The Story Of An Indian Unicorn Byju Harikangal: Which Succeeded In Becoming A Company Valued At Nearly 30 Trillion Until two years ago, India’s ed-tech startup Byju was the star of investors’ eyes. He was collecting a good amount from the market every month. On the other hand, common people also trusted and gave money from the stock market. In terms of its magnitude, the market value of Baiju in 2022 was 22 billion dollars (about 29 trillion 48 billion based on today’s exchange rate).
Byzu, which started with 25 students in 2011, was teaching lakhs of students through its platform by 2021. Due to this success, world-famous star footballer and 2022 World Cup-winning captain Lionel Messi joined as a brand ambassador. It was said that Byju appointed him as a brand ambassador by giving him 50 to 70 million dollars annually. The photo of Messi joining two hands and saying “Namaskar” also went viral at that time. By saying that Baiju patted his shoulder to bring Hindu culture to the world stage, he also garnered good appreciation.
Byju was the epitome of the Indian startup ecosystem and tech industry. The revolution it tried to bring in education was analyzed by some as ‘less business, more service to the country’. Byju’s main objective was to provide quality education to students in rural areas with the help of technology. By 2022, everyone saw a bright future for Baiju. Not only in India, this platform was said to create a stir in the global market.
Baiju, which has become the San of India in two years, has suddenly become a road sign. The company is struggling to pay the debts, pay the salaries of the employees, and manage the additional services provided to the employees. So much so that the company is not able to provide services to the employees who want to leave the company. What is even worse is that the company has not been able to pay office rent and other expenses.
This company is also accused of money laundering. The latest valuation of this company, which had a valuation of 22 billion dollars two years ago, has decreased by 95 percent to 1 billion dollars in 2024 and it is decreasing day by day. Recently, there are no atheist details of how much is its total valuation. However, some have mentioned that Byju’s values are around $200 million, considering the reports of various firms as sources.
Who is the founder of Baiju?
Baiju Ravindran was born in 1980 in Kerala, India. His parents used to teach in a local government school. Father was a mathematics teacher and mother was a physics teacher. As his parents were teachers of physics and mathematics, Rabindran was more interested in mathematics. He was equally active in sports. His parents made him dream of becoming a doctor or an engineer as he was a source of daily income from a middle-class family. Supporting his parents’ dream, Ravindran started studying engineering and completed it in the year 2000.
After completing engineering, he started working in a shipping firm in 2001. After two years, there was a turning point in Rabindran’s life, which led him to a new destination in life. Some of his friends wanted to clear the Common Admission Test (CAT) to study at the Indian Institute of Management (IIM). Friends asked Rabindran’s help for this. Rabindran had to teach his friends. He taught his friends accordingly.
He preferred concepts more than marks. He believed that if the concept can be explained to the students, they will be interested in learning. Rabindran’s teaching style was very interesting for the students who were fed up with the rote learning method. As a result, out of 10 participating students, nine students paid fees and took Rabindran’s classes.
Seeing this success, Ravindran expanded this model to four cities in the country. He started conducting classes in Bangalore, Mumbai, Pune and Chennai. While conducting classes, he met many students. He also met his wife Divya Gokulanath as a student while teaching. Later some of his friends along with Divya joined Rabindran’s company Think and Learn Pvt.
Due to Rabindran’s hard work, the demand for Baiju’s classes started to increase in other cities as well. However, Rabindran couldn’t be physically present in all the cities. He was tired of working day and night. Then he planned to digitize Byju’s classroom. In 2009, he used a satellite-based broadcasting technology called VSA. And started broadcasting his lectures in 45 cities. From here he laid the foundation of the biggest tech company.
At the same time, the company started developing a mobile app. Every student does not have the same time to learn anything and the learning style is also different. Some people find it easier to understand by watching videos, while some people read words and others need practical methods. Understanding this concept, Byju included all the methods in the app. That is, from this app, students could take all the classes according to their wishes, as they wanted to learn.
After being called by their parents, they would reach their parents’ house. While giving counseling, the salesman would ask the students about their wants and interests. Thus, when someone asked about their interest, the children would approach the salesman. During that time, the people from the sales team used to ask the children simple but complex questions.
If they could not answer, the salesman would show the parents a course taught by Rabindran. So that the students would get the answer to that question. In this way, the children used to express doubt that if they could not answer the general questions, how would they be able to participate in the kind of competition in the present situation.
Kovid’s role in bringing Baiju to the height of success
The COVID epidemic also played an equal role in Baiju’s success. The lockdown was announced in most countries of the world. The UNESCO report showed that more than 1.80 billion students in the world were deprived of going to school due to this.
After it was provided free of charge, the students’ curiosity about it increased. The company especially tried to bring more users to its platform by providing free courses. Byju’s strategy was also successful. At that time, students from countries like India, America, Mexico, Australia, and Brazil were connected to this platform.
Daw to buy the ownership of a rival company!
After good investments started coming in, Byju’s founder Ravindran decided to raise the company’s valuation to 100 billion dollars. And for that, his company started owning smaller tech startups by paying high prices. To increase the scope of education, the company started a campaign to merge various startups. Byju acquired the coding startup White Hat Junior by paying $300 million.
Similarly, the company had already bought startups like Tinker, Topper, Great Learning, Epics, Scholar, Osmo, and Gradeup. Out of which three startups were American. Ravindran was trying to expand his business outside India with the help of this startup. Byju took a loan of one billion to 200 million dollars to grow these startups. This was a big amount for Baiju.
After reaching the height, Baiju’s struggle!
Along with the speed at which the company was growing, the expectations of investors and other related stakeholders were also increasing day by day. However, at the speed at which the company was moving forward, the company did not know when there would be a bottleneck.
Compared to the valuation of the company, the sales were low. After the sales decreased, the company began to put a lot of pressure on its employees to sell the course.
In the year 2022, the company introduced a rule where employees who sold less than 50 percent of the target were fired. After this rule came, the employees of the company used to focus on achieving the target no matter what. After that, the staff of Baiju started to attract the parents of the students even though they gave false information and assurances.
“Your child will not be able to do anything in life without taking our course” started showing fear. To fulfill their goals, they started giving false assurances such as ‘after the completion of the course, they will return all the money or arrange the scholarship’. Even after doing this, the employees started to meet the target even though they purchased the course themselves.
However, an even bigger mountain of problems was rising in front of Baiju. The company’s announcement at the end of 2022 surprised everyone. That was, ‘Operating 500 offline tuition centers in all the cities of the country by spending 200 million dollars. The same company that started the online class campaign in India was also announcing that it would run a physical tuition center. This was a surprising news for everyone.
Why did a company that managed to maintain its dominance in online classes have to start a physical class? As the COVID epidemic subsided, students started studying in physical classrooms instead of online. When there was a shortage of students for online classes, Baiju started to expand offline classes.
The company had spent billions on the e-learning business model. The expenses were more than the income. Due to continuous losses, Baiju’s financial situation started to decline.
According to the financial report released by the company in September 2022, from April 2020 to March 31, 2021, the company earned 24 billion 28 crores. However, the loss of the company was almost twice that ie 45 billion 64 crores. In other words, during that period, the company was losing 12.5 crores every day. 80 percent of the company’s income was coming from tablets. The company earned 20 percent from the course.
According to data from Employees Provident Fund Organization India, the company had 58,000 employees as of March 2022. By June 2023, the number had dropped to 25,000. To raise money, Byju put its US-based Epic on sale for $500 million. While Byju bought the company for one billion dollars. In other words, the company suffered a loss of 500 million dollars.
In September 2023, the Indian Cricket Board ‘BCCI’ filed a case against Baiju for not giving the sponsorship money. It is said that the company has yet to pay the outstanding amount of 158.9 crores.
And, in the end, except Akash, which was purchased by Byju, all other startups are in losses. Now the amount owed by the company is more than the valuation. In a way, the company has become poor.
Experts allege that the company which had decided to bring revolution in education, never prioritized education. Considering its promotion, growth, and valuation as paramount, Baiju has reached the danger of losing its existence. Recently, it is said that the company is advancing the process of bankruptcy. However, some legal hurdles have arisen in this process regarding the debt owed by the company.
