With its cloud-based offering, Freshdesk helps its clients address customer issues promptly
- Year of incorporation 2010
- No. of customers 2,800
- Major competitors Zendesk and Desk
- Investment Rs 50 lakh
Ideas can come from anywhere. Sometimes it could be staring you right in the face for years and you may not see it. Luckily for Girish Mathrubootham, his eureka moment happened by accident. In mid-2010, the techie was browsing through Hacker News, a web community for geeks, where he read that online customer support company Zendesk had increased its rates by 60-300%, leaving its customers very unhappy. One irate customer had remarked that there was a huge opening in the market for someone with a product at the right price. “It was like a slap on my face for not seeing the business opportunity in customer support, especially since I had been building on-premise helpdesk systems since 2004 at Zoho,” recalls 37-year-old Mathrubootham, who was a vice-president at the Chennai-based customer relationship management (CRM) software company at the time.
|“We don’t have white papers — we make online demos and offer free 30-day trials"—Girish Mathrubootham, Founder & CEO, Freshdesk|
Over the next couple of weeks, Mathrubootham researched the companies in the space and took the usual, tech route to entrepreneurship — zeroed in on the domain name, roped in a co-founder (Shan Krishnasamy) and then quit his regular job. Freshdesk — a B2B cloud-based helpdesk software that allows organisations to support their customers over e-mail, phone, website and social media — started in October 2010 in a rented conference room of a friend’s company with an investment of Rs 50 lakh bootstrapped by Mathrubootham.
Given the founders’ background, it was easy to zero in on product features and functionality and what platform it should be based on. “We decided to build a cloud-based offering because one, there weren’t many cloud-based systems in the market. Two, our experience at Zoho convinced us that everybody will move to the cloud in the future,” points out Shan Krishnasamy, chief technology officer, Freshdesk. “The economics of the cloud is proven. The resistance to change is what is blocking people from going on the cloud and that will change.”
Freshdesk started testing its product in April 2011 by inviting customers through Google ads, LinkedIn and Facebook to try its product, besides posting a blog on Hacker News (Yes, Girish swears by it). The response was encouraging — nearly 150 people signed up for the product. More importantly, customers got back with details on what they wanted from a customer support system. It also gave the start-up insights into the small and medium customer segment.
|“We were the first one to integrate social media with traditional media"—Shan Krishnasamy, Co-founder & CTO|
In June 2011, Freshdesk was formally launched, after all chinks had been ironed out following customer feedback on the beta version. Within just two days, Freshdesk had its first paying customer, from Australia. “We changed the game by doing all our marketing on the internet. We don’t have white papers — we make online demos and offer customers free 30-day trials of the product,” says Mathrubootham. Even today, the company offers a freemium model where the first agent can sign up for free. (In this model, the company lets the first agent in any organisation use the product for free and charges subsequent users.) The company currently has around 2,800 customers, including Dell, MakeMyTrip, Naukri, Pearson and Toshiba, managed by a 65-member team based out of Chennai.
So, what does the software do? Essentially, it integrates traditional support channels such as phone and e-mail with social channels such as Twitter and Facebook. The software converts an e-mail interaction or a complaint on Twitter or Facebook into a ticket that the company needs to respond to. “We were the first to integrate social media with traditional media because companies want to go where customers are,” says Krishnasamy.
|“We felt if they could build a world-class product using India as an advantage, they could give a fight in market—Sekhar Kirani, Partner, Accel Partners|
Every ticket is routed to a team inbox where the query can be assigned a support agent who then resolves the query. The responses are posted directly on Twitter and Facebook. Besides measuring the time spent on each ticket, the platform gives analytical insights that help fix recurring customer problems. Freshdesk also helps companies create self-service portals where customers can get their queries answered before e-mailing the support staff. It can be branded and customised to fit the company’s existing website.
Pricing is based on the services provided — support only through e-mail and phone, for instance, versus a plan that includes social media support — and the number of customer-supporting agents. The services offer range from $9 to $49 per agent per month. So, if an organisation chooses the $9 plan, for instance, and has five agents, it will pay $45 a month.
Freshdesk has also created a software development kit for iPhone app developers to help improve customer support. There is even an in-house gamified help desk that converts tickets into a chance for agents to win points, earning them badges and putting the fun back into customer support.
Unlike most start-ups, for Freshdesk finding investors was just as easy as finding customers. In early 2011, the company listed itself on Angel List, a platform for start-ups and investors to come together. In June 2011, the first validation of the business model came when Freshdesk won the Microsoft Biz Spark India Start up challenge, beating over 400 companies to win $40,000. It was right about then that the team at Accel Partners, a venture capital fund, decided to invest in Freshdesk. “From a VC investible perspective, most of the ingredients were already there. Girish and Shan had already built scalable platforms and businesses, so they knew how to do it. The question was whether there truly was a large global market they could go after,” says Shekhar Kirani, partner at Accel Partners.
|Within months of testing its product, Freshdesk was able to secure over $6 million as funding from VCs|
The firm decided to back Freshdesk and invested $1 million in October 2011. “We felt if they could build a world-class product using India as an advantage, they could give a fight in the market,” says Accel’s Kirani. As business started to scale with 700 customers signing up, the second round of funding came within the next six months with Tiger Global and Accel Partners investing another $5 million together in April 2012. With the experience of two rounds of VC funding, Mathrubootham offers a word of advice to budding entrepreneurs: don’t take rejection personally. “I have been told by junior analysts that there is no interest in this space,” he recalls. “Once we started doing well, the same people came back saying they want to invest in the company.”
Tech consultancy Gartner says social CRM is a nearly $1 billion market today and by 2016, it predicts 50% of CRM applications will be web-based and delivered through the cloud. But even as the opportunities ahead seem promising, there is competition to be tackled as well. Leading players include California-based Zendesk, a $30-million company that serves more than 25,000 customers, and Desk.com, which is part of enterprise cloud computing major Salesforce. Neither Freshdesk nor its investors seem to be deterred, though. “B2B is not a winner-takes-all market. As long as you differentiate, and carve your niche in a segment, there is room for good players,” says Mathrubootham.
|By 2016, it is expected that 50% of the CRM applications will be web-based and delivered through the cloud|
Accel’s Kirani feels the segment Freshdesk operates in puts it on an even wicket with bigger players. “In the SMB market Freshdesk is targeting, people don’t decide without going for a trial. Once Girish gets them on a trial, if his product outshines the others for a given price point and feature set, they will most likely choose him,” he points out.
Freshdesk, which is incorporated in the US, doesn’t share revenue figures but says income has grown more than 100 times in 2012. However, sources say that the company has crossed the million-dollar mark in revenues in 2012. Although that is many times lower than Zendesk’s expected revenue for 2014 of $100 million, it means there’s more than enough room for Freshdesk to grow.
“If anyone is talking about your company, be it on LinkedIn, Mouthshut or blogs, you should be the first one to know and the first person to respond. That’s the power we want to give companies,” says Mathrubootham. In this age of instant gratification, companies definitely need that kind of power to keep their customers happy.