The story of the year: the big Byju’s exposé

Author Pradip K. Saha talks about his investigation into one of the most explosive stories of the year

For 12 years, Byju’s, one of India’s most valued ed-tech start-ups, aggressively sold dreams of academic success to Indian parents and students. Its valuation crossed $10 billion in 2020 with global investors pumping in money.

This year, Byju’s fall from the ed-tech throne was as staggering as its rise. Signing up the likes of Lionel Messi as brand ambassador, turning a blind eye to complaints of frustrated parents who were unhappy with the learning product, raising multiple rounds of million dollar investments, delaying the revelation of FY21 results, and its subsequent opacity about FY22 and FY23, have each led to Byju’s notoriety.

Its questionable company practices created a sense of cynicism among global investors: funding in the ed-tech sector is, as a result, at an all-time low since 2015. Journalist Pradip K. Saha, author of The Learning Trap: How Byju’s Took Indian Edtech For A Ride, talks about his investigation into one of the biggest stories of the year.

Four years ago, when we at The Morning Context decided to cover ed-tech, the biggest company was Byju’s. It was the bellwether of the entire industry. I wanted to know how this company convinces parents and if it is actually helping anyone. Byju’s draws in the parents and then it’s like going down a rabbit hole. The book goes behind the scenes, includes my conversations with Byju Raveendran [founder of Byju’s], and has a lot of fresh reporting.

It explores how salespersons aggressively sold the product to the economically weak, the toxic work environment, and instances of mass lay-offs.

You have described Byju’s hard push to convince parents to buy the learning app for their school-going children. Please explain why this is problematic?

While I have mentioned case studies of several unhappy parents in the book, there is this one case I haven’t written about: that of an autorickshaw driver in Bengaluru. He told me that a Byju’s salesperson insisted that he buy the app, even when he had no money to pay for it (nearly ₹70,000 for three years with a down payment of ₹15,000). He was told he could pay in instalments. Then there was a grandmother who hoped to help her grandson fare better at school. She was poor, but the salesperson struck a deal. This, however, pricked his conscience, and he quit the company.

What often happens is that children lose interest in the app, and then when parents seek a refund, the salespersons switch off their phones. There is no way to measure the learning outcomes on Byju’s. And that is the biggest problem. That is why it lost customers, people cancelled their subscriptions and the company had to fall back on investors and could not make a profit.

We have no idea about the company’s financials in 2022 and 2023; your investigation also found that phantom fundraising companies had alleged a connection to the Art of Living Foundation.

Byju’s serially raised money from venture capitalists, and the earlier ones such as Ranjan Pai’s Aarin Capital and the Chan Zuckerberg Initiative made a killing by exiting at the right time. With every subsequent round of fund-raising announced, the valuation of the company increased. This is how the game works.

Between 2015 and 2021, Byju’s kept scaling up. It hired more sales people, did more marketing, was the chief sponsor of Indian cricket teams, and signed up the likes of Shah Rukh Khan as brand ambassadors.

On a consolidated basis, the last publicly declared financials of Byju’s show a loss of ₹4,588 crore, 19 times the loss incurred in the previous fiscal. In July 2022, we broke the story of phantom fundraising, and that the announced $300 million from Sumeru Ventures and Oxshott Capital never landed. Media worldwide followed up the story. In an interview after the FY21 results, Raveendran said: ‘who cares about $300 million? I can raise $300 million in a week’.

Raveendran’s arrogance and the funding winter led to a crash in investments in ed-tech in FY23. What impact has the Byju’s story had on the sector as a whole?

A: The unethical practices at Byju’s have dented the confidence of global investors in the Indian ed-tech sector. From an all-time high of $4,165 million in 2021, investments in ed-tech start-ups dipped to $172 million in 2023. But the industry will survive. Now investors in ed-tech are asking questions they never asked before: about profitability and learning outcomes. And that’s a good thing for the sector.

Source:- https://www.thehindu.com/education