Founded by Girish Mathrubootham and Shan Krishnasamy, Freshworks started as Freshdesk in Chennai in 2010. After the first funding of $1 million by Accel in 2011, the customer management software company had funding rounds every year. In 2018, after raising $100 million, it was rebranded Freshworks, with a $1 billion valuation. Today, it has over Freshworks $13.4 billion 50,000 customers across 120-plus countries, and is currently valued at $13.4 billion following a $1-billion IPO and Nasdaq listing on September 24, the first global product company from India to do so. CEO Mathrubootham is a fan of Rajnikanth, but on what the future holds, he chose SRK’s line, “Yeh toh baas trailer tha, picture abhi baaki hai” (This is just the trailer, the main movie is yet to come).
While moving from the U.S. to Chennai in 2009, my television broke down. I called customer service in New Jersey and Chennai multiple times, but there was no response. At that time Twitter and Facebook were not big for communication. I published my grievance with pictures on RTI (Return to India), an online forum for people moving from the U.S. to India. The community engaged and the president of the shipping company contacted me the next day and my money was returned the following day. The ‘aha’ moment was how the rise of social media put the power back in the hands of the consumer. That’s when the idea of Freshdesk came.
We were in a crowded market, which already had many helpdesks. Many doubted we would be successful. Even at over $50 million in revenue, people were doubtful about running the company from India. The perception was we needed to move to the Valley and hire the big boys to be successful. In 2014-15, Microsoft acquired a customer service software and people thought Freshdesk would get killed. But we believed in delivering a superior experience to customers. Why we are a winner is because we don’t design our products for the Fortune 500 but for the Fortune 5 million. Customers love our products because they are for frontline users — the service engineer, the IT or sales person. These people who use the software, evaluate and help us get better. Today, we have 52,000 users in over 120 countries.
We had our share of problems as well. In 2011, there were massive power outages in Tamil Nadu. Chennai had at least a couple of hours of power failure. We were in Keezhkattalai, a Chennai suburb and needed generators to keep the Internet going. Still we couldn’t switch on the air-conditioners. Our office was a warehouse in a church building next to an air-conditioning duct storage warehouse. Once Accel invested, we moved into a space where there was electricity back-up, parking and maintenance.
Make Or Break Moment
We built a global market from Chennai and used a disruptive go-to market motion where we can sell to the long tail of global SMBs. Most companies in the U.S. start going up-market to cater to the Fortune 500 or Fortune 100. With your sales team in California, it is not easy to sell to a SMB customer with a $100 budget in Poland or Sao Pulao in Brazil or Ahmedabad in India with a $100 budget.
The Business Model We are not going elephant hunting, but staying focused on hunting deer and rabbits. We have customers who pay us $1 million, but they did not start as $1-million customers. They start as a $50,000 or $100,000 customer and then grow over time. The first key decision was to build the disruptive business model of building global products from Chennai and servicing the long tail of global SMBs. Today it is called product-led growth, but we were doing it from 2011. We call it inbound engine as opposed to outbound selling. Second, we went multi-product. Some customers were using Freshdesk customer support product as an internal IT service management tool. We said we know how to build an IT service management tool for employees, but this is not the product that customers need. We decided to go multi-product and built a second product, which now generates $100 million in revenue.
The third is when we moved from a transactional to a relationship mode. Freshworks was not designed to be a company for SMBs. It so happened that when we went through product-led growth, the majority of customers who came online were SMB customers. But there were teams from larger companies such as Burger King, 3M or Cisco. They came online and bought hundreds of seats from us and all this was closed from Chennai.
At Freshworks, all products are designed to delight the frontline user. They come online, evaluate it and say, I can configure it myself. The second is they can go live in days or weeks. That saves money for the business.
We started as a Cloud-native company from day one. Our tech was built on Amazon Web Services (AWS) from day one. We are an AWS all-in partner with access to latest technologies.
We saw huge opportunities in tech. It is what I call the iPhone moment in business software. Thirteen years ago, we all used a Nokia phone, a Canon point-and-shoot camera and a Sandisk MP3 player. We were buying all these because I need a phone to call people, take pictures of the family, and listen to Bollywood and Ilayaraja songs. When Apple launched the first iPhone, it was launched with commercial possibilities. Apple has so many technologies for sales, support, chat, or marketing. But if you go back to the iPhone analogy, you are still listening to the same songs.
As consumers, we care about the music, not the gadget; we care about family pictures, not the camera. The hurdle for businesses is that customer data, which is their music, is stuck in silos — sales, marketing, social support tools. We are breaking down the silos and helping businesses understand customers better. We want to make it fast and easy for every business to delight their customers.
I worked for 10 years in Chennai. Initially, we attracted people who had worked with me and had gone to other companies. They wanted to come back when they knew that I was starting a tart-up. It is a sign of good management when people who you managed want to work again for you.
But for start-ups, it’s hard to afford quality talent when you don’t have enough money. It’s difficult to attract experienced talent since they have a family and don’t want to risk their career because the success of the start-up is unknown. We overcame it by hiring smart youngsters who were willing to learn and were passionate. We have an amazing team in Freshworks. One of our sales managers in Europe is a rock star guitarist. We have dancers, rock singers and so on in our company.
We believe people need a complete life. It’s not about hating your work and taking your Royal Enfield and going to shoot wildlife pictures. If you are happy at work, you will be happy in your personal life with your hobbies. We want employees to experience a complete life. We don’t want to be the one taking away 40 hours every week.
I have been fortunate to attract funding from top investors in private markets, and while going public. Creating inbound interest works better. You don’t chase a VC in the coffee break at the conference and try to pitch your story. If you build something well, it will create inbound interest.
Marketing & Sales Lessons
The biggest lesson is aligning the business model. You cannot look at marketing, sales, product pricing, engineering as independent functions. Everything has to come together. When you look at a start-up, I have to do outbound marketing, I have to do Google AdWords, and so on. Everything is about alignment.
If you are selling to larger enterprises, they want trust. They need consultative sales. You need salespeople and partners. If you have a product-led growth model, you cannot have consultative selling. Your product cannot depend on a partner to implement it. It has to be easy to use. If the online buyer is coming in, and can’t understand the product in the first 20 seconds, she is going to close the browser and go away. All your marketing dollars are wasted. So, everything has to be aligned to how you are going to take your product to the customer.
When Did You Think You Had Arrived?
We are just getting started. What you have seen is only the trailer.
Riding Through Toughest Times
All start-ups make mistakes initially. But the important point is not to make blunders. We signed the deal with Accel on August 28, 2011. I was a new entrepreneur and it was my first experience with a VC. In October 2011, Freshworks didn’t have enough balance to meet the payroll of six or seven employees. On October 28, which was Diwali, we got the money and understood the true meaning of ‘Happy Diwali’.
We created 500 crorepatis in India. I want to create 5,000 millionaires over the next 10 years, and that is the journey. We want to make sure that every Freshworks shareholder-employee or investor — are together building the most iconic tech product company to come out of India.