Byju's is growing. But are its customers learning better?
It had set out to change the way kids learn. Has it fulfilled its core promise — engaging them to deliver better learning outcomes? A close look at numbers shows as of now, Byju's remains a great sales story.
Share Gift this article
Debleena Majumdar
12 Jun 2018
BYJU RAVEENDRAN, FOUNDER, BYJU'S; DHIRAJ SINGH/BLOOMBERG VIA GETTY
On a hot and muggy May afternoon in Mumbai, when their peers are probably watching the latest Avengers flick or an IPL match, a group of children from grades 6 to 10 are sitting together and sharing their feedback on mobile apps that aim to teach them math.
The children are participating in a survey for a user-assessment lab conducted by behavioural-analysis firm Final Mile supported by Gray Matters Capital, an education impact investor. The goal is to understand how they actually use mobile-based learning products. Byju's regularly meets groups of students to get feedback on improving its content and interface; photo by Debleena MajumdarSelf-learning on the mobile
If there is one thing India spends generously on, apart from consumption of goods, it is education. The most visible education start-ups or businesses are coaching classes preparing students for Indian Institute Technology or the Indian Institute of Management entrance.
Till 2013, Byju Ravindran was also an entrepreneur running a small classroom-based education company, focusing mainly on MBA preparations. The business was driven by the reputation of its star teacher, Ravindran himself. With institutional fund infusion in 2013, the company decided to turn online and then mobile, and progressively expanded from entrance preparations and higher education to the K12 market (kindergarten [K] and the 1st through the 12th grade [1-12]).
It has also acquired companies and entered the US market. Plus Ravindran has spoken about going to tier 2 and tier 3 cities. The pace of expansion was quick, and revenues increased — and losses, too — rapidly.
There's a view that this rapid pursuit of scale does not do justice to a business that will be rewarded for tangible improvement of student engagement, learning outcomes, and ultimately their performance. How has the company changed as it raised more capital? With every successive round of funding, Byju’s has grown in revenue. The company has been averaging over 100% revenue growth annually for the last three years. But like most other online businesses, this has meant growing red ink on the books. (Disclosure: Times Internet is an investor in Byju's.)
A look at the company’s cost profile reveals another aspect of its growth. In 2016, marketing and business-promotion expenses accounted for 24% of Byju’s’ overall cost. In 2017, it shot up to 45%. That apart there has been a series of acquisitions, including the deal to buy TutorVista/Edurite, which Pearson had been struggling with.
Can the acquisition help Byju’s get a toehold in the US market? Or is it spending too much to fuel this rocketship-style growth?
“Of the 3,500-odd people Byju’s employs, about 2,000 are sales people. The sales team comprises mainly engineers. Not the ones best in coding but the ones who were in their college debating teams. The ones who can speak well. Convince. Counsel. And sell,” an impact investor, who invests in the education space, says, adding, “Byju’s is a great sales story. I can’t say [if] it’s a learning-engagement story.” (Update: Byju's sent us a detailed rejoinder after the story was published, which we have reproduced verbatim at the end of the story.)
Learning or skimming?
The data is quite unequivocal across offline, online, and mobile platforms.
Similar web data shows average duration on Byju’s website is 2 minutes, with 2 pages per visit. That is too short a time to learn.
And what does data for the mobile platform show?
Byju’s has three mobile apps — a learning app for higher education, an app for classes 4 and 5, which was launched recently, and a parent-connect app. Byju’s website says app downloads are over 16 million and people spend an average 57 minutes daily on Byju’s. One hour in a day. That’s huge engagement. Yet, Byju’s annual financial filings show 85% of 2016 revenues and 89% of 2017 revenues came from sales of products — tablets, SD cards, and reference books. SD cards are shipped to customers and loaded onto tablets in locations where Internet speed could be patchy.
But how much of this is really mobile-based self-learning? Are users really paying for mobile learning?
Remember the children in the Mumbai behavioural lab? The most motivated among them had used a math app for 3 hours over a 2-week testing period. The average was around 5 minutes. How many of them would be self-motivated to use a product like Byju’s?
The children gave their feedback very clearly.
The Byju’s videos are nice. I watch it sometimes to clear my concepts.
I like the videos. But it doesn’t help me plan my study the way I want to.
I don’t think math is fun. I just need to do it. That’s why I need tuitions.
Too much hand movement in the videos. I like Khan Academy. Simpler but more effective when I need to learn.
Byju’s is more one-way information. This app, Scorace, starts with making me decide my self-learning goals. Small features like flagging difficult questions help me keep track of my learning.
Homework and tuitions leave time for little else
The feedback from the students at the lab showed that a few of the older kids knew about Khan Academy. Some had seen Byju’s ads. "Shahrukh Khan, right?" A few had watched the videos. One had used an online CBSE helper. The rest were blissfully unaware that mobiles could be used for anything other than playing games or listening to music.
"We go for tuition classes 2 hours every day, 4-5 days a week," a class 10 student said. So where is the time for mobile-based self-learning? "Vacations?" one student ventured tentatively.
Anurag Vaish, co-founder, Final Mile, feels a big question has not been addressed by many education-tech companies. “Many products have not been designed keeping in mind how children can learn on the mobile. Do they need to underline as they read? Create their own flags? Tools for commitment and personalisation are often missing. This leads to low engagement rates and high uninstall rates.”
So, who really is a Byju’s user?
Data from Similarweb shows what people search for when they land up at Byju’s — jobs and careers.
Conversations with some employees and information published by the company show that paid subscribers are currently around 900,000. That’s around a 6% conversion rate from downloads to paying users. Which means the sales team has to reach at least hundred people to convince 6 of them to buy the product.
So what sort of users are these 6%?
The ones who are motivated to learn? But they can learn anywhere, with any device.
Are they not motivated? Then they may watch a few videos, which Byju’s claims to make interesting. But are these videos making them “fall in love with learning”, as the SRK-starrer ad claims?
Are these students only motivated by exam results? If so, where are the results on learning outcomes?
“People who use Byju’s do well in exams. Because our videos make learning fun. We don’t claim to replace tuition. But yes, it can,” one of Byju’s employees tells ET Prime. This claim has problems, as we shall see.
Another employee speaks about the content system at Byju’s. “The idea is if the content is interesting, children will automatically learn.”
That is a big assumption. As the learning behaviour of the children at the Mumbai lab shows — learning on the mobile may not be as simple as showing fun videos. It might require companies to understand better the behavioural motivations of their audience and incorporate small tweaks in their app, such as flags or quizzes, or make room for personalised content.
Unsupported claims
In January, the Consumer Complaints Council (CCC) of the Advertising Standards Council of India (ASCI) pulled up Byju’s and 171 others for "misleading" ads. According to the ASCI, the claims made by the company were not supported by data.
This is specifically what the council had problems with:
"One crore students are learning from BYJU’s-The Learning App; and that it has a 600-member R&D team, [which is] involved in creating the best learning programme for students; and that 93% parents reported an overall increase in their children’s grades after using BYJU’s; and that 90% students renew their BYJU’s course year-on-year, and 51 minutes [are] spent on the app on an average by a student everyday".
So, what’s the real picture at Byju’s? The answer lies in the app features and metrics.
Language: Byju’s is still only in English. That’s not something many Indian children from smaller towns and villages find easy to learn in, especially at a K12 level. This is a limitation if the aim is to expand to smaller towns.
Price: According to App Annie, the top in-app purchases on the mobile range between USD400 to USD700 depending on the segment. The minimum price for a Byju’s course as stated on its website is INR15,000 for grade 4 math. The maximum price is as high as INR140,000, for MBA training. The mean price comes out to around INR60,000 and the median price is around INR47,000. At INR250 crore current revenue, the average price of its products works out to be INR23,000, which is very steep for an online service.
Reach: While Ravindran had started off with a dream to reach children from the lower-income community, neither his price point nor the current language and contextual capability suggest readiness with that plan.
Subjects: Even for K12, Byju’s is focusing on math and science. Other subjects are not in the company's scope. A lot of Byju’s selling, especially at higher-education levels, involves counselling students and helping them understand their options. It is neither mobile, nor tech.
Personalisation: The true potential of mobile learning is personalising the experience based on artificial intelligence and machine learning, and providing an adaptable learning path based on the students’ level. Byju’s is not talking about all that.
So can Byju’s continue to grow by spreading its reach without improving mobile engagement or learning outcomes? Are it's competitors doing things differently?
Few competitors with capital
Tracxn, the database service provider, tracks 121 entities that compete with Byju’s. The competitors differ: by geography, by stage (with 94 unfunded, 10 between early- to late-stage funding, and 14 dead-pooled), and by focus, with separate companies driving self-learning horizontal courses (26), instructor-led courses (6), tutoring (8), and K12 (84). Byju’s competes across the broadest range of audience categories. According to Ragini Chaudhury, India CEO, Gray Matters Capital, "The success of mobile education lies in understanding the learning behaviour of users who’d belong to different groups, including girls and those from less privileged backgrounds. It goes beyond inundating users with more content in the name of providing access to good-quality education [and involves] designing products that actually address the real learning gaps."
Are any of the companies doing this?
Taking math alone, Byju’s competitor CueMath focuses on removing fear about the subject and building life-skills by creating a gamified, level-wise math programme administered through women micro-entrepreneurs.
Scorace, a math app, tries to bring self-learning on the mobile by building a practice-led path for children. It believes students need to practice math to learn, through quizzes and assessments that can be mobile-enabled.
None of these companies has reached scale and brand awareness the way Byju’s has. But there lies a great opportunity.
Unlike many other unicorns, whose moves are dictated by global investors because founders have little or no control over the board, even after USD244 million in funding, Ravindran and the promoters still retain 51.4% of the company. If Ravindran really wants to drive mobile-learning engagement and outcomes, he can. He has the users and the data. Will he deliver on customer experience even as he chases revenue growth? A divergence between the two can derail even the best entrepreneurs.
(The story has been updated to reflect that Times Internet is an investor in Byju's.)
(Update: We received the following response from Byju's after the story was published. We are reproducing it verbatim:
"Total employees – 2,500 instead of 3,500.
Sales team – 1,050 instead of 2,000.
85% & 89% revenue came from sale of products - tab, SD, RB is completely wrong. Yet, BYJU’S annual financial filings show 85% of 2016 revenues and 89% of 2017 revenues came from sales of products- tablets, SD Cards, and reference books. SD cards are shipped to customer and loaded onto tablets in locations where Internet speed could be patchy.
For us personalised learning content is our core product . People pay for this and what you see over there is not hardware revenue. For example – When they pay Rs.15000 for a 8th Standard product in an SD card, what they get is 8th standard content, which will include a SD card where the cost of the card is only Rs.300 and remaining Rs. 14700 is the personalized content revenue. Direct cost in our business (includes SD cards and other hardware) is only 11%.
Similar web shows average duration on BYJU’S website is 2 minutes, with 2 pages per visit. That is too short a time to learn: We are not a website based product and hence this statement is completely incorrect and misleading to the user. And a subjective response like this can people learn in 2 minutes is baseless.
So, who really is a BYJU’S user? Data from Similar web shows what people search for when they land up at BYJU’S – jobs and careers: Data from Similar web does not reflect our user base as we are not a website based product. Learning happens completely via our learning app.)
1 CONTRIBUTOR COMMENT
• 44 days ago
Nagabhushana Urala K
Vice President , Oracle India
Parents already spend a lot of money on tuitions. If Byju’s is complimentary I wonder why would they want to spend more as they can always pay extra to get a better coaching institute that has a proven track record. May be one channel for Byju’s to explore would be those institutes. He can focus on the content (if that’s really his speciality) and have institutes market the app for him.
How children learn is complex and going by this article or the response from Byju’s there is nothing to indicate anything being done in understanding the complexity.
Like 0 like
o
Debleena Majumdar
Write on mergers and Acquisitions as well as on Education , Kahaniyah, Mergers and Acquisitions Writer at ET Prime
Thanks a lot for reading the article and for sharing your thoughts. Agree completely with your point on complexity of learning being an issue that stays unresolved. As to letting coaching institutes market the app, that's an interesting idea indeed.
It had set out to change the way kids learn. Has it fulfilled its core promise — engaging them to deliver better learning outcomes? A close look at numbers shows as of now, Byju's remains a great sales story.
Share Gift this article
Debleena Majumdar
12 Jun 2018
BYJU RAVEENDRAN, FOUNDER, BYJU'S; DHIRAJ SINGH/BLOOMBERG VIA GETTY
On a hot and muggy May afternoon in Mumbai, when their peers are probably watching the latest Avengers flick or an IPL match, a group of children from grades 6 to 10 are sitting together and sharing their feedback on mobile apps that aim to teach them math.
The children are participating in a survey for a user-assessment lab conducted by behavioural-analysis firm Final Mile supported by Gray Matters Capital, an education impact investor. The goal is to understand how they actually use mobile-based learning products. Byju's regularly meets groups of students to get feedback on improving its content and interface; photo by Debleena MajumdarSelf-learning on the mobile
If there is one thing India spends generously on, apart from consumption of goods, it is education. The most visible education start-ups or businesses are coaching classes preparing students for Indian Institute Technology or the Indian Institute of Management entrance.
Till 2013, Byju Ravindran was also an entrepreneur running a small classroom-based education company, focusing mainly on MBA preparations. The business was driven by the reputation of its star teacher, Ravindran himself. With institutional fund infusion in 2013, the company decided to turn online and then mobile, and progressively expanded from entrance preparations and higher education to the K12 market (kindergarten [K] and the 1st through the 12th grade [1-12]).
It has also acquired companies and entered the US market. Plus Ravindran has spoken about going to tier 2 and tier 3 cities. The pace of expansion was quick, and revenues increased — and losses, too — rapidly.
There's a view that this rapid pursuit of scale does not do justice to a business that will be rewarded for tangible improvement of student engagement, learning outcomes, and ultimately their performance. How has the company changed as it raised more capital? With every successive round of funding, Byju’s has grown in revenue. The company has been averaging over 100% revenue growth annually for the last three years. But like most other online businesses, this has meant growing red ink on the books. (Disclosure: Times Internet is an investor in Byju's.)
A look at the company’s cost profile reveals another aspect of its growth. In 2016, marketing and business-promotion expenses accounted for 24% of Byju’s’ overall cost. In 2017, it shot up to 45%. That apart there has been a series of acquisitions, including the deal to buy TutorVista/Edurite, which Pearson had been struggling with.
Can the acquisition help Byju’s get a toehold in the US market? Or is it spending too much to fuel this rocketship-style growth?
“Of the 3,500-odd people Byju’s employs, about 2,000 are sales people. The sales team comprises mainly engineers. Not the ones best in coding but the ones who were in their college debating teams. The ones who can speak well. Convince. Counsel. And sell,” an impact investor, who invests in the education space, says, adding, “Byju’s is a great sales story. I can’t say [if] it’s a learning-engagement story.” (Update: Byju's sent us a detailed rejoinder after the story was published, which we have reproduced verbatim at the end of the story.)
Learning or skimming?
The data is quite unequivocal across offline, online, and mobile platforms.
Similar web data shows average duration on Byju’s website is 2 minutes, with 2 pages per visit. That is too short a time to learn.
And what does data for the mobile platform show?
Byju’s has three mobile apps — a learning app for higher education, an app for classes 4 and 5, which was launched recently, and a parent-connect app. Byju’s website says app downloads are over 16 million and people spend an average 57 minutes daily on Byju’s. One hour in a day. That’s huge engagement. Yet, Byju’s annual financial filings show 85% of 2016 revenues and 89% of 2017 revenues came from sales of products — tablets, SD cards, and reference books. SD cards are shipped to customers and loaded onto tablets in locations where Internet speed could be patchy.
But how much of this is really mobile-based self-learning? Are users really paying for mobile learning?
Remember the children in the Mumbai behavioural lab? The most motivated among them had used a math app for 3 hours over a 2-week testing period. The average was around 5 minutes. How many of them would be self-motivated to use a product like Byju’s?
The children gave their feedback very clearly.
The Byju’s videos are nice. I watch it sometimes to clear my concepts.
I like the videos. But it doesn’t help me plan my study the way I want to.
I don’t think math is fun. I just need to do it. That’s why I need tuitions.
Too much hand movement in the videos. I like Khan Academy. Simpler but more effective when I need to learn.
Byju’s is more one-way information. This app, Scorace, starts with making me decide my self-learning goals. Small features like flagging difficult questions help me keep track of my learning.
Homework and tuitions leave time for little else
The feedback from the students at the lab showed that a few of the older kids knew about Khan Academy. Some had seen Byju’s ads. "Shahrukh Khan, right?" A few had watched the videos. One had used an online CBSE helper. The rest were blissfully unaware that mobiles could be used for anything other than playing games or listening to music.
"We go for tuition classes 2 hours every day, 4-5 days a week," a class 10 student said. So where is the time for mobile-based self-learning? "Vacations?" one student ventured tentatively.
Anurag Vaish, co-founder, Final Mile, feels a big question has not been addressed by many education-tech companies. “Many products have not been designed keeping in mind how children can learn on the mobile. Do they need to underline as they read? Create their own flags? Tools for commitment and personalisation are often missing. This leads to low engagement rates and high uninstall rates.”
So, who really is a Byju’s user?
Data from Similarweb shows what people search for when they land up at Byju’s — jobs and careers.
Conversations with some employees and information published by the company show that paid subscribers are currently around 900,000. That’s around a 6% conversion rate from downloads to paying users. Which means the sales team has to reach at least hundred people to convince 6 of them to buy the product.
So what sort of users are these 6%?
The ones who are motivated to learn? But they can learn anywhere, with any device.
Are they not motivated? Then they may watch a few videos, which Byju’s claims to make interesting. But are these videos making them “fall in love with learning”, as the SRK-starrer ad claims?
Are these students only motivated by exam results? If so, where are the results on learning outcomes?
“People who use Byju’s do well in exams. Because our videos make learning fun. We don’t claim to replace tuition. But yes, it can,” one of Byju’s employees tells ET Prime. This claim has problems, as we shall see.
Another employee speaks about the content system at Byju’s. “The idea is if the content is interesting, children will automatically learn.”
That is a big assumption. As the learning behaviour of the children at the Mumbai lab shows — learning on the mobile may not be as simple as showing fun videos. It might require companies to understand better the behavioural motivations of their audience and incorporate small tweaks in their app, such as flags or quizzes, or make room for personalised content.
Unsupported claims
In January, the Consumer Complaints Council (CCC) of the Advertising Standards Council of India (ASCI) pulled up Byju’s and 171 others for "misleading" ads. According to the ASCI, the claims made by the company were not supported by data.
This is specifically what the council had problems with:
"One crore students are learning from BYJU’s-The Learning App; and that it has a 600-member R&D team, [which is] involved in creating the best learning programme for students; and that 93% parents reported an overall increase in their children’s grades after using BYJU’s; and that 90% students renew their BYJU’s course year-on-year, and 51 minutes [are] spent on the app on an average by a student everyday".
So, what’s the real picture at Byju’s? The answer lies in the app features and metrics.
Language: Byju’s is still only in English. That’s not something many Indian children from smaller towns and villages find easy to learn in, especially at a K12 level. This is a limitation if the aim is to expand to smaller towns.
Price: According to App Annie, the top in-app purchases on the mobile range between USD400 to USD700 depending on the segment. The minimum price for a Byju’s course as stated on its website is INR15,000 for grade 4 math. The maximum price is as high as INR140,000, for MBA training. The mean price comes out to around INR60,000 and the median price is around INR47,000. At INR250 crore current revenue, the average price of its products works out to be INR23,000, which is very steep for an online service.
Reach: While Ravindran had started off with a dream to reach children from the lower-income community, neither his price point nor the current language and contextual capability suggest readiness with that plan.
Subjects: Even for K12, Byju’s is focusing on math and science. Other subjects are not in the company's scope. A lot of Byju’s selling, especially at higher-education levels, involves counselling students and helping them understand their options. It is neither mobile, nor tech.
Personalisation: The true potential of mobile learning is personalising the experience based on artificial intelligence and machine learning, and providing an adaptable learning path based on the students’ level. Byju’s is not talking about all that.
So can Byju’s continue to grow by spreading its reach without improving mobile engagement or learning outcomes? Are it's competitors doing things differently?
Few competitors with capital
Tracxn, the database service provider, tracks 121 entities that compete with Byju’s. The competitors differ: by geography, by stage (with 94 unfunded, 10 between early- to late-stage funding, and 14 dead-pooled), and by focus, with separate companies driving self-learning horizontal courses (26), instructor-led courses (6), tutoring (8), and K12 (84). Byju’s competes across the broadest range of audience categories. According to Ragini Chaudhury, India CEO, Gray Matters Capital, "The success of mobile education lies in understanding the learning behaviour of users who’d belong to different groups, including girls and those from less privileged backgrounds. It goes beyond inundating users with more content in the name of providing access to good-quality education [and involves] designing products that actually address the real learning gaps."
Are any of the companies doing this?
Taking math alone, Byju’s competitor CueMath focuses on removing fear about the subject and building life-skills by creating a gamified, level-wise math programme administered through women micro-entrepreneurs.
Scorace, a math app, tries to bring self-learning on the mobile by building a practice-led path for children. It believes students need to practice math to learn, through quizzes and assessments that can be mobile-enabled.
None of these companies has reached scale and brand awareness the way Byju’s has. But there lies a great opportunity.
Unlike many other unicorns, whose moves are dictated by global investors because founders have little or no control over the board, even after USD244 million in funding, Ravindran and the promoters still retain 51.4% of the company. If Ravindran really wants to drive mobile-learning engagement and outcomes, he can. He has the users and the data. Will he deliver on customer experience even as he chases revenue growth? A divergence between the two can derail even the best entrepreneurs.
(The story has been updated to reflect that Times Internet is an investor in Byju's.)
(Update: We received the following response from Byju's after the story was published. We are reproducing it verbatim:
"Total employees – 2,500 instead of 3,500.
Sales team – 1,050 instead of 2,000.
85% & 89% revenue came from sale of products - tab, SD, RB is completely wrong. Yet, BYJU’S annual financial filings show 85% of 2016 revenues and 89% of 2017 revenues came from sales of products- tablets, SD Cards, and reference books. SD cards are shipped to customer and loaded onto tablets in locations where Internet speed could be patchy.
For us personalised learning content is our core product . People pay for this and what you see over there is not hardware revenue. For example – When they pay Rs.15000 for a 8th Standard product in an SD card, what they get is 8th standard content, which will include a SD card where the cost of the card is only Rs.300 and remaining Rs. 14700 is the personalized content revenue. Direct cost in our business (includes SD cards and other hardware) is only 11%.
Similar web shows average duration on BYJU’S website is 2 minutes, with 2 pages per visit. That is too short a time to learn: We are not a website based product and hence this statement is completely incorrect and misleading to the user. And a subjective response like this can people learn in 2 minutes is baseless.
So, who really is a BYJU’S user? Data from Similar web shows what people search for when they land up at BYJU’S – jobs and careers: Data from Similar web does not reflect our user base as we are not a website based product. Learning happens completely via our learning app.)
1 CONTRIBUTOR COMMENT
• 44 days ago
Nagabhushana Urala K
Vice President , Oracle India
Parents already spend a lot of money on tuitions. If Byju’s is complimentary I wonder why would they want to spend more as they can always pay extra to get a better coaching institute that has a proven track record. May be one channel for Byju’s to explore would be those institutes. He can focus on the content (if that’s really his speciality) and have institutes market the app for him.
How children learn is complex and going by this article or the response from Byju’s there is nothing to indicate anything being done in understanding the complexity.
Like 0 like
o
Debleena Majumdar
Write on mergers and Acquisitions as well as on Education , Kahaniyah, Mergers and Acquisitions Writer at ET Prime
Thanks a lot for reading the article and for sharing your thoughts. Agree completely with your point on complexity of learning being an issue that stays unresolved. As to letting coaching institutes market the app, that's an interesting idea indeed.
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