Andrew: Hey there, freedom fighters. My name is Andrew Warner. I’m the founder of Mixergy.com, home of the ambitious upstart.
You know, we’ve heard in Mixergy interviews and courses entrepreneurs tell us that the best place to find a business idea-well, maybe not the best, but one of the great places to do it is to look in online forums and see what people complain about and then build a business that solves that complaint and sell it, sell the products, sell the solution.
Anyway, today’s guest says that a post in an online forum pushed him to start a business. This is a concept that he used. I invited him here to talk about how he did it. His name is Girish Mathrubootham. How did I do with the name, Girish?
Girish: Pretty good for the first time.
Andrew: Can you pronounce it right? I want to be accurate.
Girish: Yeah. It’s Girish Mathrubootham.
Andrew: Girish Mathrubootham.
Girish: Yes. Actually, Mathrubootham is my father’s name. So, in India, a lot of the people don’t have this concept of first name and last name. So, my last name is my father’s first name and then my children my first name as their last name.
Andrew: Their last name is Girish.
Girish: Yes.
Andrew: Oh, cool. You are the founder of Freshdesk customer support software. It’s software that we use to talk to customers, give them help. We’ll find out more about it all thanks to-actually, you know what? Before I get to my sponsor, as I said that, I looked at your face and it seems like you were not happy with the way I described Freshdesk, right? How would you describe it?
Girish: So, Freshdesk is online customer support software for the next generation. So, in one line, I would say traditionally customer support used to mean customers talk to a company by phone or email. But today’s customers, they talk to the company, they want to talk to other customers and if they are upset, they are talking about you on Twitter and Facebook and Freshdesk helps the brand actually connect with customers across all of these channels and manage those conversations.
Andrew: And multiple people who are having those conversations and it allows them all to sync up. Alright. That’s so much better than I did it. I want to get into my sponsorship message and then ask you a few questions about this.
My sponsor is Toptal. In a past interview, my guest said, “Hey, you should do a case study. Tell people who Toptal helped someone else instead of just telling them why Toptal is such a great company.”
So, I’ve got the story of Sharif, who is a former Expedia exec who wanted to launch his own travel site. He tried a bunch of independent developers that he found online on freelance websites. He discovered that the ratings that were on those sites just weren’t accurate. So, he ended up giving them tests and spending a whole lot of time looking for the right freelancer. When you’re launching a business, you just don’t have that kind of time. He said his success ratio was somewhere around one out of twenty people and he was wasting a lot of time.
So, then he hired Toptal. He said, “Can you help me find people? Here is my vision. Here’s what I need. Here’s how I work.” Toptal found people for him. In fact, he engaged with four people, four developers from Toptal. One of them ended up working for him for over a year. The site launched. Today, he’s a happy Toptal customer. He’s the kind of person that I-actually, wait.
You know what, Girish? I’ve got to call myself out. I don’t think I’m doing such a great sponsorship spot here. I’m trying to tell somebody else’s story and I’m catching myself just tripping over my own words. But I’ll get better at it.
For now, what I’ll say is if you’re looking for a developer and you want to find someone who’s the right cultural fit, who you can work with quickly and know that they’re top of their business, Toptal is a network of developers who are proven to be the top of their game, proven to be among the top three percent among their peers. Go to Toptal.com and see why so many entrepreneurs use them: Toptal.com.
Wow, Girish, a lot of tripping up. I want to keep getting better and better at the way that I do these messages. I saw as I was doing the case study, I saw you smile and I figured you thought that is the approach. What do you think?
Girish: The approach for what?
Andrew: To doing a sponsorship message.
Girish: Yeah. I think it was definitely a much better approach because I was just smiling because I didn’t figure out that just putting out the name is not much, but you telling what the company does is actually a much better way of doing it. Yes.
Andrew: Alright. I don’t do any edits. I don’t remove things when my guests screw up. So, I’m going to keep all my mistakes in there and let people watch me as I screw up and definitely get better and better at doing my sponsorship message. Alright, Toptal, thank you for being a sponsor.
Girish, I said it was an online forum that pushed you to get started with this idea. The forum was Hacker News, right?
Girish: Yes.
Andrew: What was the comment that you saw there? I know there’s some backstory, but help me understand what you saw that day on Hacker News.
Girish: Okay. So, I think this was on May 18th, 2010 when I was post-lunch reaching on Hacker News discussion boards. I was actually not thinking about starting a startup. So, I had two kids in school. I was living with my wife in Chennai. So, I had a home mortgage. So, it was not an ideal situation to jump into entrepreneurship.
But what happened was I saw an article on Hacker News where there was a helpdesk company called Zendesk. It was a startup at that time. It started in 2007. So, in 2010, they had increased their prices by up to 300 percent on their existing customers. Naturally, the customers were pretty upset. They were taking apart the company on TechCrunch forums and TechCrunch comments and on the company forums and on Hacker News.
So, I was just reading this and as I was reading this, there was a comment from Mark Ransom, who is the CEO of RansomSoft. It said, “It just shows that if somebody can come and build the right product with the right set of features, they can take all of this market away.”
Now, that was like the eureka moment for me because to give you some background, I had built four helpdesks all on premise in my previous career. So, I knew the space. I also knew that SaaS was booming. So, that was the one final push or the slap that I needed to kind of jump into entrepreneurship, if you may.
But the backstory-
Andrew: One second. Before you get into that-I’m looking at the post here. One of the big complaints was about prices. In fact, this is Ryan Allen who said, “If they ever had lower prices for little guys, they’d have got us,” meaning that they would have gotten Ryan Allen. It seems like if people are just complaining about the price and you jump in and say, “I’m going to offer a lower price.”
That just doesn’t seem like enough, frankly, because helpdesk software is not such a big expense considering all the other expenses that companies have. Second, if you compete only price, then the company you’re competing with can lower their prices and eliminate the one advantage you had. So, were you already starting to think of more than price or was it just price at that point?
Girish: So, price was one factor. I wouldn’t say it was not. But I think the idea that we had-so, for example, the company we started was Freshdesk. So, I think I should tell you what is the fresh part of Freshdesk. Everybody thinks helpdesk is boring, right? It’s just another helpdesk.
So, I’ll give you the story that happened in 2009. I was moving from Austin. I was working in Austin, Texas and I was moving back to India. So, there was an online community forum called R2I Club Forums. This is a Return to India Club Forums, where most Indians who are going back to India would actually look up things like shipping providers or schools for kids and real estate in India and a variety of topics.
So, I actually went there, got a recommendation for a shipping provider. And then I shipped all of my stuff. Two and a half months later, the stuff arrived at my home in Chennai. My TV was broken. So, my large screen LCD TV was broken. I had insurance. I had purchased insurance form the company. So, I thought it should be an easy, straightforward way to get the money back.
So, I actually had to email the company like 28 times. I went on. I had to submit a note of documents, like they asked me for the original purchase receipt, the bank statement showing the transaction and everything, the estimate form the Samsung dealer for how much it would cost to repair it. But after six months, the money was still not in the bank. I was totally frustrated because it was not going anywhere. At that point, I had just given up. I no longer cared about the TV. I really wanted revenge.
So, what I did was I went to R2I Club Forums and took pictures of my TV and shared my entire story online. You know what? Within two days, the president of the company came there, apologized and the money was in the bank.
So, what I realized was, as somebody who has building for customer support solutions, this was a paradigm shift in customer support for me. What I couldn’t get accomplished in six months through traditional channels like email and phone suddenly was solved in two days and I realized that as a customer, I had social power. So, when I take my problem online, I get faster service.
Now, I was also looking at Twitter. 2010 was the year where customer service moved on Twitter. So, there were many customers like me who were realizing that they have social power. I knew that most of the traditional helpdesk software out there were just focused on email and phone ticketing.
So, it was not about Zendesk alone. So, the whole market was up for grabs. I used to work as VP of product management for a company called Zoho. I was in the ManageEngine division of Zoho. So, I had a ringside view to how SaaS adoption was growing and I could see that Zendesk was probably one of the companies that was in the space but still not really big by any means.
I could see the paradigm shift in customer support with all these social channels and online community forums and LinkedIn groups and Facebook groups. So, I thought, “That’s the opportunity for Freshdesk.”
Andrew: So, why didn’t all of that get you to start the company? Why did it take a Hacker News post to make you say, “I’m jumping in and creating it?” Why not the experience that you had with the moving company, the things that you had seen on Twitter and the rest that you had learned from Zoho? Why didn’t all of that coalesce? Why did it take a Hacker News post?
Girish: So, I think as they say, “A good life is the enemy of a great life.” So, I had a pretty good life at Zoho. I was heading the ManageEngine division. So, all of these things were subconsciously happening. I was not thinking about entrepreneurship. So, even though I always wanted to do it, at that point in time, the final push was the comment. So, it was actually a sudden decision and not a planned multi-year decision.
Andrew: I see. You know what? Tell me if this is true too. There was something about that thread. I remember reading it at the time-so much anger, so much frustration, so many people talking about why Zendesk’s prices were unfair and why Zendesk was too powerful and all that stuff. Was it the avalanche of criticism that also helped?
Girish: Yeah. So, basically, I was just thinking for a customer support company, this company doesn’t have a lot of happy customers. I think it’s a pretty basic lesson for anybody in entrepreneurship. You don’t suddenly go and raise prices on your customers, right?
So, when you are in the SaaS business, that is a contract. Even though there is no signed contract, there is an implicit contract that a customer pays you a certain amount of money. So, imagine your cable provider or electricity provider suddenly gives you a bill that’s three times what you paid last month. Well, it would seem unfair to you. So, that’s what happened, actually.
Andrew: I See. Alright. And they did correct it. They understood that their customers were right on that and they corrected it. So, if all you had was an understanding that people didn’t like the price, that wouldn’t be enough. But you did, as you said, notice that people were complaining on Facebook and Twitter and interacting with customers there too and there needed to be a solution that did all that. People wanted multi-product support and you needed a solution that did that.
Girish: Yes.
Andrew: You mentioned a little bit about your background. One of the things that I know that you did before was you ran a company called Mindsphere. You founded it actually, right?
Girish: Yes.
Andrew: You told April Dykman in your Mixergy pre-interview that the lesson you took away from that was make something people want. What was Mindsphere and why do you feel it did not make something that people wanted?
Girish: So, I think I also had a company called Expert Labs in 1999. I’ll tell you both the stories quickly so that I understood the difference. So, in 1999 when I was running Expert Labs, it was a Java training company. Before the dotcom bust, Java was such a rage. Anybody who put Java on their resume was hired. So, I was able to create a business teaching Java courses. Everybody wanted to learn Java.
So, the only thing I had to convince the prospects or students was why they should learn from me. That was so much easier compared to 2001 after the dotcom bust. There was so much confusion in the market that even Java wasn’t relevant anymore. I had to kind of convince people why Java was still relevant. Then comes the sale of why they should learn from me.
So, I think that’s where I really understood that there is inherent demand. When people want something, like it’s always better to ride that wave and cater to that rather than trying to fight perception and common behavior.
Andrew: I see. Alright. So, you saw that there was a wave. So, what happened at Mindsphere?
Girish: So, at Mindsphere, that was probably the worst timing. You have to understand, in India, 2001 was the year when nobody actually joined computer sites because of the dotcom bust. People wouldn’t join [inaudible 00:15:16]. They thought IT was over. I knew that IT is the future of India.
But you also have to understand at that point in time, I had probably four or four and a half years’ experience, social pressures of management. Today, it’s so romantic and sexy to be an entrepreneur. Believe me, 2001, especially in India, it was not. Also, I would say that it seemed like a safer bet to kind of join a good product company rather than just focusing on a training business.
It was seasonal. I had understood that people joined training courses only when they see a job at the end of the course. So, that makes it very seasonal during boom times and bust times. So, I thought, “Let me pickup more valuable skills in terms of what I wanted to do.” The idea was always somewhere down the line I would try again.
Andrew: Okay. But did Mindsphere do okay? I get what you’re saying about ride a wave. When everyone is excited about Java and you’re saying, “Hey, I’ve got Java training,” it’s not that much harder to convince them. What happened to Mindsphere, though? It seems like there you felt like there wasn’t much of a wave. You launched the business and…
Girish: Yeah. So, basically, it started off well. So, Mindsphere was much more than just Java training. It had like ATG Dynamo, WebLogic. I don’t know if you remember all of these things. These were all part of the dotcom days. So, I was able to launch courses for all of these trainings.
In fact, the first week when I landed in India, so, I had a corporate training offer from Cognizant Technologies and it started well. But then what was clear was the consumer market was really confused. It was going to be a long road to survival. See, I had quit my job in the US and I went back with a big plan on doing a franchising model of a training company. I wanted to try and grow. I didn’t want to survive in a negative environment. So, I thought the timing was not right. So, I shut it down in a few months and joined AdventNet.
Andrew: Right. That was 2002. You worked there until 2005. Zoho was the big training ground. You did customer support software for Zoho, is that right?
Girish: No. I did IT helpdesk software, network monitoring software, applications management software and so on.
Andrew: Okay. Alright. So, you got a lot of experience there. You also found your cofounder there.
Girish: Yes.
Andrew: How did you guys connect and why was he the right person for you to found Freshdesk with?
Girish: So, Shan and I have worked together for close to eight years. He was my technical architect on the network monitoring product that I was building. That was my first product, actually. So, I think we complemented each other really well. I was the product manager and the business guy. He was the hardcore techie and the coder.
And we built a great rapport over the years. So, even if we don’t complete the sentences, there was so much understanding that he would know what I would say. Also, in terms of UI and UX, when a designer brings he UI, when he sees it, he knows whether I’m going to approve it or not. There was so much understanding. I think it just went right for me to ask him.
When I asked him after reading that Hacker News post, “Can we do this? I have an idea to build a support company,” he didn’t even think for five minutes. He just said yes. The interesting part of the story is in March 2010, I had actually convinced him to buy a home along with me. So, both of us had home mortgages. In May, we decided to kind of start.
Andrew: And quit Zoho and go do this thing.
Girish: Yes.
Andrew: And it came close to losing it all as people will hear in a moment. It was not easy. You decided to do it full-time. Why? Why not just stick around at Zoho and do this on the side and build it slowly and then quit?
Girish: Well, that’s exactly what we also thought, probably not long-term, but even a few weeks I tried it. For me, it was really, really hard because I’m very passionate. I was not able to switch on and switch off between Zoho and Freshdesk. In my mind, if something goes in, I’m 100 percent or zero. So, it didn’t feel right to do that. So, basically, I actually emailed my boss and CEO, Sridhar Vembu, before I told my wife.
Andrew: Wow. So, she couldn’t dissuade you and get you to stay?
Girish: Yeah. She was pretty upset. Actually, she couldn’t understand why I’m doing it because everything was going well and I had a company car and good salary and a nice house. She couldn’t understand why the hell did I need to pull all this. But now she understands. Now she is happy.
Andrew: I get it. I also get the focus. I work that way too. If I’m fully focused, then I get a lot done. If I can’t get focused, if I have the distraction of working full-time and then coming and doing this, then my mind is not ever fully on one thing and I can’t ever get momentum with it. One of the initial problems that you had is one that I didn’t realize until I moved to Argentina. Just getting a payment processer, the kind of thing that we in the US take for granted, you had a challenge with that. What was the challenge?
Girish: So, basically in India, the Reserve Bank of India has a rule that you can’t store credit cards on a secure wallet and automatically charge customers. So, even today, it’s not possible.
Andrew: Wait. So, Indian companies can’t do recurring payment?
Girish: Yes.
Andrew: So, if you have a SaaS product where you have to charge your customer every month, how do Indian companies do it? What is the government expecting the Indian companies to do? Send a bill every month?
Girish: Probably yes.
Andrew: Wow. So, how do you get around that?
Girish: So, actually, I incorporated Freshdesk in the US even before incorporating in India. SaaS as a business model is the lifeline of our business. So, that was very clear. So, it didn’t matter to me that we didn’t have a product built. So, I just incorporated in the US. In fact, I wrote a blog post on how to incorporate a US company from outside the USA, which is very, very popular. If you Google it, it is number one. I still keep getting two or three support calls from entrepreneurs from around the world asking me about advice.
I actually did it for one of my previous bosses who asked me. He was kind of considering incorporating in the US and he wanted me to send him an email with the stuff. I told him, “Instead of sending you an email, I’ll write a blog post.” I didn’t actually realize that it was such a big thing. But I think even today, that’s probably either top one or two posts in Freshdesk after all these years.
Andrew: Is it hard to do? Is it hard for a non-American to create a US-based company?
Girish: So, I think the entire process is somewhat hard, but to incorporate the company is pretty straightforward. To get an EIN number, the employer identification number, you would have to call I think a specific number in Philadelphia or Pittsburgh or someplace. Then the hardest part is getting a bank account and then after the bank account, getting a merchant account.
Andrew: I see. So, actually creating the account is not hard. Getting the tax ID is not hard. It’s the bank account that’s tough.
Girish: Bank and merchant. You have to understand, in 2010, there weren’t things like Stripe.
Andrew: Right. So, what do you do to create a bank account? I’ve got the article here in front of me but that’s an important thing to talk about.
Girish: Yeah. Actually, there was someone on Quora who actually helped me open a bank account. This is where I think these are the real angels. The person didn’t know me. I went and asked a question on Quora. In those days, Quora was really a very influential set of people. I think Quora did the onboarding part really well.
So, I asked a question about, “How can I get a bank account in the US without actually visiting?” So, I had a social security. I should say that. I had an SSN. And then there was this gentleman who was living in the UK. I forget his name. He actually offered to introduce me to the vice president of Silicon Valley Bank. So, he did. I followed up.
Silicon Valley Bank actually asked me for a pitch deck. I was thinking, “I’m opening a savings bank account. Why are these guys asking me for a pitch desk as if they’re going to VC fund me. They’re not VCs to fund me.” I took the call and I told them I’d send them a pitch deck and meet them when I come. But I think I managed to convince them to help open an account. And then I went with Braintree. Again, I talked to them and convinced them to give us a merchant account.
Andrew: Once you have a bank account, getting Braintree or getting Stripe or anyone else is not that hard, right? They just want to know a bank account. They want to know that you’re a US company or now international companies are okay too.
Girish: Yeah. That is right. That is true. There is also a small element of risk involved with the merchant account. So, because you are a SaaS business, you can charge customers annually and then you can go out of business and the customers who paid annually but in one or two months, they ask for chargebacks.
So, there was a six-month evolving credit which Braintree put, which means if a customer pays us, a portion of the money would come to us only after six months. Similarly, Silicon Valley Bank wouldn’t give us a credit card unless we put up collateral loan. So, we actually had to deposit money. So, if we had a $25,000 credit card, I had to deposit $25,000 to the account and then get that collateral-backed credit card. So, it was not easy.
Andrew: I always forget how much harder it is to work when you’re outside the US. I accidentally called you with a different Skype account earlier. It was because when I was in Argentina, I couldn’t login to my PayPal account and pay for a phone number. I needed a US number. I couldn’t do it. So, I asked a friend, “Can you please create a Skype account for me and with your PayPal account just pay for it? I’ll take care of you later on.” And she did it. Those little things used to really bug me. But you did it. You found a way to make it work. We entrepreneurs are hungry people. We always figure out some kind of solution and then today we start talking about it so that other people can learn from us too.
You rented an office. The office was $150 a month. That’s one of the nice things about being in India, right? Some costs are actually lower. But you still needed money. This was a surprise to me. The money came to you from Microsoft, right, the original cash?
Girish: Yeah. So, I think we were always trying to get attention or publicity. My learnings have been that if you want to attract VC funding, you don’t actually go and-I didn’t go and ask to be introduced to VCs. I focused on doing things which would generate inbound interests to the company.
So, one of the things was the Microsoft BizSpark where we participated in the startup challenge. Around 438 startups had applied and we were one of the 15 finalists. I was actually not going to apply because I had a Mac. This phone had [inaudible 00:26:58] and it kept crashing multiple times. I had almost given up, but somebody pushed me to apply and I did.
We ended up winning it. It was $40,000 in cash. It’s cash. No debt, no equity. So, it was free money. So, that really helped. I told my friends that also invested $23k each. So, that was enough for us to move fast.
Andrew: You know, Girish, I’m always wondering whether those competitions are worth doing. I know you won, but considering the work that goes into winning, doesn’t it make more sense to spend that time talking to investors, even if they’re angel investors because it’s not 400 people trying to win one prize. It’s you trying to convince somebody that they can make money from you. Even if you failed to convince them, you still learn how to hopefully convince the next person.
Girish: Yeah. So, I think each company is different. But what I think is at least if you are able to generate inbound interest, it doesn’t matter if you don’t win. Of those 15 companies, I think five or six of them got funded because the people in the audience, the angel investors and the VCs actually saw something that they liked.
Andrew: I see.
Girish: So, it’s a bit like dating, right? You have to play a little bit hard to get to get interest rather than just chasing every VC and trying to get introduced. Sometimes it works. A lot of times you can’t get to the VC. You’re dealing with an associate and they are seeing so many companies in a week. It’s quite possible that you don’t get a proper audience.
Andrew: I see. When I’m just looking at the winner and saying only one person one, you’re telling me, “No, it’s more people won.” Even the people who came in tenth place and eleventh place had an opportunity to raise money from the investors in the audience who were looking to see who was doing well.
Girish: Yes.
Andrew: I see. Alright. So, we talked about the money. We talked about the idea. We talked about the bank account. How do you get your first users? Actually, do you start building the product first and then getting users or are you looking for users before? What was your process?
Girish: Okay. So, we started building the product in October, 2010. So, we just had a simple website with a signup form or a sign up for beta form.
Andrew: Before you built anything. It was just a standard sign up for beta access.
Girish: Yes. The product was being built in parallel. So, I just thought we’d collect some potential users and once it’s ready, we would probably contact them and show them what we have.
Andrew: Okay.
Girish: We didn’t have anything at the time. But something really interesting happened on March 18th, 2011. So, this was, again, as I told you, we were participating in the AppSumo Lean Startup Challenge. There was a $50,000 cash prize. You had to write a blog post on how your startup is a Lean startup. There were also a lot of other prizes like AWS credit and so on.
So, I actually wrote a blog post about how a simple comment on Hacker News made me quit my job and start a startup. I actually posted it on Hacker News itself. I think that was probably one of the lucky things that I did. When I did that, the Hacker News community really, really liked the story because it was a startup that was born from a Hacker News comment. So, we stayed as the top post on Hacker News for, I think, like eight hours and on the top 30 for more than four and a half days, which was pretty huge in terms of traffic for us.
In two days, March 18th and 19th, we got close to 30,000 people coming to our website. We didn’t have any product. So, 175 people, I think, get signed up for the trial.
Andrew: Just because of that post?
Girish: Yeah. Just because of that blog post in two days. To give you context, between October and March, only 125 people had signed up. So, in two days, 175 people. So, we had 300 people who had signed up and we didn’t have the product. So, I actually talked to my team and then we thought, “Okay, there are so many people showing up on our door. These are Hacker News people who give us good feedback. Let’s try to engage. Let’s go down and try to get something out the door.”
So, the next week or four or five days, we just worked day and night to kind of ship a private beta. You can call it an alpha. So, we just wanted to show it to those people who had signed up. So, we got it ready by March 24th. I started sending out the product to like 10 people, 15 people at a time. I was actually scared. What happens if I send to all 300 and they all come and the product crashes?
Andrew: That sounds like a smart move, though, doesn’t it, to just say, “I’m not going to email it to everyone. I’ll send it to a few, get some feedback and then adjust and adjust and adjust,” instead of doing a big mailing to all of them?
Girish: Yeah. But I didn’t do it because it sounded smart. I did it because I was scared. Also, what I realized was we started from the original October signups. So, what we realized was you send it to 20 people who signed up in October or November, they don’t care in March. Nobody was actually reading the email because they had moved on. So, probably they had a need in October or November.
So, basically, some of those early signups never materialized. But by May, when we put out the public beta, we had 500 people signed up and evaluating. So, we launched on June 6th or June 7th, I think. That’s how we got it.
Andrew: Did you win that contest?
Girish: No. But the biggest win was the Hacker News traction and the attention that it got us. I will say there were a lot of wins because in that post, I actually thanked Venture Hacks Naval Ravikant. So, he actually wrote to me saying, “Hey, Girish, thanks for the mention. We want to introduce you to VCs in India.” He asked me to publish Freshdesk in AngelList, which I did. We got Accel through that. Accel saw us on AngelList.
Andrew: Accel Partners.
Girish: Yeah, Accel Partners found us there. So, in a way, I think these things cascading as they did, one thing leads to another and then that’s how we found Accel or Accel found us.
Andrew: You know what? I’ve got to say, the use of Hacker News is really smart. You could have said, “How I found an idea.” You could have said how all these different things led to this creation of this product that I’m working on. But you said, “No, Hacker News.”
The reason for using Hacker News is smart because it tells the Hacker News community this is about you and they start to vote it up. I feel like most people just don’t do that enough. In fact, we should be doing that more. This interview should have started with how Hacker News helped Fresh-no, you already did that. So, we need to come up with a different angle. But that works really well.
Girish: I think there’s a lesson for most startups there in marketing. The title is really, really important. So, I’ve learned that lesson in marketing. You can learn this from journalism. Andrew Chen once said that he tweets the blog title of the blog post like, “How Growth Hacker is the New VP of Marketing.” So, he tweets it out to see if it’s getting uplinked. If he thinks that’s [inaudible 00:34:36], then he writes the blog post.
So, I keep telling my marketing team focus on the title because that’s where your readers focus first. You have to catch their attention and then they’ll come to read the post.
Andrew: What I’m finding though is tagging the big community helps or tagging the big person helps tremendously, right? The Hacker News in the title made sense. If somebody were going to say, “How Growth Hacking Helped Me to do Whatever,” it might be better to say-what’s that growth hacking community called? “How GrowthHackers.org Helped Me to do Whatever,” if it’s true.
Also mentioning people helps a lot. You talked about how Noah’s contest is what inspired you to write that blog post. I remember, I was giving one of the prizes for that contest. Of course, not only does he get to say, “You get this product from Mixergy,” but now I have an incentive to promote this contest that he put together.
And you did not have the product made when you wrote that blog post.
Girish: No.
Andrew: No. It was just an idea at that point.
Girish: Yes.
Andrew: Interesting. Did you feel like a fraud for talking up an idea before you got to the product itself?
Girish: No. We were building the product. The post was about how our startup is a Lean startup. So, basically we were talking-
Andrew: Most people would say, “Hey, you know what? It’s not really a startup yet. It’s just an idea. I should wait until I launch it. I should wait until people try it. I should wait until this. I should wait until that.” You did it before the product even existed. I think that was impressive.
Girish: Yeah. But because there was merit to the Lean methodology, it focused on customer development. It focused on minimum viable product. I had laid out how we chose a different minimal viable product than what seemed obvious. So, I think okay, it was, honestly, an attempt to win the $50,000. You have to keep trying. Sometimes you don’t know which storm will hit the fruit.
Andrew: That makes sense. That contest in itself, by the way, was a really good marketing idea. They said that if you wanted to enter the contest, you had to write a blog post, which often meant people were talking about Lean startup methodology, which helped Eric Ries who came up with it and also referring back to the contest on AppSumo. I think to vote, you had to tweet out about the winner that you wanted to vote for about the person that you wanted to win.
Alright. So, now you have this community of people. How long did it take you to build the product did you say?
Girish: Nine months.
Andrew: Nine months of working to build it out. Why not launch it sooner? Doesn’t the Lean methodology say launch a minimum viable product as soon as you can?
Girish: Yes. It does. But I think B2B and in B2B SaaS, the concept of a minimum viable product sometimes can be a disadvantage. So, for example, if somebody is buying a customer support solution, they want the whole thing. So, an SMB customer doesn’t want to buy only like, say, feedback forms or email ticketing or knowledge base.
So, a lot of entrepreneurs I have seen, companies just focus on knowledge base or companies just focus on user forums and stuff like that. But when you look at the job description of the customer, you have to give everything or at least most of the stuff that helps them do their job better. SMB customers don’t have the budget to buy much tools and integrate all of them to kind of make it work.
Also, I knew that because I had built for helpdesk, I knew what was the minimum viable product to be built. So, you can actually define minimum viable product in many ways. Today, what I feel is there are many companies who are mistaking features as minimum viable product. So, if you built a feature, that’s not a company, right?
Andrew: I see. I get how you had a sense of what you should build because you had experience building this type of software before, but what if you were wrong along the way or what if you miss something because you made an assumption that was incorrect. Did you show the software as you were building it to people on your mailing list? Did you show it to potential customers?
Girish: Yeah. We had a public beta. In fact, I was personally demoing the software to customers. It was some of these customers who gave us the idea for multi-brand support, which was non-existent.
Andrew: Meaning, if we have both Mixergy.com and TrueMind.com, we should be able to manage them both within one account, not two different accounts.
Girish: Yes. For your support agents, it would be one interface. But for your customers of Mixergy, they will not be seeing the True Mind.
Andrew: I see. So, within this nine-month period of building out the software, at what point did you invite potential customers in to see it? Was it month one, month eight?
Girish: No, it was starting from the end of March, so six months.
Andrew: Six months into it. And the first customer who saw it, did they say anything that was brand new to you or did you know everything by then?
Girish: No, the first customer who saw it is now a very good friend. His name is Lou [inaudible 00:39:48]. So, he really liked it. He gave a lot of feedback. But it took us a year to get him onboard as a customer. So, he didn’t come immediately, but he was always talking and asking for more features.
Andrew: So, what kind of feedback did he give you that helped you when you were building out the product before you launched it, before the end of the nine-month development cycle?
Girish: Yeah. So, one of the things, he was pretty knowledgeable about the industry. He had evaluated almost every helpdesk software out there and actually written a blog post about his experience with most of the software. So, in one sense, it was a personal challenge to me to kind of get him as a customer. I know that if somebody who has reviewed six or seven different helpdesk software and given his opinion on that and then he finally converted, that would be a good win.
So, I think his main contribution, I’m trying to remember, he was running two startups together at the same time, like Pink Office and Virtual Office. So, he wanted the multi-brand. So, that was the number one requirement that he gave. Also he told us how he liked the user interface much better than others and so on.
Andrew: Okay. Alright. And then you finally launched it. How did the response go?
Girish: Yeah. I think I wouldn’t say it was a big bang launch, but it was a steady trickle. So, we launched it on June 7th. On June 10th, we got our first customer form Australia. He’s still a customer. It was Atwell College. It was just the customer coming to the website, not even talking to us, spending two and a half hours on the product after signing up and then putting his credit card and purchasing the product.
So, I think there was one big lesson that I can probably tell entrepreneurs today is that when I see a lot of new startups coming to me-what we did was we focused on the business model right from day one. Today, I see a lot of entrepreneurs going around and selling personally. They go and the CEO travels to customers and then makes a sales pitch and they get the first ten or twelve customers. But actually, their business model they will say is completely online customer acquisition and so on.
So, the transition from the founder selling to the actual business model, I think in our case it started off-I didn’t meet any customers personally face-to-face until we had more than 200 or 300 customers.
Andrew: You’re saying if you’re going to sell online, it’s better to start by selling online so you can practice doing it and get feedback through that process and then improve the online sales process.
Girish: Right.
Andrew: That’s what worked for you.
Girish: If you’re going face-to-face, at least realize that until you actually prove your business model, you’re not yet ready to scale.
Andrew: How did you live for so long? You had a mortgage. You had expenses. You had two kids. You had a family. How do you live for-it was at least nine months before you can actually start seeing cash.
Girish: Yeah. So, I also had savings. For example, I used to work in the US for two years, from 2007 to 2009. Luckily I didn’t get into a big home. I stayed in a two-bedroom apartment. I was living in Austin, Texas, where the rent is pretty reasonable. At that time, it was like $1,000 and not too much. So, I think I had some savings. All of that helped.
Also, my early cofounders, our first early employees, all of them took reasonable pay cuts. Me and Shan didn’t take any salary. The first other four employees actually came for 30 percent of their last salary. I think they’re all well compensated and they’re not complaining.
Andrew: Wow. I want to ask you about revenue today but we’ll get to that in a moment. What I need to talk about now is the time when Accel gave you a term sheet but the money doesn’t come into your account until-it doesn’t come in the next day. Until how long afterwards?
Girish: So, in our case, the term sheet was signed on August 28th. The money actually came on October 28th. So, two months. Also, because they were doing it for the new fund-so, we were the first investment from their, I think, second or third fund-so, it was two months.
I will say that that was the most stressful period. You know that you’re going to get the money. You start lining up big things. We went and did a deposit for a bigger office. Then the money in the bank account is dwindling. We also made offers to some really experienced people, hire offers. So, I will say in the whole lifespan of Freshdesk, the most stressful part for me was the time between getting the first term sheet and getting the money in the bank.
Andrew: You ran out of money.
Girish: We didn’t run out of money, we were almost there.
Andrew: Almost there. How close did you come to losing…?
Girish: So, basically, I couldn’t have run payroll on November 1st.
Andrew: And are they, the partners, encouraging you? Are they telling you, “Don’t worry. The money is on its way?” Are you worrying? Are you saying, “You know what? Maybe these guys are lying. Maybe it’s not true. Maybe there’s some problem?”
Girish: Actually, I used to talk to Accel and they were very reassuring, say, “Hey, we have never walked out of a term sheet. Don’t worry. The money will be there.” But that was a first time VC funding experience. So, no matter how much comfort the investor is giving, it was a little bit stressful in terms of not being able to run payroll. But I think it all happened. So, money came in on Diwali day. I don’t know if you know. Diwali is a big festival of lights in India. So, it was really a happy Diwali for us.
Andrew: I bet. One million dollars, you were brand new to raising money at the time. According to CrunchBase, now you have $45.1 million in funding, or at least you got that over five rounds, right?
Girish: Actually, I think there is some incorrect data there. It’s $44 million in funding.
Andrew: Sorry. They’re not listing $45.1. I misread it.
Girish: It was $44 million of VC funding. I think they are counting the $50k and $40k probably. They made some mistakes there. So, it’s $44 million and $50k is the angel money from my friends.
Andrew: So, you obviously got better. How did you get so good at raising money?
Girish: So, I think probably people liked our story.
Andrew: When someone puts down $25,000, he likes your story. When they’re putting in over $44 million, there’s more than a story. What was it that got you better at this and allowed you to raise more?
Girish: So, I think basically, one of the things we have shown, the first thing is we checked all the boxes. We had a good management team in place who had the experience. We were in a large market. We demonstrated capability to build a good product and also get traction. So, we were constantly growing customers and growing rapidly. In comparison to most of the other companies in our space, our unit economics are really, really better in terms of cost of customer acquisition or payback ratios. So, we are running a better business than most SaaS companies. So, I think that’s the overall messaging around the team, the product, the traction and the metrics is what is driving it.
Andrew: How do you get so many customers? You really have gotten phenomenal at that too. You’re saying, “Look, the funding came because we got the customers.” So, I want to come back and ask how do you get the customers?
Girish: So, our focus is on the mid-market and lower. When you start a business in India, you don’t really have a choice. You have to go global from day one. Usually, when somebody starts a company in the US, they start focusing on the US market, get to $10 million before they branch out to Europe or Australia, right? I’ve seen this play out. Companies that start in Europe actually try to grow in Europe and then once they reach a certain size, then they start expanding. It’s the same thing with Australia.
But if you’re starting in India, there’s no choice. You have to focus on going global unless you are in the consumer space. In B2B, I think it’s better to focus on global and that’s what we did. So, when you have a good product in a broad vertical and you’re using online acquisition and you’re targeting a global market, I think it’s-
Andrew: So, how do you get customers? I know one thing that you do really well is retargeting. Frankly, when I’m on my iPhone at night reading things to go to sleep, I see your ads. You clearly are retargeting me because I’ve been on your site. What else are you good at? What else can you say, “This is why we’re bringing in customers?”
Girish: Okay. See, this question has come to me probably 100 times from investors, from other entrepreneurs, from journalists. So, I think everybody is looking for a single bullet to acquire customers. I also had asked this question in the early days. But the real answer is there is no one source, but there are probably like 250-300 different sources from which you get customers. So, it’s like really the long tail of online acquisition.
Andrew: What’s the biggest source of all the long tail?
Girish: I would say Google AdWords and SEO. So, our PR also drives a lot of organic traffic. Our SEO drives a lot of organic traffic. Our AdWords drives traffic. We have listings in a lot of categories of select directories, like GetApp and stuff like that. And then we also have banner ads. We use display ads as a way of branding and lead gen. So, I think it’s a combination. I don’t think anybody in our category can actually say, “Okay, this is the one thing that will help you get all your customers.”
Andrew: So, how did you learn to do all of this really well or to hire people who were good at all of these things? Frankly, AdWords is competitive enough that that’s a challenging space to be in. You’re not going up against amateurs there. PR is challenging enough if you live in Silicon Valley and you’re friends with TechCrunch editors and Wall Street Journal editors, but you didn’t have that. So, how did you get to be good at all of this?
Girish: So, I think I spent ten years doing this before Freshdesk. So, basically, we built a business unit from India. In fact, in 2003, I discovered that you could actually build product from India and use Google AdWords for marketing. It was like cocaine at that time where the whole company budget was $50 a month. I started playing around with it. So, it went all the way up to $2,000, $3,000 per day, where we could really see how much we could stretch it.
So, there is a lot of talent in Google AdWords in India. I had some of my friends who are coming and setting this up for Freshdesk. So, that is definitely expertise for us. So, we had the people. We knew how to do it.
Andrew: Okay. I don’t want to underestimate what you learned when you worked for Zoho. Zoho is a huge company, right? I remember when I interviewed the founder of Zoho, it was because I read a Forbes article saying, “Here’s the smartest unknown Indian entrepreneur.” I said, “This company has been right in front of my eyes for years. I completely underestimated how big they are until somebody, in this case Forbes, pointed it out to me.” So, that is a big thing for you.
What about PR? Zoho was never as good at PR. There’s a reason why the founder was considered the smartest unknown Indian entrepreneur. You’re fantastic at PR. When a reporter mentioned how Freshdesk was copying Zendesk, you jumped on it. You created a website to deal with it. That takes some PR skill. Where did that come from?
Girish: I don’t know.
Andrew: Is that you or did you hire someone to do that?
Girish: That was me.
Andrew: That was you. This is Ben Kepes.
Girish: Ben Kepes, yeah.
Andrew: He said, “It seems to me like Freshdesk is an unethical troll trying to cash in on Zendesk’s good name, but that could just be me.” And then, instead of just saying, “People tweet, even journalists tweet,” you made it into this very interesting page where you said, “Here are the tweets. Here are what people are saying about us. No one owns the name desk. Here are all these other companies that use the name desk.”
You just jumped right in. You even said, “Look, Ben has actually blogged for Zendesk,” all stuff that people would have said internally, but you made it into a page that was shareable, that allowed people to see why you guys are the feisty underdogs that they should support. That’s a great PR move. You’re saying that just came to you. You had that idea.
Girish: No. I would actually say that it was-I’ll give you the whole scenario. So, this happened on December 2nd, 2011. December 1st was when we announced the Accel funding. So, probably somebody was attacking us when they saw the Accel funding news. To be honest, some of our employees were really upset and they wanted to take the fight back on Twitter at this point. I was not thinking about this as a PR opportunity. I was just thinking about this as, “How should we respond?” Instead of just being trigger-happy and fighting it out, I asked our team to hold back and let’s think about what’s happening and let’s try to see what’s the best course of action.
I think the idea was actually from our marketing person, Sreelesh, who still is our director of marketing. So, he and I talked. We wanted to do something. We didn’t want to just ignore it. At the same time, we didn’t want to go and reply on Twitter. So, December 2nd, I think, was a Friday.
So, we worked all through night on Friday and Saturday. We also got our investors permission to do this because we felt that it was the right thing to do. We actually went out with a site called RipoffOrNot.org. I think it went out on Sunday. So, again, we posted it on Hacker News. People really came out and supported us. On Monday morning, when India woke up, it was even more momentum because there were so many Indian entrepreneurs who actually started supporting us.
So, we didn’t’ think about it as PR. It turned out to be a great PR move. It was more like doing the right thing. So, somebody is accusing us wrongly. So, what should we do about it? How do we give them a fitting reply? So, that was what drove it.
Andrew: What about this guy Shankar Ganesh? This guy is the most determined person I ever have seen. He’s been emailing me for-let me see how long-two years almost, almost a year and a half at least, constant follow-up, “You’ve got to have our CEO on Mixergy.”
It’s not annoying at all. It’s just really smooth in the way that he does it. He says, “Listen, he’s going to be in San Francisco. How about we record in person?” That’s why this happened today because you happened to be here in San Francisco. We’re not recording in person because I still do it all via Skype. Where do you find this guy?
Girish: Okay. So, here’s the interesting part of Shankar. So, he graduated out of college in 2013. So, he’s really a kid. But I had first known about him when he had interned for Zoho, but I didn’t meet him at Zoho. I was in the managing division. I was in the US, I think, or I was not contracted with them.
After I started Freshdesk, somebody told me, “You should probably talk to him. He’s a smart, talented kid.” He was still in college. He actually was sitting in a village-the college was in the middle of a village in India. He was networking all around the world. When I was at TechCrunch Disrupt in New York, he would connect me to a CEO of a European startup.
Andrew: Why? Why does he do those kind of connections?
Girish: He was a friend. He was not yet working for us. But he was a natural networker. So, that’s what I was trying to tell you about. He knew that we were doing this startup and he wanted to help. He was actually interning for another company doing a sales role. So, he was actually pitching me for that product. Once he was connected, he knew that we were going to TechCrunch Disrupt and he just connected saying, “You guys should meet,” or whatever.
So, for me, I am a big believer and core talent. For me, PR is changing. Social is disrupting PR. I’m not the first person saying this, right? So, somebody who is good with social connections can directly reach out to journalists and people like you and actually build those relationships and get things done.
So, I could see Shankar would be a great PR person. But he didn’t believe it. And then when I made him an offer, he refused to join Freshdesk because he said Freshdesk is a growing company and he wanted to be in a smaller startup which has only six people and he would learn a lot there. Then I had to send him Paul Graham’s article on startups equal to growth. So, I had to tell him, “Okay, you are going to differentiate between a fast-growing startup.” A successful startup will become bigger. Still, he was thinking. And then we had to do, it was almost a one-year project to-
Andrew: Recruit him, to convince him that you’re worth working for. I see. So, you’re saying that he’s just a natural networker, naturally gifted at this stuff and that’s why he stayed in touch with me. I’m glad that you said that he turned you down because I turned him down. I think you even did a pre-interview and then we were trying to schedule a time and I couldn’t make it work. He kept pushing and I said, “I’m sorry. I just can’t do this interview.” Still, he persisted. He is good, that guy.
The thing I’m wondering though is why-why does he work that hard? I live here in San Francisco. I know why people work so hard. They are hoping to either get shares in a business that will make them into something big or because they want to learn. This is often more than anything else-they want to learn from the entrepreneur how he did it and they’re going to spend a few years working with them and then go start their own thing. What’s the motivation that your people have for working as hard as Shankar does? What’s the attitude? What’s the goal?
Girish: So, I think my philosophy is when you enjoy what doing what you’re doing, it’s not hard work. Work becomes play. That’s the core of our culture, actually. So, when we hire people, I always look for core talent because like a lot of times, all of these fancy degrees don’t matter.
So, what we all believe in is if somebody is really good in creative writing, you have to put them in a role that taps on that talent. If somebody’s good in speaking or articulation like you, they have to be doing that because they enjoy it. See, Andrew, you are doing these interviews because you enjoy talking to people probably, right? I couldn’t do what you’re doing day in and day out.
So, once you find out what is the core talent or what is the natural strength and then you map the roles to those strengths, you’re actually unlocking people’s potential. So, work doesn’t become burden; work becomes play. So, I think that’s what is happening. I can show you a lot more examples. There’s a marketer called Ramesh.
Andrew: I see. You’re saying that when you tap into what someone is really passionate about and what they do exceptionally well, you don’t need all this external motivation. The internal motivation has already been tapped and that’s what’s firing them off.
Girish: Yes.
Andrew: Do you have another example of that and then I’ll ask one last question and then we’ll be done?
Girish: I’ll give you another story about a woman called Anna whom we hired. We hired her fresh out of college in 2012. She was really smart, had good communication skills, was a natural talker. We were hiring her for this marketing position. I then put her in creative marketing.
It so happened that she was not good at marketing writing. You know that marketing writing is slightly different. So, she was not able to do any creative marketing and the manager was upset. He moved her to another team. This time, it was SEO and it was still in marketing, but SEO writing and stuff like that, which she didn’t enjoy. The manager was not happy. Good work was not getting produced.
So, literally she was in tears because she had spent a few months, like four or six months at the company and we had tried to do things and nothing worked out and she was feeling like she was not contributing to anything. I had promised her at the time of the interview that we would figure out what you were good at.
So, I still believed that her communication was good and she talks really well. I couldn’t figure out why she wouldn’t fit in marketing, but I thought, “Okay, let’s try her in customer support.” She actually took to customer support like fish takes to water. So, she was really, really good, had tremendous ownership.
She built a tremendous rapport with customers. Customers used to call the support line and ask for Anna. Her emails were perfectly written with a lot of empathy. The icing on the cake was when she won the Customer Success Hero Award that was given out by Totango, where customers nominated her. She was the only person from outside the USA to win it. She won it remotely from Chennai, India.
I think that was an example where when you unlock somebody’s natural-see, she could have been in marketing and been a misfit. She had an offer in a large IT company as a programmer which she didn’t want to do. That’s why she came to Freshdesk. So, what we believe in is that there are no bad employees. There are only bad fits. We try hard to match people to the role that we can unlock their true potential.
Andrew: Do you have a book you can recommend on how to find the right people or how to manage people? I do think you’ve got an exceptional skill at that.
Girish: Yeah. I think all my learning in this has started from a book called “First, Break All the Rules.” This book actually, I’ll just give you one concept that stuck in my mind over the years from this book. It’s the difference between skill, knowledge and talent. So, it’s pretty simple. Learning how to use Adobe Photoshop is skill. Actually having the design sense or the color sense is talent. Knowing how to program in Ruby on Rails is probably skill, but being a good programmer is talent.
So, what this book says is skill is teachable. Knowledge-there are two types of knowledge, factual knowledge and experiential knowledge. Again, experiential knowledge is more difficult to teach. It comes with experience. But talent is what is really hard to teach.
The book actually says, “You can’t put in what God intentionally left out.” I love that statement because that’s where most of the problems at the work culture happen, when people are not playing to their strength. That’s why we are trying to unlock the core talent. So, whether it’s creative writing or articulation or analytical skills or design skills, we try to find out what really is the strength of the person and then try to map them to the right job.
Andrew: That’s by Marcus Buckingham. I didn’t read that book but I did read one of his other books about how you should discover your own strengths. That’s been key to everything he’s said for years about management and about personal growth. Great suggestion. I think Facebook uses his teachings to help the guide the way that they manage too.
Alright. My final question is this-what kind of revenue are you guys doing? You’re really good at customer acquisition. Investors clearly love being a part of your business. You’re drawing customers in. How many and what kind of revenue are you getting?
Girish: So, as a private company, we still don’t disclose revenue. But I can tell you that we have crossed 40,000 customers and we have customers in 143 countries and we have been growing.
Andrew: You crossed 30,000 paying customers?
Girish: Not totally. We also have a freemium plan. So, it’s total is 40,000.
Andrew: 30,000 people including the Sprout plan, which is $0 a month.
Girish: Yeah, 40,000.
Andrew: I see. How many paying customers?
Girish: That’s a good healthy percentage of that.
Andrew: Okay. Are you guys over $10 million in sales annual?
Girish: Yes.
Andrew: You are? Alright. Well, congratulations. I’m not going to push anymore on that. I know that you guys are keeping that stuff private. The company is doing really well. I keep hearing about it. Your prices are still fantastically low, which I’m not sure how you do. Thank you so much for doing this interview. Everybody, the site is Freshdesk.com if you want to check them out.
Girish: Thank you. It was great talking to you.
Andrew: I’ve got to thank your guy here. I’ve got to thank Shankar for putting this together. That guy is fantastic at follow-up. I got an email from him just five days ago with more and more research on you. I’ve never seen anyone work like him. Anyway, I’m proud to work with him and I’m proud to know you. Thank you and thank you all for being a part of Mixergy.
Girish: Thanks, Andrew.
