[YS Exclusive] Freshworks without CTO after Co-founder Shan Krishnasamy’s quiet exit
India’s largest publicly listed cloud-based software company has been operating without a technology chief for at least five months in a struggling global market as businesses eschew additional tech spending.
Co-founder Shanmugam Krishnasamy has exited the company without much fanfare, per sources, amid a management overhaul that left the former chief technology officer with diminished responsibilities.
Krishnasamy, Co-founder and CEO Girish Mathrubootham’s protégé from their days atCorp., had been instrumental in establishing the technology architecture at Freshworks, helping it emerge as the posterboy of India’s software-as-a-service sector.
Mathrubootham at a town hall meeting with employees some months ago announced that Shan, as Krishnasamy is known, was leaving the company, a development not reported by any media until now.
“This was announced in one of the all-hands around 3-4 months ago. Girish invited Shan on stage and said that Shan was leaving,” said a Freshworks employee declining to be identified. A couple of other employees confirmed this.
A document sourced from the Ministry of Corporate Affairs shows that Krishnasamy ceased to be a director on the board of Freshworks on July 6, 2022.
The Freshworks website, too, does not feature Krishnasamy as Co-founder and CTO any longer.
Scouring through internet archives, his profile on the Freshworks ‘Leadership’ section appears to have been removed after June 1, 2022. His profile had earlier described Krishnasamy as being “responsible for the technology roadmap of the company".
A new president
Freshworks, which recently crossed $500 million in annual recurring revenue (a metric to track the expected business from existing annual contracts), reported total revenue of $133.2 million in the October-December quarter in 2022, a 26% increase from the same year-earlier period.
In a climate where US stocks, especially in the tech sector, have been hammered in the last few months, Freshworks has been no exception. Its stock price, which crossed the $50-threshold a few weeks after listing on NASDAQ on September 22, 2021, has nosedived by over 64% from its debut listing price of $43.5 apiece.
Upon listing, Freshworks’ valuation had soared to around $13 billion, but it currently stands at a little over $4.5 billion, closer to its pre-IPO November 2019 valuation of $3.5 billion.
Given the economic conditions, SaaS companies have seen their business slow down in line with their customers reducing their software budgets, prompting them to cut costs (some, including Freshworks, have resorted to layoffs) and shift their focus from growth to efficiency.
The latest entrant on the ‘Leadership’ page alongside Mathrubootham is Dennis Woodside, who joined Freshworks as President in September 2022. Sources say while Woodside handles the day-to-day responsibilities of the company, Mathrubootham focuses on vision and culture.
Freshworks hasn’t made an official announcement about Krishnasamy’s departure.
It isn’t clear if the company is scouting for a new CTO. Chief Product Officer Prakash Ramamurthy handles Freshworks’ overall product vision and strategy, as well as its go-to-market efforts.
"After 11 years of working hard and helping build Freshworks products and technology, Shan decided to take a career break in September 2022,” a spokesperson for Freshworks said in emailed responses to queries from YourStory. “His former responsibilities are held by (Chief Product Officer) Prakash Ramamurthy who leads both (the) product and engineering teams.”
Krishnasamy could not be reached for comment.
As Freshworks, founded as Freshdesk in 2010, grew to billion-dollar valuation status in 2018, Krishnasamy had a small army of senior engineers reporting to him, including some early employees.
But in the run-up to the IPO in 2021, Freshworks began overhauling its management team, bringing in several executives in leadership positions, including former Zuora CFO Tyler Sloat as the finance chief and Stacey Epstein as Chief Marketing Officer.
Eventually, the number of people reporting directly to Krishnasamy shrunk.
Sources suggest Krishnasamy, in his early 40s and known for his passion for coding, had not been active with routine company operations for a few years. Also reticent, he has always shied away from public appearances.
“I think every SaaS company with over $80 million-$100 million in US revenues should have a CTO,” said Scott Berg, Managing Director and Senior Research Analyst at Needham & Co., an investment banking and asset management firm.
“(But) the fact that they have a chief product officer, to me, is more important than a chief technology officer at times, because this is the individual that's really running the product that drives revenues within the organization,” Berg said in a virtual interview.
Shan’s next steps
It isn’t clear how much stake Krishnasamy holds in Freshworks, or what he is currently pursuing.
In the MCA document, Krishnasamy is listed as a Designated Partner at Skal Ventures LLP and related entities, and a Director at Sassist IO India Pvt. Ltd. Suman Gopalan, Chief HR Officer at Freshworks, is also a Director at Sassist IO India.
As per private market data platform Tracxn, Krishnasamy has invested in seven companies so far–marketing automation solution Betaout, realty technology firm Bric Spaces, travel search engine Me Tripping, employee engagement solution Super Beings, digital wealth management provider Scripbox, open source test automation platform Testsigma, and digital media platform The Ken.
Disclaimer: As a former employee of Freshworks, the writer holds a few shares (converted as part of the employee stock options) of the company. The reporting has been done in an independent manner.
(Infographics and cover image by Chetan Singh)
Edited by Jarshad NK