Entrepreneur Stories

July 21, 2023

5 mins

Journey from a Success to Controversy in EdTech

From a village terrace to grand auditoriums, this founder's incredible journey started in a small village in Azhikode, a small village in Kerala. Originally employed as a service engineer in a multinational shipping company, his life took a significant turn when he started helping his friends prepare for the CAT exam, a highly competitive entrance exam for business schools in India.

To test his own abilities,  Byju Raveendran took the exam himself and achieved a remarkable 100 percentile score. Encouraged by his friends, he decided to start teaching students for competitive exams. He left his high-paying job and established Byju's Classes in 2007, initially focusing on test preparation. Byju began teaching on a friend's terrace, and his coaching classes gradually grew in popularity. Starting with MBA aspirants, Byju expanded his classes and embarked on a path to success.

Source: byjus.com/byju-raveendran/

“I am not trying to make millions, I am trying to change- the way millions think and learn”

Transformation into EdTech Giant

In 2011, Byju and his wife, Divya Gokulnath, established Byju's as an edtech company, transforming the way students approach learning. With the assistance of recently graduated students from IIMs, they founded the technology firm known as Byju (Think and Learn Private Ltd.), driven by the motto "fall in love with learning." Byju transitioned his teaching from the terrace to a proper classroom and started the coaching class with an initial investment of Rs 2 lakh.

Byju's launched an app in 2015, taking advantage of the increasing prevalence of smartphones and allowing students to learn on handheld devices. The app quickly gained popularity and expanded to various English-speaking countries. Byju's relentless pursuit of growth and innovation continued, with the company making significant strides.

Expansion and Acquisitions

In 2021, Byju's was in advanced talks to acquire Vedantu, showcasing the company's commitment to expanding its reach and impact. Byju's success is reflected in its valuation and net worth, with Forbes estimating that Byju, his wife, and his brother have a combined net worth of $3.4 billion as of 2020.

The BYJU's app has witnessed remarkable success, with millions of downloads and users spending an average of 71 minutes on the app every day. Byju's continued its growth trajectory by acquiring Aakash Educational Services Ltd. for nearly $1 billion in 2021, further solidifying its position as a leading player in the education sector.

Byju Raveendran's dedication to transforming education and his entrepreneurial spirit have earned him recognition and accolades. He was appointed as a non-official member of the National Startup Advisory Council in 2021, showcasing his influence and expertise in the startup ecosystem. In a personal capacity, he invested $400 million in BYJU's in July 2022, emphasizing his commitment to the company's future growth.

Controversies and Challenges 

As no founder's story is complete without challenges, Byju's now finds itself in a series of controversies that threaten to tarnish its reputation. Despite boasting a high valuation, substantial funding, and a large user base, the company's path to success has been bursted with challenges and criticisms.

One of the major concerns surrounding Byju's is its significant financial losses. Despite raising billions of dollars from investors, the company's losses have continued to mount.  Byju released its audit results from its March 2021 fiscal year nearly 18 months later, indicating issues with Byju’s financial performance. In this delayed 2020-21 financial audit alone, losses grew 17 times to Rs 4,500 crore, while revenue experienced a 3% decline. This raises questions about the sustainability of its business model, as its aggressive spending on marketing, acquisitions, and expansion efforts fails to generate proportional revenue growth or profitability.

Further Indication of Byju’s financial struggle is its debt-financing arrangements, offering to increase the interest rates on its $1.2 billion term loan B. This may infer that Byju’s is struggling to meet its original repayment terms. Byju’s financial woes are additionally displayed with Deloitte and 3 board members of Byju severing ties to the startup. Deloitte was expected to audit Byju’s until 2025 but due to the lack of communication and long-delayed financial statements by Byju, they were unable to continue working with them. Deloitte’s leave announcement also comes as 3 board members from key investors Sequoia Capital India, the Chan-Zuckerberg Initiative, and Naspers Ventures have resigned from the board, leaving only the founder’s family on the board - Byju Reveendran, his wife, Divya Gokulnath, and brother Riju Reveendran. In the span of a year, Byju’s went through 2 rounds of layoffs resulting in the dismissal of approximately 3500 employees, and witnessed a 62% decline in overall worth from $22 billion in March 2022 to $8.4 as of May 2023.

Additionally, Byju's faces backlash from parents who claim they were misled by sales agents into purchasing expensive courses that proved difficult to cancel or obtain refunds for. Allegations of unfulfilled promises, such as personalized tutoring and progress reports, further fuel the controversy. Former employees have also voiced grievances, describing high-pressure sales targets and pushy managers within the organization.

Legal challenges further compound Byju's troubles, both domestically and internationally. Accusations of data privacy violations and consumer protection law breaches in India have raised red flags among stakeholders. Meanwhile, in the United States, Byju's is entangled in a lawsuit alleging the inflation of student enrollment numbers and fraudulent practices.

Byju's aggressive marketing strategies have been met with criticism. There are concerns regarding unsolicited messages, challenging cancellation procedures for discounts and free trials, and the high fees and interest rates associated with its courses. These practices are tarnishing the company's reputation and invite further scrutiny.

Byju's, once hailed as a successful startup, now faces significant challenges that have raised doubts about its viability. To succeed in the edtech industry, Byju's needs to address profitability, quality, ethics, competition, and regulatory compliance in its target markets.


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