India has a longstanding history with traditional education but is now rapidly embracing technology across sectors, especially in education, following the pandemic. The ed-tech industry, which combines hardware and software to enhance learning, has grown significantly, with companies like BYJU's leading the charge. BYJU's, an Indian multinational and creator of the widely popular K-12 learning app, once reached a peak valuation of $22 billion and claimed over 150 million registered students. However, as of October 2024, its valuation has plummeted to zero, reflecting significant challenges for the once-dominant ed-tech giant.
From Classroom to Digital: The Rise of BYJU’s as India’s Edtech Titan
Byju Raveendran, an Indian entrepreneur and educator, co-founded BYJU's with his wife, Divya Gokulnath. Born in 1980 in Kerala to parents who were teachers, he initially self-studied and later pursued a B.Tech. Working as a service engineer, he began informally coaching friends for the CAT exam, where he scored in the 100th percentile twice, sparking a career change. In 2007, he launched BYJU's Classes, which later evolved into BYJU's in 2011, an ed-tech platform that grew internationally. By 2022, BYJU's app had over 150 million downloads. As of 2020, Byju, Divya, and his brother Riju had a combined net worth of $3.4 billion, and in 2021, Byju joined India’s National Startup Advisory Council.
Pioneering Learning: How BYJU’s Captured the Hearts and Minds of Millions
Byju's initially focused on providing online video-based learning for the K-12 segment and competitive exams. Launched in August 2015, the app operates on a freemium model, offering free content for 15 days post-registration. Starting with content for classes 4 to 12, Byju's later expanded to classes 1 to 3 in 2019, and offers training for major Indian exams like IIT-JEE and NEET, as well as international exams like GRE and GMAT. Lessons are taught through 12–20 minute animated videos for self-paced learning. Byju's reports 40 million users, 3 million annual subscribers, and an 85% retention rate. In 2018, the app launched in several English-speaking countries, and in 2019, began offering regional Indian languages and kindergarten programs. In 2021, Byju's introduced "Future School," led by WhiteHat Jr’s Karan Bajaj, for interactive learning in coding, math, science, and more across multiple global markets.
Byju's has made several strategic acquisitions to expand its educational offerings and reach learners of all ages. In July 2017, it acquired TutorVista (including Edurite) from Pearson. By January 2019, Byju's purchased American educational game maker Osmo for $120 million. The company continued its expansion by acquiring Indian startup WhiteHat Jr for $300 million in July 2020, followed by virtual labs simulation startup LabInApp in September 2020 and Mumbai-based doubt-clearing platform Scholr in February 2021.
A significant milestone came in April 2021 when Byju's acquired Aakash Educational Services Ltd. for an estimated $950 million in cash and stock. This acquisition included minority stakes for Aakash's founders and Blackstone Group. Later that year, in July, Byju's made headlines with the $500 million cash-and-stock acquisition of American kids' learning platform Epic! and Singapore-based higher education platform Great Learning for $600 million, marking its entry into international markets.
Additionally, Byju's acquired online test preparation platform Gradeup (renaming it BYJU’S Exam Prep) and American coding platform Tynker for $200 million in September 2021, followed by the $100 million acquisition of GeoGebra in December 2021. In February 2022, its upskilling platform Great Learning acquired Bengaluru-based campus recruitment platform Superset.
Overall, Byju's has invested at least $2.8 billion across a dozen acquisitions, diversifying its services into exam preparation, higher education MOOCs, and tuition centers, while also incorporating innovative technologies like virtual reality and artificial intelligence, particularly during its rapid expansion in 2021.
Clicks vs. Commercials: A Battle of BYJU’s Digital and Traditional Marketing Tactics
BYJU's initially struggled with its digital marketing strategy, particularly in search engine marketing and social media outreach. The main challenge was identifying the right keywords and effectively engaging its audience. While students expressed interest in clarification of their doubts, they were less inclined to purchase BYJU’s courses, making it difficult for the company to influence this demographic. Additionally, although there were numerous leads from social media, conversions were low because the primary decision-makers—parents—were not being targeted effectively. Recognizing this misalignment, BYJU's marketers re-evaluated their strategy, realizing that while students influenced course selection, parents ultimately made the purchase decisions.
To address these challenges, BYJU's shifted focus to traditional marketing channels, particularly television. The company launched its official app in 2017 and enlisted Bollywood superstar Shah Rukh Khan as its brand ambassador. This partnership proved effective; the first television ad featuring Khan aired during a highly watched India-Pakistan match and significantly boosted app downloads. Khan's influence resonated with audiences, with memorable slogans like “BYJU’s hai toh progress hai” and a clear call to action to download the app. This campaign marked the beginning of BYJU's rise in popularity, demonstrating the power of traditional media in reaching both students and their parents effectively.
Behind the Glitter: The Dark Side of BYJU’s Success Story
Byju's has faced significant scrutiny and legal challenges regarding its practices and operations. Critics have accused the company of targeting financially vulnerable parents with high-priced products. In response to such criticisms, Byju's filed a ₹20 crore defamation suit against Pradeep Poonia, which was later withdrawn. The company's subsidiary, WhiteHat Jr., encountered issues with misleading advertisements and aggressive sales tactics, leading the Advertising Standards Council of India to demand the removal of several ads featuring a fictitious child, "Wolf Gupta," who was falsely claimed to have received lucrative job offers.
Byju's also faced backlash for its sales and marketing strategies, prompting the Department of Consumer Affairs to advise the company to work with the ASCI to address complaints. Additionally, concerns arose regarding Byju's accounting practices, particularly around revenue recognition, which led to an adjustment in how revenue was reported following auditor scrutiny.
In terms of legal troubles, Byju's was implicated in a raid by Indian authorities in April 2023, over alleged violations of foreign exchange laws, which the company denied. The firm also faced a lawsuit in the US for loan payment defaults and breaches of agreement, leading to a counter lawsuit by Byju's for harassment. Financial difficulties mounted as the company's auditors resigned, causing three board members to step down, leaving the remaining leadership to navigate a challenging landscape. In February 2024, the Enforcement Directorate issued a look-out notice against CEO Byju Raveendran, highlighting ongoing regulatory concerns surrounding the company.
Cracks in the Foundation: Major Errors That Shook BYJU’s Edtech Empire
BYJU's has faced several major mistakes that have impacted its operations and reputation:
1. Excessive Sales Pressure: The company was criticized for its high fees, which many considered unaffordable for average families. Former sales personnel reported aggressive sales tactics, including frustrating calls to students and parents, and an emphasis on overcommitting without adequate after-sales support.
2. Rapid Expansion: While BYJU's successfully built a large student base, it aggressively pursued acquisitions, spending at least $2.8 billion on over a dozen companies. This focus on rapid expansion diverted attention from enhancing its core learning app.
3. Improper Accounting Practices: BYJU's initially employed different revenue recognition methods that did not comply with Indian Accounting Standards (Ind-AS) 115. This practice led to discrepancies flagged by auditors. Since September 2022, the company began recognizing streaming revenue over the duration of usage instead of upfront, resulting in a reduced ability to book income in advance.
4. Advertising Malpractice: The company’s subsidiary, WhiteHat Jr., faced scrutiny from the Advertising Standards Council of India (ASCI) for misleading advertisements. One advertisement falsely claimed that a child named "Wolf Gupta" received job offers worth millions, later proven to be fabricated.
5. Legal and Compliance Issues: In April 2023, Indian authorities raided BYJU's Bengaluru office over suspected violations of foreign exchange laws. The company denied wrongdoing and promised compliance. However, it later faced a lawsuit from lenders in the U.S. alleging defaults on payments and breaches of loan agreements. Following a dispute over a $40 million interest payment, BYJU's counter-sued the lenders for harassment, resulting in significant layoffs of around a thousand employees. The situation worsened as Deloitte Haskins and Sells resigned as auditors, citing delayed financial statements. This turmoil led to the resignation of three board members, leaving only CEO Byju Raveendran, his wife Divya Gokulnath, and brother Riju Ravindran. In February 2024, the Enforcement Directorate issued a lookout notice against Raveendran.
What BYJU's Journey Teaches Us About Resilience and Adaptation in EdTech
These learnings can help startups navigate challenges and position themselves for long-term success, drawing valuable lessons from BYJU's journey.
1. Prioritize Customer Needs: Focus on offering products or services that meet the actual demands of customers rather than pushing what you want to sell. Understanding customer pain points is key to success.
2. Address Concerns Before Expansion: Prioritize resolving customer concerns and ensuring satisfaction before pursuing aggressive expansion. A solid foundation enhances growth prospects.
3. Avoid Overcommitment: Be realistic in your promises to customers. Overcommitting can lead to disappointment and damage trust in your brand.
4. Understand Your Audience: Effective marketing isn't about reaching everyone; it's about understanding specific needs and tailoring your approach accordingly. This targeted strategy leads to more meaningful connections and conversions.
5. Leverage Digital Marketing Wisely: Utilize digital marketing to generate leads, identify opportunities, and close deals. Focus on nurturing relationships rather than overselling, which can alienate potential customers.
6. Adhere to Legal Guidelines: Ensure compliance with local and national regulations in all business operations. This not only builds credibility but also protects your startup from legal repercussions.
7. Maintain Financial Accuracy: Diligently manage your finances, keeping a close eye on profits, revenue, and expenses. Clear financial oversight is essential for sustainable growth and stability.
8. Communicate Clearly in Advertising: Craft concise and clear messages in your advertising, whether through TV commercials or digital ads. A straightforward approach enhances understanding and engagement with your target audience.
Conclusion
In conclusion, BYJU's journey has been marked by rapid growth and significant challenges. While the company initially thrived by leveraging technology to enhance educational experiences, its aggressive expansion, questionable sales tactics, and inadequate compliance with accounting standards have led to serious repercussions. The reliance on misleading advertising and the ensuing legal troubles further tarnished its reputation. As BYJU's navigates these turbulent waters, the need for a reevaluation of its strategies and practices is paramount to restore trust, stabilize operations, and ensure sustainable growth in the highly competitive ed-tech landscape. The future of BYJU's will depend on its ability to address these issues transparently and to realign its focus on delivering quality education while building stronger relationships with both students and parents.