“We have made our fair share of mistakes but there is a strong intent to correct each of those mistakes,” Byju Raveendran, Founder and CEO of one of the world’s most valued companies, BYJU’S, told Business Today at the World Economic Forum, Davos.
He also revealed that the last six months have been full of learnings. In a conversation with Rahul Kanwal, Executive Director of India Today, Raveendran said, “It was not about chasing valuations. We were also creating a lot of value.” He said that they are on a mission to “build something that will last for decades”.
Reflecting on the last few months, he said, “The last six months were challenging but the next six years are going to be great.”
In September last year, the company hit the headlines when it reported its financial results after almost an 18-month delay and saw its losses widening to Rs 4,588 crore whereas revenues stood at Rs 2,428 crore.
And just when it seemed like it was entering a phase of relative calm after it conducted mass layoffs to focus on capital-efficient growth, the Bengaluru-based firm found itself being pulled up by the National Commission for Protection of Child Rights (NCPCR) over alleged hard-selling and mis-selling of its courses to students.
Shedding light on this incident, he said, “When you have such a large team, such incidents will happen.” He also said that there was no question of selling beyond the eligibility criteria as “financing was always done by partners.”
“There was no question of someone who was not eligible getting financed. Approvals are done based on CIBIL score, etc.”
He also said that they are on the verge of becoming profitable. “The worst is over,” he said, adding, “From growth to sustainable growth, we have already made that shift.”
BYJU’S also defended the decision to spend 32 per cent of the company’s budget on marketing and advertising. He said marketing expenses are important to spread awareness because within the edtech sector, they are “doing it differently.”
BYJU’S teaches online instead of having a traditional classroom set up and this message needs to go out to their potential customers, he stated.
Raveendran addressed the Messi controversy. The company faced a lot of backlash for onboarding football legend Lionel Messi as the brand ambassador after announcing the layoff of 5 per cent of its workforce barely a month before.
He said that it was a different kind of partnership where Messi was onboarded for their not-for-profit initiative. “What many people don’t talk about is our not-for-profit initiative where 5.5 million get education for free.”
He also revealed that the partnership with Messi was signed several months back. He said that as part of this agreement, they were required to make the announcement at a certain point in time before the FIFA World Cup. He added that having Messi has increased brand awareness in certain regions like the Middle East.
WhiteHatJr – the most challenging acquisition
The founder of the edtech giant admitted that of the six acquisitions BYJU’S did, WhiteHatJr has been the most challenging one.
WhiteHatJr was acquired by BYJU’S in 2020 for $300 million. Raveendran said that at that time rolling out this offer seemed fair because the company was getting offers which were more than $300 million. Moreover, the Karan Bajaj-led business was growing decently then, he said.
“Today, it is easy to say that we shouldn’t have made that acquisition. We have not been able to solve the cost of acquiring a student. And so, we have struggled with the WhiteHat Jr acquisition, and I have accepted that.”
He said that besides WhiteHatJr, other acquisitions including that of Aakash Institutes have been successful. He pointed out that Aakash has grown 3x and another company which BYJU’S acquired, Great Learning, has grown 2x.
Future of edtech
Raveendran also spoke about the layoffs in the Indian start-up ecosystem.
“If you see what all the leading start-ups have done in the last 6-12 months, all of them are going through an optimisation exercise where it is not just about growth but finding the right balance between growth and profitability,” he said.
Talking about the funding winter where capital infusion by investors has dropped especially in late-stage start-ups, he said that well-known players stand to benefit from it as too many players enter the market when “cheap capital” is available.
“This is a time when real business models will stand out.” He concluded that businesses with strong unit economics and profitability will survive any tide and emerge victorious.