Byju's Story From Top to Tumble

In partnership with

As a kid, I had this habit of reading the local newspaper and collecting articles I found interesting 🤗 On a fine Sunday afternoon in 2017, I was going through the newspaper and saw a whole section dedicated to a group of people aiming for a candid group photo.

The title in Telugu said Byjus is all set to revolutionize the industry, and I didn’t know what Byju's is or what it does. Just a couple of years ago, Byjus was the talk of the town in the education industry.

But today... boom! Byju's went to losses 😣 But how?

Let's see its journey.

Byju’s, officially known as Byju’s The Learning App, was founded in 2011 by Byju Raveendran and Divya Gokulnath. The company started as a traditional tutoring service with offline education in various subjects.

However, Byju’s quickly became a leading player in the e-learning sector with several phases, capitalizing on the growing trend of digital learning. Look at this YouTube shot to see how better their classes are:

Phases Involved

• The Initial Concept

Byju Raveendran, an engineer by background, offered tutoring classes to help students prepare for competitive exams in India. His teaching methods were unique, and he had to expand his services as his recognition grew.

In 2011, Byju was all set to teach students with unexplored methodologies with an app-based platform, Byju's.

• Rapid Growth

Since its beginning, Byju’s growth trajectory has been impressive. By 2015, the company’s app had over 1 million downloads in its first year.

All that was because of how they interacted with students - video lessons, interactive quizzes, and personalized learning paths. All these had set Byju's apart from most other educational methods.

• Funding and Valuation

Showing its potential, Byju's secured investment from venture capitalists. In 2015, Byju’s bagged $9 million in funding from Sequoia Capital.

This had become its major boost for growth. By 2021, Byju’s had become one of the world’s top ed-tech startups, with a valuation of $21 billion.

• Expansion and Market Dominance

In 2021, Byju's tutored 100 million students worldwide, while clever marketing, partnerships, and strategic acquisitions fueled the growth.

The app's versatility, targeting students from elementary school to competitive exams, made it a must-have for learners everywhere.

To further strengthen their position in the education market, Byju's made some strategic moves. In 2021, they acquired Aakash Educational Services for $1 billion.

This merger aimed to combine the best of traditional classroom learning with the flexibility and convenience of online education, and Byju's did not stop there.

They kept innovating, adding features like live classes, interactive games, and adaptive learning technologies. It meant that students could choose the learning style that best suited them. It was like having a personal tutor right at their fingertips.

All this seems like a dream come true for an entrepreneur, right? But the worst is yet to come - Byjus went into losses.

Why Did Byju’s Fail?

Despite its initial success, Byju’s began facing challenges. These setbacks show the difficulties of maintaining success in a rapidly evolving industry. Some reasons why Byju's is going downhill are:

1. High Customer Acquisition Costs

One of the main reasons Byju’s struggled is because it spent a lot of money to attract new users. In 2021, the company spent around $250 million on aggressive marketing.

This massive expense aimed to bring in new students, but it also meant that Byju’s had to spend a lot only to get each new user.

When companies spend too much on acquiring customers, it becomes hard to gain profit because the cost of bringing in new users can be higher than the revenue they generate.

For instance, look at how amazing (and expensive) this ad by Byju’s is:

2. Quality Control Issues

Byju’s faced criticism over the quality of its educational content. While the company promised engaging and effective lessons, some users found the content didn’t meet their expectations.

In 2022, about 15% of users reported they were unhappy with the quality of the material. This dissatisfaction led to a decline in trust and credibility, making it harder for Byju’s to keep its users engaged and satisfied.

Existing students showed their dissatisfaction with the platform in reviews. This made it harder for its targeting customers to trust the application. Therefore, money spent on heavy advertising couldn't convert better.

3. Retention Problems

Another major issue for Byju’s was keeping users interested over time. Retention is crucial for any subscription-based service, but Byju’s saw its user retention rate drop from 60% to 45% over two years.

This decline meant that fewer users continued using the app after their initial sign-up, which hurt the company’s revenue and growth.

When users leave after a short period, it increases the cost of acquiring new users to replace them, making it harder to build a stable customer base.

4. Financial Struggles

Byju’s financial health also became a concern. In the fiscal year 2022, the company reported a loss of $200 million. The losses were mainly due to high operational costs, such as marketing and content development, and poor cost management.

Despite its high valuation and large user base, these losses showed that the company’s expenses were outpacing its income, affecting its overall profitability.

5. Regulatory and Legal Issues

Byju’s ran into legal troubles that further impacted its reputation and finances. In 2022, the Indian government fined the company $10 million for misleading advertising claims.

This fine was because of accusations that Byju’s had made exaggerated promises about the effectiveness of its educational programs. Legal issues resulted in financial penalties and damaged the brand's reputation, making it harder to attract and retain users.

What Byju’s could have done?

To reverse its downward trajectory:

• Byju’s could have focused on boosting user retention by improving the quality and effectiveness of its educational content.

• Instead of aggressively spending on acquiring new users, investing in refining the learning experience would have boosted user satisfaction and long-term loyalty.

• Byju’s could have also adopted a more data-driven approach to monitor customer behavior and customize content to individual needs through personalized learning paths.

• Additionally, better cost management strategies, including cutting unnecessary expenses and focusing on profitable segments, would have improved financial stability.

• Finally, prioritizing transparency and honesty in marketing could have helped avoid legal issues and maintain the trust of its users.

Conclusion

Remarkable achievements back Byju’s rise in the ed-tech sector, but the company’s recent struggles show the challenges of nurturing growth and profitability. Byju’s story is a lesson on why managing growth effectively, ensuring content quality, and going through regulations are important.