. Yeah. Thank you. Thanks for having me here. Wait, are you in Western Michigan?

37:28Turner Novak:It's Detroit, East Michigan. I live in Ann Arbor. Oh, I thought you lived in Western Michigan. Okay. Yeah. I grew up in West Michigan. Oh, okay. And then we moved to Ann Arbor right before COVID. It was really good timing. Okay. Because my in-laws are there. And then with kids, it's like, you know, that's why we live in Ann Arbor. Are you going to make your kids go to University of Michigan, Ann Arbor? I'm actually not convinced I'm going to make my kids go to college. Yeah. I think it's going to be like not. Yeah. Yeah. I mean, everyone has different opinions on this, but I'm just like, I don't know if they want to go.

37:57That's very San Francisco of you.

37:58Turner Novak:Of being open to them not. Yeah. Yeah. Well, I don't know. I mean, they're my oldest daughter is more into like art and dancing and like singing. So I don't know. She might want to go to like a dance school. Art dance school. I don't know. She also might want she also like really good at math. She likes reading. So she might be like she might be an English major. Maybe she gets like a PhD. Yeah. Right. So I don't know. I'm just, I'm of the view of like, I'm not going to force you to do something because that sucks. I don't want to force my kids to do things that I want to do. So one thing I want to talk to you about, um, when you think of like marketing as a, as a brand, as a product, as a founder company, what's been your approach with, with merge?

38:43Turner Novak:Like how it's, how's it evolved over time? So I think marketing, I think every function has gone through like an AI transformation. I think this year marketing went through its own, like a really, really dramatic change. It became really clear that marketing was shifting a lot, especially like the past few months where like there's all these like taste AI companies, like all these design AI companies. And it's because I think like the like code AI coding got so good that the bottleneck for pretty much most companies was just was marketing because you'd end up building so many features and you wouldn't be able to market them at the same pace because there weren't a lot of tools ready for that um and so we've basically changed marketing to become like an engineering function um so all of our team members have to like build agents for everything like the dinner bot that's like one thing right like field marketing should everything that's really recurring and everything that kind of sucks we should be using ai for um a lot of our ads like we generate with them with ai a lot like a lot of our um we have like a recurring like recurring posts or like content that we generate based off of like things that we produce in our product like you know and it just pulls straight from our github and then generates the social posts and we obviously like eyeball them but it just releases them too um all like the data analysis for like demand gen of like our different ads like channels all of that also now is like fully with ai uh with like a calendar like all that's like audit like everything that goes into the calendar is automated too and so yeah we've gone through a pretty big transformation over like the past like two months um and it it's yeah it's been really exciting is it working or is it like too early to know or i think so it's hard to tell because it's a lot it's definitely logging interesting so then what are you looking at is these like leading indicators of you know ai native marketing machine yeah so like signups website visits um conversion obviously like early revenue or like pocs and like opportunities that have been open in like salesforce um so that's been like the leading indicators but yeah it's still only been like one or two months so we'll see but definitely i've been seeing like a lot more activity and activity always not always like hopefully ends up leading to more other things.

40:41Yeah.

40:41Turner Novak:You mentioned something, customer signups. So I know in the early days of Merge, you're kind of more SMB focused. Yeah. Like originally. So why did you start with SMB? Started with SMB because we were infrastructure and no one bigger wanted to take a chance on us. It was very scary. Like we could have died like any minute and they would have been screwed. And also if we had like a security incident or like downtime, it was just so many risks with being an infrastructure company. And so for us, like we really had to climb the logo ladder over time and like move to bigger and bigger companies as we got bigger.

41:13I'm sorry, as we like. Product. Yeah, as our product matured. And then around three years ago, I made a very, very concerted effort to move enterprise. So that meant like a complete like change of who our team was, how our team was segmented, how we approached our marketing, like how we didn't we didn't use to have like decks for like sales meetings.

41:31Turner Novak:And then we ended up like having decks and like we had a CRO who was really good at enterprise sales. and like that helped transform our company too. So yeah, it was a pretty big transformation, but it took, you know, a few years. But last year really like was the year when like everything came in. Like we had all those logos that you mentioned like coming to us. And it was just really exciting to see like all the prep and like the work that we'd put in for the past few years like was really finally coming in. So then what was kind of the evolution of the product then? Because when you first started, it was literally like accounting and HR integrations with accounting and HR SaaS tools.

42:04Turner Novak:And this was back in 2020. Yeah. So how did that kind of evolve over time and how did you decide what to do? Yeah. So the goal is always to be cross category. We just picked one or two categories in the beginning as like a wedge into the market and to introduce ourselves. But we picked them based off of like what would overlap, what had big like TAM opportunities and especially as the market continued like changing. So like financial services, like FinTech was getting really hot, like when we launched our accounting API and then we started noticing a lot of like sales, AI, like productivity, like tools like starting to form so we invested in like ticketing and crm integrations um but yeah we always just kind of followed like where the market was going when ai uh what we saw ai search was going to be like the next frontier of what like really needed integrations we started focusing a lot on productivity and like sources of truth like knowledge base chat um yeah like ticketing file storage um so yeah it's always been like tam driven like customers i think that's like the nice thing about b2b it's it's very like customers tell you what they want you just really have to listen to them.

43:02Turner Novak:For just consumer, you have to be kind of like, you know, philosophical. Like, I think this is what the consumers want. Like the taste. Yeah. It's a discourse. It's hard. Versus B2B is just like, yeah, there's like a billion in pipeline that wants this. Yeah. Build the thing. Yeah. I've always really looked up to good consumer founders because I feel like it's much harder. And then, so the kind of like the evolution of the AI product. So what was the very first AI feature that you, initially launched for Merge? So there was like a product that was for AI companies. And then we had like, we had our first like AI products that were just like very, very AI.

43:42But yeah, like our unified API, we started noticing like for AI search, like we needed to have file storage integrations to be really good. So like Google Drive, Dropbox, Box, those platforms have so much data that people want to be able to search across. And also like having knowledge base like Confluence, Notion, chat, like Slack, Teams, like a lot of companies need those integrations. especially as you like want to make it very easy for people to do like semantic search in your product and no one is really able to do that um so we felt like it was a unique wedge for us and so we started going all in on that like early last year um and then but at the same time we were like okay we need to be very aggressive about like this this move into becoming like an ai company so we were going to launch our first ai product which was merge agent handler so these were like tools for agents um so being so being able to like make tool calls um live tool calls instead of like our synced integrations was like kind of a slight adjustment from our first product but a completely different product it required us to like really build something zero to one do completely different marketing um learn like how to sell this new product to have different pricing um yeah it was

44:45Turner Novak:it was a lot of it was a lot of work different pricing is scary because if i'm a public company ceo listening to this i think of like different revenue structure and like different you know distribution strategy and like sales like basically like you have to like completely reinvent the company when you change the pricing so how did you approach new pricing model yeah good news this wasn't like a full dramatic shift like the first product we kept the pricing consistent um the second product we layered on like a different pricing model and we had to like train our sales team for how to talk about it and then when we did our third product it was a different pricing model again so we didn't shift the first two we will go get to a point we'll have to consolidate all three because it's just it's too confusing for like our sales team um we'll also probably have to like repackage what like the products look like so it's a little bit easier to talk about um but yeah like it's been a it's been a really big shift and i think another thing that was really interesting for us to observe so gill my co-founder and i were like we're startup people like we'd remember what it was like when it was very early to like get something from zero to one um and our team like a lot of our team members had joined with like merge already like that first product was pretty established we had customers we have like we're thinking about scale and so they tried to apply a lot of like the things that were working for that first product to our second and third product as we really had it's like tell the team like we got it like move out of this like we can't think about things that will scale you guys are protect trying to protect us from like the downside that's probably not gonna happen because it will be very very lucky if this happens like we'll be so lucky if we have like you know someone uses it in the first place yeah exactly and so that was something we really had to like iterate to the team like let don't like, don't be so focused on that.

46:20We need to just like move really fast so that we can get those first few customers. Um, and so they, luckily they were very understanding. We were able to do pretty well. Yeah.

46:29Turner Novak:And, um, I think the kind of like the second then is the agent handler product. So this is basically like it's changes, which model the, oh, that's gateway. That's the third one. Third one. Third one. So, well, I mean, I think that's the interesting one too, where you, you basically route the AI direction flow through the cheapest model or the most effective highest ROI model. So the beauty, it's whatever you want. Okay. Yeah. So then like, why is that so important? Because shouldn't you just like have one vendor that in like one that you use and like you always get the same result? Like, why is it so important to be able to switch between different models?

47:09So I think before when people, because AI was still getting so much better at every single like release um and whenever there was like a new model release like you were kind of like wow like the last version was like totally compared to this one like why would i ever use the last one um like the new one actually works um and so we had like a couple years where that was really like the case and so every single time there was a new model release everyone was just default go to the latest model and it would just be like a one-size-fits-all but i think now um there's so many new model releases like each frontier like lab is releasing models like every month and a half or so instead of like every six months um and there's also a lot of options there's a lot of open source options there's a lot of um there's a lot of like cheaper options also within like the

47:51Turner Novak:same like within the same lab and the costs are really starting to become more and more prominent um fable coming out made it really at the forefront of how expensive this could be and how companies really need to start focusing on their optimizing their ai spend but i think we're seeing like Coinbase, DoorDash, they're very advanced companies thinking a lot about like how to optimize their internal like engineering spend and like how to make sure they're not like overspending on certain workflows. But for a lot of like smaller companies and also companies that are not that advanced, having that kind of functionality and focus internally is just really, really hard.

48:25And also, even if it's like embedded in your product, like the AI optimizations, it takes a lot of resources and it can be like a full team fully focused on like, how do I route? Like, when do I make sure one plus one doesn't go to like Fable? How do I make sure like, hello, doesn't end up costing us like three cents? Those are things that like a lot of people need to focus on in-house, but it's what everyone's building over and over and over again. And so it was a natural extension of our existing products. It is a unified API. It's one API to route to all the different model providers.

48:52Turner Novak:Do you know how many different model providers or model options there are right now? Like is it? I think we have hundreds. Oh, inside of Merch? Yeah, inside of Merch. What about like Total that you could use Total? I don't know. I don't know. There's also complexities because it's not even just like, oh, okay. Well, people also have in-house models that they're probably not disclosing to. So it's infinite. Like people are starting to do post-training. But we're definitely moving to, well, right now this year was the year where everyone started realizing there's a best model per task. Next year, people are going to start training their own models.

49:24But it'll be like very good for one specific thing that's unique to that company.

49:28Turner Novak:where are the areas in people are lighting the most money on fire right now with wrong model usage yeah i think it's like it's like in product where they don't allow their customer where they're not like smart routing their customers like uh prompts where they're just like like everything they send because the customer's like i want to use like the latest in grace i'm just gonna pick fable five and then they just end up like using so much money for like the stupidest stuff and so not like smart routing it when they need to be what do you think is the biggest risk to merge today because in theory every single software could throw out an mcp and there's no need to use merge i mean in theory technically is i mean is that it or no it's not so um i think a lot of mcp is still pretty new um and there's there are some it's it's just a protocol right so like a lot of companies are releasing their own mcp servers there's public mcp servers um but like for most companies and their public mcp servers were like side projects or like a marketing thing it wasn't meant to be like they didn't actually work a lot of them don't really yeah i guess i didn't realize it was that we've been doing some studies and the success rates of most public mcp servers is like 60 we build all the mcp like the tools for mcp like in-house and we test them really extensively so the success rate for ours are like 99.9 percent we we really really battle test them um and also like there's different like you're gonna have a really dumb agent that ends up like making it not successful so we account for things like that i know it's really it's really like what's like the dumbest agent activity yeah you're so you're basically like here's the tool and here's the information for what to say like you need to send us the date in blue and it just is like i'm not sending you the date i'm just gonna send it in like red an agent will do that even though the agent will just be like fucking stupid yeah we've seen that with like older agents like some agents are just like really bad at tool calling so instead of upgrading to fable they're still on like GPT-1.

51:21Turner Novak:Like, they're just, like, so dumb. They can't even... Yeah. And you'd be surprised. There's, like, some, like, kind of later stage models that are just, like, still really dumb. But yeah, it's not a risk for us because, like, there's other things that we cover in our platform, like DLPs. We have a security layer that looks for making sure, like, PII isn't getting sent across. You can add, like, custom roles, too, to make sure, like, if you have certain policies for your company or you're in a regulated industry, you can block that data from getting passed to a third party. And so there's, like, authentication, refresh tokens.

51:48like there's just governance making sure like all agents only have access to certain connectors a lot of those things are out of the scope of the mcp protocol um that we also include in our platform

51:58Turner Novak:why why isn't that part of the mcp protocol like was it just like when anthropic kind of like invented this did was that not something they were thinking about i mean mcp's already such a big why are you shitting mcp i'm like i'm shitting on it oh it's just it's just out of scope it's just out of scope because it like all those like the governance layer like the observability, like logging, DLP, like those are things that not every single company needs. Like, and also they might not think about, and it's just huge build. Well, and it's probably, yeah, to your point, it's probably like some of that stuff is more of like enterprise grade.

52:29Turner Novak:It is, yeah. You need versus, I mean, the goal of MCP is just get people using anthropic products. And it's usually just, I mean, the most average is like a developer in their bedroom making a side project on AI. That's like the, probably like the median project. So it doesn't have to be that robust. Yeah, it doesn't. But what was interesting, so we actually start when we when MCP first came out, we actually were like, wow, this is actually become like a big security issue. And so we started off trying to build a security product for it. But when we were going out to market, we were talking to everyone.

52:58No one cared about the security because there hadn't been like a vulnerability yet. Like there hadn't been anything bad that had happened. So no one was like, OK, this is nice. But like it doesn't matter yet because there's not like a big issue. But what we really want are the connectors. We're like, OK, I guess we're going to like build the connectors then. so after now the connectors are really good like our connectors are very good but like you can't have a security incident if the connectors literally don't work that's fair so now that we have like everything end-to-end where our connectors are really good and we have the security layer and then we also have those are observability layer it makes it so it's really

53:28Turner Novak:enterprise ready yeah that's fair so but and you've pretty much gone all in on enterprise i think you still have self-serve there's still like a lot of smaller companies that use merge but what was the decision to go all in on enterprise because i think you mentioned you did it in like 2023 ish yeah yeah so why do it there's so many reasons did you have to like was it like an existential like we've got to do this i think it became pretty clear that like we well with our first product it was just a lot of effort for each customer like the amount of time that we spent with each customer like making sure they were successful and the amount of like requests that they would end up having was just a lot and if the customer didn't make it it was just a lot of work for someone who just died.

54:11So even if they paid us a lot upfront and they died, it just was very painful for our business. And so moving enterprise allowed us to have like longer term relationships with companies that will probably be okay in like 10 years. It allowed us to invest in them, them to invest in us, and also just made our company a little bit more predictable. On the downside, we ended up becoming like more of a whales business. So we ended up having like certain really large logos that we close and there's like more timing risks in like our forecast and our predictions and like if something slips it like hurts us more or if something comes in magically like it's really exciting for us.

54:48Yeah so there's definitely pros and cons but I think like the pros for having enterprise customers is that you're building together

54:53Turner Novak:there's a longer term relationship and you know that if there's something wrong they're still committed to working with you versus like if it's very PLG and you're more of a commodity business where everyone's just switching because you're the cheapest provider it's just hard to have customer loyalty yeah it's hard to have like a second chance too if something goes wrong really it's interesting when you see um like i don't know like market share of models how it just fluctuates so much yeah and even when you look at like maybe a year ago all of a sudden it felt like out of nowhere like everyone's using clod everyone's using cod cloud code and then like a couple weeks ago i was talking to someone in the latest yc batch and he's like everyone's using codex yeah i'm just like it's just crazy that it just fluctuates so much i know change people are yeah very unloyal right now yeah yeah so that's why like sometimes like if your mo is like the customer relationship like it's helpful yeah i mean that's a lot of things when an investor is evaluating like how good a business is it's like do you have sticky hard to acquire customer i mean every business it's just valued off the cash flows like do you have customers that will pay you a lot of money that will not churn.

55:58Turner Novak:That's essentially what a business is. It's just like a collection of customers paying you money. Yeah, yeah. Really at the end of the day. We're not romanticizing this at all. But a lot of investors will think about that. It's like, do you have big customers that will pay you a lot? And you've acquired these really hard to get businesses. So the point is they won't churn. So that's valuable. And so you think more startups should go after enterprise? But it's hard, right? It's hard. And also the revenue growth is going to be slower than what you're seeing with Lovable. Lovable is PLG, and so it's very easy to have a ton of companies just randomly sign up.

56:31Lovable doesn't have to do as much, and it just scales really quickly. With enterprise customers, each customer, you have to develop a relationship. You have to build together. The dinners. Yeah, security review, legal. It's bigger. Yeah, so it depends. It depends. But then also, I've seen some companies, they just get some really, really sick, really big logos immediately. That helps them a lot, too. So, but yeah, it's, I don't know if it's really hard, it's harder for someone to copy.

56:59Turner Novak:Yeah, that's true. I mean, I'm definitely, I'm a proponent of you should just do the harder things because to your point, it's like, it's harder to copy. Yeah. Like if you, you know, the whole meme of like someone will vibe code and just like steal the thing, like it's kind of true. Like they kind of, you kind of want to make sure you're not in a position where people can just, you know, quote unquote, vibe code your product and there's like a million competitors that pop up. So it's like, what can you do that's harder? Yeah. That like makes it that less likely and less possible. Yeah. I feel like part of it too is also, there's always so many other things, like whether it's the customer relationships, like the partnerships, like there's, I think it's actually not that likely that someone just vibe codes and copies the product.

57:41No, it's such a pain in the ass to have to maintain something in-house. Yeah. Like I would never vibe code Salesforce in-house. Like ever.

57:47Turner Novak:it was so interesting that that discourse is probably like was it 2024? I think so that was like the big thing that everyone's just gonna vibe code and all the software's gonna just go to zero but also like what kind of a like okay I don't know if this is gonna be cancelled but who has like the time to like build and maintain this like application in house in addition to their core product yeah well you just said you make the events thing but your events tool so this is not like you're selling it to people No, it's just using internally. What if I make a marketing event field work tool that I sell to you?

58:23Like, would you buy it for me or like, so then how do you decide then is.

58:27Turner Novak:Okay. So was it, you built this internally because it probably didn't exist. It didn't exist. And. So then if I'm like thinking about. I would wait if like, but at the time if it existed already, I'd buy it. I don't want to build it. Yeah. How much would you pay for something like that though? Probably not a lot because it's not like, but there are, but like Salesforce, we pay a lot because it's way more, you know? So it depends on like the ROI. But then with Salesforce, I feel like there's people that say they like VibeCoded replaces Salesforce. Why do you still use Salesforce and why have you not VibeCoded it?

59:03Because it's a source of truth that connects to everything. Like everything connects to it. We've maintained it for years. We have a lot of automations built on top. There are certain things that, yeah, there's just so much that we do in Salesforce that we can't, we just can't replicate if we built in-house.

59:22Turner Novak:Yeah. It's probably like the more integrations that you have and the more like different things you connect with, the more defensible you are. That's why I always tell a lot of these companies that are like a source of truth. I'm like the more companies that are built on top of you, the more you're sort of, linear does a really great job of this. Like they've created an ecosystem around their product. That makes you really, really sticky. Ashby is also doing a really good job of this too. So many companies integrate with them and like the more legacy companies are like, oh, well, like, you know, they don't understand.

59:48Like these newer companies like don't understand blah, blah. That's where we're like closed off and like we have secret sauce and people are really dependent on us. So, but like that's, that's fine for now, but that degrades over time.

59:58Turner Novak:You've kind of taken the mentality of like all the different partnerships, all the different integrations. Like you are kind of, you're like kind of that layer like personified in a way. Yeah, we do. But the thing is like whatever someone wants will follow. Like if a company is like, we want to be, we're open right now, but we're going to close off next year. We'll work with them on that. Like we are always going to follow what the partner wants and make sure that they're, um, that like we facilitate that. And we really want to be like that layer in the middle and help just make companies like integrate with them more easily.

1:00:24Turner Novak:And so you, one thing you mentioned is you still do a lot of outbound, like as the founder manually. A lot. Yeah. So why do that? You could like vibe code some, or use some like AI automation. So it's a different type of outbound that's not necessarily automated. Okay. So what's an example? Yeah. Okay. So for recruiting, I do a lot of sourcing. Like for engineers, I use this recruiting tool as an AI recruiting tool. I do use AI for that. Like I'll just basically just be like, okay, this is what I'm looking for. I'll have an agent that just like automatically sends outreach for candidates based off of the criteria that I've done.

1:01:00Oh, really?

1:01:00Turner Novak:So you don't even know that it's sending it? Yeah. Oh, that's interesting. Well, because it's hyper specific. Okay. But I can also just like, this tool is really great. It allows me to also just like select all and send. So I can do that too. But for like dinner outreach, it's like, it's kind of like having a good party. Like you don't have a good party. Like you got to know the vibes. Yeah. There might be like, Shensi would not be a good guest at this party. So I don't want to invite her. Or I do. Oh, yeah. She would. Like I know this person's like fucking hilarious. I'm really going to be in the middle.

1:01:31Or this person sucks. I'm going to put them like.

1:01:34Turner Novak:It's like, it's one of our biggest customers. I haven't talked to him in a while. Yeah. He should probably be here. Yeah, exactly. So there's just like certain things that are like hard to replicate with like AI or even like having another person. That's why it's like hard if we hire someone to even like do some of these things. But yeah, and then another thing that was outbound is more like a lot of networking. I hate to say it because like it's kind of like I think when we were smaller, networking was like not helpful. But now that we're like bigger and like there's certain networking events that have been like super useful for us and like roi is like created partnerships yep yeah we networking has actually been unfortunately very helpful networking and in what what sense like um like meeting other founders okay and you're just like manually like you come across someone you just like dm them like hey want to chat no not quite it's like you're at a conference and like you meet them or like you're at like some kind of like founder event and you meet them um yeah you have to say like psycho shit so they remember you wait what yeah you just have to say because the thing is i think um like you just have to be memorable yeah i like that advice or that tip of like you have to say something that is memorable and then it's easier to follow up yeah because like the follow-up is so important when you read those like networking one-on-one guys guides it's always like make sure you follow up after a meeting well there's been times i've like gotten a follow-up from someone i like forget yeah i know because they suck yeah like so you just have to like be really memorable and yeah so i met the runway ml guy like on this when we were like going from like one founder event to another founder event we were just on the street i was like okay i need to just like not be a i need to just like say hi to people and so then i talked to him but i talked to him and then and i was like oh i'm never gonna be able to sell to him like i don't even know why i like bothered but i was like really nice to him and i made a few jokes and i made a few jokes and then um now there's a deal and he remembers me because i was like the only person to talk to him like everyone else was being like such a and like i was the only person like that talked to him on on that like street this was when you were walking we were literally just walking and i just talked to him interesting actually there's one um event in michigan university michigan i went to and uh just uh one of the she was like a professor also has a company that i talked to in between some events and yeah i just kind of saw her randomly walking through downtown and i was like oh i know that person i just said hi to her and like again like i remembered her because we talked at this thing yeah you have to be memorable yeah yeah it's really so okay so this is like four years ago um we were at web summit and um i was like a baby founder then like i wasn't like super experienced but i was like i like at the like at the time like carta was the hottest company in like the valley carta was just like and i remember being like oh i'm like so bummed because carta is like using or competitor and like i really want them as a customer like it would just be like a dream logo like we've used carter for a long time i've always looked up to henry ward like i really wanted card as a customer and so then i look up and i see him and i'm like oh my god i have to talk to him like i'm never going to see him again if i don't talk to him yeah um and my co and gill my co-founder he's like what are you doing i was like i need to go talk to him and i was like i was like shaking i was like oh my god i needed to just like man up and i needed to go talk to him so i go up to him and i introduced myself it's so creepy because i read like i read you everything about him um it's like one of the things that you introduce and you like read their biography to them like you recite every single information that you know about that 100 yeah like what do you say when you first come up to someone like that yeah so i just had to be like i'm not usually but i had to be like pretty charming um i had to be like hi and like really and um like think of things to say and like comment on like the event and like i don't remember what exactly what it was um but yeah like he remembered me um and then i got a text or an email right after i was like hey hey, I'm doing a dinner tonight.

1:05:18Do you want to come?

1:05:19Turner Novak:You got that from him? Yes, from him. And I was like, fuck you. I know. I was like, oh, my God. That's huge. It was crazy. And so that night, we had dinner with Henry Ward. And it was such a cool because I had looked up to him for so many years. Like, and, yeah, I just feel like he's just such a great founder. And I got us an exit for the whole dinner, and I got blackout. So you don't even remember the dinner? I don't remember most of it, but I had a great time. We had, like, a lot of jokes. You know, we had a good time. And then they became a customer. Wow. I know. So you have this thing called the embarrassment framework.

1:05:49I do.

1:05:49Turner Novak:So what's the embarrassment framework? So I always tell my team, like, what's more embarrassing, posting something on LinkedIn about merge or the company dying. And so there's a clear answer. Yeah, I mean, that would be terrible to actually have to post on LinkedIn. Yeah. But so that's the framework. It's just like, it's basically, yeah. And it's like, it's helpful for the team because I think a lot of them are kind of like, oh, like, it's so embarrassing. I'm like, yeah, like, but like, it helps us so much. Yeah. And like, imagine if though you worked at that company and it died and it's just because you didn't post on LinkedIn.

1:06:22Turner Novak:Like, come on, just make the post. Yeah. And obviously, okay, a LinkedIn post isn't going to save the company. Like there's so many different things, but it certainly helps and it's free. And like, and it definitely probably gets more to like the founders. Like it is the founder's responsibility to do the thing that's embarrassing. Like you need to send that email. You need to like go up to that person. You need to like shoot your shot. And there's so many times I've had to send like an email that is so embarrassing, like so horrible. And then I'm so glad I did. So Dropbox is one of our customers and we went through deal process with them and they were like, no, we're not going to move forward.

1:06:54I was like, oh, so sad. And I kept, I stayed on it. I was like, hey, like, how's it going? How's like building a house? Like any updates? It was so embarrassing. Like obviously they didn't want to like fucking work with us, right? But then like, I think like the sixth time I emailed, they're like, let's chat. And then now they're a customer.

1:07:10Turner Novak:Interesting. So how do you get past that embarrassment? Like what's the – any advice for like doing these like uncomfortable things? Like I get it. Like the company is going to die, but you still have to do the thing. You have to let your inner autist come out. So you almost like take down your guard of like social acceptability and just being like, how is it going building this thing in-house? Yeah, pretty much. Interesting. Yeah. How do you channel your inner autist? I think you just have to give no fogs, but it's hard to get to that point. Yeah. Yeah. But you can be memorable over text too.

1:07:42Like I show my friends and my team members some of the messages that I send to our prospects where I'm like, hey, Tim, why the fuck are you ignoring me? Or like...

1:07:53Turner Novak:You actually will say that? Yeah. Tim from Apollo has gone so many times. It's like all blue, but I love him. And that works. It works because, yeah, we love each other. Okay. Or maybe I love him. I don't know. But yeah, like when we hang out, it's a good time. But he remembers me, you know? Yeah. Yeah. Also, one of my friends, she's like a really like hot girl, but she's definitely autistic. She went to Stanford, but she like looks normal, but she's just so, but it comes off like she's a bitch because she like, because she looks normal, right? So she tells me that she like, she knows she's like a little autistic and she just like leans into it when she needs to for business content, for like business purposes.

1:08:29And that actually really inspired me because I'm definitely not there. I'm not like that.

1:08:34Turner Novak:I think everyone is like somewhere on the spectrum though. From zero to 100, most people are not zero. Yeah. I'm not her level. Yeah. But, like, if I need to, I'll just try to do it. It's kind of like I feel like, you know how, like, the first time you drink alcohol, you, like, drink beer and you, like, you get drunk and you're like, oh, this is what it's like being drunk. It's almost like you can – it, like, brings that inhibition level down and you can, like, tap into it later. Yeah. I wonder if it's like the same thing where you like you get an example of it from someone else and you like you learn like, OK, this is how I do it.

1:09:12Turner Novak:I don't know. Yeah, she's really good. She's like very direct. So, yeah. Will this get me canceled? Will people be like the anti-autism? I don't know. I mean, if they didn't get canceled, if you didn't get canceled before in the first hour and a half, I mean, this is this will definitely do it. No. No, I don't know. I feel like it's almost like uncancellable talking about being – like it's like acceptable, right? Yeah. Like everyone's – I think if it doesn't – if it stays in the tech sphere. If it – once it gets out, then it's kind of like – Yeah, that's fair. Yeah. But then, you know, depending on – Also, you never know when things will – okay, so right now it's uncancellable, but in like 20 years, someone's going to be like, she said the A word.

1:09:54Turner Novak:Yeah, that's true. It's so funny when they'll dig up like old videos of Trump and he's just like, Republicans are idiots. It's like if I were to run for president, I'd be a Republican because they're just really dumb. Yeah. And like, I don't, he probably wouldn't say that today, but he said it in the 80s. Yeah, yeah. So like, I don't know. Anyways, I feel like being canceled is kind of overrated. Do you, do you have a favorite CEO, founder, or business, maybe like throughout history at any time that you get a lot of inspiration from or that you've always looked up to? Yeah, I love Frank Slootman.

1:10:24Frank Slootman, okay. That's kind of a basic bitch response, but. So why? It's alpha as fuck. Okay.

1:10:31Turner Novak:So what's been the biggest thing you've learned from Frank Sloopman? Well, I've never met him, so it's a little harder. It's that parasocial relationship. It is. It is, yeah. Yeah, I mean, I think he's really good at saying the thing that's hard to say. He's very, very direct. And he's not afraid to push people, which I think a lot of people forget. And he's okay with being disliked. is that a hard part about being a founder is like being disliked like you say something that somebody you know they they i quit yeah all the time like you say something that's like true and correct um and for the good of like them like you because you like maybe this is also because like i don't know like maybe like i'm a woman but like i really care about people and so sometimes i'll like share feedback because i'm wanting them to like really do well and they'll take it personally in a way where they think i'm like trying to like hurt them um or it's just like malicious but it's not it's for the purpose of like them and their personal growth um but yeah it makes me get disliked how have you learned to give like harder feedback as a founder because i'm assuming you have to give it a lot yeah i just am direct yeah i just it's just like you have to just say it like when you're not saying it it ends up hurting the company and the team a lot more over time yeah i feel like there's been honest is probably the most for my wife nowadays of like telling me something or like you need to change this behavior or something like that or like you do this thing i'm pretty avoidant like i have an avoidant personality and um and she's always like you stop avoiding this i'm like you're right yeah i do yeah so i think it's really again like it's it's hard because you like don't want to hear it yeah you're this negative thing this thing that you know you messed up yeah you need to be doing something better and you know and the person yeah if the person knows and they clearly don't want to talk about it then i'll just like hey i think we both know let's not talk about it but it can't happen again is that something is that a good way to approach it is like that we both know if they know then yeah it's not really worth it yeah yeah because it's just like they're gonna be hard around themselves and i could never be so yeah and that's the people you want is you want people who are like they realize like i messed up i I really want to be better at this.

1:12:44Yeah, yeah, exactly. So, but yeah, I mean, it's hard. And especially because the company is bigger, like I think the thing that was hard for me to adjust for was that the feedback got scarier. Like I think the people that I worked with much earlier when they become smaller, like we were just so close and there was so much trust from like two way feedback that it wasn't really like I didn't even have to think about giving feedback and they didn't have to think about giving me feedback because it was just like it was just like how we work together. Like it was like, oh, this part wasn't super good or like, hey, like this was a little delayed like you can't do that next time or like can you do this better like it would just be like two way but then um it was almost like once we hit like 75 or like 100 people it just was like all of a sudden like scary like people would just be like really offended by things that i said they didn't know me as well so they didn't really understand um and yeah like i was i met um like howard lorman from yext and it was like around the time where i was going through like a really hard like founder transition where i just like wasn't used to how personally things like or how removed people felt for me and he was like yeah it's like really hard at this point because like they don't understand you in the beginning they really want to understand you so when did that transition kind of happen it was like 75 to like 100 people okay and the and the the thing that you go through is

1:13:54Turner Novak:that you just are not spending as much time with every single person so no one knows you as well yeah so what do you do like how what did you change after that i realized i needed to go through my managers a lot more and my executives be a lot more reliant on my executive team. And that I had to spread out the responsibility of sharing feedback and like ownership with my executive team more. And that helped a lot. So like we were really, really strong manager bench. Like our managers are very like, I spent a lot of time with them, but like I don't give feedback to ICs anymore. I give feedback to their managers and their managers already know usually we'll be giving feedback to their team members.

1:14:29Same with our exec team. Like our exec team will usually end up like talking directly with the managers and then the ICs too.

1:14:35Turner Novak:so then your job so then what is your job then as a ceo when you meet like it's my first day as an engineer i'm meeting you yeah probably pretty nervous honestly yeah i mean the ceo of this like hot company really bad happened um so there's a guy who started and he he's so nervous he was like introducing himself to me and then on the second day he actually called me another asian girl's name wow i know i was like i mean i don't care like for me i'm like i don't care but i know he will never forget that i know he will never forget it he'll always think about it i'm like that's so fucked i feel so bad for him yeah but he's so nice yeah but he yeah so so then like is your job as a ceo like it's mostly making people feel excited about what you're doing at the company or is it like motivating people or like showing the vision like it's less about hey specific tactical things it's more like big picture like is that more yeah so things that i can uniquely do so it's like recruiting um showing the direction of where we're going um making sure like like morale like making sure like you know the team is like excited yeah exactly it's the way you said like exciting excited like know what we're doing and a lot of those things can be aligned and like to get close together too um and then like there's certain like strategic big deals and like sales things that like gill and i need to be involved in and then product obviously yeah do you what's your level of involvement in sales i mean it sounds like you're still texting and emailing customers all the time but like what's the level of involvement have you have you gone through any cycles of like oh my gosh more or less yeah sometimes it's always like um like in two to three months stints where something will be like my 100 focus so like earlier this year was like 100 recruiting with like some product and then at some point it was like 90 coding like i we just really needed to get like a product out and i i wanted to know what was going on so i i was coding so i could help contribute um and then right now it's like mostly a lot of marketing um well yeah so then how do you know when to lean in and out of different things especially like yeah i don't this is so bad but i it's just like gut so just your gut is like we need to get the word out i need to do marketing or like we're shipping this thing like i need to work on yeah i go to a spot where it's like extremely high roi only i can do it um and if we don't then if i don't help out with this then we're it's going to really impact the company negatively what was the hardest thing to to give up doing like on a daily basis because i'm assuming like when it was you and gil in the in the room during covid like you did everything yeah what's been the hardest part to give up i love coding yeah i really love coding and so you obviously don't do that all the time anymore i don't get to do it i'll do it for like for fun or like to help the team also because i work a lot and i'm kind of a loser so like when i have a lot of i just have a lot of time to focus on merge so like i'll with the time your free time yeah yeah for fun like when i'm watching girl housewives i'll code you know what is it girl housewives real housewives oh real house yeah what's so good about real housewives oh my god it's just you can like you can go in and out and multitask in a way that you can't do with anything else like it's not just real it's like all bravo shows like summer house like vanderpump southern charlie like all the shows like i don't really need to know what's going on because it doesn't matter because just like some fight is happening like oh this is entertaining exactly so but i could do it while coding okay and it allows me to be like it allows me to spend like but versus if it's like silence and i'm coding it's not the same vibe interesting okay versus i feel like i'm like enjoying it i'm like i'm watching tv while i'm like doing something very productive yeah have you ever watched uh traders yeah i love that show i love it we should do like a vc traders i thought you should film it like what founders went did i thought about it so like the issue or the thing I thought about is like it's a lot of work like just this is helpful because like I like learn a lot through this and it's just kind of fun to hang out you get to meet new people I make money from it like it helps the portfolio like you have founders that you either like want to meet want to help I mean like there's just like this whole thing is like pretty helpful versus if I spent a month doing like a trader's show yeah it would be really fun and I'm sure people would talk about it um i don't know one other one i thought about is making um parody music oh that's pretty good so like one um what was this i think he you know um by drake it's called god's plan does some guy make songs like claude's plan or something yeah i saw that yeah that was really good so good one that i when i thought about is like um who's the guy chief keef he's got a song like i hate being sober like you could probably make a song like i hate being bootstrapped or something like that like it's just like all the words are just like yeah talking about like ai like token max and i don't know like you could probably just take popular songs and just change the words like the same pattern same flow and it's just like about something that's like startup tech vc related and people would identify with and get it and it's just unique and different Yeah.

1:19:43Turner Novak:Because, like, I think, like, one of the most important things with, like, generally marketing is, like, you don't do the same thing as everyone else. Like, you figure out, like, what is, like, a new thing to do or try. So, like, we kind of go through cycles with, like, watch videos, everyone starting a podcast, et cetera. Also, ABG marketing. ABG marketing, yeah. Have you guys gone through any ABG marketing waves at Merge? Unfortunately, no. Unfortunately? Unfortunately, no. Does it work? Like, should you? It probably does, yeah. all those posts have gotten like hundreds of thousands of views i don't have a single post that has hundreds of thousands of views that's not true you have a couple launch videos okay yeah that's true so maybe i accidentally was my own abg yeah i don't yeah i don't know i mean it does i mean eyeballs works yeah but you're also like literally finding love at merge like the employees are literally getting married so that is like a good yeah we're creating arr and love Yeah.

1:20:37Turner Novak:Well, this has been a lot of fun. Thanks for coming on the show. Thanks for doing it. Oh yeah. Thanks for having me. And thank you for listening. Shout out to this episode's sponsors, Flex, Numeral, Amplitude, Merge, and Monaco. If you enjoyed this, please like, comment, subscribe, and share with a friend. Make sure to check out the back catalog of over 100 episodes with investors like Gary Tan, Vlad Gill, Chathan and Eric at Benchmark, and the founders of companies like Robinhood, Sweetgreen, and Mercury. Tune in over the next few weeks for conversations with Michael Tannenbaum, CEO of Figure, the first blockchain-based lending company, Chris Olson at Drive Capital, and Ryan Neese at NextLegacy.

1:21:10Turner Novak:If you don't want to miss any of these, subscribe to my newsletter, The Split, linked in the description to get each episode plus a transcript emailed directly to your inbox every week. Thanks again for listening. See you next time.