The Indira Gandhi Stadium, India’s largest indoor arena with the capacity to seat about 20,000 people, played host to an event in 2013 much different than its usual lineup of concerts and badminton competitions.
A packed crowd of students between country’s equivalent of sixth and 10th grades, sat for a math lesson from a 38-year-old tutor-turned-CEO. The voice of this CEO, Byju Raveendran, echoed throughout the stadium while screens at the center of the stadium’s reddish floor displayed a circle and formula he’d written as part of the lesson.
The stunt came years before the CEO’s company, Byju’s, launched a learning app that would take the company to 35 million downloads, with 2.7 million annual subscribers who pay between $150 to $200 each.
Byju’s customers pay for animations, simulations and video lessons for students in grades 4 to 12 and for students preparing for competitive entrance exams to Indian colleges. These company’s teaching methods originated from tutoring sessions held offline by Raveendran himself.
That mega-lesson, and Raveendran’s origins as a tutor, have become lore familiar to the company’s 4,000-plus employees and its collection of international investors, including the founder of Facebook’s philanthropic and investment firm, Chinese Internet conglomerate Tencent and the investment arm of the Canada Pension Plan.
So far, Byju’s performance appears to live up to the hype. The company reported revenue of 14 billion rupees (about USD$196.89 million) during its 2018 to 2019 fiscal year that ended in March—tripled from the prior fiscal year. Byju’s expects revenue to climb to more than 30 billion rupees (about USD$421.91 million) this fiscal year.
The company has raised almost $1 billion in venture capital, and is currently valued at $5.75 billion, per TechCrunch. This makes Byju’s one of the rare unicorns in education technology and the fourth most valuable privately held company in India.
Beyond the numbers, Byju’s has inked a deal with Disney to help expand its content to grades one to three, become the official sponsor of India’s national cricket team, and recruited as a spokesman Shah Rukh Khan, the king of Bollywood and one of the biggest movie stars in the world.
All of which begs the question: How did Byju’s get so big?
Origins on India’s Coast
Raveendran declined an interview request for this article. But longtime employees, like the company’s chief strategic officer Anita Kishore, are well versed in the biography of Byju—the man and the company.
A career in education might sound unsurprising given Raveendran’s upbringing. The son of two teachers grew up in the coastal village of Azhikode, a tourist hotspot in Southern India. His home state has among the highest literacy rates in the country.
He left a job as an engineer with U.K. shipping company Pan Ocean to pursue tutoring after he twice scored within the top percentile on the entrance exam for India’s Institutes of Management, schools that offer postgraduate, doctoral and executive education programs. Raveendran has long claimed he took the test twice just to prove his prowess.
His friends encouraged him to teach and help others prepare for the exams. He offered his first classes in coffee shops, but his audiences quickly grew to fill auditoriums. In 2007, he started using the name “Byju’s CAT Classes”—a reference to the Management Institutes’ entrance exam—for his services, according to Indian trademark documents.
Raveendran embarked on a tutoring tour of sorts, teaching math at multiple universities across India. Students he met in the early days of his tutoring service joined his company as executives. One of those students-turned-executives, Divya Gokulnath, became Raveendran’s wife. The couple have a 6-year-old son.
By March 2009, Raveendran’s reach had grown to seven cities, and the company’s website from that time said it had taught 3,500 students. He offered online live and video classes through broadband and satellite to teach students beyond the centers’ walls.
By the time Raveendran formally incorporated Byju’s parent company, Think & Learn, in 2011, 110 million Indians used the internet, only about 9 percent of the country, according to a study from Google and KPMG. “Everything was stacked against us,” Kishore says.
A billboard for the company ended up playing a key role in its growth when the managing director of Sequoia Capital’s Indian operations, GV Ravishankar, happened to notice it on his way to the airport in 2014. The venture capitalist arranged a meeting with Byju’s senior team at Ravishankar’s office in Mumbai, Ravishankar says. The company had just recently raised about $9 million in Series A funding from Aarin Capital. It would report revenue of about $2 million for the 2014-2015 fiscal year, according to TechCircle.
Sequoia India had already made two education technology investments before Byju’s, and Ravishankar knew the industry’s risks. “The bar was high,” he says. “We liked what we saw in Byju’s because the core content and pedagogy was strong, and Byju was a phenomenal entrepreneur with a real vision.” Impressed, Ravishankar and Sequoia India led a $25 million Series B investment round in the company in 2015.
Investors and tech
In August 2015, Byju’s launched its titular online learning app. More than two million students signed up for the app in the first three months, according to the company.
Meanwhile, India witnessed a dramatic increase in the number of people with access to the internet, which had risen to 409 million (about 31 percent of the country) in 2016. That same year, Sequoia joined a $75 million Series C round for Byju’s.
By the time Raveendran sat for coffee in a San Francisco cafe to discuss his company with Vivian Wu, managing partner of philanthropic and investment firm Chan Zuckerberg Initiative, Byju’s had reached a $470 million valuation with total funding over $150 million. It neared six million downloads with 250,000 annual paid subscribers.
Wu says she was vetting possible investments at the time in India and other countries outside of the U.S. Her firm, also called CZI, had yet to invest in Asia or Africa when she met Raveendran.
Her interest in Byju’s went beyond the company’s performance in dollars and rupees, Wu says. She liked the level of engagement from students (today a student spends on average 71 minutes on the app) and the company’s research on how parents felt about the app (today, the app sees an annual subscription renewal rate of 85 percent).
CZI soon co-led a $50 million round in Byju’s, and Wu joined the board of directors.
Sales and Scrutiny
If you ask former Byju’s salesman Himanshu Rai the secret to the company’s success, he would unabashedly point to himself and colleagues who sold families on using the app. “The Byju’s sales team is everything,” Rai says.
He joined the company in June 2017 at Byju’s Delhi office of about 150 employees, as he recalls. “I knew a friend in Byju’s,” says Rai, now 25. “So I was like, if he can do it, well, I’m better than him.”
He and his colleagues would travel to homes to demonstrate the app, with Byju’s paying for rides by train and Ola, India’s version of Uber. During Rai’s demonstrations, he says, he’d talk to the families about their hopes around education. He’d claim that watching Byju’s videos before class better prepared students for the day’s lesson. “Parents were convinced this was a nice thing,” he says.
Aggressive sales tactics and an expensive app are the criticisms Byju’s usually faces in negative online reviews. Indian business news outlet The Ken earlier this year accused Byju’s of not properly informing customers about loans and trial periods for the app.
Byju’s growth has also earned scrutiny of rivals. In 2016, New Delhi-based online and brick-and-mortar test prep company CL Educate filed suit against Byju’s to stop Raveendran’s company from using phrases CL claimed to have trademarked, phrases such as “career launcher.” The High Court of Delhi lists the case as pending, but a September 2019 court filing states that both companies have settled the dispute.
Outside of sales, the company’s high-profile marketing tactics of sports sponsorship and TV ads starring Bollywood actors are meant to grab the attention of India’s growing middle class, who still rely on TV as a dominant medium, Kashore says.
Notching deals with the likes of Disney and celebrities is a necessity for Byju’s to stand out along with investments in the production quality of its instructional videos. “We need to make our educational content as interesting as other content is,” she says. “We’re not competing with textbooks, we’re competing with time.”
The company made its first U.S. acquisition in January, when it bought education games startup Osmo for $120 million. And Byju’s has plans to expand into more English-speaking countries, as well as more countries in Asia. But in the near future, it sees more room for growth in India. “We are barely cracking the surface,” says Kishore.