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.
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.
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.
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.
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.
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.
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