Freshworks and a fledgling product nation: The best is yet to come

The SaaS company's IPO has inspired a generation of entrepreneurs in India, some of whom will likely build enduring global businesses. A peek into our cover story

Harichandan Arakali
Published: Sep 27, 2021 10:38:14 AM IST
Updated: Sep 29, 2021 02:02:10 PM IST

Girish Mathrubootham, Founder and CEO, FreshWorks

For Avinash Raghava, it must surely have been a high point, standing shoulder-to-shoulder with Girish Mathrubootham for the bell-ringing ceremony, as Freshworks went public on the Nasdaq, on September 22. It was perhaps the biggest validation of his belief that there was something special about India’s software products companies — a belief he had acted on over the last decade, patiently playing a low-profile, high-impact role, helping to build the software-as-a-service community in the country.

Mathrubootham, the founder of Freshworks, had personally invited Raghava to join the Initial Public Offering (IPO) ceremony in New York. He credits Raghava for seeding the dream of India as a ‘product nation’ in his mind.

“People often ask if there will ever be a company like Microsoft or a Google out of India. Perhaps there will never be, but there will be companies like Freshworks,” Raghava tells Forbes India in an interview. With Freshworks’s IPO signalling the possibilities, “now many more companies will come up, and this is the dream coming true of the product nation,” he says.

That is the way many see the significance of Freshworks’s rise to a $300 million revenue company that is still growing at nearly 50 percent, going public on the Nasdaq. From this point on, the plot is for Freshworks—and Mathrubootham—to unravel, because, as he never tires of pointing out, if they keep their head down and execute, they can keep winning, and there are multiple tailwinds going for them.

Those include strong demand from the market, and plenty of headroom to grow, because two-thirds of the world’s IT is still not on the cloud. Freshworks offers highly relevant products, and a commitment to customer-centric innovation to keep the products easy to use for the smallest business and the largest corporation alike.

Mathrubootham has harnessed an incredible ability to surround himself with the right people for right jobs, and be “like a sponge”, soaking in their experience and using it to keep Freshworks on the path to product-led growth. Meaning, a few people start using the product, like it, adopt it, come back for more and tell others about it, and soon their whole company is using it, and so on. All that translates to positive growth on an important metric—net dollar retention, a measure of how much more a Software as a Service (SaaS) company makes from a given customer or set of customers.

Mathrubootham learnt lessons like that by making the transition from being the CEO of a Chennai startup—although the company was always headquartered at San Mateo, California—to the chief executive of a Silicon Valley company that now has the billion-dollar revenue mark as its next target. From there, it could shoot for $5 billion and then $10 billion. Three years ago, people might have looked askance at that ambition.

Today, McKinsey and Company estimates that Indian SaaS companies will rise to be valued collectively at $1 trillion in just the next 10 years. Freshworks’s listing price was $36. It surged to around $47 dollars, and has held that level, taking the company’s market value to over $13 billion.

To be sure, the quarterly revenue of Salesforce alone is bigger than the entire SaaS sector in India. But the sector is also a fledgling one and it is only in the last few years that a handful of companies have emerged, with revenues more than $100 million a year.
That said, VC investors, like Shekhar Kirani at Accel, who is on the board of Freshworks, and younger SaaS entrepreneurs who look up to Mathrubootham, like Arvind Parthiban, co-founder and CEO of SuperOps, and a long-time colleague and friend of Mathrubootham, believe that the best is yet to come.

The Nasdaq IPO has inspired and galvanised a generation of India’s SaaS entrepreneurs. “If I can achieve a good fraction of what he (Mathrubootham) has done, I’ll be happy,” Parthiban says.
 
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