By R. Chandra Mouli
The year is 1980. Bjorn Borg faces John McEnroe on the centre court at Wimbledon. The Swede sustains through crucial sets and wins the tournament.
Next morning, my crew and I are at the Adyar River in Chennai, facing our rowing coach. Did you see the match last night? Yes, we all did. Forget everything else, remember how Borg played: the tougher the game became, the tougher he turned out to be!
Byju Raveendran, facing his most challenging life test, may well take a leaf from the anecdote. In the courts and off it, he is battling cash flow – rather the lack of it – for payment of rent, salaries, and interest. To his credit, he is already proving he is learning life lessons and prepping for the final. Setting the paper are recovery bodies, adjudicating authorities, several creditors, and a set of dissatisfied investors.
The Byju’s story has been told so often we know it by heart. I will skip the part about investment inflow, and rise and fall of valuation, these being the domain of analysts. Worth a review is its teaching services bandwidth, an upshot of the company’s vision in developing and launching courses from cradle to college and career. Here we go: Curriculum of 12 state boards, CBSE, ICSE, NCERT, prep for CAT, IAS, UPSC, GATE, JEE, NEET, Bank and Government exams, Kids Learning modules from Class 1 to 12, Mock Tests and much more.
I admire Byju as a tutor with exemplary knowledge (scored 100% in CAT), as a risk taker, acquirer of success stories such as Aakash Institute, the first to transform the drab online teaching mode of an instructor facing the camera and delivering content in plain vanilla format to sleek models and appealing pie charts on screen, the first educator to engage a film star as brand ambassador, the first academic powerhouse to sponsor the Indian cricket team, the first to teach coding to young children, and most important – as a founder often infusing his own money to bail out the business. Against all odds, Byju Raveendran and the company did everything right.
Well almost. Viewed from the lens of detractors and Byju’s bashers, there are reports of shortcomings in corporate governance, rumors of aggressive sales techniques, and challenges in refund on program fees or tablet device sought by some dissatisfied parents (for the record, the company website has a link for refund requests, and complaint resolution score is displayed at 96%). Likewise, VCs and PEs whose money is now locked or eroded will list their set of woes.
In all this hullaballoo, we fail to acknowledge Byju Raveendran is very much around. He is facing the music unlike flamboyant tycoons and financial fraudsters who have chosen safer havens abroad. Byju and his family are spending considerable time overseas but the parent company Think & Learn Pvt Ltd is very much in operation and there is no flight of leadership, income or capital.
Resolving the crisis
What should Byju be doing to resolve the crisis? Distress sale is a dumb answer but that’s not the stuff entrepreneurs are made of. They prefer to rise like a Phoenix. For the edtech enterprise to re-emerge, have a stable footing and grow organically, it could modify courses and formats, and work on the following:
Switch to hybrid: Keep online courses going, continue live online classes, and increase the number of teaching centres offline.
Enter into areas not addressed sufficiently by existing education players: Courses that serve as prep for career in banking and finance are woefully less, martech is lesser known yet one of the fastest growing tech verticals, logistics is another domain Byju’s could foray into, and they would do well to stay away from advanced courses in IT since the market is saturated with offerings.
Engage with the student: Start offering at college campuses a Byju’s ‘upskilling module’ in the graduating year. Enter into a tie-up with HR firms and mass recruiters such as Banks, FMCG companies and retail chains, thereby playing an integral if not memorable role in the graduating student’s career preparation and entry-level placement. Look at newer areas of coaching and training, such as skilling and upskilling in the Generative AI domain.
Ironically, all this will have to wait, because more urgent matters like overheads and multiple Damocles swords are to be taken care of. But a well-thought-out business plan may attract a fresh round of funding (VCs are an unpredictable lot, and for all you know there are some waiting for green shoots and evidence of sustainability if not total recovery).
The best part of Byjus: The founder and his company are a pure play ‘Made in India’ brand. His emergence signifies the hope thousands have that they too can scale from an above-average life, need not be scions of a business family, or backed by dubious money sources to climb the business ladder. The fall, however, comes as a warning to wannabe leaders that your ascent could be akin to a hot air balloon, which will descend at some point of time.
Lessons for Byjus
Many don’t want Byju’s to fail. Case in point a business leader who counts education among his verticals. He said to me in private, “We always want entrepreneurship to succeed. It is the successful ones who become aspirational guiding lights for the future.”
Writing as a former entrepreneur who has sailed through tough times in a family-owned advertising business, overcome the threat of shutdown twice in 40 years (and successfully sold the agency), here is counsel, from a molehill to a mountain:
- Knowledge is power – no one can take away the wisdom that turned you into a success story.
- This too shall pass – hang on for dear life, and someone, somewhere will give you a hand.
- Tomorrow is another day – you may wake up to a call from an angel, obtain relief from litigation and legal proceedings, get an investment offer, or a JV from an existing education enterprise.
- There has never been financial fraud at Byju’s – be proud of this but avoid future allegations of financial mismanagement.
- Move away from founder-centric decision-making (works when you own 100% stake, but not with investors on board).
Now comes the rub: Presenting guidelines gathered from a leading VC, and not all may be palatable:
- Align with market realities as you work on a turnaround strategy.
- Accept the shift in markets and market sentiment when it becomes apparent.
- Do not give cause for complaints on opaque acquisition practices.
- Watch out for cash burn and come up with a periodic plan to manage cash flows.
- Signs of toxic work culture are often missed by the management – act on clues and information gathered in exit interviews.
- Entrust daily management to professionals. Look toward promoters and family members for strategic initiatives since their vision is key to the company’s success.
- Build a team that can make the business sustainable. Define KRAs and success milestones.
- Focus on profitability, not just revenue growth.
- Heed investor advice. Actively seek their feedback.
- Give more representation to investors – on the board and beyond – and make them part of the decision-making process.
- In case of a fresh infusion of capital, make sure the availability of funding does not distract from frugality.
- Watch out for lofty valuations by the VC fraternity. Stay grounded even as the value of the business picks up.
Byju bro, you are a start-up superstar. Your resilience and coefficient of toughness are higher than doomsayers can ever dream. It is in your DNA to bounce back, just like Bjorn Borg.
As the clock ticks daily from dawn to dusk, millions of Indians wait for you to solve the billion-dollar question: Will the sunset at Byju’s turn into a sunrise?
(The author, R. Chandra Mouli, is a former advertising agency entrepreneur and journalist. Views expressed are his own and not necessarily those of financialexpress.com)