Freshworks kicks off its Refresh conference in Las Vegas today, shortly after releasing its first post-IPO earnings. CEO Girish Mathrubootham sat down with diginomica to discuss the company's plans for a scalable, platform-focused future and to dive into Freshworks' latest product announcements.
Whilst Freshworks' history sits in the customer support space, in recent years it has expanded its focus into areas that include sales, marketing, IT service management and HR. All of this has been enabled by its Neo platform, which is cultivating a strong developer ecosystem.
Freshworks recognizes that whilst other vendors are focused largely on the Fortune 500, there is a huge mid-market opportunity for companies seeking a platform approach to customer and employee engagement. As Mathrubootham says:
The key theme of Refresh is the ‘art of easy', where the focus will be how do we at Freshworks make software that is designed to delight the frontline users, whether it's sales people,support people, marketing folks, or IT folks.
Freshworks hopes that it can touch all corners of a business with its Neo platform, solving a problem for mid-market players that have traditionally been forced to cobble together multiple solutions at great cost and complexity.
This strategy ties directly into one of the company's key announcements from the Refresh event this week - Freshstack - a CRM suite built specifically for startups, which unifies customer support, sales and marketing.
Freshworks has a history of fostering startup relationships through its dedicated Startup Program, which began in 2019. Freshworks claims that 20% of the world's unicorns now use its products to support customers and employees, including companies like Databricks, Klarna, Browserstack and Chargebe.
The aim of the Freshstack announcement is to get in with companies that have huge potential and scale with them as they grow. Mathrubootham explains:
Freshworks started as a startup in 2010 and we launched our first product in 2011. In the early years, we were struggling with multiple tools, right? So we had a legacy CRM, we had a marketing automation tool - we were using Marketo at the time - and we had like five different tools. We were spending more than $250,000 per year even as a very small company.
And we had developers who are sitting and building these integrations and maintaining what we call the CRM stack. That's when we thought, it has to be different for companies of the future, we don't have to have so many different tools.
We have seen how good startups, especially the ones that are defining or redefining the future, can go through massive growth. And we've seen success with those 150 unicorns, starting early with us and growing.I think it's part of our belief and commitment that companies that are building the future want new technologies, they want the CRM of the future, not the legacy of the past. And we see that as the opportunity and we want to grow with them.
So whilst Freshworks' isn't primarily targeting huge enterprise buyers (although it does have some traction there too), it does want to become a core component for companies that have the potential to crack the Fortune 500 in the future.
The Freshstack announcement includes includes:
Freshdesk - an omnichannel customer support solution with a new unified inbox and collaboration functionality across support, sales and marketing teams, to help businesses resolve issues faster.
Freshsales - a unified sales intelligence solution with context-driven forecasting and pipeline management.
Freshmarketer - marketing automation software that enables AI-driven lead generation, email personalization and send optimization.
Access to the Freshworks Marketplace with hundreds of apps to customize the CRM suite to their needs.
The ITOM opportunity
In addition to Freshstack, Freshworks has also announced updates to its Freshservice product that will see it expand into IT Operations Management (ITOM), which it describes as a $34 billion opportunity.
The new capabilities include:
On-call Management, which aims to help IT teams to immediately respond to critical incidents and kickstart collaboration between IT and devops teams to prevent service outages.
Automated Alert Grouping with machine learning (ML), which aims to help reduce alert noise to identify the most pressing issues first and minimize business impact.
ITOM has grown in significance in recent years, driven by the increased complexity that hybrid and multi-cloud brings, and the acceleration of distributed work as a result of the COVID-19 pandemic. Mathrubootham says that there are a number of drivers to the company's expansion into the field.
Mathrubootham explains that the service desk used to be somewhat of a passive system of record, where incidents were logged and then people in the IT department would scramble to resolve the issues. Over time this has evolved to include ITOM, where tools were used to bring teams together to proactively collaborate and resolve the issues in real-time.
This evolution of service has meant that Freshservice customers are asking for more ITOM capabilities from Freshworks. Mathrubootham says:
What we saw was every one of our service customers actually starting to have the need and were looking to buy something in that space. They were saying, now that we have an incident, we need to invest in IT operations management. That's when we thought okay, this makes sense as a natural logical extension.
Also, you have to understand this has been accelerated by COVID-19, because IT teams are no longer in one room, right? And employees are working from home. So, how do you quickly bring everybody on to the same page? How do you help that collaboration happen? How do you bring the right folks to the call, give them the right tools to troubleshoot?
That's what we built with IT operations management, and it's fully integrated with IT service management. The incident is logged, the company knows that something has failed, it immediately notifies the right people and tells them what the alerts are, and gives them the right set of tools to quickly troubleshoot and actually fix the problem.
Mathrubootham is also aware of the notable skills shortage in the area of ITOM - something that we hear a lot from other ITOM vendors. Freshworks is using automation to help reduce this burden, so that problems can quickly be solved and more responsibility can be placed on junior members of the team. He says:
This is probably true for any highly skilled talent, but I think it's especially true with IT operations management. One of the things that we are doing is what is known as runbook automation. A lot of the knowledge for an IT operations manager comes from the understanding of what their infrastructure is, and if something goes wrong, knowing what the steps are that are needed to fix it. This used to be knowledge that's trapped in people's minds, right?
That's what makes IT operations managers super special. But what we have is the capability to do runbook automation, where you can actually enable this to be performed by fairly newer folks or junior folks, who can be quickly trained on the job.
So when the incident actually occurs, that documented knowledge can be automated using the workflow orchestrator to actually say: this server or critical application has failed and these are the steps that need to be done. Push this button and it will be automatically done.
Neo at the core
Central to understanding what's happening at Freshworks is recognizing the significance of the Neo platform to the company's strategy. The key is that Freshworks is looking to break down organizational silos by expanding its product portfolio through a common platform framework, much like ServiceNow has done with its workflow capabilities. There are strong similarities between the two vendors, but Freshworks should be viewed as looking to replicate ServiceNow's success in the mid-market.
And this is evident from Freshwork's HR Freshteam product, which is still in a soft launch phase. But Mathrubootham explains:
The best way to understand our long term vision is to start with our mission. Our mission at Freshworks is to make it fast and easy for every business to delight their customers and their employees. Those are the guardrails that we set ourselves. We have a new product called Freshteam, which is in incubation right now. It's very early days for that, but we believe that what is happening in the world of customers will eventually happen in the world of employees.
Our expectation, or bet, is that over the longer term businesses will want to understand more about their employees and they will want to break down the silos between HR, IT, finance and just have all these technologies centred around the employee. So that is the longer term vision and we are able to do this because all of our products are powered by the Neo platform.
The Neo new platform offers foundational services that our developers can use in order to take the innovations to the market rapidly, so rather than reinventing the wheel, every product team does not have to do the same work. Neo offers a set of foundational services, everything from multi-tenancy to centralised analytics, and all of that is available to all products, so they can focus on quickly building the core product and Neo provides everything else.
Freshworks has just IPO'd and it has only fairly recently begun expanding its product portfolio at pace. But the opportunity is there, as it is solving an issue for mid market companies that struggle with complexity and integration, which in turn limits growth. The vendor is also buoyed by a very active ecosystem of customers that really supports its work - we've seen evidence of that.
I can't help drawing comparisons to ServiceNow, where ServiceNow's platform was the key to its success in a very similar way. Yes, there are differences - for a mid market company, Freshworks could be the core, running huge chunks of the business. ServiceNow tends to operate more as an integration/workflow system, plugging into systems of record. But where they are similar is that Freshworks has a common framework and core components with Neo that could touch all areas of an organization where there is opportunity.
But as Mathrubootham says, the objective now is execution. There's a lot of the market to play for and Freshworks is focused on getting its head down and delivering on solving engagement challenges for both customers and employees.