What is Byju's? Depending on whom you ask, answers range from a venture capital fund, a private equity fund, a proxy for the government’s education policy (or lack of it), or everyone’s favourite subject of memes or criticism. Byju’s, which has spent over $2 billion in acquisitions the last six months, is said to acquire the national CBSE school board- a common joke on Twitter these days.
Jokes apart, billionaire founder Byju Raveendran’s dealmaking spree conveys his ambition. Press releases issued by Byju’s recently call it the world’s largest edtech company. Most recently, the $16.5 billion company acquired upskilling firm Great Learning for $600 million. In an interview with Moneycontrol, Raveendran and Great Learning founder and CEO Mohan Lakhamraju talk about why upskilling courses are going to become as common as health checkups, being bootstrapped, and the Chinese government’s recent death knell to edtech companies. Edited excerpts
Q: You have been on an acquisition spree in the last six months? What's the larger rationale- both with Great Learning and the broader vision for Byju's?
Byju: This gives us an entry into a new space which has very high potential. We have seen a great opportunity and Great Learning has achieved so much scene with efficiency and being bootstrapped, it is phenomenal. That too in a very competitive space. Over the last 3-4 years they have been growing at 100 percent (year on year) . When we saw that kind of model, we had to make sure there was enough of an opportunity. This is the right time we are entering this space and entering in a big way. This is one of our largest acquisitions and we will be investing more to scale this in India and abroad
In a similar way, Aakash is making a strong entry into the test prep space where we are creating a hybrid model (online and offline) for test prep. Great Learning will be our vehicle for professional upskilling and higher education. In our core segment (K12), we see continued growth and that has been scaling 100 percent year on year.
We have launched in Latin America where we got a very good start. All three segments in India - school, test prep, and Great Learning- other than Aakash, everything is scalable in international markets. Why are we doing all this? Because this sector has been grossly under-invested in, completely neglected by everyone, I strongly believe that we have an opportunity to redefine this space globally. This is not a cut, copy paste model of what is working in other markets, Starting in India is an advantage in this space
We understand the deal is a mix of cash, stock, earnout. Can you give us a breakup and the new investments you are making in the upskilling space?
We cannot disclose right now. We will be making significant investments in the near term. Aspiration here is to create a global leader in this space.
This has also come at a time when you have been on a fundraising spree.
The two things are self-explanatory. We have done these big acquisitions like Aakash, Epic, and Great Learning and raised funds for that. Our core model is already profitable. We have raised $1.5 billion in the current round. Even after all these acquisitions, we will have a billion dollars in the bank.
What is your (Great Learning’s) differentiation vs peers such as Eruditus, Upgrad and Simplilearn?
2-3 things. The quality of our programmes, the support, guidance and mentorship, not just content. We use an efficient combination of content, technology and people and that is what has given us completion rates of over 90 percent and very high student satisfaction rates. That is what has helped to get to this stage without spending too much money.
You were the head of the hedge fund Tiger Global before you started up. And Tiger is one of the most active investors in the Indian startup ecosystem. Yet you chose to be bootstrapped...What was the thinking there?
Once you have been on the other side, you know how things work. You have already learnt the best things. In the beginning, when we chose to delay raising money, we wanted to get the model right and we wanted to make sure of the outcomes. Traditional high-quality education is accessible to very few people. We wanted to be an inclusive platform where everyone who wants to learn can experience the magic of transformational education. If you raise money too soon, you don't have an opportunity to get it right. When we got it right, we didn't really need to raise money. We have never been short of money. We started a fundraising process a few months back because there were opportunities that opened up
Do you see your space as competitive? You are fighting for the same pie, so do you wonder about market leadership?
When we started in 2013, there were 40 companies that were offering upskilling programmes. It has been competitive for a long time. The market itself has grown tremendously.
Earlier, upskilling was not a mainstream thing. Now it has become mainstream. For most people going forward, this is going to be standard behaviour, just like a health check-up and car upgrades, you will be upgrading skills as well. There has been a massive expansion of upskilling space.
In the higher education space, the pandemic has put focus on the lack of digital adoption that regulatory authorities have created enabling provisions to adopt tech and online learning. Those have created tailwinds for higher education to adopt tech and move online
We are also seeing a rush of Internet IPOs. Because of investor appetite for consumer tech, have you become more open minded about listing in India?
It is good to see investors valuing growth. We have made our plans based on our timelines and what we see. But it is very encouraging to see the response that Zomato got. Being an India-based company, we now know there is a pool of investors who value internet companies. We will evaluate at the right time if we should list in India or the US. It can be first here or second later. We will evaluate in 12-18 months. By the time, we will have a significant presence in the US, we will have 3 companies doing over $100 million in revenue. There will be a huge opportunity to list in the US or in India.
Over the weekend, we saw Chinese ed-tech stocks and the industry crash because the government flipped rules overnight, banning online tutoring startups, saying they should be not-for-profit and can’t have foreign investors aid. How do you see that sort of regulatory flip? Indian ed-techs and investors have often looked to China to emulate their scale and model.
I still believe the kind of impact some of those companies had on the Chinese education system is the reason why China became a very strong force. Current regulation is anyone's guess. It has wiped out a lot of value. Some of them have been there for decades.
While the situation here is close to nowhere close to China, does it give you pause to dial down aggression, make your program inclusive or come up with a pricing program that is more accessible?
On the one hand, we are creating a very large for-profit education business. We are not denying that. But we are also trying to create a very large not-for-profit in the same sector, making sure that the bottom 50 percent are not missing out.
We have created an initiative which we call Byju's education for all. We have added an equal number of students to that platform supporting the underprivileged, we are working with 41 partners. We are providing the same content and product without cannibalizing the core product.
It is not because of Chinese regulation. I have gone to a government school where, let alone good teachers, finding teachers itself was a challenge because most of them would go for political work. I know these challenges first hand.
But does the regulatory environment make you nervous, because it is a sign of regulators globally becoming more savvy or reactive?
You can always comply with regulations. The bigger challenge is when regulation changes, Many people are telling me this is a bigger opportunity for Indian ed-tech. We stand to benefit the maximum. A lot more money is going to chase the Indian companies. India and Indian ed-tech will define how everyone will learn globally. Most of our models are very innovative. We are far ahead of the US ed-tech companies in that way.
Can you give us a break up of revenue, country-wise in terms of percentage?
There is so much opportunity in India itself, so despite aggressive overseas expansion, India is the biggest. Even after 4-5 years, India will still be 60 percent of revenue. We will be one of the largest players in the K-8 space.
With all the IPO talk, how important is that for you? Private capital is flowing freely and you can always give investors exit via secondary share sales?
We don't need to do an IPO to give exit to investors. Staying private is an option but creating a large public company coming out of India is a big aspiration. We strongly believe the next big milestone should be going public.Read: BYJU's acquires learning app Toppr and upskilling platform Great Learning