BYJU’S founders on the rise of edtech amid COVID-19 and how the startup clocked Rs 350 Cr sales in a month
The world’s most valuable edtech startup was not built in a day. In Money Matters with Shradha Sharma, BYJU’S co-founders Byju Raveendran and Divya Gokulnath share insights on building a slow, scalable, and profitable decacorn.
The coronavirus crisis may have plunged the world into deep recessionary times, but it has also served as an inflexion point for online education.
With 1.5 billion students grounded almost overnight as cities locked down and schools closed, the growth of e-learning platforms has been one of the most prominent narratives of the pandemic. The sector has witnessed phenomenal growth in users and traffic over the last two months.
, India’s earliest and most valuable edtech startup, saw 7.5 million new users on its platform since it started offering free access to content. In April alone, the Bengaluru-based firm grossed Rs 350 crore in revenue.
“We just finished our best month in April despite being free. We’re expecting to double that [revenue] in the next three to four months,” BYJU’S Co-founder and CEO Byju Raveendran tells YourStory Founder and CEO Shradha Sharma.
“We are fortunate to be in a business that has a positive relevance now. The monetisation has improved because this is a clear inflexion point. Good companies in the sector will skip a few years in their growth,” he adds.
On the show, Byju was also joined by co-founder and wife Divya Gokulnath. The two speak of edtech in a post-COVID-19 world, crisis-led innovations, new opportunities in online learning, the rise and rise of BYJU’S, and what it takes to build a scalable and sustainable business.
Byju believes that the changes edtech has seen in the aftermath of COVID-19 aren’t short-term. “Some of the things will stay on the other side of the crisis too. We are likely to see a blended format of learning, which combines the best of both worlds — online and offline,” he says.
The $10 billion startup also introduced free ‘Live Classes’ on its app recently. The feature is aimed to replicate a classroom-like environment online, and is different from the usual pre-recorded videos on BYJU’S. “It allows students to attend scheduled classes periodically and they love that. The feature is meant to replicate the regularity of school,” Byju explains.
‘Live Classes’ is one of the several agile additions and product innovations that the startup has come up with post the coronavirus outbreak. “We’ve released more app updates in the last three months than we have done in a long span of time,” says Divya. “We never imagined that work-from-home would be so productive,” she adds.
Historically, crisis breeds innovation. It is said that 50 new unicorns were birthed soon after the last global financial crisis. BYJU’S co-founders believe that several new problem-solving opportunities will come up in edtech.
Byju shares, “These are still early days in what tech can do to improve teaching and learning. Students are adapting easily because they are digital natives. But the teachers are struggling to use tools like Zoom, Google Classroom, and others. So, simpler tools have to be created. More institutions have to open up to this blended form of learning. There will be opportunities in B2B. You can also build around co-curricular skills.”
Service-based to product-based learning
BYJU’S began in 2011 as an offline tutorials company by the name of Think & Learn Pvt Ltd. The founder would travel across cities and conduct live classes with tens of thousands of students in auditoriums and stadiums.
“It was my passion [for teaching] intersecting with a real need [access to learning]. Those weren’t classes, I think of them as math concerts,” he says.
It took him four years to keep experimenting with learning formats and arrive at what is known as a ‘product-market fit’ in startup parlance.
The BYJU’S learning app launched in 2015, and set in motion its journey to becoming the world’s most valued edtech startup that would attract top-tier global investors like Sequoia Capital India, Chan Zuckerberg Initiative, General Atlantic, Tiger Global, Tencent, Naspers, and others.
Talking of the shift in approach, Byju says, “Changing the way teachers teach was a lot more difficult. So, we stayed focussed on students while creating our go-to-market strategy. Our core model was 100 percent services until 2015. We disrupted our own model with a product-based one, where students can get content based on their pace, style, and size of learning. An offline classroom doesn't allow you that personalisation. It can force attendance, but not attention. So, we offered an asynchronous, on-demand, personalised learning app for four to 17-year-olds.”
The key challenge was bringing about a shift in the learning mindset from an exam-oriented approach to one driven by the love of learning, and finding the right balance between “effectiveness and engagement”.
But how easy or difficult was it to convince the team of the change? And how does decision-making work at BYJU’S, which now has over 1,000 people?
The CEO shares, “You need to have existential flexibility. Can you question yourself at every step? Can you have a founder mentality and ownership among several people in the organisation? You make nine mistakes before you get one right, and when you get that one right, you go big.”
Divya adds, “From 10 people in the core team initially, we lost only one person in the last 10 years. Team continuity is very important. Our thinking is aligned, and we have been able to keep it a mission-driven company.”
Building a profitable long-term business
The founders reveal that when they started, there was no playbook for success in this space.
“There was no cut-copy-paste model that was successful in the US or China. We built a company based on first principles. Now, we have an 85 percent renewal rate year on year, which is a clear indicator that most of our users are finding the product effective,” Byju says.
But right from the outset, BYJU’S shunned the ‘growth-at-all-costs’ mindset and maintained a hawk-eyed focus on profitability and sustainability.
The founder explains, “We don't do anything just to add to the topline and just because we have access to capital. If value creation doesn’t follow valuation, then it is a short-term game. What matters is believing in a long-term approach. We have high quality, patient investors on the table. There is no scope for creating short-term optics if you’re in it for the long term. It is all about losing small and winning big. That is why we’ve been able to have maximum skin in the game.”
Co-founder Divya adds, “As a company, we have always respected money. We are paranoid about ROI, and knowing where, how much, when and what to spend on. Budgeting well is very important.”
The startup believes that in a post-pandemic world, it is critical to have multiple ‘lifeboat strategies’ or survival mechanisms. “Startups are much more resilient if they are creating through a downturn. The way we work, consume, transact, and do everything is changing. So, it is important to have survival strategies for 3-6-9-12 month timelines,” Divya observes.
“Weekly and daily plans are the order of the day,” Byju concurs.
He also offers a compelling cricket analogy to describe dynamic planning. “You can have a 50-over game strategy in the dressing room [off the ground]. But eventually, it all comes down to a ball-by-ball strategy on-ground, and that is what will win the game for you,” he says.
“There is no $100-billion market cap firm in education. Companies have not invested enough in getting the right product-market fit,” he adds.
Global expansion and future plans
The edtech decacorn is going global, yes. But the co-founders confirm that “India will continue to be a primary focus” for it.
Last year, BYJU’S acquired US-based startup Osmo, which builds educational games, to give a fillip to its blended learning offering. “We clocked $100 million from that integration in the first full year since acquisition. It’s a 4X growth from the year before,” Byju reveals, “Osmo added to our product portfolio both lengthwise and depth-wise.”
Are more global acquisitions in the pipeline?
Without revealing specifics, the co-founders say, “We keep an eye out for two things: one, if a company adds a lot of value for users in India, and two, if it gives us a head start when we’re looking at a new market.”
The edtech decacorn also plans to launch an accelerator this year. “We’re creating an accelerator to support companies in the large distribution chain, and this is our way of reaching out to early-stage startups,” Byju says.
In a few years, BYJU’S also plans to go public. It will keep adding to its product portfolio, and add “more subjects, more grades, more languages”.
“India has a very young and aspirational population. We have reached only three percent of the audience. We can impact millions because tech is a great enabler and it can scale without compromising on quality. The physical divide in education can be bridged with digital access,” Byju says.
What then is the final goal post? Or is there one? The founders sign off with, “If we can change the way students learn in India, we can create a very powerful nation. The day you think you are successful, it is over.”
Edited by Saheli Sen Gupta