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.
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.
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.
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.
The other big advantage is that they are ubiquitous. Outside of major cities, Walmarts are everywhere.
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?
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 customers set who cares least about price are almost always the least needy customer base.
Just my anecdotal experience.
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.
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.
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?
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 . 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.
 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...
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...
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).
On avoiding permanent presence, do you mean not living in India, or not living in the office space?
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.
To clarify, "good developer", I meant a person you would trust to write CRUD apps.
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)
Did they come through the connections made during your Zoho stint?
All the best for this venture!
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.
 Thanks for the correction, Aditya and apologies Girish for reading the post too fast and confusing Zoho with Zendesk
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.
Can I ask how the startup is doing financially?
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?