It's wartime but it's not a challenge: Byju Raveendran on the future of online learning

What about entrepreneurs?

It’s important to reflect on the missteps, but you learn from them and take the next step. Everything in the segment that we are doing, we have to learn by doing it. There is no playbook. You will never get it right the first time because it’s impossible. This is not a cut-copy-paste model.

Almost everything we do today or what we have to do tomorrow can only be done by making mistakes. There is no hybrid model globally. So it’s not that we can look at something which has worked somewhere else. What part of the hybrid model should be online, and what should be offline nobody knows. It’s important to know what all you know, but it’s more important to know what you don’t know.

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So you didn’t know what you were getting into when you bought WhiteHat Jr, right?

Are you talking about the social media controversy around the aggressive marketing of White Hat Jr, which happened within a few months of the acquisition?

Yes, and also the alleged misselling.

It’s not misselling. The mistake that they made was around marketing, like promising that you do this course and giving an indication that you can become this… that’s not the approach. When we were doing due diligence itself, we knew this. By the time we closed the acquisition in August, they actually closed all those marketing campaigns. This was one area where we did due diligence. But unfortunately, it came back and hit them later. And a series of missteps in terms of how they handled that controversy aggravated that further.

If you ask me, am I still excited about that segment as an opportunity globally? Yes, I’m more bullish than ever before. Look at the model. Everything we do creates an impact on students, but here we create a much bigger impact on teachers as well. Thousands of women teachers teach on that platform, and for most of them, this is their only job. If we stopped that business for some reason—because there was a controversy—imagine the impact. And a lot of times, it’s easy to do so. Investors might say kill this business. There is no point in taking so much of social media pressure and controversy.

And in the bigger scheme of things for investors, it’s just a $300 million investment. So it can be written off. But it’s easier said than done. But for us, I didn’t do this just to build a huge business. What people don’t talk about, unfortunately, is the real impact. We have created jobs for over 10,000 women who were not otherwise contributing to the workforce. Mostly these teachers teach from small towns in India, and teach from their homes.

There is no misselling. Clickbait ads is where they made the mistake. But that was corrected even before we closed the acquisition. And I’m owning the mistakes because in acquisitions, I give all of them full freedom. So now, just because one out of 10 times that freedom doesn’t work to your advantage, I’m not going to change that. They actually corrected all those mistakes before it came back and hit them very badly during a phase.

Three out of the five biggest businesses, including Great Learning and Aakash, within Byju’s are bootstrapped. Raveendran believes the future of learning is a mix of online and offline

Was the social media uproar a big challenge?

It was. I agree. And the cost of the acquisition is still a challenge in that model. But if you have someone in the six to 12 age group, this is what I’ll still blindly recommend as an offering. Revenue has not been a challenge for White Hat Jr, the cost of acquisition has been.

It’s a two-step process. As the first step, we enter a new market, we launch the market, we start with performance marketing, and over a period of time, we build the brand so that it becomes more organic. That’s what we did in India. So how do we build our brand? Three to four years back, we did investments around Bollywood and cricket because how do you get the attention? People always ask what is Shah Rukh Khan (SRK) doing in Byju’s?

Exactly, what is SRK doing in your advertisements?

How do you get their attention? It’s important to get them excited about something first. That’s what all the good teachers do. Teachers have to make sure that the students like them, because if you like a teacher, you like the subject. We all have those favourite teachers, and because of which those subjects became our favourites. It’s not the reverse.

If a kid loves math, it might be that in the first or third grade, she got the right teacher. So making sure that they like the teachers is the first step. Now in a self-learning product, you need to make sure that they like the content. So putting the right amount of chocolate coating before we take them to the broccoli is important.

Is SRK the chocolate coating for Byju’s?

No, not in the good product.

I am talking about the perception part.

In a 10-20-second advertisement during IPL (Indian Premier League), how do you get the attention? SRK has played a big role in our advertisements because he creates an excitement, the commercial gets attention. You won’t see Byju’s advertisements where he’s coming and selling something. He is not doing that. He talks about the love for learning. This is not edutainment, this is a serious stuff. Now, sometimes you have to talk about outcomes because otherwise parents won’t get it.

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Do parents understand the hybrid model? You have gone offline as well.

There are things which can be done better online. And there are things which can only be done offline. But if you can find the best of both, that’s the future of learning. Now, what is the best of both? Nobody knows. What should be done online? What should be done offline? Is it that we make them do conceptual classes at home and interactions in a classroom?

For online learning to work, it’s very important to create formats, which are appealing for students to learn on their own. Now the way we have built our curriculums... it’s learning driven by the fear of exams and not learning driven by the love for learning. So, for online learning to really work, you should be able to hold on to the attention of a student. If it’s done right, it can be a lot more powerful than what anyone can ever do in an offline setup. But it’s not 100 percent online and it’s not 100 percent offline.

Do you foresee a 100 percent winter? There are talks about an impending funding slowdown globally. A bunch of K12 edtech players in India have shut down and many have handed out pink slips. Is the Indian edtech story still going strong?

The global edtech story is the Indian tech story. This is one of the sectors where India can create global champions. In this sector, there is cost and quality arbitrage. So, can India be the edtech capital of the world? We have a big advantage. Though you can’t take anything for granted, we are far ahead of anyone else. Even if you are a US edtech company, and if you are building that without an India base in terms of curriculum, content and rest, they will struggle actually.

Now are there challenges in terms of access to capital for all types of companies? It won’t be as easy as it has been over the last two years. But it’s not the first time it’s happening. The importance of education during such times will only improve, whether it’s foundational or rescaling and upskilling. So the sector is bound to benefit.

Now the funding is going to become rational. But isn’t that how it is always? Every crisis differentiates fundamentally strong, long-term businesses and entrepreneurs. Those who are taking a very long-term view have an opportunity to differentiate and come out even stronger. All the pioneers, market leaders significantly strengthen their position during times like this. On a good summer day, you can overtake too many cars. But when it’s raining, when it’s difficult on a racing track, you can actually overtake 10 cars if you know how to navigate that well.

We were a bootstrapped company for the first 10 years. Even in this journey [of a structured company], we were bootstrapped for the first four years. Three out of the five biggest businesses within Byju’s are bootstrapped. Great Learning and Aakash are bootstrapped. It was never growth at any cost for Byju’s.

How do you make the shift from a peacetime CEO to a wartime CEO, if you’re assuming that this is wartime. Literally, it’s wartime. But it’s not a challenge. Finding the right balance between growth and profitability for us has never been a challenge. There are times when we focussed on over-indexing more on the growth side and less on the profitability side. But this is an easy shift for us because the company’s foundation is built as a profitable company. We were profitable for many years, and then we decided to change the model and go for growth.

A session conducted by Raveendran at the Indira Gandhi Indoor Stadium in Delhi. He says good teachers get students excited about a subject

Are you profitable now?

All the core businesses which have been there for four years are profitable—Byju’s core and Aakash. Now, investments like what we did with the cricket sponsorship... all of them will pay out over a longer period of time.

Our business was not built during the pandemic, and it’s not that suddenly we got lucky. It’s been built over a much longer period of time than what people think. I’ve been teaching now for almost 20 years, and 10 years in this format.

Businesses which are built during this phase or scale during the phase... there would be a lot of structural issues, which won’t be easy to solve. But the ones that are able to solve will come out stronger. That’s the opportunity because at the other end of the crisis, you will find that only fundamentally strong businesses will survive.

Nothing is as good as what you see, and nothing is as bad as what you see. We love living in a world where we focus on extremes. But life is always in the middle. You can’t get too excited when people write good things about you, and you can’t be too depressed when people write other stuff. You need to learn to take both because that’s how it is.

In every criticism and negative comment, 20 percent is the real feedback. Now if you’re not willing to listen to that, you’re not willing to learn.

Do you get bothered by criticism?

No. It takes time to figure out what is the real feedback. Most of it is noise at the end of the day. But filtering out feedback from the noise takes time. To be honest, nothing bothers me. I do this for fun. I don’t get too excited with anything. Everything is bound to work over a longer period of time and long term is generational for us. If I’m trying to increase my shareholding in the company it is because I believe that this is just the beginning. You won’t find many, at this stage of the company, trying to increase ownership. I won’t promote anything if I don’t have the conviction to use it at home.

What’s happening on the IPO front?

We are still figuring out the exact timelines, but in the current macro environment, we are also waiting and watching. But if you ask me today, my answer is that it will be nine to 12 months [for the IPO].

Would it take the SPAC route?

For us, both [SPAC and IPO] are the same. As an Indian company, for us to get listed in the US, we have two options: We either do a SPAC or we need to buy a US company and do a reverse merger. For us, SPAC is a vehicle which gives us a feasible option to list in the US. So if you want to list in the US, we still need to use SPAC if we want to tell our narrative. That’s the advantage with SPAC.

The other way to get listed is by buying an operating company. But if you do that, the narrative gets diluted. So if we have to choose between these two sets of vehicles to get listed in the US, which we have a very high chance of doing, then SPAC has an advantage. We will do everything like a conventional IPO, but technically we have to do a SPAC.

What is happening with Toppr?

Toppr was done for different reasons. We did that for a strong team of technology and product specialists. We are integrating the best of Toppr with Byju’s.

So it won’t continue with a separate identity?

Yes. It’s a deep integration into Byju’s. We would have been fierce competitors in the early days, but there is a lot of appreciation. We value entrepreneurs, we value that founder mentality and what they bring to the table.

How do you look at success and failure? Is there a fear of losing?

If you are scared of anything, then it’s very difficult to be an entrepreneur. I’m not scared of anything. I am doing this for fun. The last 10 years have been good. The next 10 are going to be better.