Freshdesk takes the fight to larger competitors after a year of massive growth
When you’re an up-and-comer in a competitive industry, there’s a time to keep your head down and focus on execution and a time for brass-knuckle tactics. For Accel-backed virtual customer support startup Freshdesk, the time has arrived for hyper-aggressive moves following a year of impressive growth in a hotly contested market.
Today, the company announced a “Refresh Offer” aimed at siphoning off competitors’ customers. Specifically, companies using Zendesk, OTRS, Kayako, HelpSpot, UserVoice, Zoho Support, or Desk.com are invited to try Freshdesk free for two months, with free data-migration and product support. It’s no surprise that Freshdesk is going on the offensive against its larger competitors, least of all Zendesk. The two companies have been in an ugly and ongoing public battle for nearly two years, highlighted by a December 2011 Twitter spat in which a paid ZenDesk blogger called Freshdesk an “unethical troll” – not to mention insulted the founders’ ethnicity – then its CEO called the up-and-comer a “freakin’ rip-off.”
While dem’s certainly fighting words, Freshdesk is punching up several weight classes. Five-year-old ZenDesk, which is said to be preparing for an IPO, has outraised Freshdesk $85.5 million to $6 million to date, and has roughly seven times the number of enterprise clients at over 20,000. At the time of the skirmish, Freshdesk had only 100 customers. And ZenDesk isn’t the only heavyweight in the bunch. Desk.com (the rival that lacks “fresh” or “zen” in its name) may not have as many users, but it’s backed by deep-pocketed parent Salesforce.com.
Freshdesk is known for its gamified help desk that incorporates measurable incentives such as badges and leaderboards to boost agent morale, productivity, and engagement. The company also recently rolled out a mobile help product for iOS developers that supports in-app feedback. The MobiHelp in-app feedback widget has been adopted by nearly 500 developers since launching a month ago. Founded in 2010 and entering the market in July 2011, Freshdesk saw revenue grow by 1,000 percent over the last 12 months, while tripling its customer base to over 3,000 enterprises across 77 countries during the same period. The company provides clients such as Dell, Stanford University, Honest.com, and India’s MakeMyTrip with on demand customer support software that addresses multiple support channels including social media, Web chat, email, and telephone.
Freshdesk may be playing with fire by directly targeting its larger competitors. The enterprise landscape is littered with companies that picked on a bigger bully and paid the price. Freshdesk isn’t offering to give away a limited, freemium version of its service. It’s going full boat. This strategy could open a Pandora’s Box if its deeper-pocketed competitors ape this strategy, leaving the startup seriously outgunned. Similarly, business-to-business sales is a notoriously labor and resource intensive problem, and the costs only begin once a customer is enrolled. Those companies considering switching to Freshdesk are bound to think twice whether the upstart can provide the same level of support as well-heeled ZenDesk or Desk.com.
None of the above is news to Freshdesk or its investors. When Accel and later Tiger Global backed the company in 2011, this was exactly what they signed up for: hand-to-hand combat for a massive still up-for-grabs market. Freshdesk is growing rapidly specifically because it hasn’t been afraid to innovate at such an impressive pace while largely ignoring the attacks of its competitors. Now that it’s picked a fight, it needs to keep its eyes open and its head on a swivel looking for the counterpunch.