Freshworks' Journey to India’s First SaaS IPO #scottsthoughts

Welcome to success story the most useful podcasts in the world. I'm your host Scott D. Clary the success story podcast is part of the HubSpot podcast network the HubSpot podcast network has incredible podcasts like the martyck podcast hosted by Benjamin Shapiro each week the martyck podcast tells stories of world class marketers who use technology to create lasting success with their business and their careers if you like any of these topics you're gonna like the martyck podcast is changing advertising how to set up a CRM so you actually use it private equities take on digital transformation by big social is focused on newsletters if these are topics that resonate with you go check out the martyck podcast wherever you get your podcasts or you can also go listen at HubSpot.com slash podcast network today I'm gonna speak to you about fresh works. This is a business case study so we're gonna speak about how fresh works became the first Indian sass unicorn over billion dollar valuation we're gonna speak about how they became the first Indian sass IPO when they IPO on the Nasdaq just this September we're gonna speak about the origin story how they came up some of the strategy how they competed in a red ocean and a blue ocean simultaneously how they competed against zendesk and sales force and how they leveraged both of those companies against themselves we're also gonna speak about their product suite we're gonna speak about some of the grill and marketing methods they use and also how they were so successful to the point where they went public they achieved a 12.2 billion dollar valuation on their first day of trading this is a fresh works case study this is fresh works growth story so let's get right into it fresh works journey to becoming India's first sass IPO so fresh works formally fresh desk has long been the leading light in India sass industry it was India's first sass unicorn ushering in an entire new wave of sass firms as they became India's sass superpower since last year the Indian software as a service sector has been developing at a breakneck pace but fresh works Nasdaq public offering has pushed things to the next level the company which creates customer engagement software for businesses was valued at 12.2 billion dollars after its stock opened 21% higher than its initial offering price at $36 per share but how did it all start so fresh works which is founded in 2010 by the current chief executive officer Girish methrubutham and the current chief technology officer Shan Krish Namasey delivers a business software to 50,000 clients in over 140 countries fresh works provides over 11 products as well as an AI powered software as a service platform to improve customer experiences increase staff efficiency and enable a developer and partner ecosystem fresh works began with a single product fresh desk aimed at the customer support software industry to quote Ramish Ravish Shankar fresh works senior director of marketing we wanted to make a platform that combined assistance with businesses social networks for example so fresh desk allows clients to connect Facebook pages and Twitter accounts into their help desk and manages them from there it also enables them to communicate with consumers via WhatsApp to address issues more swiftly more traditional customer care capabilities like live chat and the conversation of support communications into trackable tickets that a help desk can handle are complemented by these functionality so fresh service is a cloud-based IT service desk software that assists with tickets submitted through email a self-serve portal phone chat or in person that was introduced in 2014 fresh works became the umbrella name for current and new goods two years later after the creators then also introduced fresh sales so fresh works product suite is positioned as offering marketing support and sales for the whole customer experience from acquisition through to relationship termination it provides cloud-based software organizations with up to 5,000 workers and also utilizes software as a service products to manage its operations so fresh works conducts up to over 4,000 marketing and advertising initiatives each year accounting for around 70% of the companies income this is also reflected in its recurring revenue growth which is surpassing over 200 million in ARR in just that was in 2019 when I got those last stats so this is going to be even greater but how did they get to well well over 200 million ARR 12.2 billion dollar valuation what's the strategy so fresh desk was the company's first customer service software fresh service in 2014 fresh sales in 2016 fresh team in 2017 and now a comprehensive suite of enterprise solutions that captures the whole customer life cycle have all been released so let's figure out how they got to the point where they could even launch these products so first creating a blueprint for the red ocean market so all these services customer service marketing automation IT support and so on have significant markets of their own so fresh focus on how to identify red ocean markets and develop the strategy to perform effectively in red oceans in blue oceans markets the firm would need a specialized sales staff to educate clients on why they need a product that's very different from a red ocean in the red ocean there's already a defined market that does not require as much discovery people get what you're selling but it does require a significant effort and money to stand out there were approximately 600 help desk products on the market when fresh desk launched creating a deep red ocean industry fresh desk also was able to try and thanks to the ease of the product as well as solid execution and a very pleasing UI UX this helped its traffic grow and they have pretty much sustained it over the years if you actually look at their data they have an enormous amount of organic traffic hitting their website and this coupled so they have a strong organic strategy but they don't ignore that you have to have an organic and a paid so they have over 4,000 like I said 4,000 marketing and advertising activities they also have a very strong SEO strategy which drives traffic to their site so it's a combination of both organic and paid that is making them stand out in a very crowded marketplace but all the marketing in the world doesn't matter unless you execute so they continuously execute like their execution continuously outperforms their competition so what does that actually look like well because of execution against their marketing strategy and some other things that I'll speak about in a fresh works went from 1 million in ARR to 100 million ARR in only 5 years this is a pace of growth that is on par with the greatest SaaS businesses in the world to get to this point you need some unusual marketing methods and you have to execute against them this is not run-of-the-mill growth so to fight against established companies like Zendesk and Salesforce fresh works generated online content but also used some gorilla marketing methods so they did every traditional marketing plan in the book but there were some things that really made them stand out so fresh works was mentioned amongst well-known firms like Zendesk as part of the ripoff or not campaign so the Zendesk CEO labeled fresh desk as a ripoff on Twitter because of the word desk in both titles obviously very similar as like the very similar products and companies instead of retaliating on Twitter fresh desk launched the ripoff or not campaign which proudly displayed the Zendesk CEO's accusation and encourage users to make up their own mind fresh desk received PR alongside Zendesk as a result of this thus putting it on the same level as the industry leader and they used they cleverly used the competitors insult as a way to gain awareness of their company fresh works also gate crash dream force so sales forces largest event one of the largest software events in the world in 2018 by taking to the sky with a hashtag fails force blimp that circled sales force tower throughout the week long event the goal was to persuade customers not to pay for bloated software like sales force gear is describes how fresh works focuses on online client acquisition and obviously how this is aided the company's worldwide expansion using local talent but they definitely haven't been reserved in their marketing so they promote themselves as the leading health desk provider the first result for Zendesk versus fresh desk because they killed it at SEO is quote fresh desk versus the others see who's the number one health desk tool so they not only kill SEO so that even when you're searching for a competitor your preferred article is popping up they're also crashing sales force they're also leveraging other companies trashing them and using that to get additional publicity so they're great at traditional marketing they're also great at these really obscure gorilla marketing strategies and the last thing they did well not the last thing did a lot of great stuff but one of the last things they did that i'm going to talk about today is they created solutions for disadvantage SMB's so fresh works was able to acquire market share by catering to long tail small businesses not just in India but throughout the world so even though the health desk industry was incredibly competitive the SMB market was a little bit of a blue ocean existing solutions were either too difficult to complex or too expensive for small businesses to use so instead of elephant hunting or whale hunting going after big enterprise which all the global players were focusing on and concentrating on fresh desk or actually gearish refers to it as deer or rabbit hunting so SMB's account for half of fresh desks or the company's revenue with the remainder coming from mid market and corporate customers so it is well reflected in how well it collaborates with other apps to create an ecosystem works well with other SMB products as priced so SMB's can afford it and that makes half of the revenue so fresh works easy to navigate website straightforward pricing intuitive design ease of configuration all of which are important for any product to find acceptance by SMB's also helped it acquire so after they captured SMB something that no one else was going for that along with their marketing along with their ability to effectively also go after a red ocean market and then ultimately build out a product suite that complemented what the customers were looking for is how they want three main reasons just take away his coals notes to wrap up taking advantage of the situation fresh works picked a booming market and was able to outperform the competition in terms of product execution and design taking advantage of their assets fresh works established its unique approach to target the long tail of SMB's rather than following the worldwide SaaS model of sales driven development and also focusing on those enterprise whale customers and lastly getting a chance to play in the major leagues early on in its journey by distinguishing and generating noise through creative PR methods guerrilla marketing it was able to place itself amongst market leaders like zen desk and sales force fresh works always had the goal of expanding internationally which entailed learning about market dynamics category landscapes and geographic peculiarities before entering a new country or area in 2019 fresh works became the first Indian SaaS business to reach a billion dollar valuation fresh works was preparing for an initial public offering for 2021 with the NASDAQ listing the last round before the IPOs of the pre IPO deal was entirely meant on establishing the company's worth and establishing a benchmark for how much fresh works could be valued at in the IPO and then finally on September 22nd 2021 the shares began trading on the NASDAQ global select market under the ticker FRSH and the initial IPO price was set at 36 dollars per share easily achieving unicorn status and claiming the title as the first Indian SaaS company to not only reach a billion dollar valuation but to also IPO