The Token-Maxxing Bill That Shocks Every CFO — & the Fix

Merge co-founders Shensi Ding (CEO) and Gil Feig (CTO) join Sourcery for a wide-ranging conversation on building AI infrastructure that quietly powers some of the biggest companies in tech — including OpenAI, Perplexity, Netflix, Uber, Mistral, and Dropbox. They break down Merge's three-product suite (Unified, Agent Handler, and Gateway), the make-or-break month that pushed them to rebuild around AI, and why they now believe "English is your programming language." Gil gets candid on the state of AI security — supply chain attacks, agentic code flooding GitHub, and why the scariest threat is always internal. Shensi shares hard-won hiring philosophy (missionaries vs. mercenaries), her admiration for Benioff and the "beginner's mind," and a hot take on companies over-engineering their own models. Plus: the SaaSpocalypse, the brutal reality of token-maxxing bills, governing employee AI access, headless Salesforce, and whether today's AI valuations make any sense at all. Shensi Ding: https://x.com/shensi Gil Feig: https://x.com/GilFeig Molly O’Shea: https://x.com/MollySOShea Sourcery: ⁠https://x.com/sourceryy 𝐄𝐏𝐈𝐒𝐎𝐃𝐄 𝐋𝐈𝐍𝐊𝐒 YouTube: https://youtu.be/SjrejHEAdeg 𝐒𝐏𝐎𝐍𝐒𝐎𝐑𝐒 • Brex https://brex.com/sourcery—The modern finance platform, combining the world’s smartest corporate card with integrated expense management, banking, bill pay, & travel. https://brex.com/sourcery • Turing https://turing.com/sourcery—Turing delivers top-tier talent, data, and tools to help AI labs improve model performance—and enables enterprises to turn those models into powerful, production-ready systems. https://turing.com/sourcery • VCX https://fundrise.com/vcx—VCX is the public ticker for private tech, allowing investors of all sizes to invest in venture capital. View The Portfolio at http://GetVCX.com http://getvcx.com • Deel https://www.deel.com/sourcery—Deel is the global people platform that helps startups hire, manage, pay, and equip anyone, anywhere. Trusted by more than 35,000 fast-growing companies, Deel is the people platform that just works, so teams can scale without the chaos. Visit: https://www.deel.com/sourcery • Public http://public.com/sourcery–Investing platform Public just launched Generated Assets https://public.com/generated-asset, which lets you turn any idea into an investable index with AI. With Generated Assets, you can build, backtest, refine, and invest in any thesis with AI. Gone are the days of one-size-fits-all ETFs. https://public.com/sourcery • Merge https://merge.dev—The leading provider of customer-facing integrations and agentic tools for frontier LLMs, Fortune 500 organizations, and B2B SaaS companies. Visit https://merge.dev Follow Sourcery for the latest updates! https://www.sourcery.vc https://www.sourcery.vc/ Disclosure Paid Endorsement. Brokerage services by Open to the Public Investing Inc, member FINRA & SIPC. Advisory services by Public Advisors LLC, SEC-registered adviser. Crypto trading provided by Zero Hash LLC, licensed by the NYSDFS. Generated Assets is an interactive analysis tool by Public Advisors. Output is for informational purposes only and is not an investment recommendation or advice. See disclosures at public.com/disclosures/ga. Matched funds must remain in your account for at least 5 years. Match rate and other terms are subject to change at any time. 𝐓𝐈𝐌𝐄𝐒𝐓𝐀𝐌𝐏𝐒 (00:00) Shensi Ding & Gil Feig, Co-Founders at Merge (01:04) Three products. One big bet (03:20) How Merge made the AI pivot (04:42) The Classic Innovator’s Dilemma (05:58) Building culture around AI (07:10) The leverage nobody’s talking about (08:52) Codex vs Claude Code (09:15) The scale nobody knew about (09:47) SaaS, Finance, and the Biggest AI Labs (10:46) Why AI companies buy differently (12:04) What AI sales actually looks like (13:04) The Fastest sales cycles in the market (14:35) Why is Cybersecurity broken (15:59) Merge's solution to agent security (19:16) Mythos, Wiz, and the GitHub Hack (22:34) 1,000 Bot signups in one hour (23:23) Real reason companies pay ransom to hackers (25:43) The State of AI Infrastructure Costs (26:41) Internal AI Governance is the next big problem

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Speaker 00

  We power critical functions for a lot of businesses. Their core could be powered and heavily driven by merge. So these sort of things, we cannot break. We cannot go down. Everything's four, five, six nines of uptime. And if you lose that, you can lose all your customers overnight.

• 0:13Molly O'Shea?

  Some of your customers are names like OpenAI, perplexity, Netflix, Uber, Mr. All, Dropbox, Freshworks and more.

• 0:19Speaker 02

  So we do search some of the largest AI companies in the world, powering their AI search functionality and also connectivity in their products. Consumer expectations are higher now. Like you just expect significantly more automation. And so the SaaS platform cannot keep up with the expected automation. It's just hard to compete.

• 0:32Molly O'Shea?

  What is the state of cybersecurity in this layer of AI?

• 0:36Speaker 00

  They now speak English perfectly. They now write code perfectly and they now have unlimited manpower, all driven by AI. The second you connect it to tools, which is what everyone is trying to do right now, that's where everything goes wrong. It's so hard to block them because they're coming from IPs all around the world. And all it takes is one and it could mean the end of your company.

• 1:04Molly O'Shea?

  All right, Shenzi, Gil, welcome to Sorcery.

• 1:07Speaker 02

  Thanks for having us.

• 1:08Speaker 00

  Thanks so much.

• 1:09Molly O'Shea?

  This is a merge special. We have a CTO and a CEO on.

• 1:13Speaker 00

  We're happy to be here.

• 1:15Molly O'Shea?

  So what's going on?

• 1:16Speaker 02

  Hopefully we don't get canceled.

• 1:17Molly O'Shea?

  I don't think you're gonna get canceled, although we did have some spicy pre podcast talk.

• 1:22Speaker 02

  Yeah, we won't talk about Staples High School gossip.

• 1:27Molly O'Shea?

  So you guys are on a tear. You have a lot of big announcements that keep on rolling out. What's the latest? What's going on?

• 1:33Speaker 02

  Yeah, honestly, it's been really exciting for us. Around like a year and a half ago, we made a pretty concerted effort to do like three efforts in order to really move ourselves into the AI space. One of them was using AI really aggressively internally, pivoting our existing product to sell, or not pivoting, but like adjusting our current product to sell to AI companies. And then also launching our own AI products. And those beds have really paid off, especially in the past year and a half. So it's been really exciting seeing like all the hard work that we've put in, finally coming to fruition.

• 2:01Molly O'Shea?

  So what are those products today?

• 2:03Speaker 00

  Yeah, so we have now a suite of three products. We have Merge Unified, which is our original product. It helps companies sync data. So basically, you want to bring that in, power something like enterprise search. Do RAG, you you take you take that, you ingest all the data, we normalize it, and it's there for your customers. Helps build a really good search experience. Since then, we've also launched Merge Agent Handler, which is essentially one sort of MCP server you can connect to to help your customers offer or to offer hundreds of integrations to your customers inside of agents. And this can be used for internal agents within a company when you're building your own. It can be used for external agents. So if you're building a customer support bot, for example.

• 2:44Speaker 00

  And then it also can be used to power just internal use cases. Your whole team is using Claude code. Your team is using, you know, Claude or ChatGPT or whatever it is. The connectors all just appear in there and work with whatever AI tools you're using. And then lastly, we launched Merge Gateway and Merge Gateway is infrastructure that just makes it really easy for you to switch between hundreds of different AI models and route them based on a ton of different policies. It has security layer built in and it has a lot of smart routing policies, cost-saving policies, and dashboards that make it easy for your whole company to really optimize your AI spend and usage.

• 3:20Molly O'Shea?

  One of the observations that I've had over the last two, three years was you can see when companies don't really make a concerted effort to pivot or rebuild or embrace AI. And you can tell either by what they're posting about online, who they're engaging with, like how their products are developing. But you guys did make that concerted effort. What was that process for you internally, especially with your customers too?

• 3:50Speaker 02

  I mean, it was really hard. There were a lot. There was specifically one really, really big deal that we wanted to close, and it was going to take up like 90% of our resources. And it was really hard to figure out like, okay, how do we end up like taking, how do we end up finding resources to start building for the future instead of just building for right now? And thankfully, even though it was honestly at the time really hard, the deal paused for a month. And during that time, we actually got a lot done. We like finalized the idea that for our like second product, which was the merge agent handler, we also started really aggressively leading into AI coding. So Gil and I like paused back on the keyboard, like using Claude code really aggressively, using Wind Surf really aggressively, so we could also learn how to code with AI.

• 4:31Speaker 02

  And that that month actually really transformed the business because with us having firsthand knowledge of how powerful AI is from zero to one, it allowed us to see what was possible with our existing products as well.

• 4:42Molly O'Shea?

  Did you also notice when you were doing that, the vulnerability of your business before?

• 4:47Speaker 00

  I mean, I think absolutely. I think we realized in that moment, it was the classic innovator's dilemma where we had, you know, this product, it was growing really fast. It continues to grow really fast. But we also knew where the space was going and we wanted to put as many resources as possible in our newer products. And so during that month, Shansi was talking about, we also realized like, we do not have this ability to just put unlimited resources on this new thing. How can we get more with less? And that was why we we knew we had to invest in AI. We knew we had to be able to build new products and and, you know, adapt our existing products with just a couple of people. So honestly, actually building our our next product, agent handler, we had one engineer and me and Shansi. And we were helping on nights, weekends, we did whatever we could have because we needed to contribute.

• 5:30Speaker 00

  We needed to help. And the other half was if we are the leaders of this company, we have to know everything there is to know about how AI works, how you build with AI. So that one, we are more effective and two, we're building for where the puck is going.

• 5:43Speaker 02

  Yeah. And back then, like mostly our engineers were like, oh, like I'm going to input this code snippet into chat GPT and like ask a few questions about like how to fix something. But after that, it was like we saw what was possible. Everything was different. We were like, you need to be building completely zero to one with AI.

• 5:58Molly O'Shea?

  How do you keep your team up to date on everything? Obviously, like that is an example, but some founders have really pushed their teams to actually use and embrace AI. And then also with your new hires, do you test them? What is the experience?

• 6:14Speaker 02

  It's cultural. Like, our whole team is really encouraged to do it. If you don't do it, it does, it is a part of your performance. So everyone will share like tricks that they've learned. We'll also feature people who are really AI forward, and it's not just R and D. So like, our accounting team is really AI forward, same with our recruiting and finance teams, and our marketing team, too. So everyone is in Claude Code, everyone is generating things, then making it automated as much as possible. And we just really try to highlight it as like a positive part of like the merge experience.

• 6:43Speaker 00

  We also have, yeah, we have brown bag lunches, training sessions. We just started a recurring session on merge skills, so just skills that you've built and how to use them. We ask about it in the interview process. So what we're not looking for is, I use the latest cutting edge, but we're looking for, you know, hey, I use it to code sometimes. My company doesn't let me use it to do all these things, but I really want to. That's what we're looking for is just the desire. And I think we've brought in the right people for it now.

• 7:08Speaker 02

  Yeah, but I think it has to just be cultural.

• 7:10Molly O'Shea?

  Yeah, it's so interesting. More of the conversations I've had recently when I'm talking with either public company CEOs or really high-growth companies, when they're hiring out, they're trying to hire for founders, or previous founders, people that went through YC, like that kind of thing, that like high-agency self, what's it called, self-development? It's an autodidact type of DNA within talent. And I've just been seeing this over and over again, where there is like a clear bifurcation, and people who just like think you can still just like, apply to get a job. By the way, the bar is always very low, or high, I don't know what it is. It's one of those heights where it's as you've taken on and you've used

• 7:55Molly O'Shea?

  adoption with AI more and more internally, and the models are developing faster, and they're more, they're just more efficient. Have you noticed the company build faster?

• 8:08Molly O'Shea?

  Direct correlation there?

• 8:09Speaker 02

  Yeah, I mean, last year, we didn't increase headcount that much, but our revenue accelerated pretty significantly. And so it's had like meaningful leverage on our business.

• 8:17Speaker 00

  And yeah, I think one thing Shansi actually brings up a lot of the company is Keith Rebois barrels versus ammunition. You know, sort of, sort of view where you have some employees that are ammunition, they're really good at specific tasks and just knocking that out. And then you have barrels who basically just knock down doors and will do anything to get things done. And it used to be that, you know, a team that had a barrel of a PM or a manager and a bunch of ammunition could get a lot done. But now that you kind of can have one person just go use, you know, Codex, Claude Code, whatever, to go build something. You really just need a lot of barrels to just go get things done. So that also has shifted how we're hiring.

• 8:52Molly O'Shea?

  How do you, do you like Codex? How's that going?

• 8:54Speaker 00

  We, we love it. Yeah, we like, we like Codex and Claude Code. We use both. We're, we're big fans of them.

• 8:59Speaker 02

  Yeah, we, we allow just like a budget. So you can choose whatever tools you prefer. Some of our team members prefer Codex, some of our team members prefer Claude. It's really just dependent on like, and some people prefer like other things. It's really just up to their preference.

• 9:09Speaker 00

  Yeah, the only, we just have security reviews, obviously. We can't have people going wild on every tool, but otherwise, yeah.

• 9:14Speaker 02

  Yeah.

• 9:15Molly O'Shea?

  So let's talk about the growth. So what are the current metrics of the company? How many customers you have now?

• 9:22Speaker 02

  Yes. So we have over, I think over like 20,000 self-serve organizations on the platform, might be 25 now. I probably need to check. And over 400 enterprise customers on the platform too.

• 9:33Molly O'Shea?

  I think Brex is one of your customers.

• 9:34Speaker 02

  They are. We love Brex. Yeah. Michael Tannenbaum actually helped bring us in like a long time ago.

• 9:40Molly O'Shea?

  Oh, my gosh.

• 9:42Speaker 02

  I know. I love him. I really love him. Yeah. He's the, yeah, he's like the goat.

• 9:47Molly O'Shea?

  What are the main categories of customers that you bring in and what are their use cases?

• 9:52Speaker 02

  Yeah. So there's a couple of different categories, like traditional SaaS platforms, which can include some like AI. So like our first customer ever was Drata. And then we of course, helped a lot of the SOC two platforms like Drata, Vanta.

• 10:03Speaker 00

  Sprinto.

• 10:04Speaker 02

  Yeah, you name it. And then also like a lot of, uh, no. You know, sadly, they didn't, sadly, they didn't onboard onto, onto Merge.

• 10:14Speaker 02

  And then expense management platforms. So yeah, like Brex ramp and like a few. A few others as well. And then also large financial services. We have customers like JP Morgan, US Bank. Yeah. And that's been really awesome for us. And then of course, like the large AI companies. And that's been like a newer segment that we actively invested in early last year. So we do serve some of the largest AI companies in the world, powering their AI search functionality and also connectivity in their products.

• 10:38Speaker 00

  Yeah, that would be large LLMs as well as some of the largest, you know, AI, I'm not going to say wrapper, but you know, AI, SaaS-ish platforms.

• 10:45Molly O'Shea?

  What is the difference in selling to these different, because that's a lot of different categories there and also stages of company?

• 10:52Speaker 02

  The types of products that they're probably purchasing differ a little bit. And so we're able to, we're able to have like a guess on like what, what products they'll be mostly interested in. So for like large financial services, usually it's probably like our unified API for deterministic use cases. Or if they're building some kind of like agent tech product, then they'll need our merge agent handler products as well. And maybe merge gateway. For like large AI companies, it's usually like the connectivity that we're really, really a part of. Yeah. And then for SaaS platforms, to be honest, like it could be all three.

• 11:24Speaker 00

  I think one other interesting difference that we've started to see is when people are buying us for AI use cases, they actually don't really know what they're looking for as much as it was in the past, right? Like, yeah, you know, two, three years ago, we go to sell our unified platform to, you know, a classic SaaS company. They have seven people who are API experts on the call, asking detailed questions around rate limits and how it handles this and that. And now we go on the call and they're like, sorry, we need a chart of how this works because we don't know the MCP protocol. So like, we just need to understand, here's our software, just like tell us, is this, is this going to work with it or not? So we're, I, I think part of that is like, it's forcing us to evolve now, adapt our product to what people think that they want. Well, no one really even knows what they want right now.

• 12:04Molly O'Shea?

  That's so interesting. So what is, I mean, I guess to distill that down further, what is the sales experience in the AI world? Like, people just don't like, they don't really know what they want?

• 12:15Speaker 02

  We have to say like, oh, we've seen this from other customers, like this, these are like best practices are. A lot of times they don't have experience with like partnerships for these different integrations. They're not sure like what the best end user experience is. So we'll just, we have to use our experience to kind of guide them through the best way to build. But also a lot of these AI companies, they purchase much faster, like a large financial services, like the deal cycles are definitely just longer. For SaaS platforms, shorter, because sometimes we're selling to an existing product that already has product market fit. If it's a newer product, they're also like a little bit unsure of what adoption might look like. And for these large AI companies, it's it's really fast.

• 12:49Speaker 02

  Because the competition is just so fierce.

• 12:51Speaker 00

  Even a lot of times they come into calls and we're like, okay, this is what a POC would look like. They're like, oh no, we already had our agent built into it. We know it works. We just want to make sure, you know?

• 12:59Molly O'Shea?

  Yeah, really. Yeah. They do the proactive approach.

• 13:02Speaker 02

  A lot of times, yeah.

• 13:04Molly O'Shea?

  And so what are their biggest use cases for that? What are they dying to have ASAP?

• 13:08Speaker 02

  A lot of times it's like specific deployment options. So they'll have like specific security requirements. They might want something custom. They might want specific connectors that we don't currently offer. But they've already done the diligence where we are the best partner. But yeah, usually the deployment options are like the big, the big part that we end up having to work with them on.

• 13:27Speaker 00

  A lot of our product and adding new connectors and really supporting what our customers need for connectivity and for security and all of that, like that's, that's great. But a lot of times now, I think, I think we kind of had this almost move back in time with trusting cloud and trusting other services. And and you saw it when AI first, when Gen AI started to take off, everyone was like, no, I don't want you to train on my data and I don't want this and that. And all these custom clauses got inserted into every contract that was like, no use of AI, no doing this. And I think there was just fear of uncertainty, kind of like we have on these sales calls in general with people who just don't know what they're looking for. But now I think over the past year, you've seen people use the models, trust them more, and now everyone's backing away from that language. But there's still a lot of reservations now around using anything AI in the cloud.

• 14:12Speaker 00

  And so still demands for, no, we want this running in our own infrastructure. We don't trust a multi-tenant. But it is kind of again, moving back towards, okay, we trust the cloud again.

• 14:21Speaker 02

  Yeah, there's also, especially with the players that we're working with, there's already pre-existing partnerships or requirements where they can only use certain cloud providers. And so then we have to like. Obliged by those requirements as well, which is our pain, but you know, it's something is worth it.

• 14:35Molly O'Shea?

  Yeah, I'm curious. You you spoke a little bit about this in the explanation, but cybersecurity has become a hot topic and we're seeing prevalent breaches over and over and over again. And a lot of times it's through integrations and different APIs connecting things together. Whether it's like someone's using, I don't know, like Versal was talking about theirs openly, like we saw the Merck war one. We've seen so many. Okay. So what is the state of cybersecurity in this layer of AI?

• 15:04Speaker 00

  Yeah, I mean, I think one of the biggest problems. So what caused, you know, Merck or in a bunch of others is the supply chain attacks where everyone's using these same open source packages. But now the number of pull requests or code change requests that are being sent to GitHub. I I haven't seen the chart in a little bit, but it's like massively soaring to the point where it's, you can tell it's all agentic, right? Agents are pushing a ton of code. You don't have enough humans to read all that code. And so things are slipping by, things are getting in. And one of them was a vulnerability that gets injected into an open source package that everybody relies on and uses. And so all of a sudden that that little, you know, virus or that file goes into all the code bases.

• 15:42Speaker 00

  And people are just getting really screwed over by that. So I think there is a need for for seriously like slowing down, especially with these core packages being incredibly careful. Yeah, I think that's, that's one of the the big ones we're seeing. We're only going to see more of that as more AI generated code continues to get pushed out.

• 15:59Molly O'Shea?

  So what's your solution?

• 16:00Speaker 00

  So that so that one is a tougher problem, but I think I think the the problem that that we fall into and and what we're doing is is really this problem around integrations empowering data to be sent anywhere. So if you think about the world before Gen AI writing code before agents actually, you know, sending data to places. What you had was you had an engineer who explicitly said, pull this data, these exact fields from this platform. And then take it, transform it in this way and send it to this platform exactly in this way. And then a second engineer had to go and approve that code and make sure that that looked right. Now instead you're saying, hey, AI agent that is non deterministic and can do whatever you want, whenever you want. Take the data from here and send it here and please don't send the social security across with it.

• 16:44Speaker 00

  And then next thing you know, that gets sent across. So that's where we are. We're blocking that type of thing from ever happening. We don't trust agents. We, we say, hey, we can, we can try, we can try to set rules, but there needs to be hard guardrails and blocks for things like sensitive data being sent across. Um, and so we've doubled down there. We continue to double down around other things like jailbreak detection and all of that as well.

• 17:05Molly O'Shea?

  That's crazy.

• 17:06Speaker 02

  I know, it is.

• 17:09Speaker 02

  I know, we've built a lot. It's really cool because I think honestly, like a lot of the issues with agents is like data leaving the system. Yeah, that's what we really help control.

• 17:17Speaker 00

  Yeah. And then, you know, I, I've written about this and we'll, we'll write more about it, but you know, it's, it's kind of like, if you have this sort of evil genius who's a mass murderer, but they're locked in a jail cell, like they can't do anything. And it's the same, it actually is the same thing as an agent though, right? Like what, what do you care if the agent is so smart, it could do any cyber attack and knows how to do everything, but it has no tools. And you're just, it's sitting there just talking to you like, who cares? It can't do anything. The second you connect it to tools, which is what everyone is trying to do right now, that's where everything goes wrong.

• 17:46Molly O'Shea?

  Well, I heard with Slack too, there's like major, there's like a major leak there just as you deploy it, you can get all this sensitive data just through onboarding onto Slack.

• 17:57Speaker 00

  Yeah.

• 17:58Molly O'Shea?

  Company information and I would probably take that part out, but.

• 18:02Speaker 00

  Yeah, I don't know about that one.

• 18:03Molly O'Shea?

  I've talked to a couple of people about this. One of our interviews was with Gilly Ronan from Cyberstarts. And he had a crazy like doomer viewpoint, but he's also being realistic. He's like, look, if you are multiplying the amount of instances that you could be hacked and there are breaches, it's obviously going to happen.

• 18:21Speaker 00

  Yeah.

• 18:22Molly O'Shea?

  So we were like talking about, he thinks like really dark days are about.

• 18:26Speaker 02

  Also it's getting easier to find breaches too. I think you can just tell there's a lot more like automated, like ways to try to find bugs and like security issues. So yeah, it's both sides. It's easier to like creep issues than also easier to find them.

• 18:38Speaker 00

  All, all the, yeah, to be honest, like I, I'm on call this week for our team. I like to go back into the on-call rotations just to kind of see what's going on. Um, and yesterday I had to manually go in and intervene because we all of a sudden had over a thousand bot signups in, in like an hour. And we could see them actively scanning all the endpoints across our backend. And it was called like scanner A, scanner B, scanner C. And it's so hard to block them because they're coming from IPs all around the world. Fortunately, we have some good tooling with bot detection and we were able to, to block them. But those are just getting really prevalent and all it takes is one and it could, we know this from some recent instances, like it could mean the end of your company. So.

• 19:16Molly O'Shea?

  Yeah. What else are you seeing? I mean, you probably read and

• 19:18Speaker 02

  Oh, yeah. He's so good at this.

• 19:19Molly O'Shea?

  And research everything.

• 19:20Speaker 02

  He does his security reviews too for like different vendors that we end up onboarding on too.

• 19:23Molly O'Shea?

  Oh, wow.

• 19:23Speaker 00

  Yeah. Yeah. I mean, I see a lot like we've just been seeing just repeated attacks. We've been seeing people just, you know, like, uh, I'm, I'm sure you saw the GitHub one recently. I think that was like, uh, not that long ago. Where basically Wiz found that they were able to do a single git push of a file and gain access to every single repository hosted on the platform. Unfortunately, they responsibly disclosed it, but I'm sure Wiz did not find that manually. They're using AI. They're finding these things. Everyone's hearing about Mythos. Who knows how true the whole secrecy and whatever story is. But the point is like, good models are going to be really good at finding these things. So we need to get ahead of that.

• 19:58Molly O'Shea?

  So what is your view on Mythos?

• 20:01Speaker 00

  I mean, my, I guess, I guess my take is like, it's

• 20:05Molly O'Shea?

  Hypothetically or, you know, realistically, I don't know which one it is.

• 20:08Speaker 00

  I mean, I think it's realistic that if we have an incredibly smart model, it's going to be able to find a lot of things that have existed in these packages that we've been using for 20, 30 years. I think it's also good that we're letting it loose, uh, you know, for, for kind of like security and researchers up front to find those things and patch them. Because we saw how bad the Axios attack was where they just, I'm sure they use an agent to find, you know, a, a sort of like some problems and, and find patterns of how they could easily inject, uh, something into the package without getting caught. Um, but it worked and, and so I, I think it's, it's also the other problem here is, you know, a lot of these attacks don't come from Americans or from, from people who, who live a really great quality of life and are not, you know, not like looking for ways to make a quick buck.

• 20:49Speaker 00

  It's, it's people who necessarily need to do other things to find, to find money in the world. They now speak English perfectly. They now write code perfectly and they now have unlimited manpower all driven by AI. And so I, I think we're just going to see more and more of it.

• 21:05Molly O'Shea?

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• 21:49Molly O'Shea?

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• 22:34Molly O'Shea?

  So as CTO, what are the precautions that you take? You have a bot detector, all these other things internally. Like, what are the, how do you go about it?

• 22:41Speaker 00

  Yeah, so bot detection is one of them. You also, you know, I think in insecurity in general, I think this is not commonly known, but your biggest threat is always internal, right? So we're less afraid of someone scanning our ports and finding issues as we are someone compromising someone internally and phishing an account and then using their account to do things. Or, you know, hiring the wrong person, hiring someone who's secretly a spy. Like, that stuff sounds far-fetched, but it happens. That's why we're crazy about background checks and doing reference calls and making sure that we really are only bringing in trustworthy people. So again, I'm actually more afraid of that, of us bringing in someone, you know, bad than I am of anything else.

• 23:20Molly O'Shea?

  Oh, that's a good point.

• 23:22Speaker 00

  Yeah.

• 23:23Molly O'Shea?

  I'm so curious, this might be a little off topic, but when, because most of these are organizations that try to hack into companies, breach and then sell the data for millions of dollars. What do they do with that data? What happens?

• 23:36Speaker 00

  What do you?

• 23:36Molly O'Shea?

  When they sell it to someone, what, what do they do with the data?

• 23:40Speaker 00

  I think it depends on what the data is. Yeah, I mean, it depends on what the data is, right? So imagine someone steals all of, uh, I'm not gonna use, I don't want to use merge as an example. It's bad karma.

• 23:50Molly O'Shea?

  Yeah, yeah, yeah.

• 23:51Speaker 00

  Our data's unstealable. Our data's unstealable, but let's say like someone hacked Plaid, I'm just gonna pick them at random.

• 23:56Molly O'Shea?

  Oh my God, no.

• 23:57Speaker 00

  Their finance data.

• 23:58Molly O'Shea?

  We can't, those chickens, those chickens are on the data. Cut all this, cut all this. Make up a company.

• 24:02Speaker 00

  Yeah, yeah, all right, all right. Let's say someone hacked a, a financial data company that, that has, you know, a bunch of, I, I don't know.

• 24:10Molly O'Shea?

  Bank account information.

• 24:11Speaker 00

  We need to roll this back.

• 24:13Molly O'Shea?

  Okay, let's say there's a scenario, what would the scenario be?

• 24:17Speaker 00

  Okay, so let's say that there is a scenario where data, data got, got hacked and this could be people's financial data and potentially their social security numbers, right? There's, there's a few different things that they'll do. So first they'll reach out to the company and say, hey, we have all this data, pay us for it. Um, and the company has a lot to think about. They immediately engage crisis management and their thoughts like candidly going through their heads is, is, you know, one, if we pay for this data from this company, are they truly gonna then wipe all the data and get rid of it? You know, we still have to notify everybody because technically once a second copy of that data is out there, it's out there. Um, so that's kind of the next piece. So people are thinking about how much it's gonna cost to get them back. They're thinking about damage control, they're thinking about their brand, thinking about all of it.

• 24:59Speaker 00

  But the attackers know that, they know that actually this data might be useless to us, it might not be worth anything, but we know that to the company, it's their reputation on the line. And so that's who they're gonna blackmail, they're gonna go after that company and say, if you do not pay us for this data. We're gonna leak it and we know that means that you're gonna lose all of your customers. There's other instances where they genuinely hacked credit card numbers and the data itself can just be immediately sold on a black market. So that's another instance. In either case, the company that got breached technically has to notify everyone about it, though they often tend not to do it. But that's why I think companies really care about it. You know, morally, you should care about good security, but business is business. Companies are thinking about their own reputation and how much any breach is gonna cost them at the end of the day.

• 25:43Molly O'Shea?

  Okay, so what else is the state of the AI infrastructure market? What's going on?

• 25:47Speaker 00

  I think, I think costs is another one that's been, that's been, you know, really crazy to follow along. You know, you see everyone saying token max, token max.

• 25:54Molly O'Shea?

  Yeah.

• 25:54Speaker 00

  And that's really great. In theory, it actually is great in practice, too. You're seeing a lot being built, but then the bill comes to the CFO and it's actually really brutal and way worse than they expected. And even if they got double the productivity, they might not have had double the budget for headcount and they, they, you know, spent unreasonably. And so we've invested really heavily in, in cost savings, um, using our, our gateway product, which has been, been really cool to see as well.

• 26:18Speaker 02

  Yeah. And I think a lot more margin focus is also starting to increase. Like obviously we saw cursor increase their margins, which is very, very hard to do. But it is really important and there are a lot of really great open source providers out there too that are very cheap. And maybe that's like the best platform to route to if you're doing like what's one plus one or like hello or like hi or like thanks. But it's really hard to automate that.

• 26:39Molly O'Shea?

  Yeah.

• 26:40Speaker 02

  Yeah.

• 26:41Molly O'Shea?

  What else are you guys seeing?

• 26:42Speaker 00

  I could share another, this is not quite gateway.

• 26:44Molly O'Shea?

  Yeah.

• 26:45Speaker 00

  Another, another problem that we've really seen actually is, is internal use of AI.

• 26:49Molly O'Shea?

  Okay.

• 26:50Speaker 00

  So when we talk about, you know, our, our agent handler product, which helps you add, you know, integrations to your products. One of the things that we, we heard in a lot of customer conversations was, hey, actually internally, we want our employees using and automating everything. And, you know, I actually had a, a, you know, the CTO of a really large financial firm say to me, my employees have been coming to me and saying, all my friends are using agents to automate this and do that and do that. And why aren't we? And he was like, because we're regulated, because we can't let you just connect all of our internal services to all of your external services. But really, they should be able to do that, right? It just, security is a big problem there. So one of the big things that we've invested in and that we just see people with a lot more

• 27:31Speaker 00

  demand for is the governance and control over the agents and full visibility into what your employees are actually doing with them. So let my employees actually go and connect Salesforce and read all the data out of it and send it to other places, but also do it in a way that I'm going to detect if, if, you know, again, like bank numbers are being sent places or if proprietary data is being moved out of company boundaries. So that's, yeah, another big, and for that, you see companies being like, this has to tightly couple with our identity providers and keep up with all of our employees. And if they ever leave, they immediately get access revoked. Just been seeing a lot of demand for that sort of thing.

• 28:09Speaker 02

  Yeah, another thing is also granular access. So for example, if you hire a PR intern and you want them to have access to like your account, so you want them to be able to see the accounts in Salesforce. Right now, it's either you give them full access to Salesforce or you can't get them access at all. And there isn't really a great solution for the in-between, but we're able to make it so you could, that like IT manager or a CTO can make it so that PR intern can only like see accounts and nothing else. As hard as they try to like write data to Salesforce and they try to delete any data, it's just not possible. So we're able to help you do that.

• 28:36Speaker 00

  Yeah, and the, one of the problems there too is like people aren't just using one platform for all of this, right? People at companies are constantly saying, I want to try this new platform, this new platform, this, and security can't govern that. They can't keep track of what's being connected where, and so part of what we built was, was basically that central hub. So, you know, you built, you, you connect to all this software in one place on Merge Agent Handler, and then Merge Agent Handler connects to any platform you're using. So if you have some intern who's like, I want to try this new AI tool, you say, okay, you can use that, but don't, the only tool you're allowed to connect it to is Merge Agent Handler. That connects to all the tools and a more governed.

• 29:11Speaker 02

  What's also cool about that is it's kind of like the employees, like central node for all connectivity. So whether they're using Codex or Claude or, you know, perplexity or whatever you're using, all the connectivity and the actions through, go through that node. So the CTO is able to see all the activity, if there's any security violations and also if they want to revoke any access or add more access.

• 29:27Molly O'Shea?

  Can I ask this? What are the most popular connections?

• 29:31Speaker 02

  Yeah, I mean, it's just like general like productivity tools like ticketing systems, like file storage systems like Google Drive, Box, Dropbox. Also, people are really obviously like messaging systems are very common just for like automation of communication. Email is very popular, also like code repositories are very popular. But yeah, just like general, general like productivity tools. There are more specific connectors are very popular for specific functions. So like obviously for accounting, it's like the like most common accounting systems like QuickBooks, NetSuite, Xero. Marketing teams also are starting to use a lot of different platforms too, like HubSpot, like HR, I don't even know how to say this one, but yeah, like all these like different like G E O, different platforms too. But yeah, just overall, like it, it, everything is getting connected.

• 30:15Speaker 02

  And even if there isn't, even if there isn't a public M C P server, we'll, we specifically create our own tools. So that's not like a blocker for anyone.

• 30:23Speaker 00

  Yeah, we've also seen a lot of like customs, systems of record for specific industries like credit.

• 30:29Speaker 02

  Healthcare.

• 30:30Speaker 00

  Healthcare. And then actually just more of a fun one that we've, we've done as well as, you know, we have, we have a bunch of consumer connectors that we've built. So like Whoop and Aura, for example. One fun use case was we saw an employee at a different company connect their Whoop to their Asana task tracker so they could see how their stress correlated with the tasks on their board.

• 30:49Molly O'Shea?

  Oh my God. Oh my God, that's hilarious. Wow. Do you guys watch these trends, keep track of them for marketing purposes and for sales purposes? What have you seen over time?

• 31:01Speaker 02

  So I think we're just naturally really interested in it. So we just follow a lot, obviously on Twitter, but then also.

• 31:06Molly O'Shea?

  No, internally.

• 31:07Speaker 02

  Oh, internally.

• 31:07Molly O'Shea?

  From all, like all of your customer use, like, are you watching the trends of what people are shifting to? Because obviously a lot of these code platforms are new and some of the old SaaS platforms are, they're boring, people don't want them anymore.

• 31:21Speaker 02

  We get a lot of heads up on like roadmap plans, like where people are planning on going, what they're, where they think things are going. And also honestly, on the partner side, because we have so many different partners and Gill and I are also meeting with them a lot. We hear a lot of industry gossip about like future plans, like what they're doing with their A P I partnerships that they're going to establish. So we hear a lot naturally, just because we are. Are in the middle of all this activity. Um, so yeah, I, I don't know. Yeah. Gossip just like naturally comes to us.

• 31:47Speaker 00

  Yeah. A lot of the giants that, that seem stuck right now are planning big moves. We'll see how fast they move on them, but there's some exciting stuff coming.

• 31:53Speaker 02

  Yeah.

• 31:54Molly O'Shea?

  Speaking of one of those and your favorite person, uh, Salesforce and their headless announcement.

• 31:59Speaker 00

  Yeah.

• 31:59Speaker 02

  Yeah. I fucking love Benny Off.

• 32:01Molly O'Shea?

  You do?

• 32:02Speaker 02

  I know. I'm lo- I'm long Benny Off.

• 32:04Speaker 00

  She's read all his books. She loves Benny Off.

• 32:07Speaker 02

  His podcast. Yeah. I've listened to all of it. Yeah.

• 32:09Molly O'Shea?

  And you had a story that you guys were about to meet him and he didn't show up.

• 32:12Speaker 02

  Yes. Yeah. So one of our team members, her husband works at Salesforce and he was like, oh, like I can get you guys invited to Benny Off's holiday party. Like, would you guys want to go? And we actually had like our board meeting. We were like, oh, like, you know what? Like we should go like, we, we like, we've been work, we've been trying to like work with Salesforce for a while. Let's, let's try to go. And so Gil flew out, uh,

• 32:29Speaker 00

  For one day.

• 32:30Speaker 02

  For one day on economy. Uh, so that you go to the holiday party in New York. Um, and so we go to the holiday party. We're like ready, we're prepped. I've read all, I've read his books. I've listened to every podcast he's been on.

• 32:40Speaker 00

  I deeply researched all their products, things they were buying, new tech they have.

• 32:43Speaker 02

  Yes. Um, and then we're sitting there and then he just never shows up.

• 32:47Molly O'Shea?

  No.

• 32:47Speaker 02

  And then like four hours later, DJ's cleaning up. Gil's still like, let's just sit here and soak. He comes by, but I, but I think what was really helpful from that time actually was that we, I did do a lot of research on Salesforce and like as did Gil and, um, we talked a lot about it. And one thing that's really remarkable is, is very hard to have a dominant product and company for 30 years through multiple tech shifts. And so I just would not count Benny Off out. Um, I think like he's able to adjust really well to whatever market dynamics are coming. And I think it's partially because of his, his philosophy of like the beginner's mind that he always talks about in his book. Like if I started the company today, what would it look like?

• 33:23Speaker 02

  And so I think that if, if Salesforce can do a headless, um, can make like, it could do headless, like anyone else can, um, it's, it's really, really impressive what they've been able to do because it probably is very hard for them to accomplish that.

• 33:35Speaker 00

  Yeah. And Salesforce, I, I, I especially think they'll succeed with headless just because throughout, throughout the past, like they've always had.

• 33:40Molly O'Shea?

  For people who don't know what headless is, also explain that.

• 33:43Speaker 00

  Yeah. So essentially like you never need to go to Salesforce. You can have your agent, it can, it can, you know, go sign up through a, through the API or through a CL. UI tool, like a command line tool, it can, you know, create accounts, it can, it just kind of does everything without actually going into the platform, headless being almost UI-less. And in the past, they've, they've already shown that they are open to this for, for 20 years because they have an open API. And a lot of people have built on top of them. They, they've built a great ecosystem around them where

• 34:10Speaker 02

  It's their moat.

• 34:11Speaker 00

  It's their moat. You're using other tools. They actually, you know, maybe they do, but like on the surface, they appear to not care if you really go into the app. They just care that all your whole stack is built on top of the data that's stored inside of there. So this is actually nothing new, right? It's just saying, okay, now agents are capable of using APIs to a whole additional level. We're going to facilitate so that they can do everything via API or MCP or whatever you want to refer to it as. So I, I think they've shown that that was a moat. That was something that was very successful for them and this is only going to continue that.

• 34:40Speaker 02

  Yeah, I, we, we've like taken a lot of inspiration from what, like what he said about beginner's mind for our company too. And so, yeah,

• 34:46Speaker 00

  All the time.

• 34:46Speaker 02

  I would not count them out.

• 34:47Speaker 00

  Every day. What, what, if we started the company today, what would we do?

• 34:50Molly O'Shea?

  What would you do?

• 34:51Speaker 02

  We did it.

• 34:52Speaker 00

  We're doing it.

• 34:54Speaker 02

  We did it. We fucking did it.

• 34:58Molly O'Shea?

  Good answer.

• 34:58Speaker 02

  Yeah.

• 34:59Molly O'Shea?

  Wow. How'd you come up with that?

• 35:03Molly O'Shea?

  So I guess like because you guys are so close to the metal and you understand everything that's been evolving with APIs. Can you explain how that market has evolved? And do you think more companies are going to take the headless approach?

• 35:16Speaker 02

  I think you have to, because I think a lot of times, um, not for all software, but for some software, like you're not going to have time to make a decision for what vendor to use. We noticed this with packages a lot, also in Claude Code, scarily, but like, you know, it'll just decide which is the best package to, for your product. Um, and so they, you'll probably end up picking vendors based off of that as well. Um, and so I think you have to do that in order to compete. So you need to make it easy for people to sign up, create accounts, pay, um, as much as possible, because not everyone's going to want to meet with someone. There are exceptions, of course, like infrastructure or security products, like someone will want to, it's still a trust-based business. Where you want to meet with someone, you want to, you want to gauge like how trustworthy someone is and if you can really rely on them. Um, but for a lot of like very simple use cases, yeah, you don't, you get an agent, an agent can make the choice.

• 36:00Speaker 00

  And also Really removes a lot of the the barrier of learning any new platform like even Salesforce, which isn't, you know, necessarily a technical platform like you. I can remember the first time going in and being like, what is an opportunity? I just don't grasp this concept. It makes no sense to me. Yeah, but like technically, let's say you want to have this this whole business that you're running. You know, you are the one person company that's the next, you know, unicorn or whatever. You can't be knowing the intricacies of your hosting platform and of Salesforce and of everything, but you need all that stuff and you need those those functions going. But you know, and and lovable is a great example, right? Like you have your site lovable deploys it, it gets it running in the cloud. Maybe it's not like infinitely scalable, but it works. There's no reason that you shouldn't be able to tell an agent, you know, locally like go build this thing

• 36:42Speaker 00

  and it deploys it to AWS in a very scalable way or to Cloudflare in a very scalable way. Like everything can just be built and done by a local agent without you needing to know how any of it functions. Just using using sort of headless integrations all from one central agent.

• 36:59Molly O'Shea?

  Shanti, you mentioned like a really interesting thing when you were describing Salesforce. And I I don't know, maybe it changes with this wave of companies, but in the AI world, like everyone is so AI pilled, but it is evolving so fast. You guys made a concerted effort again to like rebuild and pivot towards these new opportunities. But how do you see that playing out, especially because you've you've been founding companies for a while? Like, how do you see this next generation evolve? Like, do you think people will be able to adapt like that?

• 37:30Speaker 02

  I I just think I think it'll be hard. Like, I think right now it's very much easy mode for a lot of these companies. And but every year from what we've seen, like we started a company in 2020. And I hear like everyone says like the year they started is the hardest year. But like when we started in 2020, it was like peak COVID and we fundraised when people weren't even used to doing Zoom meetings. And that was like very hard. And then the year after like then like everyone was fundraising crazy, the year after everyone died. And then after that, like then it became just like a crazy again. And so, yeah, I just think you need to really learn how to adjust regardless of what happens with the market. And I think Benioff is really good at it, and I think a lot of these people are not going to be used to that.

• 38:05Molly O'Shea?

  Can you tell when you're looking at companies or you're like seeing them online? Like which ones are figuring it or not?

• 38:12Speaker 02

  I I think I think the best way to succeed is to just do things. And I think if you over intellectualize your company building instead of actually doing anything, you're too high on Maslow's hierarchy and that means that you're not actually able to suffer later.

• 38:26Molly O'Shea?

  So we talked about this a little bit off camera, but we were talking about talent and recruiting. And you were saying some of your best hires came like off cycle, not through like fundraises and that kind of thing. What do you look for in talent and what are those kinds of traits?

• 38:41Speaker 02

  I mean, you, you have to actually be interested in what we're building. Like if you're only joining because like, you know, like you think you're really hot, it's going to be easy. Or like, um, you think you're just going to like only make a lot of money and you can just coast. That's just not the company that we are, that we are. And for most companies, um, that's just not a great fit. So it's really just like hiring missionaries versus mercenaries and filtering for that. And it, it is hard. Like I think during like the period, like the more upfront you are about how hard it is to do company building, the more you're able to weed out the people that are just trying to coast and just like ride on your coattails and not do anything. But yeah, I mean, it is hard and like, it's interesting to see like all these like people joining, bouncing from company to company to company, where they think will be really easy, because once something gets hard, they're just going to abandon you.

• 39:24Molly O'Shea?

  It's a common.

• 39:25Speaker 02

  I know Christina Cordova had a really great tweet about this, but I, I totally agree. Like you just, you see those people and like they have really great resumes, but they're just not on your, they're not in the boat.

• 39:34Molly O'Shea?

  What was her tweet?

• 39:36Speaker 02

  I forget what that exactly was, but it was basically just like, it was after one really hot company was going through a tough time. Um, and like a lot of they were, people were starting to leave. And it was basically just like, yeah, when like, when you've like hired these people just because you're really hot, like they're just, I, I forget the exact, I don't know. I don't remember what it was, but I don't know. It really resonated with me. I don't know if you find it.

• 39:55Molly O'Shea?

  Shiny objects in Germany.

• 39:57Speaker 00

  Yeah. You, you find it, you see it a lot too in interview processes where you're talking to someone who's just like, I'm, I, you know, I'm interviewing currently only with top hyper growth companies. And, um, I want to de-risk with every single question I ask. I want to understand how I basically have this like high risk, high, or sorry, low risk, high reward situation, which is doesn't come often. So it, it, those, those are the people that we try to weed out pretty quickly too.

• 40:20Speaker 02

  Yeah. Also interestingly, like some, um, some candidates will be like, oh, like what is your cash burn? Like you're not spending a lot, but I also want like a real one percentile salary.

• 40:28Molly O'Shea?

  Oh my God.

• 40:29Speaker 02

  How are you to get that?

• 40:31Molly O'Shea?

  Oh my God. What are the craziest asks that you've had?

• 40:35Speaker 02

  I mean.

• 40:36Speaker 00

  We we've had also, we had someone we were like.

• 40:38Speaker 02

  We okay, yeah, so like people want to just like join the exec team with like no experience.

• 40:42Molly O'Shea?

  Really?

• 40:43Speaker 02

  Yeah.

• 40:43Molly O'Shea?

  They're like, oh, I'll just be COO or I'll be co-CEO. And you're like, what?

• 40:48Speaker 02

  I was like, who are you? Yeah, no, that does that does happen too. Uh, but yeah, obviously, or like someone will just be like, oh, yeah, like I, I, I want you to pay like public company salaries. And it's like, well, then why are you here? Like you like the way it's supposed to work when you go to a smaller startup is like you're taking a bet on the equity. You can't make more when you're going to smaller startup. And maybe you can, there are some companies where you can do that, but like, I think the rule in like also like in order to find people who are really there for the company, yeah, you have to take a little bit.

• 41:16Speaker 00

  The the risk in in in high risk, high reward is the equity and lower cash. Like, that's what you're doing. If you're getting the same amount of cash, there is no risk trade off.

• 41:25Molly O'Shea?

  Okay, so I want to go back into the SaaS apocalypse a lot. You know, I don't think we we uncovered that enough. So what are you seeing in the SaaS world? I mean, the the public markets, they they've become so volatile off of all of this. But whether it's like enterprise sales or other kinds of trends that are going on.

• 41:42Speaker 02

  Yeah, I mean, I think enterprise sales for these large companies is is much harder because the time to build the same exact product in-house is just significantly lower. Um, there's also just less leverage, like when you're doing a negotiation against the customer for why they should renew. Um, yeah, like you can always just like, oh, I could just build this. And before that, that meant a very different cost, but now the cost for doing that is very, very cheap.

• 42:03Speaker 00

  Yeah, and I think people push back on that a lot at the beginning and they still do a bit. But as models get better and better, like we actively vibe code, we we we do this every day. And now it's not just like, hey, go build this thing and now let me correct it a lot. And like, no, AI is coming back to you asking clarifying questions and it's going and building a pretty robust system. It gets to the point where English becomes your programming language. Like, yeah, at some point, are you going to need to buy SaaS? Or are you going to be able to say duplicate this best in class platform?

• 42:32Speaker 02

  Also, I think like consumer expectations are higher now, like you just expect significantly more automation. And so the SaaS platform cannot keep up with the expected automation. It's just hard to compete. Like, you don't want to have to buy a platform and then build your agents on top. You just want it to come out of the box.

• 42:46Molly O'Shea?

  Does that make you nervous?

• 42:48Speaker 00

  I mean, I think we're good at this motion. You know, and we also have a sort of like in some ways forward deployed team. And the idea is, you know, a sort of if you can take off the shelf software that does most of what you need and then have someone customize it to exactly what you need at a relatively low cost, which is what AI facilitates, then I think there's still a lot of value in in sort of platforms powering or buying, you know, sort of ready made software off the shelf because there's still a lot of nuance and a lot of detail that you avoid having to figure out that that falls outside the time it takes to code in general.

• 43:18Molly O'Shea?

  Today's episode is sponsored by V C X by Fundrise, the public ticker for private tech, allowing investors of all sizes to invest in venture capital. Learn more at get V C X dot com. Some of you may not have heard this yet, but our sponsor Public just launched something called Generated Assets, and it brings AI into investing in a way I've honestly never seen before. Here's how it works. You type in an idea like AI powered supply chain companies with positive free cash flow or defense tech companies growing revenue over 25% year over year. Public's AI then dispatches a swarm of agents that scan every single US stock, evaluates them and instantly builds a custom index around your thesis.

• 44:00Molly O'Shea?

  What really stands out is how clearly it explains why each stock is included. And before you invest, you can even back test your idea against the S and P 500. So you're making decisions with real context, not just guessing. And beyond generated assets, Public lets you invest in stocks, bonds, options, crypto, all in one place. They'll even give you an uncapped 1% match when you transfer your investments over from another platform. If you want to build a portfolio that actually reflects your thesis, visit public.com slash sorcery, paid for by Public Investing. Full disclosures in the description. Enterprise AI runs on Merge, the AI infra platform for integrations, agent tooling and model orchestration, so your team's ship product, not plumbing. Mistral, Dropbox and Drata already trust Merge in production.

• 44:45Molly O'Shea?

  Start building at merge dot dev. Founders scale faster on Deal. Set up payroll for any country in minutes, hire anyone, anywhere, get visas handled fast and get back to building. Visit deal dot com slash sorcery. That's D E E L dot com slash sorcery. I think we've become like a little desensitized to the valuations for AI companies or AI-enabled companies.

• 45:10Speaker 00

  Yeah.

• 45:11Molly O'Shea?

  Do you think they're rational? What do you, what do you see with Silicon Valley and maybe even the broader market could be upper market?

• 45:18Speaker 02

  Yeah, I, I think it's, it's, it's crazy because the public markets are so, has just such a different story versus the private markets, obviously. So I think it'll be interesting to see when like OpenAI and Anthropic go public because then it'll become like a kind of like emerging of the two.

• 45:33Speaker 02

  Yeah, I, I don't, yeah, I don't really wanna like talk shit, get hit. Oh my god. But yeah, like I mean, obviously I have like a lot of like private thoughts.

• 45:43Speaker 00

  Yeah, to not, to not name any companies, like I remember when, when we first started Merge, we were like candidly, it was, it was really frustrating to see some companies where we knew what their revenue was and we knew they were raising at like a 3,000x multiple on that revenue. We were seeing insane valuations and like you can't help but be a little jealous or a little just like, come on, like, why is this happening? And your VC is telling you, you don't want that, that's not the thing, but in the moment you do it, of course you want that. And we're really glad we didn't because obviously a lot of those companies ended up falling and some of them ended up doing really well, but, but most didn't. And we're seeing it now. A lot of the numbers that are coming out, some of them are really, really successful companies and are obviously going to continue to grow.

• 46:23Speaker 00

  But we, we know specifically, like we know the numbers, we know sales figures for some of these companies raising at hundreds of millions to billions. And again, we're looking at thousand x to, you know, hundred to thousand x multipliers, like a lot of these companies are gonna fail. Or they're gonna be doing well, but just not be able to raise their next round and, and they're gonna be forced to massively lay off and, and slow down.

• 46:43Molly O'Shea?

  How do you stay focused through all of that? There's just so much noise.

• 46:46Speaker 00

  I think.

• 46:47Speaker 02

  Yeah, we just have to think long-term. And also like, I think we just have, you just have to focus on like your wins for like your customers and the type of customers you're onboarding and like what your actual business metrics are. But yeah, like obviously like it's, it's a, it's competitive market with it when it comes to recruiting talent, like it definitely makes it a lot harder, especially for people who are optimizing just for like what has like the biggest valuation, what has the flashiest like numbers. And so that's where you really filter for missionary versus mercenaries.

• 47:11Molly O'Shea?

  So I think you guys have been a little bit humble. I know, and I think these are some of your customers. So some of your customers are names like OpenAI, Perplexity, Netflix, Uber, Mistral, Dropbox, Freshworks and more. So how did that happen?

• 47:27Speaker 02

  Yeah, a lot of work. Like, it was very, a lot of work. Yeah. When we first got started, especially because we were infrastructure, a lot of startups like were very scared to use us. I remember talking at Ramp and they were, I think, like a hundred employees at the time. And we were really scared to onboard them because our product was so like early. And yeah, it's, it's, we've obviously gone like a long way since then. Obviously, they've grown a lot on us as well. And yeah, we just, we've had to adapt the company a lot. Like, I think after our Series B, we made a really concerted effort to move up market segments, our team, have a more mature sales motion, also just make sure our product was really enterprise ready. And that was really hard, but like last year was really when it all started kicking in.

• 48:06Speaker 00

  Yeah, it, it really took climbing a logo ladder, having the right, riding off the reputations of, of each successive company size growth to be able to close that, that next level and, and prove that we could handle that.

• 48:16Speaker 02

  Yeah. And then once you like close up, not fucking up.

• 48:19Speaker 00

  Oh, yeah. Yeah.

• 48:20Speaker 02

  Yeah.

• 48:20Molly O'Shea?

  Was it intimidating getting bigger and bigger logos?

• 48:23Speaker 02

  Oh, my God. Yeah.

• 48:25Speaker 00

  It is. It's intimidating every day. Like, we, we power critical functions for, for a lot of these businesses. Like, we're talking their core, you log in, that could be powered and heavily driven by merge. You go and you use some core AI model and it, it looks up any data from anywhere, that's us as well. So these sort of things, like, we cannot break, we cannot go down. Everything's like four, five, six nines of uptime, absolutely essential. And if you, if you, if you lose that, you can lose all your customers overnight, like some companies have recently.

• 48:54Molly O'Shea?

  Wow.

• 48:55Speaker 00

  Yeah.

• 48:56Molly O'Shea?

  No pressure.

• 48:56Speaker 00

  No pressure, none.

• 48:57Speaker 02

  Yeah.

• 48:58Molly O'Shea?

  You guys are so chill.

• 48:59Speaker 02

  Oh, yeah.

• 49:02Molly O'Shea?

  Speaking of that, so one of our sponsors is Brex and they're all about performance, spending smarter, faster. Love Brex. And so this is a question I usually like to ask him as regards to performance, but like, how do you think about the metrics you use to measure success? What are the next milestones that you want to go after as a company?

• 49:23Speaker 02

  So yeah, revenue obviously matters the most, but also how much money we spent to get that revenue. That's really important. So we're always looking like our gross margins or cash burn. Yeah, our cash burn multiple, what a runway looks like. Those are just really important for us. We're always looking at that every week.

• 49:36Speaker 00

  Yep. And then the, the metrics that we, you know, believe obviously heavily lead to that. What, what are the quality of our product? We think, we think our reputation and how people view us in the market is the driver of that. And so for us, it's never been okay to be in second place. We want to be the leading platform always. If we receive any negative feedback, we action it immediately. We, it's, it's critical. We are the number one product on the market and we will not let that change.

• 49:58Molly O'Shea?

  What are the biggest misconceptions that you think are happening in tech right now?

• 50:02Speaker 02

  Girl.

• 50:07Speaker 00

  Like they told us it would be easy.

• 50:12Speaker 00

  I realized this is the SAT.

• 50:15Speaker 02

  The biggest misconceptions.

• 50:17Speaker 00

  Biggest misconceptions, what about, what was it about?

• 50:19Molly O'Shea?

  In tech right now. Yeah. Everybody's tied to their screens, looking for the next like model release, but like, what's the higher picture like?

• 50:27Speaker 02

  Oh yeah. Okay. So I mean, one hot take, one hot take that I have is that I've noticed a lot of companies like kind of over engineering. They're like, I'm all usage, like they'll have like, they'll build their own custom models. They'll try to train their own models when really like you should, you could probably just use the generic model and then focus more on making your product better.

• 50:45Molly O'Shea?

  That's good. I mean, when should you build verse buy?

• 50:49Speaker 02

  I mean, yeah, there are some specific situations where you like, obviously you have to, and maybe I don't know, but I, I've noticed there are some companies that I was very surprised to hear how advanced they were when it came to training their own models when their product was logging. And I, and I don't think that their customers end up actually seeing the benefit of all of that work. And sometimes you need to just focus on like what everyone could publicly see more.

• 51:11Speaker 00

  I actually want to second that. You see a lot of people trying to build like a custom harness or, you know, use something like a workflow builder to build agents that are, that are repeatable and all of that. And I just ultimately think none of it matters because we're, we're almost at the point now where English is the language that you use to tell an agent. It will be deterministic very soon. We already see it. You just say, hey, go do X thing that. Hey, go do X thing is your artifact from then on out that gets repeated by the agent infinitely. So I think all these platforms that are around like build agents that are more reliable and that do things more repeatedly. And none of that really matters. All that's going to matter is just can you type it in English somewhere? Have that run on a periodic cadence for your background agents. Um, and then do you have auditability for and observability for security?

• 51:55Molly O'Shea?

  Okay. All right. Well, this is an easy closing question. What are you most looking forward to this year?

• 52:03Speaker 02

  It's not easy.

• 52:07Molly O'Shea?

  What's your favorite color? I don't know.

• 52:12Speaker 02

  Oh, yeah, this year. I mean, there's a lot. We put a lot of hard work into the past few years. Um, and like it's all really coming together. So I'm this, I'm really excited for it. It's just like finally come through. I actually bought a spell early this year. I bought like an at sea spell with like.

• 52:27Molly O'Shea?

  I'm sorry. You bought a spell?

• 52:29Speaker 00

  Yeah, you've never bought a spell.

• 52:30Molly O'Shea?

  Is that why you're on sorcery? You know, like this started as a witch podcast.

• 52:34Speaker 02

  Oh, really?

• 52:34Molly O'Shea?

  Yeah, I love witches. No, I'm just kidding.

• 52:38Speaker 02

  Oh, I have a girl, only $10 for three wishes.

• 52:41Molly O'Shea?

  That's it?

• 52:42Speaker 02

  I know. And one of them already came true.

• 52:44Speaker 00

  And then they email you.

• 52:45Speaker 02

  Yeah, the other one's like on its way.

• 52:47Molly O'Shea?

  Are you sure you're not from LA?

• 52:53Molly O'Shea?

  Do you have crystals?

• 52:54Speaker 02

  No, I don't. I do ask everyone what their horoscope is, and I actually did not believe in horoscopes until when we started this company. Um, like 80% of our early team members were Taurus's and Leopards because they can endure like abuse really well. I know.

• 53:06Molly O'Shea?

  What are you?

• 53:07Speaker 02

  I'm an Aquarius.

• 53:08Molly O'Shea?

  What are you?

• 53:09Speaker 00

  Taurus.

• 53:09Speaker 02

  Yeah, he's very like abusable. Yeah.

• 53:12Molly O'Shea?

  Damn.

• 53:12Speaker 02

  I know. It's very usable.

• 53:13Molly O'Shea?

  That's great.

• 53:14Speaker 02

  It's great.

• 53:15Molly O'Shea?

  I'm a Leo.

• 53:16Speaker 02

  Oh, you know, you are a podcast host.

• 53:18Molly O'Shea?

  What is, what does it mean though?

• 53:20Speaker 02

  I just like, I actually don't really know, other than you're just like.

• 53:24Molly O'Shea?

  flashy, I think. That's the only thing. I don't really know anything. Quite an introvert. Oh, really? Yeah, my family was making fun of me at dinner last night because they're like, everything that you've been afraid of since you were a child, you're now doing. It's like, facts.

• 53:39Speaker 00

  Face your fears.

• 53:40Molly O'Shea?

  Yeah.

• 53:41Speaker 00

  Yeah, I have. I have one other one that I just forgot.

• 53:44Molly O'Shea?

  Okay.

• 53:45Speaker 00

  In a second.

• 53:47Speaker 00

  Oh, okay. So, yeah.

• 53:48Molly O'Shea?

  This just in.

• 53:49Speaker 00

  This just in. What I'm really excited about for this year. No, what I am really excited about for this year is that companies are going to actually start using AI agents. So we built Agent Handler and a lot of our products gateway because we saw all these problems with us trying to use AI. And we were like, oh, yeah, this is clearly a problem. Everyone's going to hit it. And then we start getting on calls with customers to sell it. And they're like, yeah, bro, like, we just gave our employees access to ChatGPT in the browser. They're not allowed to use anything. And that was painful because we were like, we have all this stuff ready and like, no one is ready for it. And this year, we're now starting to see companies being like, we need this, we need this. And we now not only have those products, but we've been able to run cycles with a lot of the early adopters.

• 54:30Speaker 00

  So they're built out and they are. They are ready to sell as companies start to like, kind of come online this year.

• 54:35Molly O'Shea?

  It's a great way to end it. You're ready to go.

• 54:37Speaker 00

  We're ready.

• 54:38Molly O'Shea?

  Thank you guys so much.

• 54:39Speaker 00

  Thank you.

• 54:40Speaker 02

  For having us.

• 54:40Molly O'Shea?

  Awesome. Hey, it's Molly. If you enjoy our interviews, check out our newsletter, sorcery.vc, where we deliver a once a week top deals and tech headlines email and also go deeper on our podcast interviews. Subscribe to Sorcery today and don't forget to subscribe to the podcast on YouTube, Spotify, Apple, or wherever you listen. Link in description to sign up.