homevideos Newsyoung turks NewsYoung Turks' voices from the valley | It's the decade of India as a product nation, says Freshworks’ Girish Mathrubootham
Young Turks' voices from the valley | It's the decade of India as a product nation, says Freshworks’ Girish Mathrubootham
CNBC-TV18's Young Turks turns 20! That makes it India's longest-running show on startups and entrepreneurship. To celebrate two decades of chronicling the story of India's startup ecosystem, the show is back in the Silicon Valley in the U.S. for another season of “Young Turks – Voices From The Valley”, which features the biggest tech entrepreneurs, thought leaders and investors in a series of in-depth conversations.
To put the spotlight on India's burgeoning SaaS landscape, untapped opportunities and current challenging environment, CNBC-TV18's Shereen Bhan spoke with Girish Mathrubootham, founder of Freshworks. Here’re the highlights of the conversation.
"For so many years, we have been dreaming about India as a product nation. It's finally happening now. This decade is going to be the decade of India as a product nation," affirms Girish Mathrubootham, the founder of Freshworks, which created history by becoming India's first Software-as-a-Service (SaaS) startup to list on the Nasdaq last September.
In a Young Turks 'Voices From The Valley' special episode, Mathrubootham told Shereen Bhan, Managing Editor, CNBC-TV18, "I am a firm believer that it is a great time to be a SaaS founder in India."
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The poster boy of India's SaaS story, Mathrubootham believes that all the ingredients — venture capital, public cloud, top talent and global sales playbook — are available to an Indian founder to build a successful SaaS startup 'from India for the world'.
India's SaaS Opportunity
With over 1,000 startups, the India SaaS engine has begun to generate tremendous power. Between 2012 and 2019, India had only seen the emergence of eight SaaS unicorns, including Freshworks, which secured the billion-dollar valuation in 2018.
Given the wave of enterprise adoption of SaaS at global scale over the last few years, India has seen the creation of 11 SaaS unicorns in just the last two years.
Today, India is home to 19 SaaS unicorns with LeadSquared becoming the newest member of the billion-dollar club. "SaaS adoption by enterprises is growing in every category. The big macro driving this is digital transformation," explains Mathrubootham.
"About 10-15 years ago, only large enterprises bought software. Today, every company, whether an apparel retailer, a restaurant, a lawyer or doctor's office, they all have to use software to manage order bookings, inventory or customer service," he added.
Mathrubootham believes that large, traditional software companies are not suited to capture this demand. "That's where the McKinsey report calls out the 450 micro categories in which we can build startups. For each startup, there is potentially a billion-dollar opportunity," he said.
Indian SaaS companies now generate $2-3 billion in revenues each year and have earned about 1 percent of the global market. If they reach their full potential, India's SaaS engine can generate annual revenues of $50-$70 billion and win 4-6 percent of the global market by 2030, according to the SaaSBOOMi-McKinsey report.
"I think building global SaaS products from India is a durable, long-term opportunity. I am a big believer," said Mathrubootham, who has set up Together Fund with fellow SaaS entrepreneurs and VC investors, aiming to find and fund 'the next 30 Olympic champions among SaaS startups'.
Startup Woes: Dealing With Funding Slowdown
While the belief in the long-term opportunity is almost evangelical in India's SaaS community, how should the new crop of founders operate in the current challenging environment, as funding dries up with fears of a possible recession, which could hurt business in the near-term?
"Capital may be scarce with VCs pulling back. Put your head down, build great products and target the global market. If you've already raised money, this is the time to focus on innovation and focus on solving customer problems. When the market turns, you can emerge stronger," said Mathrubootham.
Also read: India is the epicentre for global consumer growth, says Venky Harinarayan of Rocketship VC
"Sustainable growth is a very important aspect of building a company. A lot of times, I have seen founders chase crazy valuations and struggle to live up to those valuations. That's when a founder is forced to do bad things. Sometimes, I have seen founders hire as if there is no tomorrow," he said. "Base it on values and culture, not just money."
The Freshworks Story: Pop To Drop In The Stock Market
The global tech rout, which is among the key reasons behind leading venture capital funds closing the financing tap temporarily, has not spared Freshworks.
Since the landmark listing on the Nasdaq in September last year, Freshworks' shares have slumped nearly 75 percent. Not only Freshworks, even Apple and Google shares are down over 20 percent over the last six-month period.
"Markets have changed and I think we have seen a 12 -year bull run and it was going to correct at some point, which we all knew," said Mathrubootham.
"Imagine if we hadn't gone public last year and imagine going public this year. I don't think many companies or any company is going to go public in this market environment," he said, adding that Freshworks is well-capitalised after the $1 billion fundraise in the IPO, which will help the company power through the tumultuous period.
"Even if I don't look at it (stock price), someone messages me!" said Mathrubootham, adding that he is focussing on the fundamentals and the controllables and not let the markets distract him.
In Q1 2022, Freshworks crossed the $100 million quarterly revenue mark with the addition of 2,100 customers, which was the largest quarterly jump in seven quarters. But, losses widened to nearly $50 million in Q1.
Now, Freshworks has a more balanced clientele with equal contribution from both SMBs and large enterprises, for whom it provides SaaS solutions for customer relationship management. In 2016, mid-market firms, who Mathrubootham calls rabbits and deer, made up most of Freshworks' clientele.
For the full year of 2022, Freshworks has given a guidance of 30 percent growth. Mathrubootham says the company has no plans of revising the guidance amid expectations of an economic downturn.
"It's a different level of hardness," he said. "Which founder can say that building a startup, taking it public and continuing to execute is easy? If it were easy, everybody would have done it."
Mathrubootham's vision for Freshworks remains the same. "We want to build the most iconic product company to have ever come out of India. That is the opportunity of a lifetime."
(Edited by : Anand Singha)
First Published: Jun 22, 2022 7:00 PM IST
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