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Rediff.com  » Business » How entrepreneur Girish built $94 mln worth Freshdesk in no time

How entrepreneur Girish built $94 mln worth Freshdesk in no time

August 24, 2015 10:27 IST

Way forward, FreshDesk's management feels building new products, increasing sales or scaling up operations is not too difficult but keeping its unique culture alive even as it expands is.

Image: FreshDesk founder Girish Mathrubootham with RBI governor Raghuram Rajan at an event. Photograph: Courtesy, FreshDesk/Facebook 

Cloud-based customer support firm Freshdesk has expanded its office almost eight times since it started operations in a small office in Keelkattalai, near Chennai, in 2010.

Now, its office at SP Infocity is spread over 60,000 square feet - reflecting its growth.

The "software as a service" company is one of the top customer support products firm in the world. It has raised funds five times in five years.

"But there are miles to go, before we change the technology environment" said Girish Mathrubootham, its founder.

The company offers software product through Cloud for businesses to communicate with customers at a "freemium" price - companies get a "free" version initially, and then pay Freshdesk as they scale up.

It now has 50,000 customers, including 3M, Honda, Hugo Boss, University of Pennsylvania, Unicef and Petronas, in 120 countries.

Image:  The price of Freshdesk's products are 50-60 per cent lower than its competition, says the company website. Photograph: FreshDesk/Facebook

Fact box

Area of business: Software Funds raised: Series-A: $1 million from Accel Partners in 2011 Series-B: $5 million from Tiger Global Management in 2012 Series-C: $7 million from Accel Partners and Tiger Global Management in 2013 Series-D: $31 million from Accel Partner, Tiger Global and Google Capital in 2014 Series-E: $50 million from existing investors .

The company has raised $94 million through five rounds of funding - starting with $1 million in 2011 to $50 million in a Series-E round from Tiger Global, Google Capital and Accel Partners in April this year.

It has also completed its first acquisition, 1click.io, a video chat and co-browsing platform for an undisclosed amount.

Dawn of a new 'desk' In 2009, Mathrubootham, instrumental in developing four helpdesks for Zoho Corporation, returned to India after a stint in the US.

In the move, his television got damaged and he did not get an insurance reimbursement after running from pillar to post.

After a 28-email thread and six months, he posted his bitter experience in an online forum where expatriates from US look for support and he immediately got a response from the logistics firm. His complaint was closed within a day.

This inspired Mathrubootham when he started a new company.

Image: FreshDesk has grown almost eight times in no time under Girish Mathrubootham, the firm's founder.  Photograph: Facebook/FreshDesk

His other inspiration was an article on Hacker News, describing how Zendesk, a San Francisco-based software development company, was raising the prices of its products freely, thanks to missing competition. Mathrubootham launched his company believing in the need for better customer support.

Shan Krishnasamy, who worked with him for eight years as a technology architect, joined him as a co-founder and is now Freshdesk's chief technology officer. Within six months, Freshdesk won Microsoft BizSpark Start-up Challenge bagging around $40,000.

It launched its first product on June 7, 2011 - a software that customers could download on a trial basis for 30 days and then buy if they like it.

On June 10, the first customer - Atwell College of Australia - came on board.

After a two-hour trial, they bought the product. "All the initial customers came like that," recalls Mathrubootham.

"We got 100 customers in 100 days; 200 in 200." Freshdesk founders were already in talk with potential funders.

Image: FreshDesk has 50,000 customers, including 3M, Honda, Hugo Boss, University of Pennsylvania, Unicef and Petronas, in 120 countries. Photograph: Courtesy, FreshDesk/Facebook

The money from Microsoft Bispark was over in two months. Thanks to the growth in its early stage, Accel gave the firm $1 million in August 2011.

There was no business risk in the company. Shekhar Kirani, partner, Accel India, who is also in the board of Freshdesk, said: "Outstanding team, great market, and fantastic execution attracted us to the start-up. "In such businesses, the costs are front-loaded. The company has to spend to acquire a customer.

The funds they managed to raise helped them ramp up operations." Early challenge & funding Soon after Freshdesk announced its first fund raising came the challenge from market leader Zendesk.

In a much publicised spat, a senior Zendesk executive called Freshdesk "a freaking rip-off".

Mathrubootham's response in the social media set the market abuzz.

For Freshdesk, the incident was a blessing, attracting investors who were earlier not too interested in it.

Image: FreshDesk is growing exponentially, thanks to the vision of its founder Girish  Mathrubootham. Photograph: Courtesy, FreshDesk/Facebook

One investor invited Mathrubootham to Mumbai and offered a mark-up of 30 per cent of valuation.

Mathrubootham spoke to many other investors and finalised the Series-B funding with Tiger Global.

"Once we had $5 million, it changed everything We put everything in marketing," he said. A smaller round of funding, of around $7 million from the existing investors, followed in November, 2013.

With this, the company had good investors and good credibility with Accel and Tiger. In the fourth round, of $31 million, the company got Google Capital as its investor.

It was the Google Capital's first funding in an international company and brought a lot of credibility to the company.

The company's valuation has gone up more than 100 times between the first fund raising and the Series-E, he said. Challenges now The price of Freshdesk's products are 50-60 per cent lower than its competition.

The company says it is different from competitors in terms of affordability, breadth of channels and depth in service.

"We are the fastest growing compnay in our sector, adding more customers per month and per quarter than any of the competitors.

In 2013, we grew 500 per cent; in 2014, we grew 300 per cent; in 2015, our target is to grow 250-300 per cent more - in terms of number of customers added and revenue. It is very linearly correlated for us," Mathrubootham said.

Image: Way forward, FreshDesk's management feels building new products, increasing sales or scaling up operations is not too difficult but keeping its unique culture alive even as it expands is.. Photograph: Courtesy, FreshDesk/Facebook

However, he refused to reveal the revenue. At present, the company has about 500 employees and offices in London, Sydney and Chennai.

Way forward The company management feels building new products, increasing sales or scaling up operations is not too difficult but keeping its unique culture alive even as it expands is.

The transformation to mobile platforms is another area that the company would like to focus on and is working with application developers.

Making inroads into markets across the world, including non-English speaking countries, would be a challenge.

The company is looking at having over 1 lakh customers across the world in two years.

"We are in the expansion phase. We have a solid product, we are very confident," he said. Freshdesk also launched an IT service management product Freshservice to offer cloud-based service desk solution for smaller companies for their internal IT support.

"We want to build a successful product company out of India, which we are already doing," said Mathrubootham.

Expert take

The global customer relationship management software (CRM) market has been on the rise and is estimated to reach around $37 billion by 2017.

This is primarily due to the rate at which businesses of all sizes are actively adopting digital marketing activities to stay close to their existing customer base, as well as acquire new customers.

This is becoming a necessity as more and more people are digitally connected. The millennial generation is also quickly getting comfortable in interacting through digital channels.

There is going to be an increasing demand for CRM solutions for any and every size of business.

One challenge this segment may face could be scores of smaller CRM software solution options with fewer or no differentiators.

FreshDesk was founded to enable businesses of all sizes to provide great customer service.

Their pricing model, I believe, would continue to be conducive for smaller businesses to engage with their end-consumers. It needs to stay fast on founding principles while continuing to innovate.

There is increasing demand and the growth trajectory of this segment.

The confidence investors have shown on FreshDesk and the direction it is moving towards. I am happy to see FreshDesk emerging as one more example of world-class products Made in India.

Sriram Subramanya founder, managing director and chief executive officer, Integra Software Services is a member of The Chennai Angels

Gireesh Babu
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