Meet the mind behind Freshworks: India's freshly-minted unicorn
Here's how Girish Mathrubootham became a poster boy for India’s software-as-a-service (SaaS) wave.
In less than a decade, Freshworks has become a unicorn. How does it feel?
I would call us more an Indian rhino than a unicorn. We are at a tipping point to see global product SaaS companies from India. We, at Freshworks, are fortunate and we look at our position with lot of responsibilities. This is the sign of a changing India, a new India.
What’s your take on India’s SaaS wave?
Most of the global (software) product companies -- from Oracle to Salesforce --have come from the Silicon Valley. This is India’s chance to disrupt and create the next generation of global product companies. China won the manufacturing wave. India can lead the global wave of enterprise digital transformation.
What makes you so bullish?
There are multiple favourable factors. Globally, small enterprises are undergoing a big digital transformation. Cloud computing and pay-per-use model makes it affordable. With Amazon Web Services, a company today can start with very little capital. India has many unique advantages. Its strengths in IT outsourcing is a perfect stepping stone to building the product wave. Its IT talent pool is globally incomparable. It has the world’s second-largest startup ecosystem. Also, small enterprises are not well served by US companies with their high cost structures. It doesn’t make sense for them to sell to a small customer in Prague. We can do that well.
Give us a sense of your customers and your USP?
Today, of the more than 150,000 customers we have, nearly two-thirds are small enterprises and the rest are large. This year, we will hit the 50:50 ratio. Serving these two different segments is almost like building two different companies inside one. Smaller companies are served completely out of India. But large companies have different needs. For example, they need integration with other products they are using. They have complex work environment, higher compliance needs and often need us to create sandbox, do audits and factor in differential access among different categories of employees. There are product differences too. SMBs [small and medium businesses] do high-velocity transactional business and are comfortable with DIY [do-it-yourself] product offerings. They are not expecting white-glove service. Larger companies require different products and pre-sales and post-sales strategies. They often have multiple teams and hence need a lot more help and time in taking a decision, for example, in on-boarding and data migration. They are more data-driven, want case studies and need to talk to other customers. Even on finance and billing, large customers need offline invoicing. Each of them is assigned a customer success team.
India’s B2B wave is gaining momentum. How different will it be from the B2C wave?
B2B is rational buying as compared with B2C’s emotional buying. In B2C, government regulation and pain points are many. In B2B, the tough ask is to establish a brand. B2C requires a lot more capital as one needs to burn a lot of money to change consumer habits. In contrast, B2B is more capital efficient and the market is huge if you are thinking global. If successful, blended gross margins for B2B startups is higher at around 80% against around 25% for B2C. The business model for SaaS companies is different. The customer first tries and evaluates the product for free before taking a decision and pays on an annual basis. You have to make sure they are happy, see tangible benefits and come back to you.
What are your biggest challenges as you eye the US market?
Talent is one. Every entrepreneur has to go through this journey. It is not so much about talent as much about the purpose of the company. If a founder can define and communicate the startup’s purpose, its larger mission and what it can accomplish to potential recruits, then good talent is excited to join the company. IT services mindset is very different from product mindset. So deliberately, we hire people who have experience with product folks. Customer acquisition is another challenge. Having good investors who can open doors does help. Our product is the superhero.