Why Byju’s Ruthless domination is a cause of Great Concern
If you’re living in India then it is remotely impossible to not have heard about a brand called ‘Byju’s. Once a humble startup that offers online courses in K-12 space, today it sits at the pinnacle of the global online education industry. Just to give an idea, today Byju’s is the world’s most valued online education company, with its current valuation hovering around $15Bn. If this eye-popping valuation has already put you on a tailspin then wait until the next few weeks. In the subsequent days, the never-ending saga of Byju’s funding juggernaut is likely to witness yet another massive funding round that will soar its valuation beyond $16 Bn. To put this in a perspective, Byju’s is now on the brink of becoming India’s most valued startup.
From the dingy bylanes of Bengaluru city to becoming India’s unicorn giant, Byju’s perfectly encapsulates the spirit of modern India’s entrepreneurial spirit and is a source of great pride for the country’s fledgling startup industry. While Byju’s awe-inspiring success is celebrated with great veneration and adulation, its success though greatly undermines the moral fundamentals of India’s education sector. These fundamentals that rest on moral virtues espousing the collective future of millions of Indians students beg for a critical question to be asked. Can India’s all important education sector afford to feed the monopolistic ambition of a company that puts ‘profit’ above everything else? This question obviously would not have risen had Byju’s hailed from any other profit-driven industry where moral principles rarely account for much importance.
Byju’s Super Aggressive Acquisition Strategy
Before I promote my case about Byju’s meteoric rise and why this spells bad news for India’s education sector, let me first give an idea about Byju’s brazen monopolistic ambition. Any big company’s anti-competitive instincts are easily gauged by its aggressive acquisition strategy and Byju’s unabashed move to leverage this tried and test strategy started last year. Last year, right in the middle of pandemic, Byju’s acquired Mumbai based online coding startup Whitehat Jr for whopping $300 Mn. This M&A deal was a high profile one especially considering that this was an all-cash deal, a rarity in India’s startup’s ecosystem.
But I could have chosen to pass this particular M&A deal as a one off acquisition deal, had Byju’s recently not pulled off an audacious acquisition deal that has literally propelled it to unassailable position in India’s education industry. Barely few weeks back, the edtech unicorn acquired Akash Educational Services for mindboggling $1.1 bn in what ought to be touted as a watershed moment for the company. What makes Akash’s acquisition a momentous occasion is the fact that it allows Byju’s to extend its supremacy in the traditional offline education space where till today the company had a literally zero presence. Akash operates more than 200 coaching centers that helps students in preparing for competitive exams like IIIT-JEE and medical entrance exams. This mammoth deal in a way unambiguously signifies Byju’s unfettered ambition to dominate India’s education sector in every way possible. While Akash’s acquisition should be suffice to give a hint about Byju’s anti-competitive practices, there is more to this story that again defines and reiterates Byju’s megalomaniac aspirations.
If grapevines are to be believed, the billion-dollar acquisition of Akash Academy is actually a tip of the iceberg as far as Byju’s acquisition strategy for 2021 is concerned. By the end of the covid ravaged year, the Bengaluru based company is likely to acquire quite a few high profile companies including its direct competitors. Grapevines have already spilled the beans that the edtech unicorn is in talks to buy Toppr, which is its direct competitor and had raised $46 Mn last year. If this deal materializes then it will officially set the ball rolling for a consolidation wave in the nascent yet rapidly growing edtech sector. This in-turn will turn the edtech battle into a two horse race where Pune based Vedantu will face the indomitable challenge of competing with Byju’s that has 10 times more cash reserves than it has. To give a rough idea about Byju’s funding muscle, during last one year Toppr and Vedantu collectively manage to raise $160- 170 Mn, which is a far cry from the astronomical $1Bn that Byju’s has raised from several global investors during the same period.
Byju’s infallible fund raising capabilities has apparently already unnerved everyone including the VC investors. Investors unwillingness to back-up Toppr, Vedantu or any other recognized player must be seen as their subtle acknowledgement about Byju’s invincibility. VC investors, who are now ruing the missed opportunity of backing Byju’s at a lower valuation, are now admittedly more or less convinced that Byju’s has become too big a player to compete against.
Byju’s –Reliance Jio of the edtech sector
Today Byju’s disruptive mode in the edtech sector can be aptly compared with Reliance Jio and the massive disruption it caused in the telecom sector. When Jio forayed into the beleaguered telecom sector in 2016, it set off a consolidation wave that led to big mergers and unceremonious exit of many big players. But there is one important exception in this uncanny comparison between Byju’s and Reliance Jio. While today the all dominant Jio still continues to face intense competitive pressure from other players (mainly Airtel), Byju’s has got a free hand to dictate the terms as per its whim. One can’t see even semblance of competition for Byju’s, not even distantly.
To put it blatantly, today the K-12 online education industry is completely devoid of level playing field as one particular player has become monstrously big. Byju’s monopolistic practice going unchecked also casts aspersions on the Competition Commission of India, which is an important regulatory body that is supposed to curb anti-competitive practices in India.
Byju’s monopolistic ambition casts dark cloud on India’s education sector
Now finally I come to my central concern about why should we raise a red flag over Byju’s increasing monopoly. Today Byju’s enormous scale of business warrants that it will have to keep aggressively chasing profits to keep its investors happy. This pressure to keep fueling its profit-mill is ostensibly reflected in Byju’s obsessive push for profit and, by doing so, it is fortifying the future of millions of students with crass impunity. Let me substantiate this argument by shedding light on some of Byju’s most controversial practices and policies.
Many critics argue that Byju’s has been promoting a toxic work culture of hiring over-aggressive sales executive teams who are assigned the daunting task of achieving unrealistic sales targets. Coerced by these targets, this huge entourage of sales teams are unleashed into the market with the sole aim of selling over-priced Byju’s courses to parents, who at best can be described as gullible and naïve. Most parents who supposedly fall prey to Byju’s sales pitch act as gullible and naïve by choice, since they are too emotionally spurred by their urge to fulfil their kids’ career goal and ensure a stable future for them.
A quick glance through popular Q&A platform, Quora, will allow you to relish some interesting stories about how parents get easily swayed by Byju’s over-the-top sales pitch, only to regret later. These sales pitch are often adorned with exaggerated stories of how Byju’s courses can play a heroic role in turning around the career of even the most average kids and provide them a glorious future that they thoroughly deserve. Mind you, Byju’s sales pitch can crack up even the most sane parents out there.
If anyone really wants to have iota of an idea about just how aggressive Byju’s sales pitch can be, then last year’s White Hat Jr controversy can prove more than suffice. Last year White Hat Jr, which is obviously Byju’s subsidiary company, was dragged to the court for running misleading ads. The online coding startups that provides coding courses to kids supposedly ran barrage of ads that promised kids of lucrative career including high paying jobs at Google and Facebook. To say that these ad were a blatant attempt White Hat to oversell their courses won’t be an understatement. The sporadic reaction to these ads were equally justified considering that the concerned customers were naïve kids.
I finally would like to sum up this lengthy article by shedding light on Aniruddha Malpani fiasco. This fiasco showed, in a true sense, Byju’s corporate muscle and how it can flex its muscle to suppress its worst critics. Malpani was literally outcasted from popular networking platform LinkedIn allegedly on the behest of Byju’s, since the latter felt castigated and even threatened by scores of Malpani’s LinkedIn posts that relentlessly attacked the company’s controversial policies and practices. Even as I’m writing this article, Malpani’s LinkedIn account continues to remain banned.
In the end, I’d like to sum up this entire article by making following conclusion: Education is too much a noble pursuit to feverishly keep feeding the monopolistic ambition of a private entity and virtually allow it to become a Frankenstein monster.
