Freshworks - a global icon from India

Abraham George Special Essay

Two simple Desi boys from Tamil Nadu who were working for Zoho in Chennai moved out to start a company. This was in 2010. They originally started to compete with Zendesk and named their company Freshdesk. Zendesk has been a listed company about five years ago. They were listed at $9 and is now priced at $97.

The CEO of Freshdesk was a young man named Girish Mathrubootham and the CTO Shan Krishnaswamy. Girish is a visionary. His full name is a mouthful and is a bit difficult to pronounce. His colleagues call him ‘G’. So let us also refer him as ‘G’. A cool name to have when the in-thing in technology is to be anything connected with 5G.

Very soon, G found a big gap in customer support for SMBs. He started to think big and still he thinks big. G and Shan started with a single product between 2011 and 2015 targeting thousands of SMEs who paid $150 on average. In no time they got thousands of customers from all over the world.

An intuitive support application was born and was named Freshdesk. But they didn’t stop there. Though it originally started as a rival to Zendesk and as an affordable alternative, it expanded to offer many other IT services. Out of this was born Freshservices (IT service management software), Freshsales (CRM software), Freshcaller (call centre software), Freshteam for recruiters (application tracking software) , Freshchat (customer messaging software) , Freshmarketer (conversion optimization suite).

Everything Fresh! Rebranded themselves as Freshworks. Their aim is to make software cheaper and kill the expensive enterprise softwares. During this time they created a large fan following and a community of developers. Their developer and customer conference called ‘Refresh’ meets in Vegas and runs in large crowds.

Meanwhile G has been an active angel investor in the Indian startup ecosystem. He is investing with the bigger picture in mind. His name crops up in most investor circles. Whenever he will decide to monetize his over 50-odd venture investments, he will be a rich man. With a bootstrapping to exit strategy, he should be accumulating huge personal wealth.

Freshworks raised money from some big industry names like Google Capital, Accel Partners, Tiger Global Management and Sequoia Capital. With a valuation above $1.5 bio in 2018, they are in the Unicorn club. They made nine acquisitions for undisclosed amounts which are all contributing to their success.

They now cater to more than 200,000 businesses including enterprises such as Pearson, Honda, Burger King, Bridgestone, Hugo Boss, University of Pennsylvania, Toshiba, Cisco and global SMBs across around 130 countries. Their global headquarters is in San Bruno, California with most of their brain work in Chennai. They have more than 2500 employees in Chennai and just around 80 in Bangalore and Hyderabad each. They have offices in Germany, Ireland, Australia, Canada and Netherlands too.

Freshworks new slogan or motto is “keep the customers for life”. With that in mind, they teamed up with Hexaware Technologies Limited, a leading global IT consulting & digital solution provider, a few months ago. Hexaware is the fastest growing next generation provider of IT, BPO and consulting services. There is no area of business that you can think of that Hexaware is not involved in.

Freshworks has also announced a strategic partnership with Tata Consultancy Services (TCS) to jointly build and market new age marketing, sales, support, customer success and ITSM solutions on top of Freshworks cloud software to elevate end-user and employee experiences. A newly commissioned Total Economic Impact (TEI) study by Forrester Consulting found Freshworks customer support offering, Freshdesk omnichannel, provides a three year return on investment (ROI) of 462% for midmarket customers.

To bolster their cloud services and strengthen intelligent automation for IT teams, they recently acquired Flint, a leading IT orchestration and cloud management platform. All along they have been roping in key experienced industry veterans especially big Indian names. They appointed Prakash Ramamurthy from Oracle as Chief product officer. Prakash held a very senior position at Oracle. They also hired another industry veteran Tyler Sloat as CFO. His appointment arrived just when the company crossed $ 200 mio in annual recurring revenue a number that they doubled in 18 months.

Freshworks is ranked number 16 on the Forbes 2020 cloud 100 companies alongside other industry visionaries like Snowflake , Stripe and Asana. This is the fourth consecutive year Freshworks has been recognized on this definitive list of the top 100 private cloud companies in the world, published by Forbes in partnership with Bessemer Venture Partners and Salesforce Ventures.

Freshworks first appeared on this list in 2017 at No. 95, moving up to No. 60 in 2018, No. 40 in 2019 and now No. 16 this year. The selection process is a very rigorous. The evaluation process involves ranking companies across four factors: market leadership (35%), estimated valuation (30%) , operating metrics (20%), and people & culture (15%).

A word about the assessing companies.

Bessemer Venture Partners is the one of the world’s most experienced early stage venture capital firm. The firm has backed more than 120 IPOs including Pinterest, Shopify, LinkedIn, Skype, Twilio, DocuSign and MindBody.

Forbes is at the forefront of entrepreneurial capitalism. Forbes champions success by celebrating with those who have made it, and those who aspire to make it.

Salesforce is the global leader in Customer Relationship Managment (CRM) bringing companies closer to their customers in the digital age. Salesforce Ventures is the global investment arm of Salesforce. They are building the world’s largest ecosystem of enterprise cloud companies and extending that technology to customers. A few days ago, I wrote a special report on Salesforce.

To sum it all up, Freshworks provides innovative customer engagement software for businesses of all sizes, making it easy for teams to acquire, close and keep their customers for life. Their SaaS products provide a 360-degree view of the customer, are ready to go, easy to use and offer quick return on investment. Moreover, Freshworks Inc is the only company named a visionary in the 2020 Gartner Magic Quadrant for CRM customer engagement Center.

This company will be the pioneer in new enterprising entrepreneurs that will come out of India. There will be many in this decade including Tanla Platforms. I attended Tanla’s AGM last night electronically and it is all good. Will develop on that in the next report.

I believe Freshworks will go for an IPO in US by early next year. That must be the reason they kept their head quarters in California. If they do, it will be the first Indian origin company that will be listed in US without being listed in India. Whenever the listing happens it will be the biggest listing for a company from India after Infosys was listed about 20 years back. The listing price is expected to be something closer to $120 but think it even could be higher.

Going forward there is more money to be made in upcoming technology stocks than the staple FAANG stocks. If you care to dig deep, some of them will be found in India.

Abraham George is a seasoned investment manager with more than 40 years of experience in trading & investment and portfolio management spanning diverse environments like banks (HSBC, ADCB), sovereign wealth fund (ADIA), a royal family office and a hedge fund.