Byju’s Group: The World Is His Classroom
From being India’s leading edtech player, unicorn Byju’s has ambitions of becoming the world’s largest education company. Will the journey beyond the shores be as smooth as it has been on home turf so far?
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Kannur in Kerala conjures up the imagery of bloody political clashes between the Left and the RSS/BJP. This coastal district is where Byju Raveendran spent his childhood and early youth. Byju had nothing to do with either Left or Right, though. His passion was Math, and sports.
Math is fun. So is business. This is the line that Byju repeats before investors — that “he does business for the fun of it”. It was for the fun of numbers — much before the fitness watches, he used to count the number of stairs and steps taken — that Byju first started tutoring students, largely acquaintances and referrals, for Math. “It was a batch of 35 students, purely in an informal setting in Bangalore, learning the shortcuts for CAT preparations,” says Byju, as BW Businessworld met up with the 37-year-old entrepreneur in his business-like office in downtown Bangalore.
The baby steps that led to the eponymous Byju’s Classes, today has grown into a $5.3 billion (Rs 38,000 crore) Byju’s: The Learning App, consolidating its predominant Indian space, and foraying beyond the Indian shores.
According to a KPMG-Google report, the online education space in India will be valued at $1.96 billion by 2021, with 9.5 million users. The primary and secondary supplemented education will be the largest category by 2021 with a size of $773 million, growing at a CAGR of 60 per cent. Test preparation, on the other hand, will be the fastest growing category in 2021, growing at a CAGR of 64 per cent, and valued at $515 million.Byju’s, with the early mover advantage, is consolidating in both categories. In the first category, it also plans to enter the Grade I-III segment by the year-end. Currently, it caters to Grade IV-XII and competitive test preparations. In the first category, Byju’s competition are players like Toppr, Vedantu, Doubtnut, among others. In the latter category, notable names include unacademy, besides Byju’s. Interestingly, most of these edtech startups have been founded by engineers.
With the Digital India push, the thrust on startups and near-universalisation of smartphones, coupled with a young population in the country, provide the just right kind of launching pad for these startups.
Byju went to the local engineering college in Kannur, where again, he did well in exams, and kept on improvising Math lessons. Come to think of it, there are no shortcuts in Math, Or in learning. The trick is learning the right way. And discover a way or two to solve the problem in a shorter time span. This is what Byju did. “I didn’t learn in the classroom at all. I was a self-learner. For doubts, the teachers were there, yes, but that’s about it. And apart from being selected in sports teams (cricket, soccer and table tennis), I did well in exams,” reminisces Byju.
Sociologists and psychologists call it the “joy of learning” — something that opens up newer vistas. Memorising, replicating (in exams) and forgetting — the rote learning pedagogy, much in vogue today, is the very anti-thesis of the learning process that liberates. Byju sought to make learning for the students a joyful process.The batch of 35 then expanded to 200, and then auditoriums were booked by him for the teeming hundreds as the word quickly spread. “I had three options then — get back to my shipping company job and see the world, or get into an IIM, or do this. I chose the latter,” he says, adding, “There was no cut, copy, paste model for my business here. Conventionally, in another setting someone else would have increased the number of batches of students. I didn’t do that. First auditoriums were booked, and then stadia, with 1 to thousands of teacher to students ratio.”
It used to be a Math concert, then. Delhi’s Indira Gandhi Stadium, Pune’s Balewadi Stadium, and Hyderabad’s Gachibowli Stadium used to host Byju’s sessions, with thousands in attendance. This was in 2009. Much before the advent of 4G, and the popularity that videos and video platforms have acquired, Byju started creating Math lessons on videos. So, in a stadium, on giant screens, videos would play out, with Byju standing in a corner, like an orchestra conductor.
With such humble beginnings, what started as Byju’s Classes is today Byju’s: The Learning App, the leading edtech player in the country. Launched in August 2015, Byju’s learning app today sees 33 million downloads a year, and out of which are 2.2 million are paid users. Average time spent by a paid user on the app daily is 64 minutes. “With decreasing attention span of children, it’s a challenge to get kids hooked to learning videos. It also means we have to think creatively. When we talk of projectile motion, how about explaining it by a cricketing shot, for instance,” he says.
Significantly, 85 per cent of the paid users renew their subscriptions. “We are hugely enthused by the renewed subscription numbers. That shows that we are moving in the right direction, and the parents, besides the students, have confidence in us,” he adds.
Byju doesn’t believe in thinking small. “I would say think big. As you are about to reach the target, take the bar still higher. This has been our defining philosophy. This also ensures that complacency never sets in,” says Byju.Global Ambitions
Having just clocked Rs 1,400 crore in revenues in the year gone by, Byju’s has set its eyes on the global stage. “We wish to be the world’s largest education company,” says Byju, as he explores newer markets (in the US, UK and other Commonwealth countries) and scouts for more investments. This makes business sense. The global online education market is pegged at $286.62 billion by 2023, up from $159.52 billion in 2017, says a Global Online Education Market report.
The recent acquisition of Osmo, a US-based learning platform, is a step in that direction. Osmo, which gamifies primary education, was acquired for $120 million by Byju’s. “This is the perfect platform for offline to online, physical to digital technology and content. We will thus be able to make reality learning games, worksheets to online to app, for children aged between 4 to 9,” explains Byju, giving the rationale behind the acquisition. Byju’s is looking at the US, UK and other Commonwealth countries as the next frontier. “We are doing data testing. So, as of now I am not too sure where I will spend the first $10 million internationally.”
Talking about investors, there’s an interesting story. Ranjan Pai of the Manipal group and Mohandas Pai of Aarin Capital were among the first investors in Byju’s. It was an interesting mix of events that made Ranjan interested in the group. One day, around 9 pm, he saw some 400 engineering students hooked on to a Math video in the college auditorium. This set him thinking. “I saw potential in the product. I said to Byju that he should look at scaling up, and I was willing to invest,” informs Pai.
Just before the app’s launch in 2015, Sequoia came on board. Theirs too was a similar story on what got them interested in the product. The Chan Zuckerberg Foundation till date has invested only in Byju’s in Asia so far. “They got interested because we were in the education space. And we believed in personalising learning. Also, because non-metro centres were also getting benefitted,” reveals Byju.
Byju’s has raised over $800 mn from various investors, including Naspers, CPPIB, General Atlantic, Tencent, Sofina, Verlinvest, IFC, Times Internet and Lightspeed Ventures. “Byju’s has so far raised Rs 3,603 crore of which it raised Rs 2,570 crore in just one single round. Its Series F round constituted 71 per cent of its total equity financing till date,” says Vivek Durai, founder of business signals platform paper.vc.
Fourth Most Valuable Startup
Interestingly enough, Byju informs that out of the $800 million or so, they have spent only $200 million, largely in product development, and around $550 million is in the banks, because “they believe in spending judiciously”. With the latest round of funding, Byju’s is now the fourth most valuable Indian startup — after One97 Communications (Paytm), ANI Technologies (Ola) and Oravel Stays (Oyo Rooms), and the fifth most valued private Internet company (after Flipkart and the three startups mentioned above).
Byju’s was profitable when they took off — all the profits were then channelled into content development. After suffering losses for the years 2016, 2017, they have been profitable in the last three quarters, says Byju.
Forty per cent of the company stake, however, rests with Bjju, wife Divya Gokulnath and brother Riju Raveendran. “This ensures that the company and the investors are aligned. We are not pulling in different directions,” says Byju.The journey, even in India, is not going to be without its challenges. Says Zishaan Hayath, Founder of Toppr: “Byju’s is a classroom approach where they want to produce videos as extensions of classrooms. Eventually technology wins over domain expertise. Like Merucabs was sent into oblivion in India. Look what Uber or Ola did to them. A technology company will win over a classroom teaching company. Ours is a technology approach. We are product managers and we find technology-based solutions to problems.”
Tanushree Nagori of Doubtnut, which has just raised $3.3 million (Rs 23 crore), adds: “While Byju’s may be the leader, we have adopted a different strategy. We help students with problem points. Then we are present more in tier-2 and tier-3 cities, whereas Byju’s targets the affluent in the metros. And, yes our primary lessons are in Hinglish, like they speak in Bolywood, whereas Byju’s is pure English. We are also present in 12 Indian languages.”
Some of these points have been factored by Byju’s. For instance, after establishing in the premium English space, Byju’s is now looking at the second language — it could be Malyalam or Hindi or any other Indian language. “As for tier-2 and tier-3 cities, we feel that less than 2 per cent of the urban students today come for online learning, so the potential is huge. When parents pay about Rs 15,000 per year for the yearly Byju’s subscriptions, there’s a strong alignment of interests of the parents and the kid,” says Byju.
But other models too are being tried. Says Vamsi Krishna of Vedantu: “Ours is an attempt to create an alternative to coaching centres and tuition teachers. As for others, including Byju’s, even if someone uses the app, s/he still goes to the coaching centre or the tuition teacher. In our case, however, the question generally asked is — should I get my child on Vedantu or should I send her to a coaching centre?”
Byju’s Biggest Challenges
Byju is not taking the challenges lying down. He says the biggest challenge is finding quality teachers. “Even a few quality teachers would do. But we have to train them. In our case, they have to be, for instance, movie makers who are Math wizards,” says Byju.
With competition and the omnipresent threat of disruption in the edtech space — “We ourselves have disrupted our own model multiple times,” he says — Byju counts on a core team that was drawn from his student base. That includes Co-founder Divya Gokulnath (also his wife). “All of us — the core group — are drawn to content because we have been good students,” says Divya. Some of these students went to IIMs; some rejected IIM offers and stayed back.
“I am inspired by Roger Federer. At 35, or 37, he’s playing better than he was at 21 or 24. That is what I aim to do. Compete against myself. And, create leaders who are better than me,” says Byju.
While Byju used to create and conceptualise Math lessons once, today he does more of strategising and hand-holding. “But we do have to be ready for course corrections; One cannot afford to spend, say, $100 million, and then realise that a mistake has been committed,” he says.
“I don’t want to live thinking about tomorrow. I live in the moment. At the same time, I know that one should have, and we do have, yearly, monthly, weekly, and even daily goals. Also, businesses are run on trust, not on contract. So, at times, I am accused of trusting people blindly. I believe that the newer startup ecosystem must address local needs. I seriously think that while businesses may fail, entrepreneurs never fail,” sums up Byju.
What started as a group of motivated youngsters, Byju’s today employs 3,200 employees, with the average age being under 25.
Byju Raveendran is an ode to Kannur’s spirit — this coastal Kerala district has much more than political violence to offer to the world.