The Downfall of Byju’s: 4 Key Lessons from an Ed-Tech Giant’s Journey

Like Icarus, Byju’s ambitious rise warns of the dangers of soaring too close to the sun.

Byju’s, once a shining beacon in India’s ed-tech landscape, known for its innovative approach to education for school children and civil service aspirants, has hit a rough patch. The company recently decided to shut down all offices except its headquarters in Bengaluru, asking employees to work from home indefinitely due to an ongoing financial crunch. This decision might come as a shocker to its customers, yet employees, already facing delayed or partial salaries, saw the writing on the wall. The question arises: How did such a leading brand teeter on the brink of bankruptcy? 

Background of Byju’s: A tale of meteoric rise

Back in 2022, Byju’s valuation was at a whooping US$22 billion, standing tall as a decacorn (valued at over US$10 billion) and a global ed-tech leader. The hype was real; Bollywood megastar Shah Rukh Khan and soccer legend Lionel Messi became the faces of Byju’s. The company even sponsored the Indian cricket team and the FIFA World Cup in Qatar

Since its inception in 2011, Byju’s has revolutionized India’s educational sector with its innovative offerings. Catering to students from elementary through high school, including those preparing for competitive exams, Byju’s disrupted the traditional education model. Its success hinged on replacing the one-size-fits-all syllabus with an engaging, interactive learning experience featuring videos, games and quizzes, all priced within reach of the average middle-class family.

However, Byju’s descent was as swift as its ascent. A series of ill-advised business strategies forced employees out the door and shook the company to its core. 

Learning from Byju’s missteps—what went wrong?

  1. Mismanagement and toxic work culture 

At the heart of any successful business are its employees. When they are not treated with respect and fairness, the entire foundation of the company starts to crumble. Studies have shown that fair treatment of employees leads to increased productivity, loyalty and, ultimately, revenue. However, Byju’s faced criticism for veering off this path. 

A year back, a lot of Byju’s former and current employees raised their voices against the toxic work culture within the company. Complaints ranged from inadequate incentives and support to overwhelming workloads and unrealistic sales targets. Situations arose where employees were presented with an ultimatum: resign voluntarily or face termination and delayed salaries

Disturbingly, reports surfaced of employees being required to work up to 72 hours a week without any breaks, under the threat of job loss if sales targets were not met. This harsh environment disproportionately affected individuals from lower-income families, who endured these conditions to support their families. 

  1. The problem with incessant sales calls to parents 

How Byju’s met its sales targets raises concerns. The strategy involved relentless, aggressive calls, messages and emails to parents, urging them to buy their courses. Sales teams employed high-pressure tactics, leveraging the fears of parents about their children falling behind and not being able to cope with tough college entries. 

This aggressive sales approach was not limited to affluent families; even those who could barely afford the cheapest courses were targeted. This cycle of pressure not only strained employees but also tarnished the brand’s reputation, as it appeared profit-driven and indifferent to its customers’ real needs. 

  1. Financial oversights: The “unicorn” curse

Byju’s journey to becoming India’s first edtech “unicorn” (with a valuation of US$1 billion) in 2018—and the first “decacorn” two years later—is a tale of rapid growth and ambitious expansion. Its initial success caught the eye of significant investors, including a notable US$50 million Series D funding round from the Chan Zuckerberg Initiative in 2016. 

Byju Raveendran, co-Founder of Byju’s, initially aimed for broader valuation through expansion within the country. Nevertheless, as the pandemic ushered in a shift towards online learning, investors eyed the platform for its potential for global expansion and revenue growth.

Yet, Byju’s approach during this explosive growth phase and the subsequent pandemic era was marked by strategic miscalculations. Massive investments in marketing, celebrity endorsements and acquisitions—including Aakash Educational Services (India-based test-prep company) for US$950 million, Epic (U.S.-based digital reading platform) for US$500 million, and WhiteHat Jr (online coding school) for US$300 million—drained the company’s finances without delivering expected returns. 

Compounding these issues was the absence of a chief financial officer (CFO), a critical oversight during a period of significant financial transactions. This gap in leadership led to questionable decision-making, putting further strain on sales teams to meet high quotas through aggressive tactics. 

  1. Absence of CFO and hefty loans 

In 2021, Byju’s secured a term loan facility worth US$1.2 billion from investors, with an interest rate of 5.5% atop a nominal London Inter-Bank Offered Rate (LIBOR) of just 0.2% at the time. For those unfamiliar, LIBOR is a benchmark interest rate used by banks. With the waning demand for online learning in the post-pandemic era, the ed-tech giant finds itself in a tight spot trying to service this debt, resorting to asset sales in a bid to appease lenders.

The decision to undertake such substantial financial commitments occurred during a time when Byju’s lacked a CFO, a lapse that would later have profound implications for the company’s stability. 

What happened to Byju’s after all this? 

The financial mismanagement caught up with Byju’s by 2023. Regulatory scrutiny and a raid by the Enforcement Directorate (ED) for potential violation of the Foreign Exchange Management Act (FEMA) underscored the gravity of its situation. According to financial disclosures made by Byju’s in November 2023, the firm faced substantial losses in its core online education sector, amounting to INR24 billion (approximately US$290 million). By January 2024, a stark devaluation saw the company’s worth plummet by 95% from its zenith of US$22 billion down to a mere US$1 billion. This drastic measure was part of an effort to attract new funding under more favorable terms.

The post-pandemic shift back to physical classes and the devaluation of the company forced Byju’s into cost-cutting measures, including layoffs and withdrawing sponsorships, leading to legal tussles over unpaid dues.

Reflecting on Byju’s journey

Byju’s so far hasn’t declared bankruptcy, but its financial woes are evident. The public is angry with the way the company has completely turned into a profit-driven organization rather than providing quality education that can bridge the gap between employment and lack of skills. 

Despite Raveendran’s commendable intentions, the lack of a solid business plan, frivolous spending and mismanagement narrate a cautionary tale. Without a doubt, the story of Byju’s can be a great case study to teach emerging entrepreneurs a thing or two about how and how not to run a business. 

Also read: 

Header Image from Wikimedia Commons


Share on facebook
Share on twitter
Share on linkedin
Share on email


Step Into Tomorrow: Explore the Wonders of InnoEX 2024 in Hong Kong

In the bustling city of Hong Kong, where over seven million people reside, the call for smarter, more livable cities is louder than ever. This April, the Hong Kong Trade Development Council (HKTDC) steps up to answer that call with the InnoEX and the landmark 20th edition of the HKTDC Hong Kong Electronics Fair (Spring Edition) (EFSE). Backed by the visionary efforts of the HKSAR Government Innovation, Technology and Industry Bureau and the HKTDC, these tech expos are set to feature the latest and greatest innovation from over 3000 exhibitors from more than 20 nations and regions. 

Cloud Software Group and Microsoft Forge Strategic Cloud and AI Partnership

Cloud Software Group Inc. and Microsoft Corp. have announced an expansion of their long-standing collaboration through an eight-year strategic partnership. This partnership aims to strengthen the go-to-market collaboration for the Citrix virtual application and desktop platform and facilitate the development of new cloud and AI solutions. As part of the agreement, Cloud Software Group will commit US$1.65 billion to Microsoft’s cloud services and generative AI capabilities.

The Best 4 Hardware Crypto Wallets of 2024

After a long crypto winter since the spring of 2022, the crypto world has been buzzing with activity recently. In January, the U.S. saw the approval of Bitcoin ETFs; on March 14, Bitcoin’s price soared to an all-time high of US$73,835—obviously, there is an upsurge in interest in the crypto market. 

SUNRATE Empowers B2B Transactions with Apple Pay Integration

SUNRATE, a global payment and treasury management platform for businesses, announced the integration of Apple Pay for its customers, offering a safer and more private payment method. This move leverages the advanced security features of the iPhone to protect transactions and aligns with the growing demand for seamless and secure business transactions.