Byju’s, India’s best-known education technology start-up that at one point claimed a valuation of $ 22 billion, started out as a one-man coaching centre. The unicorn became such a global story of success and growth that its fall in subsequent years was seen as a dulling of the India startup story in the eyes of global investors.
Among its investors were China’s Tencent and US hedge fund Tiger Global, but in recent times Byju’s has struggled with governance and financial issues, delayed financials, allegations of poor ethics in its sales, a drop in valuation, losses and layoffs, besides legal disputes over a loan. Earlier this month, BlackRock, the world’s largest asset manager, cut the valuation of Byju’s to about $1 billion, a 95% drop since October 2022.
Senior journalist Pradip K Saha, who broke many major news developments about Byju’s and about India’s huge e-learning market, offers in The Learning Trap: How Byju’s Took Indian Edtech For A Ride a meticulous analysis of the company and its charismatic founder Byju Raveendran, along with his original reportage of the allegations of mis-selling.
Writing in his introductory note that India’s education system is broken, school infrastructure lacking, curriculum dated and teachers unqualified, Saha says this makes education a multibillion-dollar opportunity in India. “The problem is,” he writes, “you can make millions of dollars by selling snake oil in the name of education.”
Excerpt
Rs 18,000.
That was all that stood between the child’s present circumstances living in a Mumbai chawl and his parents’ hopes of a better future. It would be an investment – a bridge to the wider and more prosperous world beyond the chawl.
The parents desperately wanted to give their child a shot at a better education, something they had never had. They would have happily sacrificed everything for that. Yet, despite all their efforts, all they could arrange was Rs 1,500. The bridge to the future was crumbling.
So, when they found out that they could take a loan for the rest of the amount, their happiness knew no bounds. In that moment, they were happier than Charlie during his first visit to the chocolate factory.
The salesperson from Maharashtra who told me this story remembered that breezy day around December 2018 like it was yesterday. ‘Bobby’ (name changed) requested anonymity. He was following a lead given to him earlier that week by the team in Bengaluru. As a BDE, or business development executive, with Byju’s, his job was to convert that lead into a sale of The Learning App.
As his cab approached the address, though, his heart started sinking. GPS led him to a chawl, where he knew that a sale would be close to impossible. But he needed this one to complete his targets. In his short stint at Byju’s, his numbers had been fine. He didn’t want to botch this one up. Not now, in his final few days at the company.
‘The parents were extremely vulnerable. To be honest, every parent is,’ Bobby told me over the phone. ‘But that set of parents, their eyes, I can’t forget them. They told me, “We want to do something for the child; we want to give him what we didn’t have, but we can’t even afford simple things.”’
He told them about The Learning App and how it could help their child in his education. He also told them about the option of taking a loan from Capital Float, one of Byju’s lending partners at the time. An hour into the meeting, he finally made what he remembered as his most desperate sale. ‘I had a feeling that I would get a refund call soon from the parents,’ he said.
Things hadn’t felt right.
First, the child went to a government school where English was not the medium of teaching. His command over the language, which Byju’s used for all its lessons, was much below par.
Second, he was a slow learner, a fact that Bobby had gathered from his interaction with the child. Letting children learn at their own pace can only go so far. Frustration creeps in with each wrong answer.
As the BDE expected, the father called and asked for a refund, which was done promptly. But in hindsight, the BDE says, he shouldn’t have sold to those parents in the first place. But not all such meetings – called counselling calls – are morally ambiguous in the same way. Bobby also recalls the time he sold a package to a couple for their children within 10 minutes. In contrast to the parents in the chawl, those parents were well-informed and affluent. They requested a demo and immediately cut a cheque for Rs 1.5 lakh (~$2,000) for a four-year course for their two children in grade 6. No convincing or explanation was required.‘The ticket value of that deal should have been Rs 1.2 lakh (~$1,600),’ Bobby said. ‘But I overpitched and they bought it at Rs 1.5 lakh without any questions.’
Did you read the two stories above? Read them again. Slowly, this time.
Over the last 45 months, as I reported on education technology for The Morning Context, I have heard more than a hundred stories from Byju’s salespeople about their lives, work and sales tactics. But this salesperson’s account stands out for the sheer contrasts.
It presents two sets of parents, one from each end of the socio-economic spectrum, both wanting what is best for their children, and the salesperson playing fast and loose in different ways with both sets to make the sale. The moral dilemma was different in both cases.
Since it launched its Learning App in 2015, Byju’s has revolutionized learning. It must be given credit for the big changes it has wrought. For the first time in the history of India’s education system, someone was talking about learning and not marks. It was unbelievable and heartwarming at the same time. Byju’s preached that the ultimate goal of all education is learning. It is not about being robots, memorizing and regurgitating results, but instead about learning concepts and their application where required. Learning remains at the heart of Byju’s operations, at least on paper.
But for the learning to happen, and for the company to make a sustainable business on the back of that desire to learn, the app needed to reach a large number of people.
Selling the app to parents was a challenge and parents are the final arbiters and decision makers in the kindergarten to grade 12 segment where Byju’s was operating. This contrasts with the test-prep or higher education segment, where the student looks for options and often takes the final call. So, the kindergarten to grade 12 segment of edtech runs on push sales, unlike the other segments that rely on the brand’s image and pull sales.
Sometime during the latter half of 2015, the company launched an advertisement blitz across TV as well as digital campaigns on social media. The first task was to get the students or their parents to download the app. The ads on TV and social media campaigns were good and had plenty of recall value, but Byju’s needed a bigger dhamaka (blast). It also had to keep its target audience in mind – children, the end-users, and parents, the buyers.
Only two things in India cut through all societal boundaries, Raveendran told me once: cricket and Bollywood.
So, when Byju’s needed mass appeal, something to make the company a household name, he acted upon that insight.
On Children’s Day (14 November) in 2017, Byju’s launched one of the biggest and most popular ad campaigns of all time, starring none other than Bollywood superstar Shah Rukh Khan. Created by Lowe Lintas, the ad shows Khan with a group of children during a school’s annual day performance. Here’s what Raveendran said in a media release announcing the collaboration with Khan:
Children rarely use the word ‘Love’ and ‘Learning’ together as learning has always been equated to pressure, stress and competition. We have always strongly believed that children learn better when they love what they learn. Our partnership with Shah Rukh Khan will help us increase our reach and create a deeper connect across geographies. His wide appeal and adoration amongst parents and children makes him a perfect fit for our brand.
Barring a brief hiatus in 2021, when Khan’s son was arrested, Byju’s association with him continues till today.
Raveendran hadn’t forgotten about cricket either. Nearly two years later, in July 2019, just ahead of the ICC Men’s Cricket World Cup, the edtech company replaced mobile handset maker Oppo as the Indian cricket team’s main sponsor.
‘We are proud to be the Indian cricket team sponsor. Cricket is the heartbeat of all Indians and we are thrilled to be an integral part of our much-loved team,’ Raveendran said in a statement. ‘As a learning company, Byju’s has always recognized the critical role that sport plays in a child’s development. Just as cricket inspires a billion budding dreams across India, we too as a learning company hope to inspire the love of learning in every child’s heart.’
One week later, COO Mrinal Mohit told Adgully, a media platform for advertising and marketing, that the company would spend 15% of the marketing budget on the ICC Cricket World Cup 2019.
Here’s what Mohit said to Adgully: ‘Our product is visual and we want the parents to understand how early learning will make their children better learners for life in about 30 seconds. Advertising on TV has always helped us with customer acquisition, that is, increased downloads. From the time we launch, we measure the ROI [Return on Investment] of our ad campaigns, through downloads, subscriptions, etc. We are very paranoid about the performance of an ad; if we see it performing well, we are ready to invest. In terms of mediums, we have seen that TV, when used simultaneously with social media, amplifies our ROI.’
As the company grew further and looked outside India for its expansion, it needed a global face – somebody who could replicate the Khan effect. It needed a sport with the same fanatical following across the world as cricket has in India – somebody and something to work the same magic as cricket and Bollywood.
There was only one possible sport and only one individual. In March 2022, the company announced it had signed up as an official sponsor of the FIFA World Cup Football, which was scheduled to be held later that year in Qatar.
In November 2022, Byju’s announced Lionel Messi would be the first global brand ambassador of its social impact arm, Education For All. The announcement coincided more or less with mass layoffs in the company and, thus, created a lot of furore in mainstream media as well as social media.
But the goal was to become a household name across the world and what better way than signing up Messi? The high-power collaboration would send brand recall into the stratosphere. So, Byju’s spared no expense.
The company’s advertisement and promotion expenses grew from Rs 188 crore in FY18 to Rs 457 crore in FY19, to Rs 899 crore in FY20, and an eye-popping Rs 2,251 crore in FY21, according to its audited earnings reports. Byju’s topline – consolidated revenue for FY21 – amounted to Rs 2,428 crore, so A&P expense was a whopping 92.7% of revenue in FY21.
(Excerpted with permission from The Learning Trap: How Byju’s Took Indian Edtech For A Ride published by Juggernaut.)
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