Getting EdTech to work - the BYJU way
Last month, Chan Zuckerberg Initiative (CZI) announced its first investment outside the US in Think and Learn (Byju’s). I got a flurry of congratulatory messages including several, interestingly enough, from EdTech entrepreneurs that I had had a chance to meet over the years. There appeared to be genuine happiness among this group with Byju’s success and their ability to attract funding, perhaps in anticipation of brighter prospects for the sector overall. But it made me wonder why such a large sector with so much promise had failed to produce companies of significant scale so far. Having watched the sector for more than ten years and worked closely with Byju’s over the last two, I would like to share a few observations on this very interesting category and the dynamics that are at play here.
We first talked to Byju (the founder) in a small meeting room at our Mumbai office in what started out as a routine interaction. Having heard that he was a teacher entrepreneur, I was expecting someone older and academic looking. So, I was a bit taken aback to find myself shaking hands with a young man in a casual black polo t-shirt and jeans (a combination that I have now come to recognize as his trademark uniform). But within a few minutes, he had our undivided attention as he took us through the history of the company, vision, product roadmap and their go-to-market approach. It was clear from that first meeting that the team was on a mission to democratize access to high quality education and that they had figured out a delivery model that was highly effective and scalable at the same time. Soon after, Sequoia became a partner in Byju’s journey. You can read more about the story here: (https://www.sequoiacap.com/india/company-story/byjus/)
How did Byju manage to find success? How did they manage to break out beyond the vanity metrics to build real revenues and profits? I think we can find some answers to these questions if we take a closer look at the building blocks that Byju’s is founded on.
Ed over Tech: Every EdTech business is an education business first. Perhaps the most important reason Byju’s has found success is by placing Education ahead of Technology. Does that sound like a contradiction given all the talk around tech in Edtech? I strongly believe that, to be effective, one has to go back to the drawing board to see where tech can truly influence educational outcomes. Adaptive learning is good but great content comes first. Gamification is great but intelligent assessment comes first. The best education brands have been built over long periods of time and with a proven history of improving student outcomes. Byju’s had the track record of having helped thousands of CAT aspirants get into the IIMs and that’s what gave them the license to win adjacent markets. The core team spends most of their time in figuring out how to best help students understand concepts and how to make the content engaging and fun. Tech for them is an important enabler but not the reason they win.
Everyone’s favorite teacher: Think back to your school days (minus the exams - to keep this a pleasant memory!). Each one of us had a favorite period or subject. It was math for me (yes, I confess I was a geek!). Ask yourself why a particular class was your favorite. More often than not, it was because you were learning from a teacher who managed to make learning interesting, engaging and fun. These exceptional teachers sparked our imaginations, allowed us to grasp concepts and most importantly, made difficult topics easy and within reach, thus defraying our fear of the subject. Personally I believe teachers are central to learning and hence approaches that enable teachers to do better are more effective than those that try to replace them. Byju’s has found a unique way to give every student their favorite teacher through the power of video-based learning. This delivery model has the potential to disrupt education because it can scale great teachers infinitely and create much higher levels of engagement. For students, higher engagement means better understanding, leading to better performance.
_The upside of starting small and selective: _ Education is a trust business and you make decisions based on what people in your trusted circles say. Starting small and getting the initial customer group right is key. Few people know that the first few thousand students who got access to the Byju’s EdTech product were actually selected from lakhs of students based on merit. By ensuring that top students used the product and derived value from it, the company built trust with parents. Higher trust and more champions translates to a lower cost of acquisition (CAC). Do not underestimate the power of the common neighbourhood Whatsapp group!
Parents want the best not the cheapest: Most EdTech companies we meet have lots of visits, downloads or early engagement on their free content or product. The plan always seems to be to monetize some time in the future. With so many resources available online, there is limited perceived value if something is offered free. Parents are not looking for free ways to make their child successful. They are looking for The Best Way! Have the courage to charge for the value you provide. But if parents have to pay, selling needs to be consultative (especially for price points >$100). Byju’s monetized their product through large events where they would have the parent and the child in the same room (in essence, a stadium!) and where they could convince parents of the value of their offering. It’s important to iterate and find an effective selling model that can be refashioned into scalable models down the road. This is exactly what Byju’s did when they moved to a mobile app-led model.
If you run an EdTech company with usage but limited monetization, ask yourself a few tough questions to find out where you actually stand. For example, do consumers love the product enough? Is it truly differentiated from the market? If the answers to these questions point to specific problems, fix those first and demand will follow. Every parent wants their child to do well. Education is one area in India where parents are willing to spend money to equip their children with the right tools for better outcomes. It is up to companies to provide them with tools and solutions that are compelling enough.
Byju is very fond of saying, “...(Your) competition is not with others, (it) is with yourself. Especially when you are creating something [that has not been] done before, the competition has to be with yourself.”
We hope his success inspires many others to solve the scaling challenge in the sector. More importantly, we would love to see many more companies jump into the battle to democratize learning and make quality instruction and content accessible to every student, regardless of where he or she lives in the country.