What started as a standard coaching class 14 years back, turned into a ‘decacorn’, world’s highest-valued Edtech company, second most valued start-up in India, first in the consumer internet start-up space to turn profitable (in 8 years), raised $2.48 billion funding till date, 64 million registered user base on its leading K-12 app and so on. But most important of all, it is the company that made us “fall in love with learning”. What is it that this humble start-up Byju’s did to achieve such glory?
Sowing the Learning Seeds: Byju’s First-Mover’s Advantage
Over the years, founder Byju Raveendran has pivoted from being a mechanical
engineer to a teacher to a hard-core technology entrepreneur. Raveendran, who was working with a multinational shipping firm back in early 2000s, had become quite a hit among locals after he helped some of his friends prepare for CAT. Many of them ended up clearing the test with flying colours.
During his next visit, more students approached him for tutorials and the number kept growing till it reached an auditorium of multiple cities. By 2009, Raveendran was pre-recording his lectures and offering to students across 45 cities, milking the Byju’s brand that he had established. In 2011, Raveendran set up a company called Think and Learn to run a multi-city offline coaching class chain for competitive exams that offered classes and course material along with Raveendran’s video lectures, under the brand Byju’s. However, he had curated a team to create learning content for school children in grades six to 12, to tap the opportunity at the right time.
Perfect Timing to Come Online
Finally, the app was launched in 2015 which garnered a massive response from the students with more than 5.5 million downloads in just one year. The company shifted from teaching only for exam-taking classes to teaching students across age groups. This was integral for the brand’s evolution from a test and exam prep teaching model to teaching and learning for students across age groups.
Raveendran saw an opportunity in the K-12 segment and gradually pivoted. Why the company pivoted is credited to the founder’s acumen, in identifying a market and business model that was extremely lucrative.
The app today has a subscription renewal rate of 90%. As per statistics, a subscribed student spends more than an hour on the app every day. The Edtech entrepreneur Raveendran, along with his wife Divya Gokulnath, never started with a business plan in mind, the venture followed its own course.
In 2017, Byju's entered the unicorn club with over $1 billion valuation. This made global VC firms sit up and take notice of the rapidly growing Edtech market in the world’s second-most populous country.
A Strong Core Offering
There is a certain liking for. the classes on the Byju’s app. They are enjoyable, easily understood and interesting. This is the major selling point as the videos are highly engaging with an amalgamation of animation, gamification, and live-action formats. It is interesting to watch pizza being used to teach complex math problems.
Therefore, the quality of the teaching material, the way of presenting it and the connection built with the students makes Byju’s a preferred choice for its target audience.
What also gives Biju’s an edge over its peers is the personalisation of the teaching material for every student it provides. A rich learning profile is built for each student and the app memorises the student’s learning fingerprint, enabling it to customise and personalise the student’s learning experience. Byju’s personalisation engine mimics the actions of a personal tutor, helping in tackling students’ weaknesses and enabling the students to learn at their own pace.
Everything has been built on this core offering of the company. “If you have a great product, it will sell automatically”.
Having said that, a good product also needs a “business brain” along with a mix of right marketing, right amount of funding and investors, sense of pivoting at the right time and grabbing the right opportunity, to survive and thrive. Byju’s managed to be the shining example of that, of course with certain glitches…
A Favourite of the VC World
Things started coming together for Byju’s as soon as it had launched the app. The company was bootstrapped by Raveendran who had put in over $2,500 from his earnings. Byju’s received its first funding of $9 million in 2013 from Aarin Capital, which is run by Ranjan Pai and Mohandas Pai.
This was followed by the entry of Sequoia Capital in 2015. They liked what they saw – the core content and the pedagogy of the company was strong besides the entrepreneurial spirit and vision of Raveendran, who had already started catalysing product development in the K-12 segment and building a strategy around device learning.
Apart from the right timing, Raveendran’s reputation as an educator worked in his favour in terms of investors’ faith. Later in the same year, it launched the Byju’s app targeting school students, which amassed two million users within a quarter.
2016 was a significant year for Byju’s with a line of investors, including Sequoia, Innoven Capital, Sofina Group, Times Internet and the International Finance Corporation, signing big checks. Byju’s raised four rounds of funding, quickly rising in the valuation charts. The internet boom was at its peak along with smartphone penetration which gave the investors the right proposition. In the same year, Mark Zuckerberg and Priscilla Chan’s funding arm — Chan Zuckerberg initiative led a $50 million round and boosted the startup’s value to $462 million. This was a stardom moment for Byju’s in the start-up industry.
Vivian Wu, managing partner of Chan Zuckerberg Initiative appreciated the level of engagement from students (average 71 minutes are spent by students on the app) and the company’s research on how parents felt about the app which was reflected by the annual subscription renewal rate of 85%.
By 2017, the company’s growth with 3,00,000 annual paid subscribers helped turn it into a case study in Harvard. Its reported valuation was at $800 million.
In August 2017, it entered the elite group of “unicorns” with over $1 billion valuation. This made global VC firms sit up and take notice of the rapidly growing Edtech market in the world’s second-most populous country.
There was a high adoption and 85% annual renewal came from small towns and cities shows, which had set the vision for Byju’s scope for deeper penetration. There was a huge market.
Later in 2018, Byju’s raised a whopping $540 million round from Naspers Ventures and Canada Pension Plan Investment Board at a $3.6-billion-valuation, it became the world’s most valuable Edtech company besides turning profitable.
The company has hit $12 billion valuation in its recent round of funding of $200 million led by BlackRock and T Rowe Price. What also makes Byju’s investors’ favourite is the company’s usage of capital. In the first five years, the company utilised less than $350 million of the primary capital. Most of the recent fundraising has been utilised to finance inorganic growth. The company never raised money because it needed it, but to add the right propositions.
Byju’s Business Model: “Freemium”
It’s a freemium business model – some content is available for free, whereas the advanced content requires a subscription. This is like Sample Sales. Students are allowed to see a sample video or a basic video. If they like the video, they can purchase all videos in bulk (subscription). It is a great method to attract students. Once they get to know how good the app and the content are, they automatically feel the need for subscribing to the paid services.
This reflects what an entrepreneur’s confidence in its product can do. Byju’s has always been confident about the quality of service provided on their platform and never hesitated to fight back. Raveendran knew that his material and presentation had the potential of affecting millions and gaining their attention.
The free service made students understand the quality of teaching provided by Byju’s, which started enrolling a higher number of students for their premium teaching services. The company also launched new products like Byju’s Online Tutoring and other learning programs to boost revenue growth.
It is impertinent to mention here that Byju’s has set its target audience right. Whether it is a student of grade one or a student who is trying to clear entrance examinations such as IAS, CAT, JEE, NEET, BITS, Byju’s has it all. It has chosen its target audience very wisely as it covers every exam which is crucial and trending.
A metric which is generally ignored by VC-backed companies is sales. Byju’s stronger focus on the same has allowed it to race ahead. Hence, the strength of core offering (learning platform) coupled with a deep sales network is Byju’s winning formula.
What also gives Byju's an edge over its peers is the personalisation of the teaching material for every student it provides.
Leveraging Acquisitions: An Edtech Super App
Byju’s has acquired a range of companies over the years that aligned with its value. The company has focused on assimilating younger start ups/peers with niche offerings. This assimilation seems to be a movement towards becoming a ‘Super App’ — multitude of offerings that will give students a variety of choices and a complete learning experience — besides expanding the market share in the crowded Edtech space.
Since the beginning, Byju’s has been on a lookout for companies that add strong product components to its existing user base or potential new customers in new markets, or companies that give it some kind of distribution so that it gets a head start to launch in new markets — especially English speaking.
It is making a serious effort in replicating its successful model in the US, UK and South Africa. And why not? The applicability of Byju’s solutions to be expanded internationally is its greatest advantage. Their product (content in this case) is scalable and modular. So even if the curriculum changes across different customer groups, the core concept remains adaptable.
Since 2018, the company has acquired US-based learning platform Osmo for $120 million, math learning startup Math Adventures, US-based online tutoring app TutorVista and Edurite from Pearson, student assessment platform Vidyartha and online coding platform for kids WhiteHat Jr, for $300 million. With the WhiteHatJr acquisition, Byju’s will gain access to seven lakh registered users on the platform, benefiting from around 7,000 online classes every day.
In one of the largest Edtech acquisitions in the world, Byju’s is now all set to acquire brick & mortar test prep leader Aakash Educational Services Ltd for $1 billion, to consolidate its test preparation space.
Smart Moves: What They Did Right
There are a lot of factors which placed the company at the top of the game. Most companies beginning to launch their Education technology platform have been facing the monopoly of Byju’s Classes. Let’s start from the beginning.
The year 2011-14 was considered as the dark period for the first breed of start-ups who were all hoping to replicate the success story of Coursera. The founder had struck with the offline approach for this very reason. At the same time, he launched a tablet learning program to sidestep the issues with connectivity and devices, and waited for the right time to make his online debut.
Byju’s became the most sought-after platform for students during this pandemic and the company leveraged the same. With schools shutting down during the pandemic, the app offered content free for students, which brought in 30 million new users. The company offered personalised online coaching by introducing live classes that further garnered users.
This increased Byju’s growth estimates to over 200% in 2020. In 2017, Raveendran played another card that proved extremely crucial in bumping up the company’s brand image and valuation – bringing Bollywood actor Shahrukh Khan as the brand ambassador. This was a bold move but an extremely smart one.
Analytics comes to the company’s advantage. Byju’s is able to tap into student’s behaviour with Amazon Web Services. The insights have helped Byju’s curate a customised offering for each student.
This was in contrast to Byju’s ‘Feet-on-Street’ marketing strategy in 2018, where the company reached out to individual potential customers in the small cities to pitch-in their products with home-to-home visits. This was an unusual approach for an internet-based company which usually depends on the online platforms to drive sales while tapping into the customer’s data.
This campaign began from the streets of Bengaluru and later extended to the cities of Hubballi, Dharwad and Mysore in Karnataka. Byju’s executives were successful in generating upto 50% conversions through these free counselling sessions.
Byju’s knows what connects the masses — Bollywood and cricket. It’s ‘Keep Learning’ campaign, launched in 2019, shows how the company clearly understands India’s love for cricket and knows how to use it in their favour very well.
Moving forwards, there is looking at an infinite headroom for growth in two extreme corners — small towns and international. Close to 60% of students at Byju’s come from outside the top 10 cities. The company has been laying heavy focus on regional content with its recent partnership with Sudeep Sanjeev to launch their first-ever campaign in a regional language (Kannada). The team has also created two ad-films in Telugu starring movie star Mahesh Babu.
On the other hand, the company is aggressively looking to take its products to the global audiences and is on an acquisition spree to speed up the same.