Byju Raveendran, the man behind the once a $22 billion company Bjju is now in serious trouble. Two years ago, Buju was a star in India’s EdTech scene which raising large amounts of money and attracting public investment. By 2022, its value had soared to $22 billion, and it was educating millions of students worldwide. Famous footballer Lionel Messi even became its brand ambassador, reportedly earning $5 to $7 million annually. A photo of Messi folding his hands and saying ‘Namaste‘ went viral at that time.
From Indian superstar Shah Rukh Khan to many renowned artists, they were all associated with it in some way. Byju’s sponsored major events like the FIFA World Cup and was widely known in sports and education circles.
However, Byju’s is now on the verge of collapse. Its founder, Byju Raveendran, has taken a $12 million loan by mortgaging his houses to cover debts and pay employees. Byju Raveendran’s wealth, once around $2.1 billion, has reportedly dropped to nothing by April 2024.
The company is struggling to repay loans, pay salaries, and cover other expenses. It is also facing accusations of money laundering. Byju’s valuation has plummeted by 95% to $1 billion, and it might be as low as $200 million now.
Who is Byju Raveendran?
Byju Raveendran was born in 1980 in Kerala, India. His parents were teachers. His father taught math, and his mother taught physics. Because of this, Byju was interested in math from a young age. He was also very active in sports.
Byju’s family was middle class. They hoped he would become a doctor or an engineer. To support their dream, Byju studied engineering and finished his degree in 2000.
After he graduated, Byju worked at a shipping company starting in 2001. Two years later, his friends needed help with a big exam called the CAT. This exam was important for getting into top business schools. They asked Byju Raveendran for help, and he taught them. This experience sparked his interest in teaching.
Later, Byju Raveendran took the CAT exam himself. Out of his 12 friends, four passed. Byju scored 100% on the test and also did well in the interview. But he chose not to go to college. He took the exam just for fun. Afterward, he kept working as a service engineer at his old job, Pan Ocean.
In 2005, Byju took the CAT exam again and got 100% once more. People started calling him a CAT expert. Many students wanted to learn from him. That’s when Byju discovered how much he loved teaching. He decided he wanted to be a teacher for the rest of his life.
How Byju Raveendran Started Byju’s and Built a $30 Billion Company
In 2006, Byju Raveendran began teaching in a small room and named it ‘Byju’s Classes for CAT’. As more students joined, he moved to a bigger hall where he taught 1200 students at once. His classes were ‘freemium’, meaning the first class was free, but students had to pay for the rest. Raveendran focused on teaching concepts rather than just aiming for high marks. This approach made learning interesting for students who were tired of rote learning. Because of this, many students chose to pay for his classes.
Seeing this success, Raveendran expanded to four cities: Bangalore, Mumbai, Pune, and Chennai. During this time, he met Divya Gokulnath, who later became his wife, and some of his friends. They joined his company, Think and Learn Pvt Ltd.
By 2009, Byju Raveendran had expanded Byju’s classes to nine cities. He traveled a lot to teach and worked on making the teaching materials better. His classes were so big that students couldn’t ask questions directly, so he designed materials to answer common questions.
The demand for Byju’s classes grew, but Raveendran couldn’t be everywhere. He was also very tired. So, he decided to digitize his classes. In 2009, he started using satellite broadcasting to reach 45 cities, which helped build the largest EdTech company.
In 2011, he started ‘Think and Learn Pvt Ltd’ to grow further. He created a team of teachers who shared his teaching style and entered the school tuition market. With over 250 million students in India, he realized he needed a mobile app. In 2013, his company raised ₹500 crore from the Manipal Group for 26% of the company.
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From Mobile App to Major Shares
At the same time, the company began developing a mobile app. Every student’s learning time and style are different. Some find it easy to understand by watching videos, while others prefer reading text or hands-on methods. Understanding this concept, Byju’s incorporated all methods into the app. That is, students could take all classes according to their preferences.
Byju’s also knew that students spend more time on video games and movies. That is, students’ focus on learning would come when they got education of the same quality as video games or movies. Therefore, Byju’s started designing courses accordingly with the help of expert teachers, motion graphics artists, 3D designers, and professional musicians. With millions of investment and years of effort, the ‘Byju’s Learning App’ was launched in 2015. In addition to the app, Byju’s also began selling course content on tablets and SD cards. Customers using these products started giving positive feedback. Seeing the increasing demand, investors like Sequoia invested $25 million. In 2016, Mark Zuckerberg’s (CEO of Meta) organization, the Chan Zuckerberg Initiative, invested $50 million.
Byju’s Business Model, Investments, and Acquisitions
After getting investments, Byju’s turned its attention to selling its courses. They hired engineering graduates as salespeople, who were tasked with creating ways to sell the courses. They started by advertising on TV. Parents saw these ads, downloaded the Byju’s app, and then received calls from Byju’s salespeople to set up meetings.
At these meetings, the salespeople visited the parents’ homes. They talked to the students about their interests and asked them various questions. If the students couldn’t answer a question well, the salespeople would show them a course by Byju Raveendran that helped them understand the answer. This approach convinced many parents that Byju’s courses were necessary for their children, leading them to make a purchase.
By 2017, Byju’s revenue hit $100 million, and 10 million students were using the app. The company then bought other educational tech startups, including TutorVista and Edurite. Byju’s also raised $40 million from investors like Sofina and started offering a two-year subscription package for ₹5000, which included classes, live sessions, and homework help. By then, Byju’s had 50 million users. In 2018, they raised $150 million from General Atlantic, and in 2019, they raised $400 million from Naspers.
By 2020, Byju’s was in 120 countries with 80 million students worldwide. They began working with the South Korean government and started expanding into the American market. Byju’s acquired WhiteHat Jr. for $300 million in 2020, a company that teaches coding to kids.
By 2021, Byju’s revenue had risen to $540 million, with 150 million students using the app. Byju’s became a ‘unicorn’ company, meaning it was valued at over $1 billion making Byju Raveendran a Indian Billionaire. They also began sponsoring sports events and teams that year.
How Problems Started After Rapid Growth and Major Acquisitions
By 2022, Byju’s was valued at around $22 billion and had amassed 500 million users, offering 15,000 courses. Despite this impressive growth, the company encountered several problems.
There were concerns that Byju’s might be involved in fraud, and in 2022, the company faced criticism for laying off employees as part of cost-cutting measures. These layoffs led to further controversies and delays in releasing the annual report. Byju’s was also accused of not adhering to financial standards and failing to disclose important financial information. These issues hurt the company’s reputation and market value.
In 2023, Byju’s struggled with managing its debt and finances, leading to serious financial instability and problems meeting its financial obligations. The company’s internal issues compounded its troubles, making it difficult to manage its operations effectively.
As of 2024, Byju’s is in a precarious position. The company is grappling with severe financial difficulties, including challenges with debt repayment and salary payments. It has also faced allegations of financial misconduct. The drastic drop in valuation and ongoing issues highlight the difficulties of managing rapid growth and financial stability in the startup world.
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