A few years ago, SoftBank-backed edtech unicorn Unacademy made an offer that it hoped a Prayagraj-based (Allahabad) physics teacher wouldn’t refuse.
It offered a whopping Rs 40 crore per annum to hire this teacher, who had started his own YouTube channel, and was growing leaps and bounds in popularity.
But the teacher had larger aspirations. He stayed put, built on his popularity on YouTube and went on to build an edtech startup that is not only profitable but also on the cusp of becoming a unicorn, a term used to refer to private firms valued at a billion dollars and above.
This is the story of Alakh Pandey, the 30-year old co-founder and chief executive officer of PhysicsWallah, which he founded two years ago. However, Pandey or Unacademy did not comment on the offer.
If his story reminds you of the breakout character Jeetu Bhaiya, who plays a Physics teacher on Netflix’ Kota Factory, you wouldn’t be wrong.
Pandey’s outspokenness, earthy sense of humour and ability to connect with students on life problems bears an uncanny resemblance to his on-screen counterpart.
In fact, there’s a dedicated fan channel filled with Pandey’s unique comments on everything from love, to success, and heartbreak. You might even stumble upon Shayaris (short poems), anecdotes and relatable experiences shared by Pandey, during his classes made into YouTube Shorts with songs and transitions that are viral on Instagram.
Pandey’s teaching appears as if he is having a one-on-one conversation with students, motivating them, as he laughs with them and even pulls their legs.
“When PhysicsWallah launched their courses, they were mocked by other institutes, that if they are providing classes at this price point, their quality must be low. Alakh sir always said don’t answer them, prove them wrong with your results,” said Ritu Chauhan, one of Pandey’s students, who is currently a first year MBBS student at Maulana Azad Medical College, New Delhi.
Chauhan is not alone in singing Alakh ‘sir’s’ praise.
“After 12th, I took a drop year and was taking classes at a well-known coaching centre, but I wasn’t able to crack it (medical entrance exam NEET) in the first go. I was a tuberculosis patient at the time, my dad was already paying a lot for my treatment. So, I decided to study at home while my treatment was going on. That’s when I came across PhysicsWallah and Alakh sir,” said Ruby Prajapati, a student of the first batch of PhysicsWallah’s NEET Crash Course 2020.
Prajapati is now studying MBBS from Vardhman Mahavir Medical College in New Delhi.
"A lot of these large coaching institutes rush us through the course. But students like me, who come from government schools, do not always get quality education," Prajapati added.
PhysicsWallah, which was formally incorporated by Pandey and Prateek Maheshwari in 2020 as PhysicsWallah Pvt Ltd, is a bootstrapped edtech company that offers an online platform for JEE and NEET (key entrance exams for engineering and medical) preparation.
The company is now in talks with global investors to raise $100 million which will give it a ‘unicorn’ tag.
News website Entrackr had first reported the development in March.
PhysicsWallah will become one of the country’s rare profitable unicorns and the only profitable edtech unicorn.
In contrast, Unacademy, Eruditus, Byju’s, Vedantu, LEAD, upGrad ― the six edtech unicorns in India, widened their losses in the recent past, despite surging revenues, thanks to heavy marketing and advertising spends. But PhysicsWallah clocked a profit of almost Rs 7 crore in the very first year of its operations.
Early journey
Before formally registering the company, Pandey had started a YouTube channel named PhysicsWallah in 2014, which had roughly 10,000 subscribers in its first year. The channel, however, currently has close to seven million subscribers and over 1.2 billion views.
“I am not a businessman. I had never even thought of starting a business or anything. That’s my co-founder. I come from a humble background and I love teaching,” said Pandey in a virtual interaction with Moneycontrol.
“Ever since my childhood I was a teacher. When I was in grade eight, I used to teach grade four and grade six students. It didn’t start out of passion initially, it started because I was having a few financial issues at home and I had to take tuitions. This went on forever, I used to teach grade nine students when I was in 11th and then in second year (of engineering) I started teaching again,” Pandey added.
Unlike most unicorn founders in the country, Pandey did not get into any of the country’s 23 IITs.
“Back then cracking IIT was of paramount importance and I was unable to do that. I didn’t get a platform or proper coaching in institutes like Aakash or Allen, which for me was a dream back then. Then I started teaching in an offline centre where I had a partnership with an established player. One day, my partner told me that I was great and I could reach six to seven thousand students through YouTube. That’s when it hit me and I started my own YouTube channel,” Pandey added.
Pandey said he started uploading videos for NEET and JEE students on his YouTube channel in 2013, but was focusing more on offline teaching back then. Pandey’s channel was active, but he had not started monetising it and only began earning through it in 2019.
“Since 2013 to 2017, I was completely focusing on offline coaching. It was only in 2017 that I left my well-paying job (teaching job), and started focusing completely on the YouTube channel. That was a big risk for me,” said Pandey.
“But I was not earning anything through YouTube, not even a bit. I learnt a lot of things and got massive feedback from thousands of students through the comments section. From then to 2019, the journey was good as we became India’s most subscribed IIT JEE channel and all,” Pandey said.
From a YouTube channel to an edtech unicorn
Pandey said he was satisfied teaching on YouTube and was not looking to launch a formal education platform even as his students kept pushing him to launch one. But the pandemic forced him to change course.
“In 2020, corona (Covid-19) hit and physical tuition centres were shut. That’s when students started pushing me to launch a formal edtech platform as they wanted to learn all subjects together,” said Pandey.
“We then decided to launch this PhysicsWallah app formally in June 2020. One thing that students told me was – Alakh sir, the fees should be affordable,” Pandey added.
PhysicsWallah’s course fees is lower compared to its competitors including Byju’s, Unacademy and Vedantu, among others. The company’s cheapest package ― crash courses on entrance exams ― start at Rs 1,000 per student and goes up to Rs 4,000, a tenth of the fees charged by its competitors.
Its other online offerings, which include full-time courses for grades ninth, tenth and entrance exams are also about 60 percent cheaper compared to Unacademy and Byju’s, industry sources said.
PhysicsWallah claimed that revenue surged multifold to as much as Rs 350 crore for 2021-22 (FY22) and the company sees an annual revenue run rate of more than Rs 650 crore for 2022-23 (FY23).
Most of the company’s revenue comes from subscriptions and it earns very little from its YouTube channel now, Pandey said.
“If at all we decide to increase fees it will be a very small hike. Like, we might increase crash course fees by Rs 100-200. This will help us attract more students,” Pandey said.
Risks and criticism
PhysicsWallah is adding new students every month at a brisk pace, with 5.5 lakh students spending about an hour-and-a-half everyday on the platform.
However, industry sources say these are early days for the company, with concerns on whether PhysicsWallah will be able to survive with this business model.
“PhysicsWallah is like an Unacademy on steroids,” the founder of an edtech firm said, requesting anonymity, an apparent reference to Unacademy’s blitz scaling approach to growth.
“Their model is pretty similar in the sense they are hiring star teachers, who sell packages to students. What’s going to be interesting is whether the company is able to sustain this model as it evolves, raises funds, expands offerings, etc,” a person in the know said.
“Right now Alakh is a star teacher. PhysicsWallah is synonymous with Alakh and not his company that has a hundred more teachers. So, he’s attracting thousands of students by leveraging his own goodwill. But as he adds more teachers and takes a step back from hardcore teaching, I doubt the same number of students will be attending PhysicsWallah’s classes,” the founder quoted above added.
An investment banker Moneycontrol spoke to on condition of anonymity, too, said that it is very early to comment on PhysicsWallah as the company is in its early days of business.
“Growth for PhysicsWallah will be obviously faster because it’s just started. But it will be interesting to see where it goes in the next couple of years, especially with the fundraises it is planning to do,” he the investment banker said.
But Pandey refutes some of these comments.
“I have stepped back from teaching for over a year now and still students are coming to PhysicsWallah and that’s because of our educators, who are very good, and our affordable packages. Many have been forced to lower their course fees and many have also launched cheaper packages, and that’s why I expect this kind of criticism,” he said.
Pandey’s comments come at a time when the edtech sector is experiencing a blip in demand with schools, colleges and physical tuition centres opening their doors as the fear of COVID-19 abates. Many edtech companies are announcing layoffs, slashing costs and launching new products. In April, edtech unicorn Vedantu launched courses for Rs 5,000, leveraging its artificial intelligence (AI) capabilities. Unacademy and Byju’s, meanwhile, are moving to offline tuition centres to attract more students.
Evolving as a business
PhysicsWallah is planning to expand its operations and diversify from its core test prep platform, according to Pandey. The company also plans to go aggressive on the K-12 segment (kindergarten to class 12 segment) and add executive education, among other products, to its portfolio of offerings.
“We are already in the K-12 segment. It has been more than 16 months since we are into 9th and 10th, not very aggressive, but we are there. We have a solid foundation to build on. We have paid courses for classes 9 and 10 students as well, and I guess there also we have the maximum number of students in the industry, I guess we have close to 50,000 students,” said Pandey.
Pandey said that the company will also start spending on its branding and marketing through advertisements.
“We need to create a brand. We were happy that there were so many students coming to our platform without any advertisements, only through word of mouth. But now we want to reach students and parents and make them aware of PhysicsWallah,” Pandey said.
While it currently has a team of over 1,600 employees including 500 educators and 120 people in tech, it is looking to add close to 150 members every month Pandey added, as it looks to gearing up for aggressive expansion. Interestingly, PhysicsWallah is adding employees every month at a time when well-funded edtech unicorns are laying off thousands of employees, citing funding crunch. So far in 2022, three edtech companies have laid off over 2,500 permanent or contractual employees.
“Let me be very honest with you, I don’t do any market surveys or anything. But I definitely don’t see any fall in demand because of the kind of love we get from our students,” Pandey said.
Pandey also doesn’t hold back when it comes to answering his critics. When told that many of his competitors claim his teachers don't know how to solve JEE questions, Alakh replied, "If my teachers can't solve JEE-level problems, why are you trying to poach them in the first place?”
While PhysicsWallah has expanded to a website and a mobile app, it has also grown in number of YouTube channels, each serving a different purpose. Some of these include, JEE Wallah, Competition Wallah, PW - English, and PW Bangla, among others.
“I feel good that Natwar is becoming the first doctor from his village. I feel good that Ruby, daughter of an auto rickshaw driver, is becoming a doctor. External competition comes later, and I honestly never think of competing with anybody. My students inspire me, that’s what keeps me going,” Pandey said.
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