From 2011 to 2021- The Rise and Fall of BYJU's

 31.01.2024

In 2011, a company that began with 25 students emerged as the most valued startup in Indian history within just a decade. By 2021, not only millions, but hundreds of millions of students were utilizing its resources. The country's leading star, Shahrukh Khan, endorsed it, swiftly propelling it to the forefront of India's booming edtech industry. This company is none other than BYJU's.

However, in the past two years, BYJU'S has experienced a significant downturn. The media has extensively covered their challenges: investor troubles, key personnel departures, massive layoffs, and staggering financial losses amounting to thousands of crores.

During this tumultuous period, their valuation plummeted from $22 billion in 2022 to under $3 billion today. These setbacks were primarily attributed to bold strategic decisions that did not yield the anticipated results.

The primary contributing factor to BYJU'S downfall was its exorbitant marketing expenditure. In 2021, advertising and promotional expenses accounted for a substantial portion of their budget, surpassing even operational costs. Their aggressive marketing campaigns, featuring high-profile figures like Shah Rukh Khan and Lionel Messi, often overshadowed the company's core operations. Despite investing a staggering 22,509 crores in marketing, their revenue stood at 24,283 crores, highlighting the imbalance in their approach.

Furthermore, BYJU'S sales tactics came under scrutiny, with reports of aggressive sales practices aimed at instilling fear in parents about their children's future. Employees faced immense pressure to meet unrealistic sales targets, resorting to misleading tactics to drive sales.

The company's lending partnership scheme further exacerbated the situation. BYJU's acted as a guarantor for customers borrowing from financial partners, leading to lax lending practices and increased financial risks.

Moreover, discrepancies in accounting practices compounded their woes, resulting in mismanaged growth and obscured financial health. Revenue recognition discrepancies inflated their financial reports, leading to false perceptions of exponential growth.

The COVID-19 pandemic dealt a severe blow to BYJU'S, as students transitioned back to offline classes, citing negative reviews and publicity. While their Indian revenue plummeted by 38%, their international ventures saw significant growth, albeit with escalating expenses.

Despite these challenges, BYJU'S aggressively pursued acquisitions, aiming to bolster its user base. However, not all acquired companies proved profitable, adding to their financial woes.

In conclusion, BYJU'S faces a formidable task in reclaiming its market leadership in India. The company's tumultuous journey underscores the dual nature of marketing and the importance of sound business practices in sustainable growth. As Warren Buffett famously said, "It takes 20 years to build a reputation and a few minutes to ruin it." BYJU'S must tread cautiously, prioritizing value and impact over rapid expansion to rebuild trust and emerge stronger from this ordeal.

Mekha C. M, Assistant Professor of Commerce, Al Shifa College of Arts and Science, Keezhattur, Perinthalmanna