Byju`s Learning App: An Indian Edutech Startup`s Growth and Future Challenges

Code : MM0082

Year :

Industry :Education

Region : Asia

Teaching Note:Available

Structured Assignment :Not Available

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BACKGROUND NOTE: India had the world’s largest school-age population at 260 million. However, the education system was plagued by a lack of quality teachers and old infrastructure. School level learning was primarily fear-driven and passing examinations through rote learning was considered more important than learning to apply theory in the real world. In 2009, when India participated in PISA (Program for International Student Assessment) conducted by the OECD (Organization for Economic Co-operation and Development) to evaluate its education system by measuring school students' scholastic performance on mathematics and science, it ranked 73rd out of the 74 participating countries..

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MARKETING STRATEGIES: Byju’s education delivery was supported by Artificial Intelligence (AI) while for business analytics it relied upon Amazon Redshift, a data warehouse from Amazon Web Services (AWS). In order to develop an engaging and differentiated learning content, Byju’s had been using ‘gamification’ , using technology. For this, it used a combination of video, animation, and interactive tools. Its content, media, and technology teams, consisting of nearly half its employees, were in charge of creating and delivering this customized video content and were supported by the two in-house bands for original music and soundtrack creation . For its overseas markets, the company roped in famous YouTube teachers and domain experts so that international students could relate to them easily . Divya Gokulnath, an online teacher at Byju’s and Raveendran’s wife, observed..

GROWTH STRATEGIES: After penetrating the metro cities, Byju’s decided to target the vernacular language speaking students of smaller Tier-2 and Tier-3 cities in India. Raveendran explained the rationale: “…we feel that less than 2 per cent of the urban students today come for online learning, so the potential is huge.” For this, Byju’s launched Hindi (national language of India) version of its app and created content in regional languages like Marathi, Gujarati, and Malayalam...

FINANCIALS: Byju’s reported a profit of ?201.6 million on a standalone basis for the fiscal year ended in March 2019 against a net loss of ?286.5 million, while its revenue tripled to ?14.8 billion compared to the previous fiscal year’s revenue of approximately ?5 billion. However, when its subsidiaries (Refer to Exhibit IV for list of subsidiaries) were included, the company reported a net loss of ?150 million in 2018-19, though this had come down from ?370 million in the previous fiscal . Its expenses increased to ?13.2 billion in 2018-19 from ?5.2 billion in 2017-18 with a significant increase in employee benefit expenses and marketing and promotional costs...

CRITICISM AGAINST BYJU’S: Despite its exponential growth, Byju’s came in for severe criticism by various online consumer forums and on social media. Critics alleged that the company’s claim of “transforming education” was not based on ground reality and it remained to be seen whether it was just marketing hype. The Ken, an independent online news outlet, reported such complaints and criticized Byju’s alleged ‘growth-at-all-costs’ sales tactics. The complaints alleged that salespersons of Byju’s, in order to achieve their target, deliberately indulged in miscommunication on the consumer loan details related to multi-year subscriptions and on the trial period of the app to parents who were willing to buy the expensive mobile app for their child. As a result, many parents who took the loan from third parties facilitated by the Byju’s salespersons, unknowingly turned defaulters...

ROAD AHEAD: While Raveendran was pleased with the growth journey of his company, he also faced a few dilemmas. First and most importantly, how would he maintain and deliver on the core promise of “reinventing the classroom” in the long term? He was well aware that the interest of profit-motivated private equity firms in Byju’s was primarily due to the rapid growth seen in its user base in the last few years. To maintain that growth rate, the company pursued a high cost customer acquisition strategy. But, the aura around the brand was bound to wear off as competitors had started to copy its style of content delivery. Sections of stakeholders accused the company of simply peddling a dream to customers. Critics said that a smartphone was perceived to be a source of distraction worldwide across all age groups and the story of a school kid learning himself/herself through a mobile-app with little human intervention seemed far-fetched...

Exhibit I: Byju’s – Milestone Events
Exhibit II: Byju’s Logo
Exhibit III: Price List of Byju’s Offerings
Exhibit IV: Subsidiaries of Byju’s

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