5Y Talk｜ONES Acquires Tower: On the Multiplication Rule of ToB M&A

Recently, ONES, an enterprise R&D management tool, acquired Tower, a well-known collaboration tool — one of the few domestic B2B integrations and acquisitions this year.

After years in the collaboration space, why did ONES and Tower choose to merge now? And does their combined entity have a shot at becoming China's "Jira + Trello"? Liu Kai, partner at 5Y Capital and a common investor in both companies, sat down with ONES founder Wang Yingqi and Tower founder Shen Xueliang (Lao Shen) to discuss the story behind the merger and the reflections of two B2B founders still on the journey.

Q & A

Liu Kai: Let's start with your respective entrepreneurial journeys.

Lao Shen: I'm the founder of Tower — everyone calls me Lao Shen. I started Tower in 2012, and over eight years, I went from "Little Shen" to "Lao Shen" the hard way. Along the way, Tower was fortunate to receive support from investors and, more importantly, from customers. We've served nearly a million teams and built solid word-of-mouth among users, which is something we're proud of.

Wang Yingqi: I'm Wang Yingqi, founder of ONES. I spent seven years at Kingsoft Office early in my career. My first startup was ZD Clock, which reached 100 million users. After that, I joined 5Y Capital as an EIR. I started ONES, an R&D management tool, in 2015 — this is my second startup.

My work has always been related to tools for individuals or enterprises. In 2015, I also considered building a lightweight collaboration tool. But we found that China already had many excellent products, Tower among them. At that time, it would have been difficult to do better than Tower. So I decided to focus on what I was good at — professional R&D management tools — with the goal of serving software R&D teams of 100 people or more. We've stuck with that vision ever since. R&D management may look like a niche market, but it's growing, and ONES has accumulated many customers in this vertical.

Liu Kai: You both ended up in collaboration, though from different angles. What insights and reflections do you have from the journey?

Lao Shen: When we started Tower, our original intention was to help small and micro businesses by creating a general-purpose collaboration tool as accessible as Word or Excel. So we kept refining the user experience, which became the foundation of our reputation. At one point, Tower had the largest user base in the domestic industry. But because our business complexity was low, we could only serve teams of 20–30 people. When clients grew, they needed more sophisticated products for larger scale — something Tower didn't have. This customer churn created a weakness in our revenue structure.

For us, the lesson was this: you have to decide early on whether to optimize your growth curve for user count or for revenue. This is something startups, especially B2B companies, must clarify from day one. Tower wavered at times during this process. If we had committed to user growth from the start, we should have partnered with DingTalk in 2015 — that year alone, DingTalk brought us 3 million users. If we had chosen revenue growth, we should have done what ONES did and gone deep into professional R&D management solutions.

So I really admire how ONES firmly chose to build a domestic alternative to Jira from the beginning, staying focused on R&D management for teams of 100+, and committing to service excellence. Because the goal was clear, execution was clear too. Tower's golden period for user growth was 2013–2016; we should have seized that window to convert user growth into real competitive moat. That's my first reflection.

My second reflection is that entrepreneurship requires conviction and focus. From 2016–2018, we built an HR software product, so we were operating two products simultaneously. The result: we spent plenty of money without concentrating our force in one direction.

But we also had an important gain. Tower was a horizontal product covering product, R&D, operations, design, new media — its business coverage was very broad. Our renewal rates and word-of-mouth were excellent, so all our traffic came from user referrals. We were originally a design company, and it was our persistence with user experience that carried us this far. That's also a lesson from the journey.

At this stage, we had to think about joining forces rather than going it alone. Scale determines development speed; the market has evolved to where you can't acquire customers on experience alone. So we decided to move forward with ONES.

Wang Yingqi: Our choice to build ONES was deliberate. When selecting our direction, we looked at many lightweight collaboration products, but ultimately steered clear due to concerns about renewal rates and average contract value. Deep products have higher ACVs, but we underestimated the R&D difficulty of professional products in our early days. We thought we'd be ready for market by end of 2016, but it actually took us over two years to truly commercialize. Another challenge with professional products: as features proliferate, the cognitive barrier for users rises. We've kept thinking about how to lower customer acquisition costs. If I had to name the pitfalls we hit: first, underestimating the R&D cycle for deep products; second, acquiring small customers or low-barrier customers — though this was a pre-merger issue that Tower helps address.

Liu Kai: Though you started in different directions, you eventually converged.

Lao Shen: Right — we grew closer as we went. In 2018, we refocused fully on Tower. By then, Tower's business complexity and expansion capabilities had strengthened considerably. Product teams would bring in operations, R&D, design, and customer service — clients would start with a single point and expand gradually. But when we wanted to serve higher-ACV clients, our business support capabilities needed to level up, because price and value are linked. ONES needed to expand downward, while Tower needed to move upward. So we ended up heading the same direction.

Since a large portion of Tower's customers were in product R&D scenarios, we internally debated whether to build R&D management solutions to retain high-ACV clients. But to invest in what ONES had already spent years building — we lacked the people and capital to make that pivot. Tower's main path should be: acquire customers, let them experience the product for free, penetrate quickly, and as usage deepens, have products at every level support more complex business needs. That's the rationale behind our partnership with ONES.

Wang Yingqi: In our discussions, we also found that what Tower wanted to do for large customers was what ONES had already done in 2018 — things like managing organizational structures for large teams. The merger is a reorganization of product efficiency and social efficiency; there's no need to duplicate development. This also shows how rigid customer demand really is.

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The Multiplication Rule of B2B M&A

Liu Kai: You both mentioned that B2B mergers should be additive — rare in B2C. What's your outlook post-merger?

Lao Shen: We chose ONES because only by partnering with ONES could we best ensure continuity of responsibility to our customers. Post-merger, Tower customers gain access to richer solutions than Tower alone could provide. If you're in an R&D scenario, you don't need to abandon Tower and incur heavy migration costs to Jira — you can use both Tower and ONES together.

Complex R&D scenarios can run on ONES, while product operations and other departments can continue on Tower. With collaboration打通 between the two, the customer value created exceeds buying two separate products. So I'm quite optimistic about the product-level integration ahead, and about how ONES R&D teams can use Tower for cross-departmental collaboration — the chemical reaction and customer value this produces. Of course, we'll need to work hard on product and operations to unleash the merger's potential, turning addition into multiplication.

Wang Yingqi: For customers, the merger means service consistency — doing what they want in one place — and service continuity for Tower's existing customers. The merger's real impact on the industry ultimately shows up in customer value. When existing and future customers evaluate options, the fact that we cover more scenarios, more employees, and continuous iteration and service makes them more confident in choosing "ONES+Tower." So whether an M&A truly succeeds ultimately comes down to customer value — that's the fundamental question. Only when B2B customers genuinely recognize you does customer value exist.

Lao Shen: Right — as customer value increases, we'll definitely see better retention post-merger in the data; these go hand in hand. Also, we'll keep both brands post-merger, since each product corresponds to different user tiers and brand perceptions.

Wang Yingqi: Yes, after acquiring Tower, ONES will not only preserve both brands but strengthen their distinct positioning. We believe Tower should be the best brand for lightweight collaboration and small teams, while ONES is the most professional brand for R&D management in China. On product capabilities, we may do data integration, permissions integration — things we might pursue going forward — but brands should develop completely independently. In this regard, some major companies' acquisitions domestically and internationally set excellent examples. Atlassian's merger with Trello, for instance, delivered tremendous business value and customer growth. We're quite confident about this path.

Lao Shen: There are also positive effects on cost reduction for customers. I'm very optimistic about the future.

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B2B Entrepreneurship: Surviving the "Dark Tunnel"

Liu Kai: How do you view the future ecosystem for domestic B2B? Will we see more M&A?

Lao Shen: Before COVID, as long as your product wasn't bad, domestic B2B saw some growth every year. During the pandemic, surging demand drove "high-speed growth" in B2B — Tower included. Meanwhile, major platforms expanded aggressively too. Tencent Meeting, very typically, grew hundreds of times this year. I believe it will continue to supplement more partnerships and acquisitions around meeting collaboration, so I think platform M&A will be more active and aggressive than before.

For SaaS companies like ONES and Tower, if you have business relevance and can cross-sell, you should bundle quickly. As domestic platforms develop more aggressively, customer retention becomes critical. If customers churn at the first mention of a free big-company product, that only proves you failed to deliver customer value. Despite many products going free this year, Tower still grew. I think B2B M&A ahead will produce two positive effects: first, platform M&A will become more aggressive; second, business cooperation and mergers among peers will increase. The 1+1>2 effect of mergers is barely visible in B2C but especially pronounced in B2B. Our businesses are a classic case — Tower's business isn't deep but it's broad; ONES's business is vertical. Put them together and you get a plus sign, a structure with high stability.

There are many international examples: Salesforce buying Slack and Quip, Jira buying Trello, Microsoft buying Wunderlist — all integrated. But historically, domestic B2B SaaS companies haven't been particularly strong; this year there are some stronger ones but still not large scale. So I think we're still in a relatively early market. When Tower and ONES come together, the equation becomes simpler. At minimum, we can achieve addition. With good execution, we can rotate that plus sign and turn it into multiplication. This merger has a precondition: it only makes sense when business fit is as high as ONES and Tower's. If you were in HR and bought a CRM, that wouldn't make sense.

Liu Kai: You're raising a good question — how B2B companies build bigger moats and achieve next-stage growth.

Wang Yingqi: And our merger involved considerable serendipity — shared philosophy, complementary products, common investor — these aren't things you can engineer. There are many major platform M&A cases domestically and abroad, but successful M&A means not just transactional success but the product thriving on the platform and growing within a larger system. Honestly, I've seen few true successes so far.

Why does B2B need M&A? Because B2B customers are hard to acquire and migration costs are high — that's why M&A is needed. What you gain is renewal rates, historical customer base, plus product and team. B2C can burn money for customers, but B2B can't be bought with money, because a good product requires long investment in product refinement, team refinement, and building customer recognition — things that M&A can solve. So I believe domestic B2B M&A will increase. But will major company M&A truly succeed? There aren't really large B2B companies in China in the true sense — they're all ToC internet-origin companies doing B2B business, initiating M&A out of operational need. The ideal would be domestic B2B SaaS companies with sufficient industry understanding, recognizing the value of startups in specific domains, where both parties can grow healthily post-merger — that's virtuous M&A, and I don't think we'll see much of it in the next five years.

Of course, there's financial M&A versus business merger. I'm more hoping to see a true B2B company solve business problems through capital M&A. For now, that seems rare — everyone is still in relatively early stages of B2B.

Liu Kai: I'm curious about the wave of low-code and no-code products emerging in the market. How do you see their relationship to what you do?

Lao Shen: Low-code and no-code open up entirely new business domains; they have a symbiotic relationship with us, not competitive. Take Airtable's Gantt chart — it's essentially an online database that happens to form a Gantt view. But in Tower and ONES, task breakdown is inherently there; users don't need to build a Gantt chart from scratch. Whether ONES or Tower, we're standard products, ready out of the box — that's the fundamental difference. No-code opens a new software delivery model. For highly fragmented, unscalable needs — that's where no-code shines. So these aren't in conflict.

Wang Yingqi: I agree with Lao Shen. The core point is: if an industry is proven to have massive demand, professional products will emerge, unless it's a very small industry that makes do with general tools or even spreadsheets plus email. But R&D management is a proven high-demand industry; these products must be professional. In principle, you can't build a CRM through Airtable; so-called "mini ERP" is a false proposition. So this symbiosis isn't between individual companies but across the industry. For rigid-demand domains, use vertical SaaS; for long-tail needs, rely on low-code or more general tools to piece together solutions.

Based on this industry judgment, we're willing to continue investing time, people, and capital into "ONES+Tower."

Liu Kai: Last question — if you could start over, what would you do?

Lao Shen: I'd still do Tower, but more focused, more decisive about choosing between user count and revenue — definitely better than now.

Wang Yingqi: I'd still choose ONES; choosing ONES for my second startup was definitely right. But Lao Shen and I would probably still face the dilemma between user and revenue growth. So if I could do it over, I might postpone revenue focus further — perhaps faster development with a more mature product. But every step counts; do it again, and Lao Shen and I would probably still hit the same potholes.

Liu Kai: What you're both really saying is "persistence" — stick with anything, do B2B software, do SaaS, and you have to persist through the "dark tunnel" at the beginning.

5Y Capital (formerly Morningside Venture Capital) currently manages approximately $3 billion across USD and RMB dual-currency funds. We believe the world would be a better place if the crazy you that others see starts to be believed.

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