What Went Wrong for Byjus: Explained

The FIFA 2022 World Cup is officially sponsored for the first time by Byju's, an Indian business. Although Byju is valued at 22 billion dollars, its sales were only 2400 crores and they lost 4600 crores last year.  The topic at hand is: How did Byju's incur a 4600 crore loss? 

 

Brief about Byjus

 

Consider yourself in a crowded classroom as the instructor explains a crucial idea. Everyone else seems to be following along with the teacher's explanations by nodding their heads in agreement, but you are unable to comprehend a single word of what is being said in class. Do you identify with this situation? Whether you like it or not, students have encountered such circumstances at least once in their lives. Since everyone learns at a different rate, the teacher cannot possibly keep up with everyone in the class.

 

Fortunately, the Edtech industry is expanding quickly enough to close this gap. And when it comes to EdTech in India, BYJU is a name that must be mentioned. Continue reading to discover how the world's most valuable ed-tech company was founded by an engineer who had a passion for education.

 

Byju Raveendran founded BYJU'S in 2011, and BYJU'S The Learning App was released in 2015. Currently, BYJU's is worth roughly $8.4 billion.

 

BYJU's is an online tutoring and coaching business that was founded in 2011 and is based in Bangalore. It utilises a freemium business model. The parent firm of BYJU is called Think and Learn Pvt Ltd. BYJU's primary goal is to offer tutoring via online video lectures to children in grades 1 through 12, as well as to those preparing for competitive exams like the IIT-JEE, NEET, CAT, GRE, and GMAT.

 

The Learning app from BYJU was released in 2015 and has been a tremendous hit. More than 15 million students utilize it globally, and 9,00,000 of them are paying customers. The software encourages independent learning among the pupils rather than relying on lecturing. 

 

Byju's valuation increased from $5 billion prior to the Covid epidemic to $22 billion last year as students all over the world switched to the online style of instruction as a result of the pandemic. However, once the pandemic's impact diminished and students resumed attending offline sessions, the company's growth halted.  Byju Raveendran, the company's creator, and his wife Divya Gokulnath operate Byju's. In 2011 Raveendran established the startup, and in 2015 he released the app. 

 

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Core Team of Byjus

 

The company that develops educational technology, BYJU's Classes, was founded by Byju Raveendran. Listed below is the core team of byjus

 

1. Raveendran Byju

 

The CEO and founder of BYJU, Byju Raveendran, was born in Azhikode, Kerala, in 1980. He graduated from the Government Engineering College in Kannur, Kerala, with a B.Tech in mechanical engineering. Byju Raveendran was a service engineer for a large shipping company before founding BYJU's. However, he loved to teach, which is what motivated him to start BYJU's.

 

2. Divya Gokulnath

 

In addition to being Byju Raveendran's wife and a co-founder and director at Byju's, Divya Gokulnath is an Indian businesswoman and educator. Divya studied at National College Jayanagar and R.V. College of Engineering, where she earned a B.Tech in biotechnology. In 2011, she and her husband decided to co-found Byju's.

 

On December 10, 2021, Rachna Bahadur was chosen to be Byju's Senior VP. In this role, she would be responsible for the company's overall planning, strategies, and roadmap in both new and existing markets. Previously, Rachna worked as a Partner with Bain & Company.

 

The Chan-Zuckerberg Initiative, a charitable initiative started by Facebook founder Mark Zuckerberg and his wife Priscilla Chan, awarded its inaugural grant to BYJU's in 2016, making it the first Asian business to do so. BYJU's became a unicorn in 2018, making it the first Indian edtech business to join the elite unicorn club of Indian startups.

 

BYJU's completed a $800 million fundraising round successfully in March 2022. Famous investors including Sumeru Ventures, Vitruvian Partners, and BlackRock invested $400 million, with the remaining $400 million coming from BYJU's founder, Byju Raveendran. However, difficulties were encountered in July 2022 when Sumeru and Oxshott failed to transfer their $250 million due sum, alleging macroeconomic factors.

 

BYJU's received money in June 2021, making it the most valuable startup in India and valuing the edtech behemoth at $16.5 billion, surpassing Paytm. After the investment round was a success, the valuation increased to $22 billion in July 2022. BlackRock, however, reduced BYJU's valuation by 62% in May 2023, resulting in a new valuation of $8.4 billion. Just one month prior, BlackRock had reduced its estimate to $11.5 billion.

 

Downfall of Byjus

 

Since September 2022, when Byju's, a prominent player in edtech, presented its financial statement for FY21, the company has been in financial trouble. This has damaged the group's reputation and resulted in raids by the Enforcement Directorate and lawsuits against lenders.

 

Even if Byju's, an online education platform, has had a lot of success, it's vital to remember that any speculation on why it might fail should be treated with caution. However, the following speculative elements could result in difficulties or failures for Byju's:

 

1. Jr. Whitehat Flop

 

A number of White Hat Junior advertisements proclaiming "Learn to code and change the world!" and "Now every youngster in India learns to code, make apps, and change the world!" were likely seen during COVID two years ago. How youngsters as young as 7 are contributing employment to Google and giving lectures at TED.

 

Since COVID is no longer in effect, many experts think the coding trend is over. Therefore, it would be best for Byju's to shut down White Hat Junior. However, the company's owners don't want to do that, claiming that even if the program may not have performed well, Indian teachers and kids have benefited much from it.

 

2. Advertising Costs

 

Major athletes and celebrities including Neeraj Chopra, P.V. Sindhu, and Shah Rukh Khan serve as their brand ambassadors. The Indian cricket team and the FIFA World Cup both have brand agreements with Byju's. As you can see, these are significant occasions involving well-known individuals. Byju's had to spend a lot of money to secure each of them as brand ambassadors. Last year, Byju's spent over Rs 2,000 crores on marketing. Last year, 32% of Byju's spending was on marketing.

 

3. Scalability Problems

 

Byju's quick expansion into new markets and rapid growth may present scalability problems. It can be challenging to provide scalable, individualized learning experiences, and a failure to uphold high standards could have an adverse effect on customer satisfaction and retention.

 

4. Evolving Educational Landscape

 

Byju's may face difficulties if it is sluggish to change or fails to match its offerings with the changing demands of students and educators. Changes in educational regulations, instructional techniques, or curriculum requirements may also present Byju's with difficulties.

 

5. Technological Setbacks 

 

Byju's heavily relies on technology infrastructure to provide its services, which presents some technological challenges. Users may get dissatisfied with any significant technological errors, cybersecurity breaches, or service interruptions, which could hurt the company's success.

 

6. Subject Coverage Is Limited

 

Byju's places a strong emphasis on fundamental disciplines like physics and math. The platform may be less appealing to a wider range of students and educational requirements if it does not offer thorough coverage of other courses or a well-rounded educational experience.

 

7. Negative User Reviews

 

Byju's reliability and reputation can be greatly impacted by negative user experiences or reviews. A significant number of unsatisfied users airing their grievances in public could cause people to lose faith in the site, which could result in a drop in its popularity.

 

It's vital to note that Byju's has millions of users and has experienced great success. These extra potential failure factors are theoretical and could not accurately reflect the business's current situation. Byju's has demonstrated flexibility and a dedication to innovation, and it is still developing to keep up with the shifting educational scene.

 

Future plans of Byjus

 

The company's auditors, Deloitte Haskins & Sells, resigned citing their inability to complete audit reports for the fiscal years ended March 2021 and March 2022 due to growing financial worries. Three of Byju's directors' resignations were the subject of intense market rumor. They consist of Russell Dreisenstock of Prosus, Vivian Wu of the Chan Zuckerberg Initiative, and G V Ravishankar of Sequoia Capital.

 

A representative for Byju, however, refuted the resignations. "A recent media article speculating the departure of Byju's board members is absolutely unfounded. Byju's vehemently refutes these assertions and implores media outlets to abstain from disseminating unreliable material or engaging in unfounded conjecture. Our organization uses formal channels and announcements to highlight any noteworthy developments or changes. For factual information on Byju's, we ask that media outlets rely on confirmed sources and official announcements, the spokeswoman stated.

 

As of February 2022, Byju's plans to increase its focus on the Byju's Tuition Center (BTC) by spending up to $200 million on it over the following 12 to 18 months. Over the following two years, Byju's hopes to enroll approximately 1 million pupils under this approach. This product is now being used as a pilot by the Byju Raveendran-led edtech behemoth in about 23 cities and 80 centers, and it will be expanded to 500 centers across 200 cities by the end of 2022. Byju's is anticipating a public listing in the coming 18 months. It also seeks to buy well-known businesses like 2U Inc., which is listed on the NASDAQ.

 

BYJU's claims that it generated approximately Rs 10,000 crore in gross revenues during FY22, despite not yet releasing its financial data for that fiscal year. The operating revenue for BYJU, however, only increased modestly by 4% to Rs 2,280 crore in FY21 from Rs 2,189 crore in FY20, according to the annual financial accounts submitted to the Registrar of Companies (RoC). In contrast, the company experienced a significant surge in losses, which increased nearly 15 times to Rs 4,564 crore in FY21, as compared to Rs 305 crore in FY20.

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