• ProductNation Network

    Scaling from $1m to $5m, lessons learned by Freshdesk

    I travel to India once every quarter to catch up with our India team based out of Coimbatore. I was planning to attend SaaSx for a while now and this time, it was perfect timing the event is scheduled on 2nd April, right in the mid weekend of my India trip. This is an invitation-only event, I’m thankful for the organiser to get me involved. With 200 attendees where the majority of them are founders and key people in some of the promising and growing companies on the Indian start-up eco-system, you can sum up the experience in a single word it’s “awesome”. Even though there were lots of sessions, round-table playbooks, product tear-down analysis, countless conversations we had between founders during the event, the one session by Girish from Freshdesk stood out and made everyone speechless. I wanted to highlight more about it here.

    When Girish assembled his sales/marketing team on the stage and opened up the statement, please do not share anything I speak on this stage outside this room, and we need to get investors approval to reveal this data, I know something interesting is going to happen. It was kind of nostalgic moment for me, I heard a similar sentence from Peldi from Balsamiq when he opened his speech at Business of Software at Boston last year and that session turned out into one of the best sessions of BoS 2015 (Rookie CEO Grows Up. Reluctantly).

    In that session, Peldi literally opened up some of the confidential emails he had with possible acquisition offers, the conversations he had with his team, and how they boldly stood against the offer etc. Girish did something similar down the lines showing the real reports he was sending to the investors, with some key metrics like revenue targets, projections, the goals they were setting for the sales team, how they aligned the marketing and sales team to work together, different experiments they were doing with several revenue channels, how they drop some non-performing channels, and so on. To respect the confidentiality of the subject I’m not going to go into the detail, but cover some interesting general topic Girish highlighted.

    Everyone needs inspiration, most of the founders read tons of books, blogs, magazines etc (I haven’t met a single founder who said I never read any books). The problem is to get a single actionable item from reading a book takes hours and weeks, still you won’t be sure and just need to experiment and find it. But what Freshdesk team has shared is real data that took them from $1m to $5m in annual recurring revenue (ARR), which is priceless (note: the $5m is not their latest number). Every slide they shared had something for me to take away and I believe that’s the case for everyone.

    I have known Girish personally for few years now and he is a kind of person who goes with the gut feeling and figure out what’s happening. I’ve captured some of his best statements during his presentation “Do best of your potential and you’ll eventually end up somewhere higher up”. This is such a true statement, you set your vision on $5m ARR and align you sales/marketing team towards that goal, and work backwards. Even if you don’t achieve $5m, for sure you are going to end up somewhere higher up than where you are right now.


    The second best statement is on utilising the talent in the right way “Don’t try to put something into people, what god intentionally left out”, this is not the first time I’ve heard Girish saying this but this is something worth repeating. To give you a better analogy, if you take Sachin Tendulkar and ask him to do wicket keeping and complain he is not performing well, whose problem is it? Is it Sachin Tendulkar’s or the selectors? Same for start-up founders, understand the real potential of your team (team member) and place them in right places. Jim Collins highlighted this in his popular book “Good to Great”, it’s not just about getting the right people on the bus, and it’s also about setting them in the right places for you to be successful.

    When it comes to pricing, Freshdesk made couple of important pricing changes during their journey, first one is introducing the expensive Estate plan (that time) as their last tier, they figured out people are always reluctant to buy the last tier, even if it has some interesting features, it’s more of psychological thing, and they figured out n-1 tier performs better, hence, they introduced the Estate plan with just gamification, the intention is not to push and sell this plan, but to sell the n-1 tier the “Garden” plan. They also made some important pricing decisions on how they structure their free offer. Previously it was 1 free agent on any tier, and they moved it into 3 agents free for life. There are a couple of key factors in this decision if there is only one person doing support then there is no necessity for a help desk system, and also, they are throwing away free agent license on each tier which the customer would have bought anyway. The key takeaway for me in this is when designing the free tier, make sure it’s useful for the people and also it’s aligned with your goal of eventually converting them into paid customer gracefully.

    Getting to the unicorn status, the “triple-triple-double-double-double” formula. Girish highlighted this article from Techcrunch “The SaaS Adventure” during his talk as one of the influential blog that helped him to set the target of growing from $1 to $5m. The article explains how you scale to unicorn status, what are the benchmark numbers to hit. It’s $2m > $6m > $18m > $36m > $72m > $144m (i.e. triple-triple-double-double-double). If you need to be listed as the unicorn, then the magic number to hit is $144m ARR.

    The other important information he shared is finding the magic number of leads for each sales person. At the early days, each sales person at Freshdesk were handling at an average of 800+ leads per month, which of course is not efficient. In order to fight against time, they were using automated email sequences to improve the lead quality. Girish accidentally bumped into this article from Hubspot “CREATING A SALES PROCESS FOR YOUR INBOUND LEADS: 150 IS A MAGIC NUMBER” where they discuss in detail about the magic number for a number of leads a sales person can optimally handle i.e 150 per SDR, and they scaled the sales team accordingly.

    A little bit about customer success team, it’s very important to set up a customer success team as soon as possible to avoid churns. Most of you might know the leaking bucket analogy, if you have holes in your bucket, where your customers are churning regularly, then you’ll be constantly fighting against filling the bucket to maintain the level instead of growing. In a lot of companies it will be a bit late when you realise it, when you call a customer who has already left you, it’s way too late. They might have already set-up a system from your competitor, and you need to sit and wait to hope they won’t like the competitor’s product. Freshdesk has done similar mistakes in the past and now they have the process in place to avoid it.

    Even though this article would have given you some interesting tips shared by Girish and Freshdesk team, there is no alternate to hearing directly from horse’s mouth. With the great sense of humour in his speech and ability to instantaneously crack jokes on stage, I thoroughly enjoyed the session, noted down some key tasks and set myself a target where I wanted to take BizTalk360 by the end of this year.

    In the future if you get a chance to attend one of the SaaSx events, don’t miss it.

    Guest Post by Saravana Kumar, BizTalk360

    Using the product roadmap to keep an organization in sync
    Hey Indian SaaS Founders, Are you dreaming big enough and aiming high enough?

    Tags: , , , ,

    Apr, 06
    2016
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