The hype and hubris of Byju’s

The Learning Trap traces Byju Raveendran’s meteoric rise and inevitable fall but glosses over deep systemic challenges in India’s education sector.

Published : Jan 25, 2024 11:00 IST - 14 MINS READ

Byju Raveendran, co-founder and CEO of Byju’s, and Divya Gokulnath, co-founder and director of Byju’s, during a panel session at the Qatar Economic Forum in Doha, Qatar, on May 24, 2023.  

Byju Raveendran, co-founder and CEO of Byju’s, and Divya Gokulnath, co-founder and director of Byju’s, during a panel session at the Qatar Economic Forum in Doha, Qatar, on May 24, 2023.   | Photo Credit: Christopher Pike/Bloomberg

Unintentionally, Pradip Saha’s book is a fierce commentary on India’s morally compromised approach to mass education. It narrates how opportunists exploit desperate children and their parents. Saha tells the tale through the lens of his protagonist, opportunist-in-chief Byju Raveendran, who promised to replace the broken education system with the mirage of online education, bringing him global celebrity for a brief moment. Saha burrowed into Raveendran’s operations and accounts to bring us this fascinating story.

The Learning Trap: How Byju’s Took Indian Edtech for a Ride
By Pradip K. Saha
Juggernaut Books, 2023
Pages: 280
Price: Rs.399

Yet, the story falls short because Saha remains preoccupied with Raveendran’s flaws. In fact, Raveendran is merely a metaphor for an Indian and international elite that proclaims that India is about to leapfrog its decades-long social and human deficiencies through digital magic. That hype ignores, even scorns, the needs and hardships of multitudes of struggling families. In particular, Raveendran’s final ascent into the celebrity stratosphere coincided almost perfectly with the India hype that flourished amid the death and desperation of the two waves of COVID-19. The tale will continue to be told that Raveendran’s failings doomed him. The hype about the digital transformation of Indian education—and, indeed, of the Indian economy—will sadly continue. Saha’s narrative, while occasionally delving into the broader context of Indian education, primarily centres on Raveendran. I begin by trying to convey the grand drama in Saha’s account of Raveendran’s meteoric ascent and precipitous decline. Alongside, I intertwine the tech and Indian-market-size hype, highlighting thereby the impetus to hubris even when debacle looms.

Also Read | Byju’s staff reveal harsh work conditions, Indian parents say edtech giant pushed them into debt

Raveendran was born in 1980 to two schoolteachers in northern Kerala. His father taught physics and his mother mathematics. He studied in Malayalam medium until class VIII, and while he did not attend any of India’s elite schools or colleges, he evidently received an admirable education. He graduated with a mechanical engineering degree in 2000 and became a service engineer for a shipping line.

Teaching prowess

He strayed into teaching between 2003 and 2005, when he helped some friends prepare for the entrance test to business schools. Word of his teaching prowess spread like wildfire. In 2006, he set up Byju’s Classes, a test-prep class held in rented auditoriums across the country. In 2009, he began recording videos of his classes and transmitting them over satellite channels. That year, he married one of his “awestruck” students, Divya Gokulnath. In 2010, he added civil service test prep to his repertoire. He was working “round the clock, 7 days a week, 365 days a year”.

In 2011, Raveendran incorporated Think and Learn Pvt Ltd (commonly referred to as Byju’s), hired tutors, and added school tutoring to his offerings. He was selling the dream of a one-man substitute for India’s broken education system. His cheerleaders believed (hoped) he would replace millions of poorly trained and unmotivated teachers who failed to teach hundreds of millions of struggling students.

One pivotal cheerleader was the business tycoon Ranjan Pai. Pai and Raveendran met by chance in 2012 at the Fortune Inn Valley View Hotel in Manipal. Manipal was Pai’s home base, and Raveendran was at the hotel to teach his signature business entrance test-prep class. As always, he had attracted a zillion students. According to folklore, Pai sat incognito in Raveendran’s class. Later, over a cup of coffee, Pai offered to fund Raveendran’s expansion into online tutoring, an offer he followed up by becoming his first investor.

Raveendran’s celebrity grew alongside his business. In 2013, he performed a “maths concert”, as he later described it, at the Indira Gandhi Indoor Stadium in New Delhi. Twenty-five thousand students crammed in to see him, bathed in dozens of spotlights centre stage and projected on six giant television screens. Raveendran, who kept himself in good trim, was a star. He repeated stadium performances across the country.

In July 2015, Raveendran launched Byju’s App—with teaching content for kindergarten to class XII—and also prep classes for competitive examinations. One version of the app streamed online, and the other was loaded on to a memory card bundled with laptops sold to subscribers. Raveendran blitzed the country with advertising and social media campaigns, and hundreds of his foot soldiers sought out subscribers who would pay for these services.

The drums began to roll. The breakthrough came in September 2016 with Mark Zuckerberg’s announcement in a Facebook post: “As part of the Chan Zuckerberg Initiative, Priscilla and I are investing in an Indian education technology company we’re excited about called BYJU’s.” That post, with a photograph of Raveendran displaying geometrical figures, touted Byju’s App as a solution for the learning handicaps of India’s children. At that point, the app had been downloaded seven million times and Byju’s had 2,000 employees and 3,00,000 paying customers. Money was pouring in, including from marquee venture capital investors such as Sequoia Capital India.

In 2006, Byju Raveendran set up Byju’s Classes, a test-prep class held in rented auditoriums across the country. Here, a class in an indoor stadium in September 2018.  

In 2006, Byju Raveendran set up Byju’s Classes, a test-prep class held in rented auditoriums across the country. Here, a class in an indoor stadium in September 2018.  

In November 2016, Raveendran told The Economic Times that he was setting his horizons beyond India. He was poised, he said, to “revolutionise the way students are learning across the world today”. His goal was not to build a billion-dollar company but to “help millions of students learn better”. That month Raveendran sat down with scholars from Harvard Business School, who wrote a glowing report—based on company documents that Raveendran provided—on the improvements in learning achieved with Byju’s App.

Even as Raveendran touted high-minded goals and his celebrity grew, his sales force played on the aspirations and guilt of parents, who paid steep prices with possibly unrepayable loans in the hope of giving their children a better life. In November 2017, Raveendran hired the Bollywood superstar Shah Rukh Khan to be the company’s “brand ambassador”. By the end of 2018, Byju’s crossed the billion-dollar valuation to become a unicorn. And in July 2019, the company became the official sponsor of India’s cricket team. With India’s two most valued cultural symbols by his side, Raveendran and Byju’s were ready for the big moment: COVID-19.

Dystopian tech hype

A dystopian tech hype fed on distress. On the evening of March 24, 2020, Prime Minister Narendra Modi announced that the country would be locked down at midnight to limit the spread of coronavirus. Saha overlooks how over the following months Indian policymakers played down the death and desperation and, as nowhere else in the world, hailed technology as the saviour.

The government prodded edtech firms to “optimise e-learning”. Byju’s, then valued at $8 billion with 15,000 employees, provided free classes in April; other firms pitched in. Indian tech firms of all stripes grew rapidly, the minting of unicorns accelerated. As the death toll mounted and despair gripped the nation, a despicable hubris arose among investors and tech entrepreneurs. In late 2020, a private equity investor compared the pandemic-induced crisis to the Y2K opportunity for Indian software companies. The techno-oracle Nandan Nilekani weighed in. It was an “India for the world” moment, he said.

But the start-ups drew on a very narrow base. Established tech firms and professional and business services firms rushed to serve a voracious international market. Within India, an elite population of perhaps 10 million people stepped up their online transactions. These were first-world Indians who owned iPhones, subscribed to food delivery services, sent their kids to study abroad, and transacted online. They holidayed and shopped in Singapore, Milan, and Zurich, drove SUVs at home, and flew abroad in chartered flights to escape COVID’s tentacles. Beyond this tiny sliver of the country’s population, there was little appetite to pay for online services. Venture capitalists, however, with virtually zero-interest money (because of extraordinary easy global monetary policy) were dazzled by the growth fuelled by Indian elites and persuaded themselves that the Indian market would grow to embrace its nearly 1.4 billion people.

Byju’s rode that hype, claiming that its paying subscribers were increasing rapidly. But it refused to refund advance payments of (often desperate) customers who wanted to exit. Raveendran understood online learning was at a dead end and began pivoting away. In July 2021, at the onset of the deadly second COVID wave, he acquired Aakash, a bricks-and-mortar network of coaching centres, for a billion dollars. He also began establishing new analogue-era tuition centres. Just when the digital flower was to blossom, it withered. This should not have been a surprise.

“Byju’s delayed releasing its financial results for two years in a row and has yet to give a full accounting of the past year. The company’s auditor, Deloitte, walked out in June 2023. ”

As Sal Khan, founder of Khan Academy and the world’s most important practitioner of online learning, recently said, technology is an aid inside a classroom where it enhances all-important human-to-human interactions between students themselves and their teachers. Children, Khan noted, fell behind during COVID even when they had easy access to technology. In India, expensive edtech peddled to vulnerable parents was doubly ignominious: it was exploitative and futile.

Nevertheless, Byju’s valuation jumped to $21 billion in December 2021, up from $8 billion in March 2020. Through the dark days of COVID, when over three million Indians died—and even as Indian online education crumbled—Raveendran and his investors became fabulously rich. In February 2022, Byju’s moved further away from online education, announcing the roll-out of 500 tuition centres across 200 cities by the year end. Evidence of online learning’s existential crisis kept accumulating. Lido Learning, a once promising edtech company, fired its 1,200 employees without paying them their final salaries while leaving thousands of students, who had taken large loans for multiyear contracts, stranded with examinations around the corner.

As Saha gingerly puts it, “the physical elements in learning” reasserted themselves. Before they could be consumed like Lido Learning, every so-called edtech in India acted on that reality, scaling down and firing thousands of employees. Personalised, digitally paced learning, democratisation, and the common good were a chimera. Edtech had failed in its social function and as a business. The carnage, in fact, was spreading across all of India’s digital services as the limits of the Indian market became evident.

Wile E. Coyote moment

The Wile E. Coyote moment had arrived. Byju’s valuation jumped to $22 billion in March 2022, up by a billion from three months earlier. BlackRock was among the investors. A giddiness set in. Byju’s signed up as a sponsor of the 2022 FIFA World Cup in Qatar. It had 58,000 employees, and at the world edtech conclave in April in San Diego, it seemed everyone wanted to work for Byju’s.

Like Wile E. Coyote, the fictional cartoon character, Byju’s and Indian edtech had run furiously off the cliff and stood suspended in mid-air. Some ghost investors who had promised to fund Byju’s at its ethereal valuation disappeared mysteriously. Byju’s borrowed from international lenders at a floating interest rate. Exactly then, the US Federal Reserve began raising its policy interest rate, which raised Byju’s cost of servicing its debt. And the Indian market was small.

The entire venture capital-backed start-up concept was about to nosedive. Yet, the hype, with a life of its own, went on. Modi, who in January had declared start-ups to be India’s economic backbone, continued to laud their ascendancy to unicorn ($1 billion valuation) and decacorn ($10 billion) levels.

By the end of 2018, Byju’s crossed the billion-dollar valuation to become a unicorn. And in July 2019, the company became the official sponsor of India’s cricket team.

By the end of 2018, Byju’s crossed the billion-dollar valuation to become a unicorn. And in July 2019, the company became the official sponsor of India’s cricket team. | Photo Credit: Pankaj Nangia/Sportzpics for BCCI

Then the dominoes began to fall. In September 2022, a Nilekani-backed e-commerce start-up shut down after defaulting on its debts. More edtech firms folded. In October, Byju’s valuation fell sharply in a new financing round, down to $6 billion from the high of $22 billion six months earlier; over those months, the company laid off about 18,000 employees to bring its employee count down to about 40,000. Byju’s claimed it had seven million paying subscribers, which was within the 10 million perimeter of first-world Indians. In fact, as Saha discovered, many frustrated former customers had stopped repaying the loans taken to pay Byju’s upfront charges; to maintain them on its roster of paying customers, Byju’s was servicing those loans.

The hubris refused to die even as the end loomed. Byju’s signed up Lionel Messi as its global ambassador that November and was now spending almost its entire revenue on advertising. The gravitational pull, however, was powerful. Byju’s delayed releasing its financial results for two years in a row and has yet to give a full accounting of the past year. The company’s auditor, Deloitte, objected to the way Byju’s was recording its revenues and, unable to get full information, walked out in June 2023. So did a number of the company’s board members. An international lenders’ consortium declared that Byju’s was in default, in part because it did not transparently report its finances. In June 2023, Byju’s valuation was down to $5 billion, and Saha estimates, the company employed fewer than 25,000 people. Saha sent his book to the printer in September 2023 but continues his reporting on fast-moving developments. He reasonably concludes that Byju’s is headed for bankruptcy. Byju’s has not paid its vendors or its employees. Even the cricket board has sued the company because it has failed to pay for sponsoring the Indian cricket team. Indian law enforcement authorities have accused Byju’s of violating foreign exchange laws. In November 2023, Byju’s valuation fell to $3 billion, and in January 2024, BlackRock reduced the valuation to $1 billion. The employee count is about 12,000.

Wrong lessons drawn

Saha forensically records the hubris that propelled Byju’s but draws the wrong lessons from his findings. He believes that Raveendran, although a gifted teacher and charismatic showman, was a poor manager who tried to bluster and bluff his way through his troubles. Saha focusses on Raveendran’s personal flaws because he uncritically buys into the idea that edtech can be the lynchpin in transforming and “democratising” Indian education and that Raveendran came close to achieving that ideal. The “democratisation” notion is especially puzzling because Saha documents the unbearably high costs and debt burdens that Byju’s hard-selling sales force imposed on parents. As he ends the book, Saha maintains the hope that artificial intelligence (AI) will transcend present-day edtech to yet save Indian children from the unforgivably poor education that all but a creamy layer receive.

Because he is enchanted by technology’s magic, Saha is sucked in by the elite Indian hubris, which generated an unconscionably growing hype to deflect attention from COVID’s horrors. Saha is not alone in his techno-optimism. Rajiv Gandhi in the flush of his prime ministership in 1985 visualised a computer in every classroom; in March 2000, the then US President, Bill Clinton, on a visit to Hyderabad anticipated Indian tech entrepreneurs would upgrade the country’s education and healthcare; Nilekani recently proclaimed that AI would transform Indian education.

Also Read | Bridging the learning gap in Indian schools: Is generative AI the answer?

Saha’s Panglossian outlook ignores his own evidence. He notes that the technological promise of tailoring lessons to individual capabilities proved elusive and that edtech had become financially unviable by early 2022. In an essay he wrote after completing his book, Saha has harsh words for the venture capitalists who did not foresee the demise of Indian edtech. The real difficulty is that Saha shows no awareness of the centrality of human beings in successful education systems. Three lessons from Stanford University professor Eric Hanushek’s research apply emphatically to India.

Basic cognitive abilities in the population are crucial for national economic progress. Perhaps as many as 85 per cent of Indian students lack these basic abilities (in China, only 14 per cent of students are thus handicapped). And, among internationally comparable indicators, the teacher’s cognitive ability is the best predictor of students’ learning outcomes, which, as Sal Khan attests, is categorically true even for online education.

Research also shows that good education requires steady enlightened public commitment at scale. Child nutrition, safe neighbourhoods, and parental income and education are crucial for effective learning. Offering technology as a substitute for good teachers and a nurturing childhood environment reflects moral callousness and a disregard for equity and human dignity. The Learning Trap is an engaging narrative set within the seductive trap of quick technological fixes all too common among India’s elites. Raveendran’s rise and his inevitable free fall make a great story. But the book glosses over the deep-rooted systemic challenges that technology cannot solve. Edtech is not viable because it disregards the social and human beating heart of education. Gee whiz technology will remain a sideshow: true educational progress requires the long-term and unsung dedication of educators and the communities they live and work in.

Ashoka Mody teaches at Princeton University. He is the author of India is Broken: A People Betrayed, Independence to Today (2023).

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