Freshworks, the first Indian software-as-a-service (SaaS) company to debut in the US, raised $1 billion via its Nasdaq IPO yesterday (Sept.22). It opened at $43.40 per share after pricing at $36 per share. The 11-year-old company is basking in its glory—but only for a day. After that, it’s back to work as usual.
While the loud cheers make founder-CEO Girish Mathrubootham feel like “an Indian athlete who’s won gold medal in the olympics,” he understands that scrutiny of his tech firm will be stepped up.
“Being a public company is not about doing an IPO. It’s about being truly being successful year after year,” he tells Quartz. To be a world-class athlete in the SaaS space, Freshworks has to “perform, train, and stay disciplined.”
How, when, and where Freshworks was founded
When Mathrubootham moved back to Chennai from Austin, Texas, in 2019, the shipping company broke his TV on the way over. He took to an online forum to vent his frustrations with the rigmarole of claiming insurance. Shortly after people engaged with his post, the CEO of the company apologized, and his insurance money was deposited in his bank.
The experience gave Mathrubootham the idea of building a new kind of help desk, as he realized social media was changing the dynamics in the customer service industry. He had prior experience, having built four help desks already, and called the new one Freshdesk (the current company’s original name). He gave up his position as vice president of product management at software products firm Zoho to start the business with Shan Krishnasamy, a Zoho colleague.
From the get-go, he wanted to create a world-class platform for businesses to engage with customers and employees. He wasn’t trying to make a billion dollars.
“If I tell you I was dreaming of being a public company [when we started], I’d be lying,” Mathrubootham says. “Our big dream in the early years was to somehow try to get to $1 million of revenue, and then figure out what to do next. We’ve been always dreaming in increments.”
Freshworks’ growth story
In March 2019, the company moved headquarters to San Mateo in March 2019—closer to its biggest rival, Salesforce—to chase bigger and faster growth in Silicon Valley. A year later, the pandemic served as an unexpected booster shot as businesses found an increased need to digitize.
By February this year, the ARR grew 40% year-over-year to reach $300 million. The company now has over 52,500 customers in more than 120 countries. “That combination of scale and growth is hard, and what makes it even rarer is that we have done it efficiently,” says Mathrubootham, adding that the company was able to generate $25 million of free cash flow in last twelve months. The company has also been shrinking its losses drastically.
Currently, Freshworks employs 4,200 people, with 3,800 of them in India. It foresees more job opportunities in the aftermath of its public debut. Besides hiring, the IPO funds will be used to invest in research and development, and grow the business’s core markets.
“We have the opportunity to truly build an iconic product company to come out of India,” Mathrubootham says. “That’s going to be the journey of the next decade.”