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How a simple comment on Hacker News made me quit my job and launch a startup (freshdesk.com)
504 points by girishm on Mar 18, 2011 | hide | past | web | favorite | 92 comments

One word of caution--do not, I repeat do NOT, focus on price ("we are cheaper") as the main reason for people to use you. People who are "priced out" of other solutions still need to buy in to whatever you are doing, beyond price, or else you risk losing those customers to your competitors should your competitors offer a cheaper/simple plan.

You're off to a great start (I just signed up for the beta), but make sure you do the hard work of selecting your target customer ("who will we NOT serve?") and don't preach price--preach superior experiences.

philosophical aside: a low-cost business model is a legitimate disruptive strategy, which many startups follow with respect to physical businesses: travel agents, newspapers, retail, maybe hotels etc. Lower costs enable unmatchably lower prices. I agree with your practical advice; esp when applied to co-disrupters, who also (should) have low costs.

Agreed, but if I were in those industries I would market the superior experiences those low-costs allow us to deliver, with price merely as an enabler (makes product a viable alternative to commodity/free option, or an accessible entry into something previously reserved for kings).

Example #1: Zappos has low costs vs. bricks and mortar so they can afford to do free shipping overnight.

Example #2: Southwest has low costs so they don't have to charge for bags.

Example #3: ING Direct has low costs so they offer a better interest rate.


Ryanair is a hugely successful airline business in Europe.

Its advertising and marketing strategy is about low price above all else, and unashamedly so.

Look at their garish and ugly website: http://www.ryanair.com/en Count how many times they use the word 'cheap'.

Read the wikipedia article, which mentions how badly they treat customers, and their rapid growth and financial success: http://en.wikipedia.org/wiki/Ryanair

Sometimes low-cost, sold as low-cost, works well.

Ryanair has taken the low-price aspect to an extreme too. For the flights I care about, it's generally something like £5, but once in a while it's literally £0 plus airport fees.

I have never been treated particularly badly by them. You don't get anything that might be included in a more expensive flight such as checked bags, a meal, assigned seating, etc., but I don't really care about those things anyway, certainly not for 1-3 hour flights within Europe.

Ryanair also mastered price making. Prices vary in a way that is almost scaring from day to day, if you try to get a last minute flight you may end up with a hundreds of euros or half penny depending on their expected load, while traditional companies are way more rigid.

See also WAL-MART. Wal-Mart doesn't purport to do anything better than its competitors really, and I don't know how they could; they all sell the same things, and so price is the only real competition (environment counts too, but it's a tertiary point). Wal-Mart is now one of the biggest companies in the whole wide world.

You should learn more about Wal-Mart. It is, profoundly, a technology company. Wal-Mart was one of the earliest adopters of satellite communications in the 1970s and are leading the RFID revolution today. They have used logistics technology to ramp up to heretofore unknown scale, and use that scale to batter their suppliers down on price.

As uxp describes below, this may be the mechanism Wal-Mart uses to get a price advantage, but it's not why people shop there. People shop at Wal-Mart because it's cheap. I've never known a town to have only a Wal-Mart, there are always some regional or local grocers in the game too, but Wal-Mart wins because Wal-Mart has better prices. It's nice that they use technology to gain the price advantage, but ultimately consumers don't care or know that Wal-Mart uses satellites or RFID extensively; Wal-Mart markets price, not fancy back-end warehousing.

AIUI Walmart is successful because they mastered logistics.

Which is a key point, and probably the one wensing was originally trying to make. If you can build a business with the intent of doing something like logistics extremely well (which lowers your costs) then you can pass that on to the consumer of your products. They don't give a rats ass about your logistics, but they do care that whatever the blackbox your warehouse does ends up shaving 20 cents off that bag of chips. WalMart still gets about the same percentage of profit, but the overall cost of the product is less.

Lowering your price just to be cheaper than your competitors only cheapens the market and doesn't add anything of value to the product. You will quickly learn why everyone else keeps their margin up higher than yours when you can't expand due to lack of funds, or you have to cut something else out to keep in business.

True, but the result is low prices and that's what they market.

The other big advantage is that they are ubiquitous. Outside of major cities, Walmarts are everywhere.

Yes, price is an enabler, that enables you to get started. The key is you don't have to be very good in other respects at first, and yet customers will be delighted, if their other option is nothing (e.g. because of price). Over time, you can improve at what your customers value, and usually you'll find things your particular customers especially value, and that your position serendipitously helps you do better. Improving market/product match over time.

That's marketing, in the sense of targeting need; I agree it might not be the best marketing in the sense of advertising! Yet... it still does depend on the segment you target: for some, low price is what they want to hear.

I like your example of using the money saved from a low cost business model to improve something else. But to compare Zappos with a retail store: there's no shipping cost for a store; overnight is slower than today (or now); and buying-without-trying remains less reliable than in-store purchase. I would guess being cheaper is the highest ranked attribute for most of their customers - if it was the same price as retail (or higher!), how many would still buy?

I think your reasoning fails the real world test. Reasons Zappos' target customers use Zappos: vast selection, easy returns, no hauling your kids to the mall (this is HUGE), excellent customer service. I'd guess they could charge 5-10% above retail and still win.

I haven't actually used Zappos, but if you're saying a website has better customer service than an actual person, maybe I should. Unfortunately they don't ship overseas.

Exactly. Or, if you do want to compete on price, make sure you're competing for the customer set who cares mostly about price. This is usually a less sophisticated and less needy customer base, which can be a good thing. But it's also a less stable customer base, and generally, you need that many more customers just to get to the same revenue potential as a handful of larger customers with a more expensive product.

There are tradeoffs everywhere; just make sure you know which ones you're seeking and which ones you're consciously avoiding.

In my experience, "the customer set who cares mostly about price" is almost always never the "less needy customer base."

In my experience, the customers set who cares least about price are almost always the least needy customer base.

Just my anecdotal experience.

Depends on the category, really. Also, by "needy," I'm talking primarily about preferences for, or requirements of, feature richness. Really should have phrased it as "fewer (feature) needs" rather than "less needy."

Agreed. The blog post was great. We use tender for our support, and I took a quick look at freshdesk. Having tickets with priority, type, building and group are way overkill for us and one of the reasons we left zendesk. I'd encourage you to carve your niche in the market by having an opinion and sticking to it, not by emulating zendesk's features and slapping a cheaper price tag on it.

I will request you to reserve your judgement till you have played with the Freeshdesk beta. Just give us a few more days before we open for the public.

Consider doing both with two different brands; with an online business, and a decent MVC architecture, it isn't very hard; a slightly different view for each brand, and different processes around advertising and customer support for each one. If your cheaper brand is so cheap your competitors can't beat it, they won't compete with it on price, and it won't start a price war.

That way, you capture the customers who respond to price and the customers who respond to non-price factors, and the market segments could well be different enough to limit cannabilisation of each other.

eh, one of my (much smaller) competitors attempted this. They were larger than I was when they attempted it. Now, they're smaller than I am; so much so that they are talking about selling the company to me.

I mean, I'm sure you can do it, but it's difficult enough to maintain one brand, without trying to pretend to be two different companies.

You can probably learn enough by being lean that parallel universes isn't necessary.

The mental difference between 0 and X is dramatically larger than the difference between X and X+1, no matter what X may be. Focus on the offering and striking a chord with your target market.

Zoho is most probably the best known tech startup from India that isn't in the typical call-center or medical transcription business. As key Zoho employees go on to build in their own companies, this could bring SV/YC culture in India where success does not mean finding a big check-writer from US but rather building products that users from around the world can use and buy. Keep up the good work FreshDesk.

Slideshare also started its development office in India first. Its as product-y as it gets.

Watch out for Flipkart.

OrangeScape too!

Beautiful story. The way you listed to the market, built the right product in the right moment - just perfect.

One think caught my eye: $160 for your office space?? From what I've seen on http://blog.freshdesk.com/freshdesk-gets-a-fresh-office it looks very decent. Your burn rate is also quite good.

How easy is it for a non indian to start a company in India?

I've been helping someone start their business in India, so I can give you some info.

Your company should be incorporated in the US. You get tax rebates (not available to Indian companies) if you pay for services in USD from a foreign account. Typically you'll pay a local company directly and they will pay your workers (something like a ghetto version of Ambrose Employer Group in the US). Labor is cheap, but often of low quality. Lying on resumes is rampant, and filtering the wheat from the chaff is very tough. Getting good people can be tough for a startup, most people will want to work for bigger company [1]. Pay can be considerably higher in bigger cities. Bombay is more expensive to live in than NYC, and pay can be comparable for great people (though the spread is much wider than NYC). If you need top talent, go to the Valley. If you need commodity talent, go to India.

(I'm not saying top talent doesn't exist there, I'm just saying you probably won't find it.)

Often you can get a package deal - office, servers, workers with a single payment. The SLA will usually have terms like "you don't have to pay workers while the servers are down." My friend exercised this clause several time - between power loss, workers tripping over wires, broken DSL (!!!) connection and the like, he has about one 9 of uptime. Just accept it, plan for outages (read: no MongoDB) and move on. Production servers live on linode/EC2/rackspace, not locally.

You want to avoid a permanent presence - if you can't easily walk away you are at risk of being shaken down for bribes. "Sorry, but the electricity is down, and it will take 2 years to fix it, though maybe I could do a personal favor for you and push you further up the queue." Same thing if you need permits, want to incorporate locally, etc.

Short version: living is cheaper (not as cheap as you think), commodity talent is cheap, but quality will often be lower. Look for bargains, and be aware that it isn't the valley or NYC.

[1] This is true for both cultural and economic reasons. Short version: a) working for an unknown company can mess up your prospects in arranged marriage market, b) family might be disappointed, which is a big deal and c) risks are a LOT higher so stability is valued.

On c), in India, you have a LONG way to fall. Utter destitution in the USA (i.e., bottom 5%) is roughly comparable to upper middle class status (top 95%) of India, in terms of PPP-adjusted income. http://economix.blogs.nytimes.com/2011/01/31/the-haves-and-t...

Could you also comment on the following aspects:

How easy and practical would it be to have developers in India while staying outside the country? Would it help if a local manager is hired?

How secure would be the IP developed? Given you mentioned lying on resumes is rampant...


I have no idea how practical it would be to hire developers in India but you live outside the country. That's basically outsourcing, or perhaps a remote workplace. Some companies do it well (DeviantArt, Morgan Stanley), some suck at it (Boeing). Lots has been written on outsourcing, I have little to add to it.

However, I didn't mean to imply that you personally need to stay outside the country. It's unlikely you will be harmed - India isn't Russia, after all. I just meant that corruption is rampant and you should plan your business to minimize the impact.

As for IP theft, IP is probably about as secure as anyplace else (i.e., not very). How can you prevent `git clone ~/src/important_startup_code /media/usb`? Banks use PS2 mice/keyboards and put glue in every single USB port, not to mention paying for a massive surveillance infrastructure. Good luck with that.

The primary risk unique to India is that the courts are worthless. You can't get an injunction to stop them from building their own startup with your code, all you can due is sue and maybe win in court in 20 years (unless they bribe the judge).

If you want to hire only 1 or 2 persons, how long will $10k last you? (same question for $5k in case the costs are not linear)

On avoiding permanent presence, do you mean not living in India, or not living in the office space?

Depends on the people and the location. A good developer in Pune might be getting $15k/year or more, a bit higher in Bombay. Nationwide, salaries tend to range from 1-5 lakhs ($2.5-10k).

2 low end college students for mechanical turk type work outside Bombay/Bangalore/Delhi, they would probably last you a year or two. More if you go to the outskirts. (Note: I'm probably inappropriately scaling down here - in reality, you probably need to rent them 30 at a time.)

An illiterate peasant? You could pay him double market rates ($1-4/day) for 30-120 years on $10k.

By avoiding a permanent presence, I mean having the ability to pick up and leave at a moment's notice. If the phone company, the government or your landlord tries to shake you down, you need to be able to say "fuck you" and walk out. Keep your exit costs lower than the price of a bribe. I.e., don't get into a situation where downtime results in big monetary losses.

What's to stop someone on $15/k a year jumping on the internet, finding some good contract work and easily doubling or tripling this? If they are great developers.

Nothing, beyond economic incentives. The great developer can also move to Mumbai, Bangalore and earn $100k/year at a hedge fund, Google or Oracle. Top talent is not a lot cheaper than the US.

To clarify, "good developer", I meant a person you would trust to write CRUD apps.

Ok. One thing regarding the office space. The place we got was a 700 sq ft rectangle that looked like a run down warehouse. We spent approx 3k for the paint,flooring and cubicles. It is in an upcoming suburb. A similar space in a prime locality will cost at least 5x the price.

Very inspirational story. May I ask what software was used to make the "Fresh Office" video? Looks polished.

Just the simple iPhoto slideshow on Mac and screenflow for screen capture

Is this in Chennai? Whereabout in Chennai?

I'm not sure you have to go all the way to India for that. Here in Denver we had Downtown office space (about 1200 sq. ft.) for $500/month on a sublet. That's about $0.41/ft as compared to $0.21/ft for freshdesk. Sure it's about double, but they're within shouting distance of each other. Our four person team had a burn rate of about $12k/month at that point... again, about double but still really manageable. Given our access to capital in Boulder, it was a really nice situation all around.

Coming from the EU to India might be easier than from the EU to Colorado. If the visa situation was different, maybe, but if the problem can be redesigned to use average coders as explained by the earlier comment, it might be a better idea to opt for India. The cheaper living costs + office space + salaries means a lesser burnt rate, and thus more time to succeed.

Another reason to prefer India is that the food is tastier and the women are more beautiful.

India is a big country. Are you referring to a particular city or region?

You have obviously never been to Denver:)

I took away the same thing. Thats a fantastic burn rate. especially compared to a [hardware] startup I worked at that had a burn rate that'll make your eyes water.

How about BC Canada? It's west coast, and tech companies get a lot of corporate tax breaks, and canadian immigration isn't as horrible as US.

What tax breaks do we get in BC? I didn't know of any except for things like biotech, greentech, etc.

Immigration is going to get tougher in Canada from April


That is one awesome story, congrats! I was especially struck by some of the stuff you said about product/market fit. To me, this bit is pure gold:

We started engaging with our prospects on what they were currently using and what problems they were facing. In many cases people were telling us clearly what they really wanted to see in their customer support software.

Yeah, that's the key, right? Actually engaging with the customers and finding out what problem they're really trying to solve. This cuts to the core of sgblank's Customer Development stuff and the whole Lean Startup movement.

We were surprised to see that a lot of what customers wanted were their core problems solved and not some fancy features of supporting customers from their Facebook wall or converting tweets into customer support tickets. While we understand that these are definitely the way of the future, many many customers do not need this today.

Heh, perfect example of how us techies can get caught upin the fancy, glitzy, "cool" stuff and maybe not realize that customers are not so concerned about that, as they are getting work done. Really, really good reminder to focus on the customer's needs!

Another important learning for us was that customers did not want to be dealing with separate invoices for their helpdesk, their contact management software, for their customer feedback forums and customer satisfaction surveys. The SMB customer wants one invoice and as much functionality as possible in the customer relationship management solution.

That's gold too... It reminds me that sometimes the "problem" isn't so much a technical problem, as a structural problem with the existing business arrangements. Wanting one invoice instead of 3 or 4 is a wonderful example of a problem an entrepreneur can solve, and it doesn't have anything to do with product features or technology. Reading this is like having a glass of cold water thrown in your face (well, for some of us!)

We also identified underserved market segments (companies with multi-brand support requirements) and segments which were getting priced out because the current solutions were expensive. So we reprioritized our feature set to what we thought is the ideal product/market fit for us. This means that things like Twitter and Facebook integration can wait. But things like multiple support emails or support for SLAs and Business hours are in.

Very inspiring. Thanks for sharing such details about your experience. I think a lot of people can learn something useful from your experience. You've certainly given me some thoughts to chew on.

  Now we have a team of six people - (3 developers, 1 UI/UX designer, 
  1 QA / Customer support engineer and me as - the Product Manager / CEO)
It would be great if you could throw some light on how you went about building this team and your hiring process. In my experience, it ain't easy here in India to find quality talent willing to work in an early stage startup whose product is still not out in the market.

Did they come through the connections made during your Zoho stint?

All the best for this venture!

Yes. That is one advantage that I had working at Zoho for nine years. Everyone in the team has worked with me at zoho. 3 of the 6 people had worked with me at Zoho and had moved on to other companies. They came back to work for Freshdesk as they believed in the ability of the team to ship products.

Great. I think it also helps that you were at a senior position in Zoho. Apart from the visibility and a large network, it probably makes it a little more convincing for people who are on the fence when it comes to joining such a venture.

Congratulations on the launch (and welcome to HN, since I see that your account is just 3 hours old :)

That said, your post suggests that you acquired domain knowledge at Zendesk, then decided to use that knowledge to immediately and directly compete with Zendesk with price as your only differentiatior.

I suspect that the folks at Zendesk aren't going to sue you on any non-compete or trade-secret agreements, but I'm curious to know if you think that your competition raises any ethical concerns or not.

[edit] Thanks for the correction, Aditya and apologies Girish for reading the post too fast and confusing Zoho with Zendesk

Not Zendesk, he worked at Zoho where he built an in-house helpdesk system...

I also wonder about using the word "desk" in the name of a competing product.

Given that the category is called "help desk software", ZenDesk has a lock on "desk" like I have a lock on "bingo"

Good point.

It's a great post. But I'm posting here to gripe: why oh why do so many blogs never have a direct link to their business front page? It's always to the blog front page. You see a blog article posted, interesting read, the next thing you want to do is visit the front page. grrrr.

Interesting you say that as that is one of my gripes about blogs on company websites.

Great focus on MVP and a lean team. Designing a usable service for outsourced "enterprisey" software is challenging because your customers (a company's HR dept, in this case?) are not your users (support desk employees and the company's own customers). These three sets of people will all have different feature requirements.

I have to say that your post on how to get a corporation in the US is fantastic. I'm sure there's a lot of information out there, and it's something many people have done before, but the fact that you laid it out extremely clearly and gave very relevant contact information is amazing. Really great stuff.

Definitely good information to have. Lots of services and startups, especially those for payments, phones or other geographically constrained industries (which really need a good startup to disrupt them), never make it outside the US. However, from the comments I gather you need some sort of US SSN to be able to get the Braintree account? Any other "hickups" to non-US citizens? I ask because one day that might be the best solution for what I work on and expanding to the US.

The name is a little too close to ZenDesk, isn't it? Especially since the two companies are in the same market.

Why downvote? I feel the comparison is inevitable.

Awesome story Girish, very inspiring and down to earth!Loved the simplicity and the way you approached product market fit! We as tecchies more often than not, deprioritize the part of finding out what the customer really wants. Thanks for sharing and Good Luck!

Your design looks great. You mentioned that getmefast did it and I had a look at their portfolio which isn't as strong in my opinion as your design and UI. Did you UI designer have to change what they came up with?

Frankly, this isn't very interesting. Some guy gets inspired to launch a startup, grows a company beyond the bare minimum, and we are supposed to swoon?

Come back when you have 150 employees and the competition is begging for mercy. Then sing to us about the blood sweat and tears.

People get inspired to launch startups all the time, and some of them become great businesses. Some of them fail miserably. Lets all do ourselves a favor and not praise effort before it bears fruit.

Pretty inspiring, though I hope you add a live demo to your main site (maybe to handle support? :). I know as a potential customer, I'm hesitant to pay for anything I haven't seen and interacted with.

We have a live version in private beta. I plan to post it to HN for feedback as soon as we are ready for the public launch.

Congratulations and nice write-up!

Can I ask how the startup is doing financially?

We are in private beta so the money is yet to flow in:)

Doing this right now, have just submitted for YCS2011 :-)

Congrats Girish.

Unrelated question: as of now your post is number one on hacker news, would you like to share what does it mean in term of traffic on your blog?

I've found it very inspirational and informative...

Some UI issue while mouse over SSL on Firefox 4 http://imgur.com/yktw8

Same in chrome 10 windows 7

Thanks for letting us know. Will fix it soon.

Good Luck..... I guess this sort of explains what's up with AdventNet and it's quirks too... all the good people left?

Definitely no. Zoho(AdventNet) was the best thing that happened to me in my (work) life. It's an amazing company with over 1200 employees with very smart engineers and a kick-ass product culture. I owe everything that I learned in Product Management to AdventNet. It's a huge playground for people who are not afraid to try new things. I used to tell my team members that working in Zoho is like getting an MBA on how to build a Product Business.

Glad to hear it. A great example of how sharing information, once again, helps people to take bold action.

Great post. Reading HN is better motivation than any cheesy book on the market. I love HN. :)

great story. FYI - the mouse-overs for the 'Premium' price plan are broken in both Chrome and Firefox for me (Win7). they get cut off at the edge of the white-border.

thanks for putting a inspirational example for Indian startups

Saw the word "cloud", scrolled down, yep-- business guy.

Congratulations! Makes me want to do the same thing.

Very inspiring...Goodluck Girish!

awesome story! Very inspiring

is it worth it?

You lost me when you said you liked the idea of 99designs.

The word STARTUP is starting to SUCK the life out of me. It is now as bad as "epic" and "fail" with the word being used in 1/8th of every headline on HN. THANKS!!!!!!

You are on a forum about startups.

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