How Freshworks CEO Pradeep Rathinam grew Freshworks to $713M revenue and 50K customers in 2024.

Hello everyone, my guest today is Girish muffler butum he is the founder and CEO of a company called fresh works One of the world's fastest growing SAS product companies winning the economic times startup of the year in 2016 and the business standard starting off the year in 2017 fresh works now is a suite of products for businesses worldwide including freshdesk fresh service fresh sales fresh collar fresh team fresh chat and fresh marketer Girish Are you ready to take us to the top? Yes. All right, very good So I you know I think a lot of people listening maybe have heard or definitely part of one of these products and they go Oh my gosh one guy and one team is behind all of these things. So tell us the founding story When did you launch the company? And which of these product lines is your focus right now? yeah, so We started the company in October 2010 and at that time we started with only one product freshdesk freshdesk, the whole idea was the story is Coming from a life incident I was moving back from the u.s. To India And I was shipping my stuff back and a long story short my when my stuff arrived my TV was broken, you know the fancy 40 inch LCD TV was broken and I tried contacting customer care since I had purchased insurance, but 500 months numerous phone calls and emails later. They still wouldn't pay my insurance money So at that point I didn't care about the money. I wanted revenge and justice so I So as for marriages justice, right, yeah, so I actually shared my experience online on an online forum where I found the Shipping company and I posted pictures of my TV and posted my story and the community started engaging The next day the president of the company came and apologized and the next day money was my bank so I Sensed that there was a paradigm shift happening in the world of customer support This was February 2010 when Twitter Facebook using Twitter persephone was not mainstream yet. So I Got this idea to build a fresh L desk which Helps companies to listen to customer complaints not just on over email or phone call but also on Facebook and Twitter and so on so I think That was the original idea to build fresh fresh L. Bisque And we call the freshness and help me understand. So, you know, you have four actually give me the order real quick So freshdesk was first and then quickly what was second third fourth and fifth yeah, so first service was second Versailles was third and then finish chat And what about fresh team in fresh caller? So it came after the mediator. Oh, so fresh chat fresh caller and fresh team, we're all kind of together Together almost in the same week Okay. All right So, I mean that's a mercy I mean your average and what basically one new product line every you know One and a half years, essentially, correct? Tell-tell, so tell me how you one of things I'm interested in is how you're doing core analysis across your customer bases right you have Six different product lines and I'm sure you have different cohorts in each of those different product lines walk me through how you what kind Of kind of analysis you guys are doing on a quarterly or monthly basis with your executive team So so, I think the key freshness and first service are Not really Complimentary products one is focused on an entirely different buyer So the external customer support and internal customer support, so there is not a lot of overlap between those two before I answer your question so first sales was the first product we got out of which really could be sold into our existing customer base and then The other four products we launched last year. So what we do is again as part of our board meetings and investor Analysis, we do all this fancy I had to learn all of this stuff like the layer cake analysis, and and the net expansion into new products and so on and I Think what we see is a very big opportunity for us is the fact that I think less than only 5% of our customers actually use more than one product which is both the fact that all the products are new and So we didn't want to put a cross sell team. I wanted to do product based auto discovery So like two months ago, I think we launched Works unified experience with With the normally bar and a single sign-on called fresh ID. So so I am a product person so I believe that for our SMB customers I want to do product lead discovery automatic discovery of products Like how when you sign up for Gmail you don't sign up for Google Docs or calendar or you just use them, right? so so that's the kind of product integration you have done and Now we will we are starting to see that cohort of customers using more than one product move up rapidly and they are also in the process of Seeing if you can do a cross cell program across No touch though all and product Till now everything is involved. Yep, very good. So give me an average across all these products I mean your is this mainly for the SMB like what's the average price? When would you say across these things? So we have see one more than one third of our customers and our revenues are it comes from? larger customers so we have 65% of our revenue from SM because loss and 32% from what we call mid market Okay, and give me if people want to start with you, you know They want to start with fresh sales today are being are they took you're talking ten bucks a month to get started a thousand bucks Ten thousand bucks. Where is it generally start or average? fresh sales today Okay want to get started you can get started at zero, but the average customer today Basis, I think 1200 Okay, got it. And now they're paying on a monthly basis that right. You are. Are you locking them in you annual contract? Yeah, okay very good and then break down it sounds like there's some funding here because you mention you have a board So how much have you raised today? So, you know we have least close to 2250 million and when was the first round first round was closed? Mm. Okay. So fairly fairly it only about one year after your launch Why'd you decide kind of twelve months in that the right the right path is gonna be to go down to venture path yeah, that's a very interesting question and See, there are two things one is in a SAS business model The marketing costs are very front loaded So I have to spend let's say for example thousand dollars to acquire a customer who's paying me under dollars a month So unless I have real word-of-mouth and vitality Which usually happens when you are like a new category creator? But when we started we started in L test which was an existing category with multiple players So it was important to kind of get funding in order to pay for the front-loaded marketing costs So and and get scale and I think this is a question that many artists ask us Asked me actually should they be bootstrapping or should they get visa from there? So I think if you are in a category where there is a lot of competition and if some of your competition already funded it's probably a better idea to get funding and scale rapidly because PCs are going to look for other players in the Caribbean if you are still bootstrapping maybe others will get funded and Build a superior product quickly and scale. Yeah, but there is you have a nice mode and if you are actually Like you don't have a lot of direct competition Then you will have enough word-of-mouth. And if you can also manage larger customers, then you can profitable So help us understand today, you know, you recently did a raise How much what was the valuation what have you here in terms of ARR run rate? So we announced that we crossed hundred million dollars of ARR and valuation for the last funding round was 1.5 billion bucks and an IPO is coming up? So we don't have a definite date yet, but I think that is the one of the obvious choices And again, we are excited about that because like There has been no product company from India. That was actually IPO'd story for us to be like one of the Like I we love Atlassian for yeah the kind of success that they have from Australia They're the only multi-billion dollar products story from Australia, right? So I think we could do that the same for a company they start out of India so I think that's the excitement but having said that We are not on a timeline yet. We are not we still Like from in the startup stage and moving to more mature Company, I think we are there in terms of revenue. We have to be ready before we can go Yeah, now you're in good company J president of Atlassian was on a couple episodes ago And he said the same thing how proud they are that they were they kind of the only folks in Australia born in Australia known for this so I'm certainly rooting for you Give us. Um, you must the more the kind of the custom metrics here So how many customers you have know on across all the platforms? Using our software, that's great. Ok next if you're at about a hundred million run rate today I mean I can divide, you know a hundred million by the 115 what people are paying about fifty six ish bucks a month on average is that sound about right? So actually this includes our free customers also, so we don't think we and Oh got it, so when you say a hundred fifty thousand users that includes the freezers Businesses are using start users its companies using our software but since we have premium versions for some of our products that includes the Okay, how many so how many are just paid customers No, I think like we don't disclose that bigger place. Okay? Okay. Got...