Girish Mathrubootham is the co-founder and CEO of Freshworks which provides businesses with SaaS customer engagement solutions. The company has raised $400 million at a $3.5 billion valuation. Some of its investors include Sequoia Capital, Accel, Tiger Global Management, and CapitalG to name a few.
In this episode you will learn:
- The best practices for pulling off a rebranding
- What was more important than the money when bringing in these top VCs
- How the Freshworks Software Academy is lifting kids out of poverty
- How a high valuation helps your startup
- How they turned a Twitter attack into an epic PR moment
- The concept of Indian Democratic Design
- Alternate design models
For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
Moreover, I also provided a commentary on a pitch deck from an Uber competitor that has raised over $400 million (see it here).
Remember to unlock for free the pitch deck template that is being used by founders around the world to raise millions below.
ACCESS THE PITCH DECK TEMPLATE
About Girish Mathrubootham:
Girish Mathrubootham is the founder and CEO of Freshworks, one of the world’s fastest-growing SaaS product company. It was awarded the Economic Times Startup of the Year in 2016, and is now part of India’s unicorn club.
Freshworks has a suite of products for businesses worldwide – Freshdesk, Freshservice, Freshsales, Freshcaller, Freshteam, Freshchat, Freshmarketer, and Freshconnect. The homegrown customer-engagement software maker has a suite of products, catering to more than 1,50,000 businesses worldwide including big names like Honda, Cisco, Toshiba, Bridgestone, University of Pennsylvania, and Hugo Boss.
Girish is part of the Product Council for NASSCOM, the trade association of Indian software companies, and actively works to promote and nurture startups and young entrepreneurs.
Girish also runs a charitable trust to promote grassroots football in India, which backs FC Madras. The professional football club will compete in the U13 and U15 divisions of the I-League.
Connect with Girish Mathrubootham:
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FULL TRANSCRIPTION OF THE INTERVIEW:
Alejandro: Alrighty. Hello everyone, and welcome to the DealMakers show. We have today, a very exciting founder who has built a pretty meaningful business from nothing, and also, a founder that has the global and the international perspective and story. So, without further ado, I’d like to welcome our guest today, Girish Mathrubootham. I don’t know if I said the last night right, but hopefully, that works. Welcome to the show.
Girish Mathrubootham: Thanks, Alejandro, and thanks for having me.
Alejandro: So you are originally born and raised in India. Tell us about growing up and being born and raised there.
Girish Mathrubootham: I was born in Tamil Nadu, in India, in a town called Trichy. I did all my schooling there and went to college in Shanmugha in Tanjore and out of this small town. I came to Chennai, which is the capital of Tamil Nadu, for my MBA in ’96 and finished my MBA in ’98. Then I went on to work for a few software companies like HCLTechnologies, which was running the Cisco Offshore Development Center.
Alejandro: It’s interesting there, Girish because you did the MBA, but you also did the electronic engineering degree. Typically, what you see is more of the engineering folks going more for the engineering side rather than the business side. Why did you decide to combine the two types of degrees?
Girish Mathrubootham: Honestly, getting a job in 1996 was very hard, and I didn’t get a job out of college, so I was not recruited on campus. I applied for this MBA program, and I got admitted. In India, there is a lot of social pressure to get a job once you get out of college. So the MBA, in reality, was an escape for me from that social pressure. I thought it wasn’t very expensive, and also, it was funded and not expensive. It was a great escape for me in terms of the social pressure to get a job as soon as you graduate. So, that was the reason why I went into an MBA.
Alejandro: Out of curiosity, how is that social pressure built? Is there some kind of expectation that you have to follow that path, or why is that?
Girish Mathrubootham: In general, in families, you are always compared to relatives and friends. If you finish your graduation and if other peers get a job, there’s always an expectation in the family. There’s culture in India, as well. Today, the situation is very different. The job market, when people graduate, many people are easily getting a job or multiple offers. But in ’96, things were very different. It was supposed to be an expectation from almost all families that the day you graduate, you graduate with a job in hand.
Alejandro: After you got your degrees, then you went at it more on the engineering side at Cisco, then you did eForce, and then you did Zoho Corporation, which is where you spent the most amount of time. What was this experience like for you being at Zoho?
Girish Mathrubootham: I think it was a phenomenal journey. Before Zoho, I was more of a Java programmer, Java trainer. At eForce, I went into presales and also did training because training is my passion. I think I’m a teacher by choice. That was my background. When I joined Zoho, I joined them as a presales engineer in 2001. When I left Zoho in 2010, I was VP of Product Management. I think the biggest area of change for me happened at Zoho. After 18 months in, I had the opportunity to discover that I could be a product manager. That was a big learning, and I’m fortunate and grateful for that. My boss at that time spotted that I could be a product manager and asked me to consider that as a career. I started Googling what the term product manager meant. You also have to understand the context in India where we didn’t have a lot of product companies, so product management as a career path did not exist. It was all learning by doing and trial and error. I spent almost ten years at Zoho and built a very successful product line at Zoho, creating a massive revenue stream in six years between 2004 and 2010.
Alejandro: One thing that is very interesting from your background is that you have been doing these transitions quite often, so you went from engineering to product management, and then from product management to business operator. How do you typically tackle those transitions?
Girish Mathrubootham: That is a tweet that I came up with recently, where I said, “Building a company is like building a product where culture is the UX for employees and customer experience is the UX for customers. I think I’m a product manager at heart, and building a product was a very fulfilling experience. It’s almost like being a CEO of the product where you are taking care of all the business aspects in terms of pricing, working with sales, working with [7:41]. It’s a foundation for being a founder. I think the transition to being a CEO, definitely there was a lot more learning because as a product person, you don’t run HR, you don’t run finance. You most often don’t run sales, so all of this was new, but fundamentally, I think building a company and building a product have a lot of similarities, and that’s how I think I was able to make the transition. I also believe strongly in learning by doing. At Freshworks, we have a very strong culture of learning by doing. [8:21] today, but we can become experts in the next couple of years. We have the ability to learn as individuals, as teams, as a company. I’m really proud of that culture that we’ve created. I can speak about that from my own personal journey.
Alejandro: That’s amazing, and obviously, you have this dogmatic approach and perhaps all these key lessons that you’ve been able to gather. For the people that are listening if there is one trait that you would associate to a rockstar engineer, then one trait to a rockstar product manager, and one trait to a rockstar business operator, what would be those three traits that you would assign to each one of them?
Girish Mathrubootham: Before answering that question, I would say — and this is something I’ve told inside the company — the days of the individual superstar are over. Today, it’s all about teams, so how do you get teams to work together to deliver great output? When you’re building a company or building a product, you can’t get much done with one rockstar over a long period of time. But having said that, for a rockstar product manager, empathy is a great trait to be able to understand things from the user’s point of view. For a great designer, I think it’s craftsmanship, like being pixel-perfect and taking care of the details. For a great developer, it is probably understanding complexity and simplifying it in architecture. Like, how can they really break down a complex problem into working software, like breaking down a complex structure into modular manageable units?
Alejandro: And talking about breaking things, your TV got broken, and that led you to build the business that you’re building now, Girish. So, what happened with the TV story?
Girish Mathrubootham: Okay. Between 2007 and 2009, I was working in Austin, Texas. In mid-2009, I was going back to Chennai. I was shipping all my stuff back home. When my stuff arrived 2 1/2 months later — do you remember the fancy Samsung 40-inch LCD TVs? I had actually shipped that back to Chennai. I was waiting for it. When it arrived, it arrived broken. I had purchased insurance from the shipping company, so I thought it should be straightforward to call them and get my insurance money back. But a long story short, 5 1/2 months later, multiple phones, multiple emails, submitting all the documents that they had asked, they just simply wouldn’t refund the money or pay my insurance claim. At that point — this was 2010. I didn’t care about the money anymore. I guess I wanted revenge or justice, whichever way you look at it. I went online to a forum called RTI Forum, which is Return to India Forum. People who are moving back from the States to India use that forum. That is where I originally got the recommendation for the shipping company. I shared my entire story with pictures of my broken TV, and the community started engaging. The same day, the president of the company came and apologized, and the next day, the money was in my bank. You should understand that these were the days when Twitter wasn’t big for customer support, or Facebook didn’t have Messenger or business services. The back story is, I built four helpdesks in my career, so I understand the concept of a multi-channel helpdesk. I know the industry well. What I experienced was a paradigm shift in the balance of power. Power had shifted from the company to the hands of the individual customer when I was able to take on a big company by going online and impacting their brand in a place where the source leads. So I think that was a big learning for me where I spotted the opportunity that, “Hey, maybe there’s an opportunity to build a fresh helpdesk.” That’s how the idea for our first product came, which is Freshdesk. We called it Freshdesk because of its being a fresh helpdesk. The company and the product were called Freshdesk in the early days.
Alejandro: So the idea comes from a major frustration that comes out of the broken TV. Basically, then once you have that idea and you decided to execute, how do you go about it? How did you go about, let’s say, really pulling the trigger and “I’m actually going to go at it with this idea, and I want to find the solution, and this is going to be the team I’m putting around it to help me out on this”?
Girish Mathrubootham: Our challenge was not in the product market fit because, as I told you, I had built four helpdesks earlier, so I knew exactly what we were going to build. SaaS was new, but I assembled my friends from my career at Zoho. I had made a lot of connections in those ten years. So getting a rockstar early team with six people was not hard, and I’m grateful to my team. What was more challenging was the fact of doing it from Chennai. We never thought we could be VC fundable. At that time, when I started, I thought, “Who would fund a boarding helpdesk?” But I was wrong, thankfully. We took almost nine months to launch the product. We launched the product on June 7, 2011. On June 10th, we got the first customer from Australia. It was Atwell College. They are still our customers. They came online, played for 2 1/2 hours with the product, then swiped their credit card, and made the first purchase. We never spoke to the customer. The reason I’m telling you this is that we were international from day one. We had to build a completely new playbook, which is very different from the typical SaaS company. When we had six customers, they came from four different continents. We got our first 100 customers in 100 days, and 200 customers in 200 days, all without VC funding. We realized that we were on a roll, and we were able to reach the long-tail of the global SMB setting in Chennai and building software for the world. We were able to attract the attention of top-tier investors like Accel Partners and Tiger Global, who invested one million and five million in 2011 and 2012.
Alejandro: We’ll talk about the financing in just a bit, but what I find mind-blowing is that here you are, you started this company in 2010. Obviously, when people think about international presence and all of that stuff, they think about physical space, meaning physical presence in all these different areas, regions, or locations. So it’s amazing that you guys backed-in and were already thinking ahead and saying, “We don’t need the physical presence to actually be global.” Tell us about this a little bit more.
Girish Mathrubootham: Yeah. If you Google “how to incorporate a U.S. company from outside of the USA,” you will land on my blog post. It is still the most popular blog post in FreshBooks. What we decided was — today, we are living in a global world. You need a phone number, and if you need a physical address, you have many companies that offer you this virtual office. So we incorporated a company in the U.S. We actually got a physical office. We got the phone numbers. We set up the systems, and we were ready to go global from Chennai in 2010. We talked to top banks like the Silicon Valley Bank and convinced them that we had a high-quality startup, and they allowed us to open a bank account. We created a Merchant account — so a lot of work that needed to happen. We did all of that without actually coming to the U.S. Today, I think what we have done is a playbook for global companies to operate from wherever they want. We really understand digital, and I think the Freshworks story is how people can learn how you can have a digital presence, which can take you to customers and help closing business without actually having a physical location. Having said that, today, we’re operating out of 13 offices, and we have more than 3,000 employees, and we have customers in 126 countries. But when we started, we were global from one office in Chennai.
Alejandro: That’s amazing. What ended up becoming the business model? You guys also went through a rebrand.
Girish Mathrubootham: Yeah. When we started with Freshdesk, and when we had online acquisition as a strategy, we went after the longtail of the global SMB. We got a lot of SMB customers, but what happened was by 2013 and 2014, we also realized that we had more than 1,000 customers who had not necessarily small companies. I’m talking about companies like Burger King, or Shell Electric, or 3M, or Pierson. These were large companies that were coming and buying our software. We were closing all this business from Chennai over the phone. We’re talking about 300 licenses and 200 licenses. We realized that while our assembly engineers were working great and we were able to close these big deals from Chennai, we also realized we were losing a few deals because we were not able to meet the customer. For example, there was a customer in the UK who wanted us to come and meet them on Tuesday, but we had to tell them, “Sorry, we don’t have a visa.” That’s when we realized their SIM engine is great, but given that the product is working well for larger companies, why don’t we go and set up offices globally. Even if they’re small offices — like we wanted a commando team and not an army of salespeople, so we set up small offices in the U.S., the UK, Australia, and Berlin. We hired a few salespeople who would go outbound and frontend a relationship with the customer while we were initially doing all the heavy lifting from Chennai. We were able to get a lot more customers who had bigger companies because these companies don’t come on Google and search for software. They’re usually used to be sold to, so they expect to meet face-to-face, so we created that. In 2015, we created the U.S. and the UK office, and then followed it up in 2016 with Berlin and Australia. We set up these offices and then hired people locally and built the teams there. Today, we have a very successful twin-engine model. The SMB engine is still operating out of India, working globally, and the mid-market engine, as we call it, actually goes after mid-market and larger companies like 500 to 5,000+ employed companies. We also have large enterprise accounts. So we have in-region salespeople in order to go after that. These are two very different go-to-market motions, but I think this has been phenomenal learning for us where we built our own playbook. We couldn’t use a typical Valley playbook, so we built our own playbook on scaling the business on where we are today.
Alejandro: That’s amazing. Yeah, because sometimes, the way the wheel has worked for others doesn’t mean that it’s going to work for you. Very cool. Girish, I was alluding to it, and we’ve been discussing it: the rebrand. Obviously, you guys started here in 2010, and then you did the rebranding in 2017. Doing a rebrand is a beast. What have you learned about doing a rebrand successfully?
Girish Mathrubootham: First, let me also tell you why we did the rebrand. Our vision was always to be a multi-product company. We went from Freshdesk to Freshservice, which is helpdesk more internal customers. Then based on looking at our customer feedback, we saw how much our own teams were actually missing a good CRM, and what was available was, we had to integrate five different systems and have an inhouse team building and maintaining. So we built Freshsales more to solves our own internal CRM needs. But we have a strong product culture where whenever we build internal tools, we build it as a product, and we launched it to the market. Freshsales today is one of our fastest-growing products with more than 8,000 customers. What we realized was, this multi-product journey, while it was working great in our online existing model, it was also causing some confusion in our customers’ minds. I’ll tell you a famous story. Once in London, in a tradeshow, our Freshservice team had a booth, and they were standing as Freshservice, and there was a customer who came and said, “Do you come complete with Freshdesk? The customer did not realize that Freshservice came from the same company, and the company name was Freshdesk. That’s when we realized we were not doing justice to the other products by having the same brand. So, we decided to rebrand as Freshworks being the company brand, and the products having their own sub-brands as Freshdesk, Freshsales, etc. It’s always a hard journey, and in fact, there was a lot of discussion and debate inside the team. But one thing was clear. If you’re going to do it, doing it sooner is much better than later. So that’s why we decided to pull the trigger and actually get it done. We did it in phases. Also, doing the company brand was easier than changing the product brand because most customers, at that point of time, knew us as Freshdesk, and changing the product name would have meant a lot of engineering changes and disrupting customer brand developers. So we decided to change the company brand. Much like the whole alphabet was formed from Google. It’s always easy to create a new company brand than change a dominate existing brand. I think those are some of the learnings. We did it in two or three phases. I would say the first phase was all the administrative, website, logo, and then aligning people internally to work as one company because, in a multi-product company, they are very entrepreneurial. A lot of times, we say that we operate as eight products and not as one company. I think getting the internal alignment, also — for example, when we do an API, we used to have a Freshdesk API and a Freshservice API. But now, we have a Freshworks development platform or a marketplace, a Freshworks marketplace. I think creating the internal alignment was really an important lesson.
Alejandro: Got it. You guys have raised quite a bit of money. How much money have you guys raised to date?
Girish Mathrubootham: We have raised around 399 million dollars through multiple rounds of financing, but we have more than 55% of the money sitting in the bank, so from a capital-efficiency standpoint, the primary capital raised is slightly lower than that. We have top-tier investors like Accel Partners, Tiger Global, Google CapitalG, formerly known as Google Capital, Sequoia. These are all the Tier 1.
Alejandro: Great investors. This is like going to the Oscars of investors in the venture world. So, good stuff. What has been the experience? What have been the different expectations, Girish, that you have been encountering from round to round from those investors?
Girish Mathrubootham: I read online, I think it was Brad Feld or someone who wrote this, or maybe Fred Wilson of Union Square. “When the company is doing good, [25:50] in charge, and when the company is not doing so well, [25:54] in charge. Basically, we have been fortunate to have great investors who understood the business, and we have also been fortunate to be growing at a very healthy clip for all these years. I think each investor brings a different value prop to the table, whether it’s customer introductions, or with hiring local talent, or in the case of CapitalG giving us access to Google operators or leaders from Google. So I think each one of our investors brings a different set of values that we have tapped into. Always, there has been a very healthy growth, this is a profitability balance in the way we have approached the business. We want sustainable growth and not plain growth. I’m also personally super proud that our investors are supportive of all the initiative that we do at Freshworks, whether it’s the Freshworks Software Academy where we train young high school kids who aren’t able to afford a college education. We teach them software and try to lift them out of poverty. These kids come from low-income groups. Freshworks is a great platform that enables us to do a lot of good stuff like that, and our investors have been supportive. I think we’ve had a great journey along with our investors.
Alejandro: You were mentioning there, Girish, that you guys have over 50% of the money still in the bank from the money raised. So it seems that you guys have been raising quite opportunistically. Would you say that’s accurate?
Girish Mathrubootham: Yes, that is true because last year, we raised a 150-million-dollar round, which was the biggest round. The reason for that is that we knew the markets were very good and the valuations in the public market were good, so we wanted to capitalize on that, and also, the fact that it was predominantly an internal round. What happened was, when we were able to present our strategy to the board, they all got excited about the long-term growth potential. I was thinking about doing a round to probably bring in other investors, but there was so much internal demand and interest that it was a good time, and it also helps us. Like having a reset on the valuation helps us in attracting talent and acquisitions and so on. I think we decided to do the round, and having internal investors excited is a great positive signal.
Alejandro: Absolutely. Obviously, on the way to the top, there are always bumps. I know that you guys had a story there with ripoffornot. So what happened with a big competitor?
Girish Mathrubootham: First of all, I would say that I’m happy that we didn’t have too many bumps. It was almost like a smooth takeoff. The ripoffornot story is — it happened in 2011. We were very small at that time. We had probably 200 SMB customers in total. We got attacked on Twitter by one of our competitors as a rip-off. The reason quoted was, “Freshdesk has desk in the name.” I had built four help desks, everything like Service Desk Plus and so on. It was quite common for a CRM to have sales in the name or when a helpdesk has desk in the name. But then, we realized why this was happening, so we responded with a website called ripoffornot.org. I think that moment, what I would say was a total PR moment for us as a startup, and that was going after big established competitors. I think it was an internet sensation overnight. Entrepreneurs around the world came in support of us. This went viral on Hacker News and others. I think it’s a great story, and I would encourage people to go and read at ripoffornot.org. It just happened. We didn’t plan anything. We were attacked, and we came up with a good response by doing the research on why and what was happening. I think it worked out well, and it was a good outcome for us.
Alejandro: That’s amazing, and now that we’re talking about product, software, and all of that good stuff, I’ve heard you speak about Indian Democratic Design. What does that mean?
Girish Mathrubootham: A lot of times, people don’t understand really that software — there could be an alternate model of designing and building software. There’s nothing wrong in having two models. There is one model of software development, which is focused on building it for the large companies where products are actually built for managers and for vice presidents, but there’s not enough focus on the end-user. Also, they’re built for really large enterprise customers, which means the pricing is also like that. So many times, developing markets cannot afford that product. We have seen that in enterprise software where the software becomes too expensive, clunky, and also takes a lot of time to implement. It may have all the bells and whistles, but to go live with the software, it may take like 12 to 18 months. We wanted to show the world that there is an alternate model of product design. We call it Indian Democratic Design, and this is based on five principles of simplicity, self-reliance, craftsmanship, scalability, and affordability. Basically, what this means is there are several products and examples that we lay out in Indian Democratic Design to demonstrate what we mean by each one of these. But from a software context, simplicity just means anybody coming in should be able to understand the product without requiring the help of an expert to explain to them what it means. Self-reliance means that they should be able to do it for themselves without having to rely on heavy-duty professional services. Craftsmanship is basically attention to detail. Nobody wants to buy a cheap product that’s not well-built. So, how do you craft a great experience in terms of paying a distributor? Then, scalability — we all know that software has to be scalable, and if you’re running a SaaS company today with millions of users accessing your system, you have to have a secure and scalable product. The last point is affordability, where not every company in the world can spend a million dollars or two million dollars per year on software. There are so many businesses who may be able to spend even $100 a month. There are companies who want to spend $10,000 a month. There are companies who may be able to spend $30,000 to $40,000 per year. So, the spectrum is wide and a variety of customers. Software design can happen where you can actually cater to a broader spectrum of customers. That is our approach at Freshworks through Indian Democratic Design, where we want to build software that is universally appealing to a broad set of customers.
Alejandro: Very cool. One question that I typically ask the guests that come on the show is — what an incredible ride, Girish, that you’ve had. Now, if you had that chance to have a chat with your younger self, with that younger Girish that was thinking about maybe starting a business, like while looking at the broken TV. What would be that one piece of business advice that you would share with your younger self and why, knowing what you know now before launching a business?
Girish Mathrubootham: I would probably tell my younger self two or three things. One, because I know a lot of people that are afraid to be entrepreneurs. They think building a business is so scary. It is a hard journey, but I would tell myself, “Girish, go for it. If so, many people are doing it successfully; you can do it.” But the most important thing, I would also say, “You have to learn how to learn.” A lot of times, we’re learning in education and colleges and schools, but a lot of what we learn in school and college does not prepare you for real life. The most important quality and this is what I’m telling my sons — just have the curiosity to learn. If they know how to move from a state of “I don’t know” to a state of “I know” by themselves about any unknown topic, by actually doing the research and going out and finding out, I think that will serve people well. That’s what I would give myself as advice.
Alejandro: Very nice. For the folks that are listening, Girish, what is the best way for them to reach out and say hi?
Girish Mathrubootham: You can email me at firstname.lastname@example.org.
Alejandro: Fantastic. Are you on Twitter or LinkedIn or anything like that?
Girish Mathrubootham: Yeah. At Twitter, my handle is @mrgirish.
Alejandro: Wonderful. Girish, thank you so much for being on the DealMakers show today.
Girish Mathrubootham: Thanks for having me.
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