Building a Global SaaS Empire | Freshworks Founder & CEO Girish Mathrubootham on His Biggest Bets

First of all, let me say I miss this energy. I'm employee number one. Girish Matherbudham, employee number one at Freshworks. How many of you here are co-founders of your own startup? Awesome. Let's give it up for all the founders. And let me start off by telling you that I've been there hustling for business in all of these booths every year. Till a few years ago, till I stopped coming. So, so I miss that energy and excitement, and I want all of you to keep doing what you're doing, and soon we'll see you on stage sharing your stories. So today I'm here to talk about 5 decisions or 5 big bets that worked for me. So thankfully I don't have to talk about the 100 that didn't. So And I'm going to use a fishing analogy here to just try and keep it more interesting for me. Otherwise, it's very boring if you just keep talking about go-to-market strategies and things like that. So, so we'll use a fishing analogy to try and make it a little bit more interesting. So as you probably saw in the video, Freshworks was founded in October 2010. In Chennai, India, in a small suburb which most people in Chennai wouldn't know where it is. And we had, or let's say, let me say we were foolish enough to believe that we can start there and build a global software product company. In 2010, it sounded foolish. I think now, how many of you here are from India? Wow, this looks like an India conference. So starting in India, There's always a famous lesson that today every founder will know. It's actually much easier to sell to global customers than selling to Indian customers. You know, Indian customers are notorious for hijacking your product roadmap, and you can never sell outside once you start selling to India. So, so that was— now I can talk about it as a big bet that paid off, but I think truly the That was probably the best decision that we took in those days of how do we go global from day one. And Freshworks was truly global from day one. So we did not try— I did not try going and meeting customers in India, trying to sell to companies in India. So when we had, I think, 7 customers, they came from 4 different continents. Our first customer was from Australia. They're still a customer, Atwell College from Perth, Australia. So I think that was a big lesson in hindsight that Many entrepreneurs, many colleagues who worked at Freshworks and now entrepreneurs, they're all following. Like, we have 31 startups that have come out of Freshworks. I'm super proud of that, and some of them are here. So the big lesson is try to go after a bigger market. It's like increases your chances of success than getting stuck in a very small niche market. So, so casting your net wide wide, bringing the fishing analogy to life. So we were betting on inbound and product-led growth before product-led growth became a term. So we were— PLG is fancy now. In the last 4 or 5 years, we have this term coined. But 2011, our first customer came online, tried the product for 2 and a half hours, put their credit card, and bought the product. So that was probably the best or the biggest addition that worked well. We are an inbound company even today. We have 40% of our revenue is completely SMB customers, 100% inbound. We also have inbound feeding mid-market customers. But, but this was really what worked for us. But I would like to share some stories around this so you can see Picture of my family. Okay, I was a little bit— I don't recognize the guy over there, but so let's say things have changed for good now. So this is 2011. The story I want to tell you is how we won the Microsoft BizSpark India Startup Challenge. So I shared a personal story. As a startup founder, you want to break the rules. So instead of showing the product and the demo, I actually talked about what entrepreneurship, how it changes lives. And in my previous job, I had a bigger car, and I had to buy a small hatchback after starting a company and bootstrapping it. And my kids don't understand the difference between working a corporate life versus being an entrepreneur at that time. So they were quite sad that they couldn't sleep in the backseat of the car. And I was sharing the story along with the product and So we ended up winning the Microsoft BizSpark Challenge, and it was $40,000 first prize at that time. No equity, no safe note, free cash from Microsoft. That was the oxygen supply for Freshworks in the early days. So I'll tell you, the total capital in the company at that time was $85,000. So this is almost 50% of our capital coming in from Microsoft. But what did I do? I did not add it into the kitty and try to extend the runway. The next 2 months I ended up spending $45,000 figuring out all the online channels to see which ones will scale for us. Because I had made the decision to be going global and going inbound, so ended up spending all the money on Google AdWords, some of it in Google AdWords, very expensive when you're very early stage, you know that. Even more expensive now. Like tried LinkedIn ads, even more expensive than Google AdWords, figured out a lot of channels, smaller channels that wouldn't scale but still was giving us leads for much lower rates. So at the end of that $45,000 spend, we ended up having 70 customers in 2 months, which was great for a startup and also helped us get funding from Accel, the first round of funding. When we had 70 stranger customers from all around the world paying us an average of $30 a month. So we had $2,100 of MRR, but that was enough to get us a million-dollar funding. And that's why I said it's a big bet that paid off— the decision to go global, the decision to splurge the entire $40,000 and some more in 2 months to get those customers. Not super efficient at that time, but I think overall it played out well. So that's the story I wanted to share about betting on inbound, casting your net wide, go for a larger market. Okay, the second bet is around hiring. Now a lot of you are sitting here, so San Francisco is probably the, the at least used to be before COVID the place for SaaS talent. What do you do when you start a company in a city like Chennai in 2010, 2011, and you're trying to hire people? There is literally very little experienced, been there, done that talent, and the willingness to join a startup that's probably just raised $1 million. Like, it wasn't very easy. It wasn't easy. We just couldn't find the talent, right? So I think that's where the bet was on And I've been told, or I've been asked several times in the early years to either move to Bangalore because you can't find the talent in Chennai, or move to Silicon Valley because you can't find the talent in India. So that message kept coming several years, but we decided that, hey, we can build a company and be successful from wherever we are. We just need to find people who are willing to work with us. And so the bet was on hiring younger talent with a learning mindset And I'll tell you, I'll share the secret sauce of our hiring. I don't know how many of you are aware of the book called First Break All the Rules by Marcus Bingham. So what I learned from that book is about the difference between skills, knowledge, and talent. So skills are easily teachable. Knowledge is something where factual knowledge is again easily teachable or learnable. Experiential knowledge comes from Of course, experience, but talent is what you're naturally born with. And so we decided to bet on the inherent talent in employees, even if they did not have the experience. So I'll give you an example, and you have to understand this with context. So in India, pretty much everybody finishes engineering and then figures out what to do with life. And many of them would— 70% would be computer science engineering. And then they'll put up their hands and say, "I want to do sales, I want to do marketing." So that is the social structure of India, right? So if I want to hire customer support, I could be hiring a biomechanical engineer, but if she's— I would check for empathy, detail orientation, patience. So those are the skills with which I would hire somebody in customer support. If I'm hiring somebody in pre-sales, I would actually look at, hey, do they have the ability to think on their feet? Can they adjust their level based on the audience skill level? You can be talking to a power user, or you can be talking to a layman user. Can you teach something? So these are some of my interview hacks. So the entire bet was really based on what I learned from the book, "You Can't Put in What God Intentionally Left Out." So ignore the educational background, especially in India, where everybody's a computer science engineer. So ignore their experience sometimes, because They may not be in the right job right now. But focus on what they're truly good at. If you're hiring a salesperson, I should enjoy having a conversation with you. Think about it. When did you last buy something from someone? Like, you enjoy the conversation with the salesperson. Can they talk about any topic? So we went to the basics of betting on the core skills of the talent and our core skills of people, and then unlocking that— Talent. I can actually name examples from in the audience, but I won't. I'll actually show you— by the way, I'll also tell you that when we were— before I talk about this candidate, I'll tell you our programming language was Ruby on Rails. Till employee number 69, we did not hire a single programmer who actually knew Ruby on Rails. We hired great programmers and figured out that, OK, they can learn Ruby on Rails and then contribute. So I'm not making this up. So this is from LinkedIn, a screenshot that I picked last week. So this is an ex-employee called Sairam. So he— is he here? Okay. So the first marketing job that I had posted on LinkedIn for Freshworks, so I got 85 applications. I had people who had worked for 8 years in marketing in India, not in software. So I had experienced people with 3, 4 years, and he was a fresher just out of college, finished his MBA. And I was looking— I had asked everybody to send in writing samples because sitting in Chennai with an inbound model, marketing, product marketing is all about content, right? You have to do SEO, you have to do website content. So I was looking for a really good content writer who can write engaging content. So of the 85 resumes or applications that I got, like, his was the best blog. He had a blog. He'd sent a blog link. I saw deeply engaging stories, random people coming and commenting. So that is how we gave the job to him. And you can see he's had a very successful marketing career over the years, twice at Freshworks. And this is— I think it's especially useful for many of you here. You have to accept the fact that when you are a young startup, you may not be able to attract all the talent that you want. And also, today it's cool to work in a startup. 2010 in India, 2011, it wasn't cool. People weren't rushing to join a startup, right? So, so you have to learn how to work within the constraints that you have. And so this ended up to be like really, really great. We found an amazing team where people were happy to come in and learn on the job, but also contribute and grow. So, okay, big bet 3. See, a lot of times when people look at Freshworks, they don't really understand what is the true differentiation of Freshworks. So our business model of going global, going inbound from India, spending a lot of money on online marketing and online acquisition, but actually servicing all of those leads from a low-cost location like India— very low. Our sales, if you look at our early years, our sales cost would be like 20% of the CAC, marketing would be 80%. I haven't seen that anywhere else in the world, right? So that was truly the differentiator. And we knew that— I had booked— I always wanted to build a multi-product company. I'd actually booked 40 domains starting with Fresh in 2010. So now I had to convince our investors to let me build the second product. And we actually built our second product when Freshdesk, our first product, was not even $1 million in revenue because we had conviction in the model. Going after a large market, we are going inbound. And we are able to close deals from Chennai. So we said, okay, we also saw that— I'll probably show you the product evolution journey. So Freshdesk was the first product we launched in 2011. What I saw even as early as 2012 was one out of every 4 or 5 customers of Freshdesk was actually using Freshdesk as an internal employee helpdesk. And like we— I knew how to build an employee support system because I built 4 helpdesks in the past. So instead of taking the same product and putting a marketing website saying, hey, you can use Freshdesk for IT support, like some of our competitors do that. So we actually purpose-built an ITSM product today. So this second product, Freshservice, which we launched in 2014, Today is north of $260 million ARR. I can tell the numbers because I was at an investor day today morning. So it's public information. So also along the years, what we noticed was, hey, some of our customers— like we saw customers using or asking us for like chat or they wanted to support customers on modern messaging channels or cloud telephony. So we added chat and FreshChat and FreshCaller. As modern messaging and cloud telephony. In 2016, we actually unveiled our Customer 360 vision because we saw that, hey, we were struggling ourselves with sales tools, a marketing tool, and a support tool that our own— we were using Freshdesk, but data was siloed. So we thought, hey, there has to be a better way. So we thought, okay, how can we have a single record for the customer? So we then launched Freshsales in 2016. FreshMarketer in 2017 and Alfredi AI. So I'll talk about that in a bit. We launched in 2018. So as of last month, August 2023, we launched the Freshworks customer service suite, which is an omnichannel customer service suite helping businesses, B2C companies engage with their customers on like Instagram or Apple Business Chat. Today, business want to have conversations with their customer. So the reason I'm showing you all of this is, as a founder, you have to be planning ahead. The work that you do in product today is going to help you in revenue 2, 3 years down the line. And especially once you have product-market fit in the first product and the revenue is coming in, that's when you will have the time to actually invest in the second product. If you don't do that, let's say like last year or this year, the macro gets tough and investors are asking you to cut down the spend, you may not be able to invest in your second product at that point of time. So while your sales team is thinking one quarter ahead or about this quarter, you should also worry about that as a founder. But at some point of time, at least once every quarter, you have to be asking, hey, how am I going to— you have to assume that, okay, if things go well, if you are successful, How does the company look like 3 months down the line, 3 years down the line, 2 years down the line? So you have to be planning for revenue that's going to come 2 years down the line. So that is something that we have always done, thinking ahead of building multiple products. That's serving us well now. Our second product is actually the fastest growing product now, better than our first flagship larger product. Okay, so this is not a big bet, this is a lesson. So when you are building multiple products, right, when you're building, doing— so there is always this famous theory like, how can you do so many things? So at Freshworks, we have a culture code. One of the values is craftsmanship. So I will use this example of making biryani to help everyone understand. How many of you here Do not know or have never tasted biryani? Okay, very few. Okay, so this is this authentic, flavorful Indian dish. You can find it now in many parts of the world. So I'll share the story of Dindigul Thalappakatti Biryani. It's a small town, tier 2 town in India, which makes flavorful, delicious biryani. So the first generation built this out of a small restaurant. Many people who are traveling along that city would take detours to go in, have lunch there, and then go because the food was so amazing. The biryani was awesome. And the second generation is now actually building a business on this biryani. So they have now, I think, 25, 30 stores. They have one in Milpitas as well, and definitely I think in New York and Singapore. So, but you have to— and Of course, when you're building a business, you have to take care of all the metrics like single store profitability, average selling price per table or per person, all of that. But you have to understand that the foundation of the business is in the biryani. The day the biryani loses its original recipe or flavor, the business will collapse. Why am I saying this now? As founders, we need to understand that All the metrics that we talk about in our board, to our board or to our investors, so they are all important for leadership, they are important for the board. But you cannot push down the metrics to the people. So you have to celebrate your employees for making biryani. So like if your marketer is writing a brilliant blog post, or your AdWords person is coming up with a creative campaign, or let's say, you your product person has really built a cool feature. So employees need to be celebrated for making biryani or actually creating those— whatever, doing whatever they are good at, because the combination of those ingredients is what brings that biryani for your business. If you focus too much on the metrics and push it down to employees, not everybody is excited about $1 billion in revenue or $5 million in revenue. They're not excited about Salespeople can be excited about hitting a target, but employees need to be celebrated for what they are really good at and what value they are adding. So that's why what I call as making biryani. So this story is told to everybody in Freshworks. I've told this to multiple startup events because it's important as founders to understand what you care about in metrics may not be what your employees care about. Okay, moving on. So big bet 4. So one of the things we realized in our inbound— a lot of times people think when you're doing inbound, it means SMB customers, small customers, right? But what most people don't realize is you can close larger deals inbound. Like, even as early as 2013 and '14, we had closed Burger King, 3M, Schneider Electric, Macmillan Publishing, Pearson, Sony. All of these customers actually came inbound. Average SMB customer would buy like 4 or 5 seats of Freshdesk. Like Burger King was 300 seats. So we were closing several customers with 100 seats and 200 seats, all from Chennai. Could be a $50,000 deal. Big celebration would happen, but it'd be closed on the phone from Chennai. So I would say we were COVID ready 10 years before COVID So in terms of selling remotely, so So basically, once we realized that, what we wanted to do was, hey, how do we now take the product to more mid-market and larger enterprise customers? So how do we overlay a field sales motion on top of the inbound motion that was working? Now, it's really, really hard to have two go-to-market motions. I'll tell you, we are going through that phase. And but, but if you want faster growth, You have to do it. Every company that started with PLG or inbound, at some point of time, you can see they will overlay a field sales motion. Dropbox is a great example. So here's an example again. I think this was 2015 or '16 where we did a PR saying, hey, we announced Cisco as the 30,000th customer. But you have to understand inbound. It was not an enterprise license across Cisco. It was one team in Cisco. Coming and buying for them. But it still helped us. Like when, when Procter Gamble saw this, they came to us and said, hey, we saw that Cisco is using your products, so we would like to come and evaluate, right? So I think it's important to understand the power of inbound. It's not just about SMB customers. And now we decided, okay, a product is working well in these larger companies. And many times what starts out as a 25-seat, 50-seat 100-seat deal would expand to several hundred seats. So, and that is still ongoing even as we speak now, right? So, so that's when we decided, okay, why don't we go and overlay this field sales motion and go after larger customers? So today, 60% of our revenue for Freshworks comes from mid-market, what we call as mid-market enterprise companies, which is companies from 250 to 5,000, and 5,000 and above enterprise. Okay, one more lesson before we go to the big bet again, right? So especially I'm saying this after overlaying the field sales motion is because, see, as a founder, when, when your teams or employees are coming and talking to you, you have to learn the kaleidoscope lesson. What I mean by that is, hey, there are so many different lenses, and you should be aware of these lenses through which people people speak, because you have to understand where they are coming from. Like, I'll give you a very famous story which will illustrate the point. I once had my sales leader, a field sales leader, come and tell me that, "Gee, we have to stop these day passes." We used to have a concept of a day pass where people, instead of buying a named user license for a month, they could buy a flexible a day pass, which means you can come and access the product for a day. So we had that for seasonal users or for managers who wanted to come and take a look at a report or things like that. So it was a feature that customers loved, and they were buying day passes as and when they needed it, and they could buy like 100, 200 day passes and use it like Skype credit. Or Skype. So— So one day I had my head of sales come and say, we need to stop these day passes. It's actually— customers are abusing it and we have to push people to named license. Now, when your head of sales is saying something like this, you immediately start up a team, right? So I had a program started where we had engineers, data analysts, everybody looking at all the data. Looking at which customers were abusing it, how much revenue would we lose if we were going to do day pass, how can we make up for that revenue. So it became a big project and we had like 10 people in a meeting room actually talking about the impact of stopping day passes, right? And engineering had to work on that. We had to change our billing systems to stop that. Like our finance teams have to be informed. So it's a big project. But then finally, when we looked at the customer data, like there was only one customer who was using a lot of day passes, and that is a customer that I had personally given in the early days when we didn't have certain functionality. We said, okay, you use more day passes to compensate for that. So there was no real abuse. So then as we were peeling the onion, finally we got the real reason that our sales compensation plan did not actually compensate people for selling day passes. So that was not uncovered. And it came to me as customers are abusing day passes and we have to stop selling it. Right. So I think I'm giving you this as a real example because a lot of times you will see there's a product lens, like product managers should want to increase adoption. Salespeople will want to make their commission this month or this quarter, which is all fair. But you as the CEO or founder have to be aware of all these different lenses and Understand where people are coming from. And so I thought it's a good lesson to share, especially when you have these different go-to-market motions. Like, for example, product marketing for large enterprise and SMB inbound is very, very different. Okay, last bit. So how do you know where the fish is going to be? Like, how do you stay ahead of the curve? So I think what we did well in Freshworks was, see, today we all talk about GenAI and ChatGPT. So we asked ourselves this question in 2016 or '17 that, hey, what could really kill us? And where is our opportunity? Where is our threat, right? What could kill us? So clearly AI was the biggest threat that we— we were not looking at any of our competition that's going to crush us. So we didn't find a threat in our competition. So, but AI was the threat. So we invested early. We launched our Freddy AI in 2018. So we have customers using our bots and AI for several years now. But with GenAI, there's a lot more excitement. There's a lot more— there's a refresh of Freddy AI that we presented 2 months ago, which is getting a lot of excitement. But you have to be knowing what's coming. So you have to ask that question like, what can kill you? What's changing in the landscape? Same way we took a big bet on Customer 360 because your AI is only as good as your underlying data. So when we saw the bet on AI, it was not just a technology bet. We— and you know that we have companies that do AI work only on telephony data, companies that do AI work only on marketing AdWords spend data. There are companies that do AI work only on chat data. So what we said, okay, where is the real value for a business for AI going to come from? It's going to come from understanding everything about the customer. So that's where the Customer 360 made sense. So it's not just about the UI for a support person or salesperson. It's all about the AI. So, so this is Freddy. We chose Freddy to be— again, in 2018, there was a lot of fear in customer support teams that AI is going to replace the agents' jobs. I think the fear still persists, but we wanted our Freddy to be like a friendly friend to the human. So So no better representation than a dog. So Freshdesk buddy is short— the short form is Freddy. So we launched— this is 2018. And by the way, I'll also share another story. It's not like all the big bets that happen. Sometimes you also need a little bit of luck. And this is a story that many of you may know. When we were a really young startup, 2011, we had, I think at that point of time, 200 SMB customers. We had— we were just going to announce, or we just announced, a $1 million funding from Accel. And the next day we were attacked on Twitter to be a ripoff of Zendesk. And I can see our friends at Zendesk are in the booth here, so please go and visit them and show them some love. But in 2011, so we were attacked to be a ripoff. What we figured out was Again, the story you can go and read on report4not.org. They had employed a paid blogger to talk bad about us. But the lesson here is sometimes as a startup you also get a stroke of luck that happens. It's sent by God, right? So this moment where we resp— instead of fighting on Twitter, we responded with a website. We exposed what was happening. And the whole internet community, we were on Hacker News for 30 hours as the top post and for 3 days on the top page, the entire community supported us. And from that point onwards, like, Freshdesk was the alternative to Zendesk and the entire PR— thank you. So that's where I would say, if you are a small startup, don't worry. It's not about the size of the dog in the fight, it's about the fight in the dog. So, all publicity is good publicity. You have to set yourself up in the minds of customers as who are you fighting against, right? So I think that is a story and a lesson that I want to share. And with that, I think I'll just summarize quickly and then we can move on to Q&A. So these are the 5 big bets that worked for Freshworks. We went after a large market, casting our net wide, going global, betting on inbound, our hiring strategy. Focused on hiring young people with a learning mindset, but mapping their core talent to whatever job that they would be doing. We went multi-product early on when things were good. That's the time to go multi-product. So we overlaid a field sales motion because we saw that our product was working well in larger companies. So we can go and acquire more larger companies and then also staying ahead, thinking about what would be the next big opportunity or what could kill you and being ready for that. So when a ChatGPT moment happens, you're ready to take advantage of that. So with that, I would like to say thank you.