The video footage shows thousands of youngsters thronging the Indira Gandhi Stadium in Delhi and a clean-shaven, muscular young man in a tight black tee standing centre stage. He speaks in short, clipped sentences, with the practised ease of someone doing it for a long time, as six giant screens catch everything he says and does. On the face of it, it looks like a massive youth forum, but the man on the podium is talking numbers, logical reasoning and analytical ability. Meet Byju Raveendran, 36, in the midst of a demo tutorial while his audience listens with rapt attention.
In a country where places such as Kota in Rajasthan and Dharwad in Karnataka have built entire economies around the test prep business, big chains such as Brilliant, Bansal Classes and FIITJEE remain the traditional money grossers. Then there is a whole new genre of digital businesses, either offering customised content or building learning marketplaces online (think Embibe or Toppr or Vedantu). In this scenario, cracking the crowded test prep market is not easy, unless one can build scale and stickiness to match Raveendran's rock star ways - right from town-hall-type teaching to whiteboard-style analytical lessons to raising funds from marquee investors.
That the venture has gone on from offline test prep to digital and app-based learning - featuring videos, assessments and interactive components - and raised $204 million (See Table: Quick Facts) tell much of the story. Byju's is now a familiar name in the world of CAT, GMAT, GATE and GRE - a bunch of hard-to-crack entrance tests that you need to clear to qualify for coveted post-graduation courses in India and abroad. Add to the mix undergraduate entrance tests such as JEE and NEET, and the Indian Administrative Service exam. Not wanting to leave out any part of the value chain, the founder has been broadening the offerings since 2015 to also address the kindergarten-Class XII (K-12) segment.
The latest numbers are impressive. Byju's now employs about 1,500 people. Its mobile app has seen 7.5 million downloads within 19 months of launch; 3.3 lakh of these are paid subscriptions. The app now clocks 5,00,000 downloads a month on average. The company adds approximately 30,000 students every month at an ARPU (average revenue per user) of `15,000-17,000. In the last financial year, its revenues stood at around `110 crore, which are expected to reach `280 crore this fiscal. "Next fiscal, we will do around `600 crore and turn profitable as recurring costs will become minimal once we have created all the content," says Raveendran.
Overall, the addressable test prep market can be as big as 5,00,000 students per annum. Byju's claims to have about 7 per cent market share. "We have around 10 per cent market share in the CAT test prep market and lower in others," adds Raveendran.
Creating a killer brand is a tough task, but it was his passion for teaching that set Raveendran on the right course. Son of teachers and an avid sportsman, he grew up in Azhikode, Kerala, and always "helped" his friends with their studies - first at school and then throughout his college days when he was studying at Government Engineering College in Kannur. In 2003, he cracked CAT with a 100 percentile score, making him eligible for all the IIMs. He did not join any, but his reputation soared. Three years later, he shifted to Bengaluru to start a coaching business.
In 2007, his first full year of operations, Raveendran was teaching 35 students and planning to scale up. Classrooms at Jyothi Nivas College were rented for the weekends, and within seven weeks, the number rose to 1,200. As the numbers kept ballooning and students, especially young professionals from other cities, wanted to join weekend classes, he donned the garb of the flying teacher. "I was teaching in nine cities every week," he says.
It was not a sustainable model. So, the young teacher focused on expanding his core team, bringing on board many of his former star students, his brother Riju, and Divya Gokulnath, who joined as a student but eventually became his wife. In 2009, he decided to switch to the video format. His classes in Bengaluru were recorded and played across other centres the following week. In 2011, he floated Think and Learn Pvt. Ltd, the holding company for Byju's Classes.
The Ground Game
Getting the product and the user experience right had worked in the niche test prep market, but Raveendran was aware of the key challenges. First, not everybody buys courseware to crack these exams; only about 50 per cent do. Second, ARPU is non-recurring as a student usually registers just once for such tests. To scale up, therefore, he needed to focus on a broader segment. And finally, in today's digital era, young people (including his three-year-old son) learn everything on mobile.
Tying these pieces together was not easy, but Byju's managed to take the much-needed leap. In July 2015, it started offering maths and science coaching through its app for Class IV to Class XII students. The attraction of this market segment is clear. There are about 260 million students in the K-12 category, and when they enrol, they are likely to stay on as paying customers till Class XII because of the value they find. "For us, even 1 per cent of that market will be good," says Raveendran. Byju's will also cover the rest of the lower classes (up to Class III), but "that will take more time as it requires gamifying the content. For higher classes, we don't want to do it, as learning should not be trivialised," he adds.
Unlike many start-ups, Raveen-dran is not worried about cash burn. "Bulk of the money we have raised recently is still in the bank," he laughs. On a serious note, Byju's will continue to invest about `100 crore per year for content creation. It will expand its tutorials beyond Math and Science for the K-12 segment, work on study material for up to Class III, and start offering tutorials for the commerce stream.
The core value driving Byju's is best described by G.V. Ravishakar, Managing Director of Sequoia Capital India, when he says, "We always believed that education comes ahead of tech in edtech. When we met Raveendran, what impressed us was his focus on providing high quality content. Tech for him was an enabler to make education engaging and fun at scale. This resonated well with us."
IFC's Ruchira Shukla, Regional Lead (South Asia), Venture Capital, agrees. "It is a strong team and is delivering well across all operational and financial metrics," she says.
To maintain momentum, Raveendran now spends most of his time on strategy and occasionally teaches the only offline class that Byju's still runs in Bengaluru (everything else has gone digital). "I take classes as I do not want to lose touch. But my biggest success lies in developing teachers who are more talented than me," he says. He still plays sports, especially football. "After all, playing those games gives me the stamina to do classes for 12 hours at a go," he says.