Jaro and an edtech masterclass

Sanjay Salunkhe, Founder, Jaro Education Image: Swapnil Sakhare for Forbes India
 
“Knowledge is like an underwear,” Nicky Gumbel once reportedly remarked. “It is useful to have it but not necessary to show off,” the Anglican priest and author is widely attributed to have shared this nugget of wisdom. Back in India, for over two decades, a first-generation entrepreneur from Maharashtra never paraded his knowledge undies.

Born into a life of hardship—Sanjay Salunkhe’s father was a mill worker, mother was a homemaker, and he lived in a single room along with three siblings—the founder always practised humility. “This (humility) is what education teaches you,” says Salunkhe, who started IT hiring company NET HR in 1999, and after a decade, an online higher education company Jaro in 2009. “We are the edtech OG,” he laughs. Teaching, he adds, is a humbling experience.

Twelve years later, sometime in 2021, Salunkhe was about to learn a new lesson, and get to know a new brand: Unicorn underwear. “Dr Salunkhe, tell me your right price,” thundered one of the top edtech unicorn founders. “And doctor sahab, don’t exaggerate your finances. I know them,” the caller continued with his aggressive tone, pitch and intent to acquire upskilling edtech platform Jaro.

“I want to buy you out,” underlined the notorious bully, who had raised loads of capital, had a long list of global marquee venture capitalists on his cap table, and was all set to enter into the decacorn club (privately-held companies that are valued over $10 billion) with the next round of funding and valuation. It was 2021, the year that happened to be the peak of edtech funding—from $1.87 billion in 2020 to $5.82 billion in 2021--and a bunch of new-age edtech startups were busy using their war chest to either kill the competition or buy them out.



Salunkhe, meanwhile, was startled by the abrasive approach and naked display of venture capital. “I am not for sale,” he retorted. “And I come from a humble background,” he underscored, adding that there were days when his family barely managed to have one meal a day, and the lad even sold vegetables to make some money.

The unicorn founder, though, was quick to match Salunkhe’s modest roots. “I too come from a humble background. I took a loan from a bank and then went to an Ivy League,” he said. “Now my venture is valued in billions,” he added. Salunkhe was unable to process what he heard, and didn’t speak for a few seconds. What, however, shook the founder to the core was not the arrogance of the potential buyer but the way the edtech industry was growing in the country. “Almost all were bleeding heavily, and yet creating lofty P&L (profit and loss) targets on excel sheets,” says Salunkhe.



Irrational valuation, unsustainable business models, and excessive inflow of capital was turning out to be the bane of the edtech segment. “It was froth,” says Salunkhe, who in FY10 had an operating revenue of Rs81 lakh, and posted a tidy profit of Rs10 lakh. After eight years of sedate growth, Jaro laboriously increased its operating revenue and profit to Rs51.85 crore and Rs15.59 crore, respectively, in FY18. “We have been profitable from the first year,” he says. “We were building slowly, sustainably and remained invisible,” he adds. “I'm not on TV, I'm not on IPL, and you might have not heard my name at all,” he smiles.

Meanwhile, in 2022, there was not much to smile for edtech players. A collateral damage, and quick fallout, of the edtech froth was evident on another front. Salunkhe recalls. In one of the hiring interviews, he got a bunch of applicants from a popular coding startup. “I was shocked when I got to know that they didn’t have a coding background,” he says. All were imparted a crash course in coding for three weeks, and were asked to teach the kids. “This is more than what you need to handle the kids” was the blunt instruction that came from the top of the organisation. The coding businesses blossomed.  

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For Salunkhe, the artificial growth trajectory of the edtech players was unnerving. He could sense an imminent bursting of the bubble. Back in 2001, the founder had experienced the painful crash when the dotcom bubble exploded. Salunkhe was just two years into his maiden entrepreneurial venture. In 1999, he started an IT hiring company NET HR, and over the two years, the hiring business scaled at a fast clip.

Then came the 2001 global crash. “I was only into IT recruitment, and I went bankrupt,” recalls Salunkhe, adding that the blunder of focusing only on IT hiring proved to be too costly. The founder mortgaged his house, borrowed money from wherever he could, and survived the crisis. “I still didn’t lay off a single individual, and always paid salaries on time,” he claims. A decade later, and after a failed and short-lived offline edtech joint venture where he had to mortgage his house for the second time to come out of the mess, the gritty entrepreneur started Jaro in 2009.


 
Close to a decade later, Salunkhe was forced to mortgage his house again. This time, it was his fault. “I got tempted. Yes, I really got tempted,” he underlines. The temptation, he explains, was venturing into K12 education. Most of the new age edtech startups were making brisk progress in K12, the VCs were too keen to bet on the future of the segment, and Salunkhe too decided to test the waters sometime in 2018 and 2019.

“We started K12, we had 250 teachers, 8 studios and 50 graphic designers,” he recalls, adding that too much money was invested in the new venture. It, however, bombed. The problem, he explains, was not with the model but the strategy. The core sales team of Jaro was shifted to K12. Salunkhe, meanwhile, spread himself too thin by doing multiple things. His NBFC gig—which he was inspired by the exorbitant rate of interest that his mother used to borrow money—was meandering; the plans to venture in the US too were not going anywhere; K12 was bleeding; and Jaro lost focus because the core team was removed.

The founder was quick to realise his folly. He closed the NBFC arm, exited the US market, shuttered K12, and brought the focus back on the breadwinner and core proposition of upskilling. The results are for all to see. Jaro closed FY23 with an operating revenue of Rs 122.15 crore, and is likely to cross Rs 200-crore mark in FY24; it still remains profitable; now offers over 100 management and tech courses and programmes in tie-ups with a battery of universities, IIMs, IITs, and top premium institutes such as The Wharton Interactive, Rotman School of Management, NITIE Mumbai, and Symbiosis International University (see box). “We have built a rock solid, and sustainable business,” says Salunkhe.

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The industry observers are not surprised with the long-term growth story of Jaro. “All of us have heard the story of smart hare and industrious tortoise,” says Jai Vardhan, co-founder of Entrackr, a media venture tracking startups and internet economy in India. “Jaro happens to be a classic example of this story,” contends Vardhan, who has been closely observing digital entrepreneurs for over a decade. “The founder built the company in a slow, steady and sustainable manner,” he adds. It takes years, if not decades, to build a solid foundation for a business. Jaro went bootstrapped, picked up a niche of higher education and stayed away from the temptation of doing too many things at the same time. “At a time when the edtech wave had crashed splendidly in India, Jaro stands out for scripting a rare story,” he says.



Salunkhe, for his part, underlines that slow and steady is the only way to grow a company. “Tata, Birla, M&M, Reliance took decades to grow,” he says. “There is no shortcut, there are no quick fixes,” he adds.

The biggest edtech lesson, maintains the entrepreneur, is that one needs to be slow, steady and not greedy. “How can you call a business a business if it fails to make money even after a good number of years,” he asks. Building profitable businesses, he reckons, is the biggest edtech lesson for all entrepreneurs.