The evolution of SAAS (Software as Service) can be traced back to the late nineties, when Marc Benioff, Founder of revolutionized software as a subscription service rather than just a single download. SAAS is the front runner in evolution of paperless offices. It is a 360 degree service for almost all official functions like email, internal communication, expense reporting & much more.

It is easy to sell product for which the market already has a demand for rather than than build a product for which new need has to be created. “Capturing an already developed market with an innovative product will beat competition’’ – Girish Mathrubootham CEO & Cofounder Freshworks.

The name Freshdesk (Previous name) came from the idea of building a new age help desk with a fresh perspective. It all began when Girish went through some critical comments posted by customers of Zendesk. Girish decided to roll out SAAS based professional & modern customer service platform for small and medium sized businesses.

In January 2011, When Shekhar Kirani visited Fresh Desk office in Chennai he saw a 700 sq ft office with mixed furniture (the tables and chairs didn’t match in terms of design & colour), but all six desks had a Mac each. This showed the rational mentality of the founders, choosing where the funds should be spent. On 1st Dec, 2011 Freshdesk raised $ 1mn from Accel Partners & Shekhar Kirani joined the Freshdesk Board.

Zendesk, a competitor, grew jealous of Freshdesk’s growth spurt and tried to pull it back. As Freshdesk had attracted frustrated Zendesk customers, the accusation was that Freshdesk was making use of Zendesk’s name; as both the names had ‘Desk’ in common. Moreover, Zendesk allegedly couldn’t digest the Accel fundraise by Freshdesk. The truth however was far from being stuffed and Zendesk’s ill intentions were soon uncovered. This rivalry actually benefited the six month old start up!

Because now Freshdesk was being compared to a global renowned player – Zendesk. Lesson learnt: Never attack a small guy who has nothing to lose. Just after a dispute Freshdesk had 700 signed in customers & Tiger Global funded it with $5 mn. This was the first B2B investment in India by Tiger Global. What’s most surprising is that Tiger Global made an investment without looking at the performance report of Freshdesk. It was a bet on the founder. However, Tiger Global conducted on ground survey to gauge the customer perception of the Freshdesk’s product. 96% of the surveyed audience responded positively.

As Freshdesk started expanding the product line, Founders felt a need to change the company name to Freshworks. This time they went beyond customer service which was earlier Freshdesk’s arena; the company moved to innovative offerings like ITSM, CRM & call center domains. Girish explains his intentions for getting multiple services under one roof. It was an opportunity to let the customers build a superior customer engagement platform. It was a unified way to bring all the business services across marketing and sales, support context under one platform. It was a seamless integration which did not require a developer or expensive consultants to be employed by the company.

SAAS model helps to create predictable revenue, lower customer attrition if the product is good and locks down users with a growing customer base. Although the SAAS model looks lucrative around 90% of the SAAS start-ups eventually fail or record Zero growth. One needs to be sensitive and understand the customer pain points diligently and earnestly address them. One should be able to provide superb experience in the trial version and the prospect ought to find the product is intuitive. Choice of market, product architecture, pricing, aesthetics & intuitiveness are some of the key focal points to consider for SAAS start-ups.

Categories: Finance


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