Byju's freefall: A reflection on the missteps of Indian edtech

Early this week, the edtech world woke up to sad news. The promoters of the once-celebrated leader in the sector, Byju’s, had pledged their residential properties to raise around $12 million to fund the salaries of 15,000 of their employees.

For those on the side of Byju’s, it clearly showed an empathetic employer who was trying hard to feed his employees. For the rest of the stakeholders, which includes investors and thousands of subscribers, it mirrored an imminent fall, which serves as a cautionary tale for the industry.

Despite roping in a white knight, Dr Ranjan Pai, the head of the multi-billion-dollar Manipal Group, Byju's journey from a pioneering startup to facing critical operational and ethical challenges highlights significant flaws in the business models of many edtech companies in India. This downfall provides crucial insights into the pitfalls to avoid and the strategies necessary for sustainable growth in the sector.

Byju's aggressive expansion, characterised by high marketing expenses, costly brand endorsements and rapid acquisitions like WhiteHat Jr, focused on inorganic growth to drive its revenues. Though initially successful, this approach eventually led to significant financial strain, contributing to the company's downfall.

For the edtech startups, the pandemic was the opportunity that helped them scale up operations quickly, with investors responding to their funding needs whenever they stretched their hands. But there were too many of them. But to differentiate one from the other, edtech firms, including Byju's, heavily relied on marketing to attract customers. This strategy resulted in substantial spending without proportionate attention to product development and customer support, creating a gap between customer expectations and the actual value delivered.

Missing personalisation

Byju's one-size-fits-all approach failed to cater to the diverse needs of learners, leading to disengagement and lower retention rates. This lack of personalisation is common across many edtech platforms in India. Byju's failure to sufficiently differentiate its offerings and adapt to the competitive landscape led to a loss of market share.

The premium pricing models of many edtech companies, including Byju's, have made quality education inaccessible to a large segment of the population, particularly those from lower-income backgrounds.

Frequent technical glitches, poor user experience and toxic workplace culture have plagued many companies, including Byju's, further eroding trust and credibility among users and stakeholders.

At the last count, there are over 13,000 edtech companies in India. But what is interesting to note is that Byju’s is the largest beneficiary of the total funding. It received 65 per cent of all edtech startups' funding. Nearly 80 per cent of the total edtech startups have not gone beyond receiving their second round of funding.

Way forward

Several edtech firms have tried to copy the successful ones and failed. Edtech companies must balance growth with sustainability, prioritising long-term viability over short-term gains. This approach includes prudent financial management, responsible marketing, and gradual, organic expansion. Several of them have received a good amount of funding in the initial rounds but have squandered it away by hiring too many people or trying to reinvent the wheel.

Hence, they need to invest in product improvement, including adaptive learning technologies, to sustain themselves for a more extended period. Personalised learning experiences that cater to individual student needs can significantly enhance engagement and learning outcomes. A toxic work environment and forcing unsuspecting parents to buy their products, promising their students to crack competitive exams, was perhaps Byju’s biggest mistake and led to a huge trust deficit.

To truly democratise education, edtech companies should adopt more inclusive pricing models. This strategy will help bridge the educational divide and expand the customer base to include underprivileged segments.

Technology should be used to enhance, not replace, traditional learning methods. A balanced approach, integrating online and offline educational experiences, can create a more holistic learning environment.

Unchecked growth

Maintaining high ethical standards in sales, marketing and overall operations is non-negotiable. Transparent practices and genuine customer care can rebuild trust and ensure long-term success.

Fostering a sense of community through collaborative learning experiences can enhance the effectiveness of online education. Peer-to-peer interaction and mentorship should be integral components of the edtech model.

Byju's challenges are a stark reminder of the pitfalls of rapid, unchecked growth and the importance of a balanced, customer-centric approach in the edtech sector. By learning from these mistakes, Indian edtech companies can realign their strategies to create sustainable, inclusive, and effective educational platforms that truly transform the learning experience.

The future of edtech in India depends on its ability to innovate responsibly, keeping the learner's needs at the forefront.