Why the EdTech Start-Up Byju’s is Failing

Byju’s is an EdTech start-up, currently valued at $22 billion. It is the highest valued among start-ups in India.

Why is Byju’s Failing

This EdTech company, founded by one Byju Raveendran has been on the limelight for all the wrong reasons!

First, let us take a loot at last 5 years of Byju’s revenue –

The growth seems steady over 4 years. But that does not tell the full story! Let us take the approx. estimates of losses too –

In 2021, Byju’s suffered 20 times loss than in 2019, there are little signs that the bleeding is going to stop!

What is going wrong with the highest valued startup in India?

The reasons are varied – a reportedly toxic work culture, bad reputation due to false advertising, negative customer experience, disappointing results for students and ending of the pandemic – these are the main reasons, Byju’s is going down.

Reportedly False Advertising

WhiteHat Junior is a sister company of Byju’s. This company advertises to teach coding to 6 year olds!

Not only that, the company also has advertisements showing kids working at Google, giving lectures at TedX, and earning in crores, all after learning on their platform!

The only problem is that, all the kids shown in these advertisements are fake!

The company initially did not divulge the fact that they were using fictitious accounts of kids to promote their products! But after people pointed out that none of the accounts are real, and the models in the ads were fake, the company started adding the word “fictitious” in ads! But why hide that from the beginning?

Take the example of Wolf Gupta! If the parents could not understand from the beginning that this was a pure fictitious account then the joke is on them- because no parent would name their child “Wolf”! But the fact remains that WhiteHat Junior did not reveal that it was not real and merely an imaginary child doing almost impossible things!

After criticism from several sources, the only counter of the company was that some of its advertising campaigns could be “poorly designed”!

Negative Publicity

A ton of negative publicity has been affecting the company’s bottom line. Specially in social media channels like YouTube, Twitter and Facebook, the company has been facing a lot of flakes.

For example – take the case of software engineer Pradeep Poonia against whom the company initiated a defamation case.

Poonia posted material on social media regarding mis-management of student classes. In several cases he demonstrated that the teacher was ill qualified for taking class. He even called the instructors “uneducated” and “housewives”!

WhiteHat filed a defamation case against Poonia, which was subsequently withdrawn. This case brought widespread negative attention to the company.

Apart from Pradeep Poonia, many people have been posting in Face Book and Twitter about the low standard of teaching.

Most of the complaints are mainly for WhiteHat Junior classes, but also affects the parent company Byju’s.

The company, instead of addressing the issues, tried to silence the critics, drawing sharp criticism from several quarters.

Disappointing Results for Students

Byju’s conducts classes for K3, K10, k12, K3 and NEET, JEE. But the results are not something to be proud of. Classes conducted for free at some YouTube channels have more students scoring higher marks than their Byju’s counterparts.

Also, there are numerous allegations that WhiteHat Junior has taken parents for a ride. There is a huge learning and performance gap in classes from WhiteHat Junior.

No kid has ever landed a crore rupee job, no kid has made million dollar apps, no kid has started any start up, after learning from WhiteHat Junior!

The marketing hype made is possible for ByJu’s to make money from WhiteHat Junior initially, but after not getting results in more than 2 years, parents are probably realizing that the company can not make their child the next Steve Jobs!

Toxic Work Culture

There are videos on YouTube where ex-sales people have come up and divulged the toxic nature of work at the company. Not sure how much of that is true, but it surely puts a cloud over the company’s reputation.

In one such video, the manager is heard berating his salesperson for being unable to fulfill a sales order. The language bordering on vulgar and crude, no wonder, many BDAs (business developments associates) left their job in the midway!

A simple search in YouTube yields several such videos of previous employees talking about the negative work culture in the company.

Ending of the Pandemic

The pandemic introduced a mad rush in Indian Edtech sector which is now slowing down and the affect is being felt by all Edtech companies.

During the lockdown, student has no recourse but take online classes. Now that demand is no more, students are going back to offline classes. Consequently, revenues are going down for Edtech companies, including Byju’s.

More Competition in the Market

When Byjus launched its app for the first time in 2011, there were few Edtech companies in India.

In 2016, Reliance Jio revolutionized the India telecom industry and made data cheap and fast. Byju’s cashed on the online education trend and spread throughout the whole of India and then the world.

During the pandemic more competitions showed up, as the barrier to entry in this sector was low.

The people already on this space and providing quality training, started picking up and in this period their audience also skyrocketed.

As a result, the customer acquisition cost has shot up from Rs. 10,000 for a Rs. 50,000 paying student in 2017, to Rs. 40,000 and sometimes more for the same student, post pandemic!

Byju’s has always been spending a lot of money in advertising.

Byju’s is having to spend a lot in advertising these days to stay ahead of the competition. In the financial year 2021, they spent close to 2250 crore rupees, which is almost 3 times the amount spent by Unacademy, Vedantu and upGrad combined!

On top they have to compete with the well established online tutors whose personal brands have been growing steadily over the years.

These channels with personal brands do not need to spend anything in advertising, as word of mouth spreads the marketing message among millions!

Future Trends

The future looks uncertain for the company. In the financial year 2022, the company clocked a revenue of Rs. 10,000 crore, which is a 4 times the value in 2021, but details of losses or expenses in marketing and advertising are not known yet.

A large part of their revenue in 2022 is coming from the acquisitions. So it remains to be seen whether the company can sustain the same levels next year or falls down.

After the pandemic, students are going back to regular and physical schools, so that will play a role in company revenues as well. How Byju’s counters that trend will be interesting to watch.

The competition will also eat away at profit. Barrier to entry in Edtech is very very low. A lot of start ups are loaded with VC money in this space and the fight to remain one will be intriguing.

Last but not least, the personal brands with huge trust factor are definitely going to sway students away. These channels have charismatic educators providing quality education, and their brand values will only increase in coming years.

Tidbits about the company

Byjus brought Shah Rukh Khan to advertise for them.

Byjus sponsor the shirts of Indian cricket team.

The FIFA event is co-sponsored by Byjus.