We Are Not Acquiring Revenue, We Are Acquiring Talented Technology"
You're reading Entrepreneur India, an international franchise of Entrepreneur Media.
Girish, who had built four customer helpdesks prior to Freshdesk, understood the power of challenging bad customer service and other grievances over a social platform. This gave birth to a fresh approach towards the customer service space by allowing companies to respond to their customers via social media tools, apart from other regular mediums.
When Investors Came to Freshdesk
The idea of venture funding was something that had never occurred to Mathrubootham while starting off, his team knew that they were capable of creating a customer service forum and could charge customers on the basis of their services. “Like most other entrepreneurs, we will slowly build the company to $10,000 monthly revenue and become profitable,” was the initial idea according to Girish Mathrubootham, CEO, Freshdesk. But little did the team know that a series of events would invite the attention of investors towards this fairly new company. Mathrubootham wrote a blog titled “The Freshdesk Story,” which spoke about how a simple comment made him quit his job and form a startup.
The post went viral and Freshdesk got several calls, but it was in June 2011 when the company won the Microsoft BizSpark Startup Challenge in the cloud category that helped it fetch $40,000 in cash. These competitions really helped draw inbound interest from VCs. The company was in talks with five investors back then, one of them being Accel Partners.
Getting that One Interaction Right
According to Mathrubootham, there is enough money available for early-stage investment even during the current environment of bearish funding. “I know that VCs are looking for good companies to invest in,” he says. He further says that new start-ups should understand that an investor will not write a cheque to them just because they happened to run into them at an event and pitched an idea amid thousand people. He stresses on the need of a one-on-one interaction between VC firms or partners and the start-up, where there is ample room to discuss one’s idea and product. If someone is building something remarkable, investors will come to you. You don’t have to run behind them. A good product speaks for itself. One can definitely write a blog to spread the word around, and the minute investors read about your product, they will automatically reach out to you.
Acquisitions & Their Imprints
As per Mathrubootham, most of the acquisitions Freshdesk had made were on the basis of their superior technology or a talented team or a mix of both. “We are not acquiring revenue, we are acquiring talented technology,” he says. Before making an acquisition, he mainly searches for an ideal leader who can
fit into Freshdesk and take its journey ahead. An acquisition should be a win-win situation for both parties, and these acquisitions have taught Mathrubootham the importance of bringing different minds on board for a particular idea. Many SMBs across the world are directly coming on board using software in SaaS form even when they do not have any software in the first place. It’s like how Indian consumers are directly opting for smartphones and giving the landline a miss completely.
Freshdesk is a global company, with customers spanning across more than 140 countries, with the US being its biggest market and Europe its second largest market. About 75 percent of Freshdesk’s
revenue comes from the US and Europe and the rest of the world accounts for the remaining 25 percent.
Picking Chennai Over Uber-cool Bengaluru
Having spent a good number of years in Chennai and collating some precious contacts, Mathrubootham
chose to station Freshdesk in Tamil Nadu’s capital over Bengaluru, which was then gradually becoming a home to a soaring number of start-ups. Mathrubootham says that even though Bengaluru is the ideal start-up destination for India, one is also pitted against stalwarts like Google, Yahoo and Microsoft as well as other start-ups in the hiring space. In Chennai, Freshdesk is one of the finest start-ups to work for and
the city is also a home to good amount of talent.
Hiring & Nurturing the Right Talent
In the early days, the initial employees were all those who had worked with Mathrubootham in the very at some point. In 2012 a lot of the experienced professionals were hesitant to join Freshdesk as it was a fairly new name in the market. So the company ended up hiring a lot of freshers. The company believes that people who are smart and talented will eventually learn at their work and believes in investing in such people. They might not be productive immediately, but in six months to a year the company has seen a lot of folks who believe in the Freshdesk way of doing things.
Freshdesk kept certain things in mind before hiring. When everyone was rushing to the IITs, Freshdesk stayed away from them and eventually hired talent from the sources other than IITs. Back in 2011, when the company could not pay bloated salaries to their employees, it would compensate by parting with some company stock. “Some of our early employees who joined Freshdesk in 2012- 2013 have Freshdesk stock which is worth several lakhs today,” he says.
He also believes a start-up needs to find the core talent rather than eyeing people who have years of experience. You need to find people who are willing to sweat it but have the core talent. They should be willing to grow with the company, in simple terms, if you can’t find a Sachin Tendulkar, see if you can a Rahane and give them that opportunity.
Freshdesk today is backed by investor honchos like Accel, Google Capital and Tiger Global Management. Mathrubootham also dons the hat of an investor at times, with a sole motive to help nurture those companies who he has seen struggle during Freshdesk’s struggle period. However, Mathrubootham still claims to be more of an entrepreneur and less of an investor looking for market share and other intricacies. Mathrubootham mainly looks for a good product and a smart founder before placing his bet on a start-up.
This article first appeared in the Indian edition of Entrepreneur magazine (April 2016 Issue).