Freshworks aims to court SMBs, scale and deliver consultant free SaaS

Girish Mathrubootham, CEO of Freshworks, maintains that SaaS has lost its simplicity and that reality has given his company an opportunity to land and expand.

Sound familiar? It should. Salesforce started that way. So did Workday. And ditto for NetSuite. The initial pitch was that legacy enterprise vendors became too complacent and hard to integrate. Now you can argue that the former SaaS upstarts are now legacy players themselves.

We caught up with Mathrubootham to get the lay of the SaaS landscape, catering to SMBs and that attention getting #FailForce blimp at Salesforce's Dreamforce powwow. What remains to see is whether Freshworks can move beyond its $100 million in annual recurring revenue, integrate new hires--CMO and CFO--and scale while staying focused on the SMB and maintaining its culture with 1,600 employees and counting.

Here are some highlights from our conversation in the video above:

Why poke a big bear like Salesforce? " This was part of our brand awareness campaign; which we branded the company as Freshworks last year. And, we really wanted to use this as an opportunity to tell our story. We believe its time for a refresh, in terms of software," he said.

Why refresh? Mathrubootham said:

The large enterprise software where is expensive where you need these customers to come in and integrate. When Salesforce did this (20 years ago) , the whole promise 'hey it's the cloud it just has to work on the browser. You don't need to bring in the consultants. You don't need to bring in the million dollars to kind of go live with your year long implementation.'"

What do SMBs need and what's the competitive landscape? Mathrubootham said Freshworks is taking a business model approach that's designed to scale on a global basis. As a result, Freshworks isn't likely to see the need of chasing large accounts to grow. For instance, the Silicon Valley scaling formula revolves around "going up market and selling to the enterprise." "To grow in revenues, you really want to go up market and close those million dollar deals and $350,000 deals," he said.

Mathrubootham continued:

What we really have is a business model description where we are able to serve the long tail of the global SMBs profitably. To understand this, you have to probably look at the only other company, that I can think of in Atlassian; which also started off outside the Valley. You saw along with rest of Wall Street and Silicon Valley on how different that climax of the model was. Even though Atlassian didn't have a lot of didn't have a lot of SMB customers, their price point was SMB. The highest price point was $8,000. Even Walmart paid them a $8,000 one time fee. So, I think what Atlassian shows you is a glimpse of a different model.

Thinking global. Mathrubootham said that Freshworks, based in Chennai, India, started 8 years ago, but didn't have many customers in India. The first customer was from Australia. By time the company had 70 customers in 2011 it was getting $30 a month per customer. Freshworks defines its core market as companies with 50 to 500 employees. He said:

We were really starting from the SMB and then we started building more products, expanding our product lines, expanding our portfolio, offering customers more feature to get them to upgrade to higher plans or try other products. What we had is fundamentally a different business model of getting customers online and selling profitably to the long tail of the global SMB. Twelve years, 13 years ago SMBs did not have the budget to go and buy or spend $100,000 to buy software. But today they can put credit card and pay $100 or $200 a month and actually buy software. We were probably at the right place at the right time.

Artificial intelligence, machine learning and build vs. buy. Freshworks recently launched an omnibot called Freddy. The idea is that machine learning and natural language processing can create insights and visualizations based on simple queries. Mathrubootham said that his company will leverage AI from google or Amazon, but build algorithms that apply directly to its expertise. He said:

Most of the stuff that we build is in the context of our domain. Like for example, how can we use AI in the customer support domain, in the help desk domain? We actually focus on our core areas, which is customer engagement, help desk, CRM or that is the area that we built ourselves. We bought some technology and we know that it takes lot of years, several years to develop something like that. When something is available off the shelf, we definitely will be right on top of that.

ZDNET'S MONDAY MORNING OPENER

The Monday Morning Opener is our opening salvo for the week in tech. Since we run a global site, this editorial publishes on Monday at 8:00am AEST in Sydney, Australia, which is 6:00pm Eastern Time on Sunday in the US. It is written by a member of ZDNet's global editorial board, which is comprised of our lead editors across Asia, Australia, Europe, and North America.

Previously on Monday Morning Opener:

• Telcos flailing against tide to turn into dumb pipes
• We're killing off passwords. But are we ready for what will replace them?
• Edge Computing: The 2 things tech leaders should know
• If being customer first is so important, why don't companies do it?
• The race to ruin the internet is upon us
• How the iPhone lost its crown to the Apple Watch
• The 3 golden rules for winning IT budget victories
• The AI, machine learning, and data science conundrum: Who will manage the algorithms?
• Why Facebook is powerless to stop its own descent
• GOAT uses machine learning, computer vision to verify your top dollar sneakers
• Windows 10: Swapping the big bang for the long grumble
• Report from an almost cashless society
• The 4 hottest tech trends that are transforming the world in 2018