Blowout IPO establishes Indian startup pioneer Freshworks as rival to ServiceNow and Salesforce

The company's stock closed up 32% on Wednesday, giving Freshworks a roughly $13 billion valuation.

Freshworks employees celebrate its IPO on the floor of the Nasdaq stock exchange.

Freshworks was India's first software-as-a-service business to IPO in the U.S.


Freshworks' monster debut on the public markets, exceeding its own expected valuation, firmly established the upstart enterprise software company as a threat to two of the industry's biggest names: Salesforce and ServiceNow.

The company's stock closed up 32% on Wednesday, giving Freshworks a roughly $13 billion valuation. While its shares were down slightly on Thursday trading, the IPO was a windfall for Alphabet and other investors.

But it's also a major win for India's startup community: Freshworks was the country's first software-as-a-service business to IPO in the U.S. A wave of public offerings from Indian companies is expected to follow, including from payment platform Paytm and discount hotel chain Oyo. And Indian startups are drawing investment from the likes of Salesforce, a16z and Microsoft.

"There are a lot of [Indian] startup founders that are building global SaaS companies," CEO Girish Mathrubootham told Protocol. "It's day zero, the way we look at it … because we see the opportunity to build a massive company."

Freshworks is often compared to Salesforce, but it has been competing with ServiceNow for even longer. Released in 2020, the startup's CRM product is still fairly new. However, it's been selling an IT service management tool since 2012. That product was an expansion of Freshworks' first tool — a customer service platform released in 2010 — that, at the time, organizations were increasingly using to address internal issues like technology problems or laptop requests.

Freshworks declined to disclose exactly how its $249 million in revenue in 2020 was split across the three product lines, but said 18% of customers use two or more.

Outside of its brand-name rivals and the home country of its founders, Freshworks' public offering stands out in another way.

Many of the blockbuster IPOs of the past year have been startups focused on the creation of new product categories. Confluent is a leader in the push towards real-time analytics. UiPath helped popularize robotic process automation. Unity is peddling a vision towards the metaverse for enterprises. And Palantir is a poster child for the modern data-analytics platform.

But the rise of Freshworks, as well as other startups like Monday.com, signals another major change unfolding in enterprise software: The incumbents that gained prominence in the past two decades suddenly seem more vulnerable.

Companies like Salesforce helped build a "multitrillion-dollar industry by basically taking form fields and moving them on to the web. That is child's play compared to what is coming next," Gordon Ritter, a co-founder of Emergence Capital, told Protocol. "Those software players better really reimagine and rearchitect their systems or else they are going to get left behind by the new players that have access to the granular data."

Salesforce, for example, remains the market leader in CRM and commands a market cap of roughly $269 billion. And the future looks bright: The company just improved its revenue outlook for 2023. Outside of growing competition from startups like Freshworks, however, Microsoft is charging hard with its own offering and also partnered with Adobe and C3.ai — a startup led by industry pioneer Tom Siebel — to build an "integrated suite of industry-specific AI-enabled CRM solutions."

But it's not just Salesforce. Adobe is facing new pressure from upstarts like Canva and Figma. And HR management software provider Personio is taking on Workday by targeting smaller organizations.

One of the advantages of Freshworks' system, according to Mathrubootham, is its ability to help populate increasingly popular customer data platforms with a single stream of information as opposed to a patchwork system, where data from Salesforce, Marketo, Gong and other software providers is all transported into a data lake for analysis.

"For all those companies that don't want that unwieldy stack, you don't have to go that route," he said. "You can have an integrated suite … all operating with the same underlying customer data."

And there appears to be a real opportunity for companies like Freshworks to succeed against the market leaders. For years, vendors like Salesforce created walled gardens around their data that made it difficult to move data outside of the company's own systems. Now, they are scrambling to build more open architectures to capitalize on the move toward automation and artificial intelligence. Whether they can pivot fast enough is the question.

Still, it can be challenging to try to compete against one tech giant, let alone several. In its IPO prospectus, Freshworks listed Oracle, Microsoft, SAP, Zendesk, Atlassian and other large software vendors as rivals. And it now faces the difficult task of expanding its customer base beyond small to medium-sized businesses and deeper into enterprises.

"CRM is a big market. Salesforce is talking about going from $25 billion to $50 billion," said Mathrubootham. "Yes, change is hard. But people change when they know that there is a better option available. And this is where we feel that having software designed … [for] the front-end user is a trend that is driving that change."


Why it’s time to ban algorithmic recommendations for children

How do we encourage the good that ML and AI can provide while restraining potential harms?

Algorithms often harm the very users they are supposed to serve.

Photo: Alfonso Di Vincenzo/KONTROLAB/LightRocket via Getty Images

Tom Siegel is the CEO and co-founder of Trust Lab.

In the era of social media, AI algorithms have the power to decide everything from our playlists to the videos we watch, the news we consume and what special shopping deals we’re offered, and which are withheld. For all the good machine-learning technologies and algorithms do to improve and personalize the online experience for all of us, they also present one of the biggest threats for online safety, with real-world negative implications for the health and well-being of all internet users.

Keep Reading Show less
Tom Siegel
Tom Siegel is the CEO and Co-Founder of Trust Lab. Previously the VP of Trust & Safety at Google for 14 years, Tom built its global team through all stages of growth into an industry-leading user protection and abuse fighting organization with thousands of team members globally.

Sustainability. It can be a charged word in the context of blockchain and crypto – whether from outsiders with a limited view of the technology or from insiders using it for competitive advantage. But as a CEO in the industry, I don’t think either of those approaches helps us move forward. We should all be able to agree that using less energy to get a task done is a good thing and that there is room for improvement in the amount of energy that is consumed to power different blockchain technologies.

So, what if we put the enormous industry talent and minds that have created and developed blockchain to the task of building in a more energy-efficient manner? Can we not just solve the issues but also set the standard for other industries to develop technology in a future-proof way?

Keep Reading Show less
Denelle Dixon, CEO of SDF

Denelle Dixon is CEO and Executive Director of the Stellar Development Foundation, a non-profit using blockchain to unlock economic potential by making money more fluid, markets more open, and people more empowered. Previously, Dixon served as COO of Mozilla. Leading the business, revenue and policy teams, she fought for Net Neutrality and consumer privacy protections and was responsible for commercial partnerships. Denelle also served as general counsel and legal advisor in private equity and technology.


Google is wooing a coalition of civil rights allies. It’s working.

The tech giant is adept at winning friends even when it’s not trying to immediately influence people.

A map display of Washington lines the floor next to the elevators at the Google office in Washington, D.C.

Photo: Andrew Harrer/Bloomberg via Getty Images

As Google has faced intensifying pressure from policymakers in recent years, it’s founded trade associations, hired a roster of former top government officials and sometimes spent more than $20 million annually on federal lobbying.

But the company has also become famous in Washington for nurturing less clearly mercenary ties. It has long funded the work of laissez-faire economists who now defend it against antitrust charges, for instance. It’s making inroads with traditional business associations that once pummeled it on policy, and also supports think tanks and advocacy groups.

Keep Reading Show less
Ben Brody

Ben Brody (@ BenBrodyDC) is a senior reporter at Protocol focusing on how Congress, courts and agencies affect the online world we live in. He formerly covered tech policy and lobbying (including antitrust, Section 230 and privacy) at Bloomberg News, where he previously reported on the influence industry, government ethics and the 2016 presidential election. Before that, Ben covered business news at CNNMoney and AdAge, and all manner of stories in and around New York. He still loves appearing on the New York news radio he grew up with.


Everything you need to know about tech layoffs and hiring slowdowns

Will tech companies and startups continue to have layoffs?

It’s not just early-stage startups that are feeling the burn.

Photo: Kirsty O'Connor/PA Images via Getty Images

What goes up must come down.

High-flying startups with record valuations, huge hiring goals and ambitious expansion plans are now announcing hiring slowdowns, freezes and in some cases widespread layoffs. It’s the dot-com bust all over again — this time, without the cute sock puppet and in the midst of a global pandemic we just can’t seem to shake.

Keep Reading Show less
Nat Rubio-Licht

Nat Rubio-Licht is a Los Angeles-based news writer at Protocol. They graduated from Syracuse University with a degree in newspaper and online journalism in May 2020. Prior to joining the team, they worked at the Los Angeles Business Journal as a technology and aerospace reporter.


Sink into ‘Love, Death & Robots’ and more weekend recs

Don’t know what to do this weekend? We’ve got you covered.

Our favorite picks for your weekend pleasure.

Image: A24; 11 bit studios; Getty Images

We could all use a bit of a break. This weekend we’re diving into Netflix’s beautifully animated sci-fi “Love, Death & Robots,” losing ourselves in surreal “Men” and loving Zelda-like Moonlighter.

Keep Reading Show less
Nick Statt

Nick Statt is Protocol's video game reporter. Prior to joining Protocol, he was news editor at The Verge covering the gaming industry, mobile apps and antitrust out of San Francisco, in addition to managing coverage of Silicon Valley tech giants and startups. He now resides in Rochester, New York, home of the garbage plate and, completely coincidentally, the World Video Game Hall of Fame. He can be reached at nstatt@protocol.com.

Latest Stories