Byju’s is one ed-tech company that surprised the market with its exponential growth and sudden upsurge. While looking at it, the firm touched unprecedented heights in the educational industry. Byju’s became the last word of education in India and abroad with the innovative app and aggressive marketing strategies. However, once sterling reputation of Byju’s took a dip with the controversies regarding their financial audit. Asset manager BlackRock reduced Byju’s valuation by around 95% from $22 billion to $1 billion. Trust once, broken is impossible to rebuild without a tinge of stain. Once pegged as India’s most-valued startup, at $22 billion, Byju’s is bracing itself for a 99% cut in its valuation as part of a potential rights issue. In this article, we will observe the reasons behind the downfall of Byju’s and extract valuable lessons for companies in the ed-tech space to learn from.
Byju’s: The Real Fiction
The story of Byju’s is fraught with twists and turns that are tough to believe. The rise and fall are as fast as had it been in a movie sequence.
1. The Meteoric Rise
Founded in 2011 by Byju Raveendran, Byju’s started as an offline tuition center. Byju’s rose to fame after its learning app was launched in 2015. By combining video lessons with innovative and interactive content and personalized learning, Byju’s challenged the traditional education system. The unique teaching style helped them in gaining traction among parents and kids.
2. Fast Expansion
With the financial backup of investors like Sequoia Capital and Tencent Holdings, Byju’s expanded rapidly. They quickly acquired the competitors and formulated new strategies along with diversifying into the international market like the US and Australia. At one point, Byju’s was one of the most valued startups in India. Its value soared to heights in no time.
3. Dip In The Graph
Notwithstanding the initial success, Byju’s was soon amidst controversies and challenges. They made headlines for all the wrong reasons. The aggressive marketing tactics, overpriced content, and scrutiny of their advertising strategies contributed to the acceleration of the downfall. The push became shove when schools shifted to in-class education after the pandemic. The vulnerabilities in the business model of Byju’s were exposed during this period.
Reasons for the downfall
Experts say that their marketing strategies and lack of customer support contributed to the graph’s dip. The reasons for the downfall were multifactorial.
1. Low Quality Of Service
One of the most critical managerial lessons – prioritising quality over quantity – was showcased while we observed the downfall of Byju’s. After the rapid expansion, the quality of services delivered by the company was diluted. The strained resources and the lack of product integrity were not lost on the observers. Their failure to address customer grievances was called out in the long run. When they were busy acquiring competitors to ensure monopoly, they conveniently ignored the existing clients.
2. Lack Of Ethics
As damaging as it sounds, the lack of ethical business practice is one of the core reasons behind the downfall of the ed-tech giant. The marketing executives were pressurized with unrealistic targets. Their advertisements were misleading, and the pricing and subscription policies were masked in ambiguous clauses. The customer would learn about the hidden costs only after they pay a fortune for their child’s education. In an attempt to gain new customers, they failed to gain and retain the existing customers, thereby deterring the trust and credibility of the investors and regulators.
3. Failure To Cope With Innovative Market
Though Byju’s came up with the most unique idea of ed-tech when they were launched, it failed to upgrade itself to the evolving market. While their competitors stayed ahead with innovative content, Byju’s focused on aggressive sales tactics. They failed to grab the benefits of the changing dynamics of online education.
Learnings From Byju’s
Every management textbook is designed based on the case study of various businesses. Similarly, the rise and fall of Byju’s also contributes to the upgraded versions of Do’s and Don’ts in startup business.
1. Customer is the king
For sustainable growth in the long run, moving along with the customers’ needs is vital. The pivotal role of customer’s needs and preferences should be considered while formulating the business strategy. Effective customer grievance is a must for nurturing loyalty.
2. Effective strategies
Focus on sustainable growth of the business instead of user acquisition or valuation. While expansion is essential for business development, profitability and operational efficacy cannot be ignored. When you look forward to growth in your business, you should not ignore the fact that what you have in your hands should not suffer.
3. Integrity
Your business dealings should be showcased with transparency, loyalty, and integrity. With ambiguous clauses and hidden costs, you would be able to attract a few customers, but unhappy customer feedback could be synonymous with negative publicity. The stakeholders would prefer to stick to firms that follow ethical standards.
4. Innovation and adaptation
Upgradation should be the key aim of any business. Ever-expanding information technology is the source of neverending competition and growth. To stay abreast of industry trends, there should be an effort to leverage data and insights. Moreover, there should be a learning mindset to observe competitors and nurture a continuous learning and adaptation culture.
Future Prospects Of The Edtech Industry
It is surprising to notice that despite the challenges, Byju’s still has a loyal user base and significant resources. However, once a formidable player in the market, they currently face challenges from existing competitors and nimble startups. It is a tough road ahead for Byju’s. It is imperative to regain trust, and customer satisfaction, maintain ethical conduct, and adhere to innovation.
If we look at the ed-tech Industry in the larger picture, the future is bright and promising with the increasing awareness and demand for online education and the advancement of technology. The EdTech industry can become a dynamic and rapidly growing economy with unique concepts, innovation, and a customer-centric approach.
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