On November 13, 2009, I wrote an article in my Forbes column titled India’s Next Celebrities. It was a year after the financial crisis.
Never mind the recession. In India, entrepreneurial energy has continued to grow. It still exists only in small pockets. And the sophistication of the entrepreneurial ecosystem has a long way to go before it can resemble anything like Silicon Valley–or even Israel. In this evolution, the Indian media has an important role to play.
At the time, I was busy trying to turn Sridhar Vembu, CEO of Zoho, into a celebrity. Hardly anyone had heard of HIM until my 2007 profile.
I had not yet launched 1Mby1M.
Girish Mathrubootham, avid fan of celebrity Tamil film star Rajnikant, had not yet launched Freshdesk (now Freshworks). He was still working at Zoho, under Sridhar’s tutelage.
Both of those events happened in 2010.
Fast forward to September 2021.
I am thrilled to see Freshworks go public this week in a $10 billion IPO on Nasdaq, the first Indian SaaS product company to do so. Freshworks is a proud flag bearer of India’s presence in the global cloud CRM space alongside Zoho. It was incubated at 1Mby1M (2011-2013) and is one of the early crop of companies that engineered India’s shift from a services-based IT industry to a product-based one.
Freshworks’ Early Journey
Freshworks, originally called Freshdesk, was founded in 2010 as an affordable, fresh alternative to Zendesk by CEO Girish Mathrubootham and CTO Shan Krishnasamy. The idea for Freshdesk came from the indignant reaction to an exponential price rise by Zendesk, a major player in the space. Mathrubootham sensed a market for a company that could provide good quality customer support solutions at reasonable prices. Deciding to take advantage of the opportunity, he founded Freshdesk in 2010, funding it with his own savings and also raised funds from friends.
I met Girish in Chennai in April 2011 when he pitched me at a TiE Chennai event. I immediately saw the potential for building a Zoho-style company.
Within a week of the launch in June 2011, Freshdesk had five paying customers and 100 in almost exactly their first 100 days. Over 500 small/medium businesses signed up after reading their launch story on Hacker News. In June 2011, it won the Microsoft BizSpark Startup Challenge grant for $40K in the Cloud category, validating their idea and business model, and setting the stage for further investment rounds. We deliberately waited until the paying customer milestone before raising Series A.
Read my December 2011 post Indian Product Entrepreneurs: Your Time Has Come for the industrial backdrop that made the success of Freshworks possible.
Freshworks’ Financials
Within two years of its launch, Freshdesk joined the 1Mby1M Million Dollar Club. Revenues were estimated to have grown to a $10 million annual run rate by the end of 2013. In December 2011, the company raised its first Series A funding for $1 million, $5 million in 2012, and $31 million in 2014. So far, the company has raised $484 million in over nine rounds and has acquired 13 capital-efficient startups, several of which were funded by Girish as an angel investor.
Freshdesk rebranded itself as Freshworks in 2017 after it expanded its portfolio to offer IT services management software Freshservice, CRM software Freshsales, call center software Freshcaller, applicant tracking software Freshteam for recruiters, customer messaging software Freshchat, and conversion optimization suite Freshmarketer.
Along the way, it has slowly but surely reached all its goals: $100 million ARR, unicorn status, and most importantly, profitability in FY 2017-2018.
As per the S-1 filing, Freshworks has a customer base of 52,500 organizations as of June 30, 2021, compared to approximately 48,500 as of December 31, 2020 and approximately 40,000 as of December 31, 2019.
Its revenue grew 45% to $249.7 million in 2020. Net loss increased to $57.3 million in 2020 from $31.1 million in 2019. It had an accumulated deficit of $3.1 billion and cash and cash equivalent balance of $104.8 million as of June 30, 2021. It achieved profitability in one quarter of 2020, but does not foresee profitability in the near future as it is a growing company.
Freshworks competes with Salesforce and Zendesk, and legacy vendors, such as Oracle and SAP in the CX market. Within ITSM, its competitors are ServiceNow, BMC, Ivanti/Cherwell, and Atlassian. Within CRM, it faces competition from full-featured vendors, such as Salesforce, HubSpot, and Microsoft Dynamics, and legacy vendors, such as Oracle, SAP, and Sage.
Freshworks’ journey to a multi-product strategy has expanded from CX, to employee and IT support, to messaging and cloud telephony, to a unified customer vision. It also has advanced AI and ML capabilities. Its marketplace provides access to over 1,100 applications developed and published by third parties that businesses can plug into their Freshworks solution to further extend the product. Businesses have built over 2,900 custom apps to address their specific use cases. Its partner ecosystem consists of channel partners, independent software vendors (ISV) partners, and its marketplace.
Freshworks expects its TAM to be about $120 billion. According to IDC, by 2025, the markets it addresses within CRM will represent a $76 billion opportunity and the SSM market will represent a $44 billion opportunity.
Broader Implications
I have been watching with delight how the Indian startup ecosystem is celebrating the success of Freshworks.
Indian entrepreneurs have found their celebrity role model in Girish Mathrubootham.
Chennai is celebrating their local hero.
Trichy is celebrating their local boy.
THIS is the kind of celebrity I had called for when I wrote my Forbes column in 2009. Twelve years later, the Indian startup ecosystem has found the kind of starpower with which to create a celebrity role model.
You see, Sridhar Vembu, one of my personal role models, could not be this celebrity. His journey is too far off the beaten track. He has bootstrapped to a billion dollars in revenue. Who does THAT?!
He has moved to a small village in Tamil Nadu. Who does THAT?!
Besides, Sridhar has the same kind of elitist pedigree (IIT Madras, Princeton) that prompt entrepreneurs to ask: “Do I have to be from an MIT, IIT, or IIM to be a successful entrepreneur?”
No. Girish comes from a modest background that resonates with a much larger audience.
Girish has raised tons of venture capital and has received immense media attention with each funding round.
Girish has taken Freshworks public, and is getting enormous international coverage.
THIS is how a celebrity profile is built.
And Now?
So now that India has Girish Mathrubootham as her celebrity son who is taking on Salesforce with a global platform, where do we go from here?
Well, we go to the heartland.
In August 2012, I met an entrepreneur called Bimal Patwari who had built a $6M company from Durgapur, West Bengal. Durgapur is a relatively small industrial town in the heartland of India.
In January 2020, I was giving a keynote at TiECon Kolkata. Bimal was there. In his own address, he spoke to me directly (I was sitting in the front row): “Sramana, we’ve crossed $45M!”
We had dinner here in Silicon Valley in February 2020.
I learnt more about how.
There are such success stories emerging all over India.
Now, we need local celebrities like Girish throughout the country.
Guwahati needs its own Girish Mathrubootham, as does Goa.
Global Impact
The other thing to note is the globalization of entrepreneurship aspect of the Freshworks story.
Girish has proved “Made in Chennai” is possible. Unlike other Indian CEOs running SaaS companies, he never shifted the center of gravity of Freshworks away from Chennai.
In 1997, I tried to build a product company from Kolkata in the India-Silicon Valley mode. I had a product and paying customers by the time I went out to raise venture capital in Silicon Valley. Forty-seven VCs turned me down because developing the product in India was too risky. Finally, NEA said YES. But it was at a cost. I had to give up the CEO job to “an older, more experienced CEO.” This guy was a bozo. He fired me and drove the company to the ground.
I never lost the passion for moving the Indian startup ecosystem away from body shopping and towards an intellectually exciting path, working relentlessly on that agenda for the last 25 years.
Today, no one questions the fact that startups can be built from anywhere in the world. India’s stature has improved tremendously.
In fact, in 1Mby1M, we now see companies coming from Africa, a startup ecosystem that is currently where India was fifteen years back.
The continent needs its first Girish Mathrubootham.
And thereafter, each African country needs one of its own.
Colombia needs one. Indonesia needs one. Cambodia needs one.
What I have Learnt
I remain focused on the 1Mby1M mission of helping a million entrepreneurs globally build a million dollars in annual revenue and beyond.
Notice, I didn’t say that we’re trying to fund a million companies. That would be impossible. Over 99% of the startups out there are not venture fundable.
I have explored and continue to explore every possible democratization route to propagate and disseminate knowledge.
My core belief remains Entrepreneurship = Customers + Revenues + Profits. Financing is Optional. Exit is Optional.
Education is the ultimate tool for Development Economics, not financing.
Inspiration is all very well, but where the rubber meets the road, you need education to succeed.
A catchphrase that has taken hold on which I am quoted often: Do NOT go to VCs as Beggars. Go as Kings. Bootstrap First, Raise Money later.
This summer, we started releasing the 1Mby1M methodology in short, affordable Udemy courses as a further attempt to democratize access to startup knowledge. [Udemy Courses Based on 1Mby1M Methodology]
Today, the scale of the global startup ecosystem is about 30 million people. By 2030, it would grow beyond 50 million.
An entrepreneur from Madagascar wrote to me last week about a Digital Health startup she’s working on. She’s doing my Udemy course on How to Build Digital Health Startups.
We’re succeeding in executing on our mission, but it will take a lot longer.
I never expected this journey to be easy.
For now, I simply want to raise a glass to Girish Mathrubootham and hope he can inspire many others by categorically embracing the celebrity that destiny has thrust upon him.
Congratulations, Girish!
