As SaaS startup Freshworks prepares to list on NASDAQ in the US, here's a throwback to one of Girish Mathrubootham’s earliest interviews with Young Turks in 2016. At the time, Mathrubootham said, 'It seems like we have come so far. But, at the same point, I say it is also the beginning.'
Freshworks’ $100-million IPO filing marks a pivotal moment in what’s being termed a breakthrough year for Indian software as a service (SaaS) startups.
In 2010, operating out of a 700 sq ft warehouse in Chennai, Freshworks started its journey as a SaaS provider for customer support operations. The space was as ‘fresh’ as it could get in India. Termed a ‘greenhorn’ at the time, Freshdesk (renamed to Freshworks) was among India’s earliest SaaS startups.
Former colleagues at cloud platform Zoho, Freshworks Founders Girish Mathrubootham and Shan Krishnawamy quickly decided to set up a shop in the US as well. In India, besides the turtle-paced adoption of new tech, the deal size was smaller, deal cycles longer, and accounts receivables cumbersome. An issue that still makes SaaS startups sail out -- as soon as possible -- to North America.
Within five years, backed by Accel, Tiger Global and Google Capital (now CapitalG), the startup scaled its revenue to $100 million while boldly challenging larger global players like Salesforce with its in-your-face guerilla marketing campaigns.
During the pandemic, as all kinds of services went digital, companies needed Freshworks’ products more than ever before to engage with consumers, not only via chats, email, and messages, but also through every available online channel, including social media platforms like Twitter and Facebook. Earlier this year, Freshworks hit an annual revenue run rate of $300 million with over 40,000 clients in more than 100 countries. The most recent fundraise valued the company at $3.5 billion.
For the next generation of Indian SaaS startups, it was important that Freshworks succeeds. In a letter that accompanies the IPO filing, Co-Founder Girish Mathrubootham said, “Freshworks is the company that wasn’t supposed to win. Whether we could differentiate ourselves in crowded markets, or compete with larger players, or build a global SaaS company from India, the doubts were always there. And people were not shy about telling me!"
In 2018, it became the first pure-play SaaS unicorn of India. Since then, eight SaaS startups -- Druva, Icertis, Postman, Zenoti, Innovaccer, ChargeBee, BrowserStack and MindTickle -- have achieved the unicorn status. Six of them during the pandemic.
“The Indian SaaS space has the potential to create $1 trillion in value and nearly five lakh jobs by 2030,” according to a report released by SaaSBOOMi in association with McKinsey & Co. The report says India has over 1,000 SaaS startups, which cumulatively generate revenue of $2-3 billion annually.
Given the market potential, B2B enterprise software startups are a top draw with investors this year. As of August, these startups have raised over $2 billion in more than 100 deals. In the number of deals, it is beating every other sector, according to data from Venture Intelligence.
Still, Indian SaaS startups have a long way to go. But, the previous generation of SaaS founders are close at hand to help. In July, Girish Mathrubootham along with Manav Garg, Founder and CEO of cloud platform Eka Software, launched an $85-million venture capital fund to support early-stage SaaS startups in India.
In August, an ironic funding round put on display the evolution of the Indian SaaS ecosystem. Girish Mathrubootham joined as an investor in SaaS-based API platform Postman’s latest fundraising round. The upstart unseated Freshworks to become India’s most-valued SaaS startup at a valuation of $5.6 billion.
At the time, Mathrubootham said, “It seems like we have come so far. But, at the same point, I say it is also the beginning.”
Our guest on Young Turks today is Girish Mathrubootham, the Co-Founder and CEO of Freshdesk, the company he set up in Chennai in 2010. Today, Freshdesk is considered to be the poster-child of enterprise SaaS from India. With over 60,000 businesses in over 145 countries using the SaaS-based customer support solution provided by Freshdesk, Girish has proved that Indian tech companies can build world-class products. Here's a look at the Freshdesk story:
Narrator: What started as a five-member team, working out of a 1,000 sq ft garage office in an obscure Chennai suburb to a 500-people strong organisation in a 60,000 sq ft office in one of Chennai's premier IT parks, Girish Mathrubootham's Freshdesk has surely come a long way in five years. Girish founded Freshdesk in 2010 with a Zoho colleague Shan Krishnasamy to build a cloud-based customer support platform that could be used by companies of all sizes to better service their customers in the age of social media overload.
Girish Mathrubootham: In 2010, we identified as an opportunity that the whole paradigm of customer support was changing. So, customer support used to be a one-to-one conversation between the customer and the company. But, we observed that was no longer the case. Today, customers want to talk to the company, customers want to talk to other customers, and if customers are unhappy with the brand, they want to talk about the company on Twitter, Facebook and so on. That's when we thought that customer support tools of yesterday are not really solving this problem. So, let's build a fresh customer support system. That's how the name Freshdesk came about.
I would say funding actually helped Freshdesk to accelerate its plans. We pretty much knew what we wanted to build. To give you context, I spent 10 years at Zoho before Freshdesk. I have managed a business unit and scaled it to multi-million-dollar revenue. I pretty much knew what we had to build. It's not like we were trying to figure out the product-to-market fit or what we need to build. We had a lot of aspirations. We had a lot of plans.
Narrator: Serving 60,000 customers, Freshdesk scores on usability. Because it is highly customisable, not just small and medium businesses and startups, but enterprises also use Freshdesk to manage remote customer support. Businesses pay Freshdesk on a monthly or an annual basis, based on the number of agents or users who will use the platform.
Girish Mathrubootham: We don't customise in the traditional sense of sending customer service consultants or writing custom code for enterprises. That's an old model. That's an enterprising model also. What we do is, there are obviously customisations that customers require. We have productised most of the standard customisations required. We have something called FreshPlugs, which allows customers to customise their Freshdesk.
To give you an analogy, you or I may have an iPhone. But, your iPhone will look different from mine. The reason for that is the apps. That's the same way we have handled customisation. Even though every customer may have Freshdesk, we have enabled customers to be able to build customisations themselves or through third-party developers to treat the core product as the same, but change the behaviour as per their needs. We also have APIs and we work with system integrator partners, who sometimes do customisation work.
Narrator: Girish considers himself a product manager at heart with a strong bias towards good user experiences. For him, ensuring all his team members are equally enthused, is crucial. So, in 2012, Girish integrated gamification into Freshdesk to turn customer support into a fun job. The feature -- Arcade -- when turned on, allows Freshdesk agents to earn points for issues they solve and move up an internal leader board.
Girish Mathrubootham: It is true that Bangalore has a lot more talent. But, it is also true that Bangalore has a lot more competition. You are fighting with the Flipkarts and the Olas and the Microsofts and the Yahoos of the world for talent. In Chennai, Freshdesk has been fortunate enough to be the number one startup that comes to people's minds. So, when somebody wants to work in Chennai and wants to work at a startup, Freshdesk is the number one choice.
We don't believe in hiring people who have solved the same set of problems. We believe in hiring smart people and letting them learn on the job by figuring out how to get stuff done. Also, we hire a lot of freshers, whom we train. We are willing to put in the time to build the people that we want. To build the way we want them to be. Rather than expecting ready-made talent. We look at understanding the core talent of a person and matching the job role to that talent. For example, what I am saying is, if we have a Sachin Tendulkar, we want to make sure that he is batting -- upfront.
Narrator: In 2014, apart from the core product, Freshdesk launched FreshService, an internal IT helpdesk for enterprises. And, MobiHelp, an in-app support for mobile app developers. FreshService already has 1,500 customers across the world. While these products were developed internally, Girish is not shy to go out and make acquisitions to ramp up its offerings. So far, Freshdesk has made three acquisitions. In August 2015, it acquired live video chat provider, 1Click. In October 2015, it bought out social recommendation app Frilp. In December 2015, Freshdesk made its third acquisition, when it acquired mobile-first user engagement platform, Konotor.
Girish Mathrubootham: We don't have a target number of acquisitions to make. We didn't set up a budget to spend on acquisitions. But, we are well-capitalised. If strategic opportunities show up, we would definitely like to go after them. So, as we speak, there are many opportunities that are coming our way. The way we look at it is, we don't want to compete with somebody who is just trying to get the best possible deal. We are not the right home for them. If entrepreneurs believe in what we are doing, and feel Freshdesk is the right home for them to continue building their dream by joining forces with a bigger army, those are the kind of companies we are looking for.
Narrator: The company's dramatic scale-up has attracted some serious venture money. So far, it has raised $94 million over five rounds from marquee investors like Tiger Global, Google Capital and Accel Partners.
Girish Mathrubootham: It seems like we have come so far. But, at the same point, I say it is also the beginning. We have customers in 145 countries. Typically, if you look at any company, if it is a US company, they first focus on the US market. They get to $20 million in revenue and branch out into Europe. Then, build to $50-60 million in revenue before going out to APAC. Freshdesk was global from day one. Our first customer came from Australia. The fact that we have customers from 145 countries and we are scaling looks like we have grown. But, the reality is that in each of these markets, the contribution to our revenue is really small. It is like little drops making a big ocean. The headroom for growth in each of these markets is so tremendous that we believe that we just have to put our head down, focus on work and focus on execution.