Byju Raveendran has always been a self-learner.
As a child, he says, he taught himself English. His school in Kerala’s Azhikode village used Malayalam, the local language, as the medium of instruction.
Years later, those self-learning techniques came handy when Byju appeared for the Common Aptitude Test (CAT) in 2003, the demanding entrance exam for the elite Indian Institutes of Management (IIMs). He aced the test with a 100 percentile—twice—but didn’t bother to join any IIM. Instead, the mechanical engineer turned around and took up teaching.
Byju, 35, is now using those tried-and-test self-learning skills to expand what is already India’s largest education technology startup: Think and Learn, which owns the Byju’s Learning App.
The app has audio-video and animation tools to teach math, science, and logic to around 200,000 school and college students. The app is gaining around 30,000 new users every month, according to Byju.
This March, his company raised $75 million (Rs505 crore) from Sequoia Capital and the Belgian investment firm, Sofina. This was one of the largest fund-raising in the education startup segment in India.
On July 24, the company said it is in final talks to raise another $50 million from investors.
“The freshly-raised funds will be deployed to fuel international expansion and inorganic growth through global acquisitions,” a release from Think and Learn said.
CAT for kicks
Byju’s parents wanted him to become a doctor. But he joined the Government College of Engineering, Kannur, in northern Kerala.
In 2003, during a vacation, he visited some friends in Bengaluru who insisted that he take a shot at the CAT. “My friends knew I had my own set of hacks and tricks when it came to math, and they asked why don’t I give it a try,” he recalled. CAT is an unavoidable nightmare for those seeking admission to the top B-schools of India.
Byju appeared for the test and ended with a 100 percentile. Two years later, he appeared for CAT again “just to check if it wasn’t a fluke.” The result was the same.
His teaching career began sometime in 2006. Byju’s first informal session in Bengaluru, with friends and others, had 40 participants. In six weeks, he was dealing with crowds of almost 1,000 students. His weekend workshops became so popular that soon students from Mumbai, Delhi, and Pune were dropping in. He began charging a small fee and turned it into a full-time job.
“One day I was in Pune, the next day in Mumbai, and the third in Delhi,” Byju said. He even held his workshops in stadia with around 10,000 students attending his session at a time.
Till 2011, he continued the “running around.”
That year, he founded Think and Learn, the company that owns the Byju’s app. Some of the best students from his workshops—many of them IIM graduates by now—joined him. His initial focus was only preparations for management entrance tests and the civil services exams.
“I was a teacher by choice and an entrepreneur by chance,” he said. “It just took off.”
Catching them young
Byju’s focus is simple: change the way students learn.
That’s key in Asia’s third-largest economy where educational outcomes are often based on rote-learning and geared simply towards scoring in exams. Practical knowledge or application is seldom the priority. Not surprisingly, many students can’t perform (pdf) basic math problems or read full sentences even at the third or fourth-grade level.
“After speaking to some of the brightest students, I realised that most of them, unfortunately, study only because of the fear of exams. They are taught to solve a problem but aren’t enabled to find a problem,” explained Byju, now father to a two-year-old.
He realised that if his strategy of self-learning was adopted in early years at school, it could potentially create a huge impact.
“You learn the best when you learn on your own,” Byju said. The videos on the app don’t need any guidance from teachers, students can watch and learn by themselves. The app also incorporates quizzes and games involving other students.
The massive Indian education sector, with over 315 million school students, has quickly become his target audience. The school vertical, which covers grades 4 through 12, is now bringing in 90% of Think and Learn’s revenue. In June 2016 alone, Byju’s app generated Rs30 crore.
The average annual subscription cost per student is Rs10,000.
Sustainable business models
Education technology firms in India don’t exactly have a stellar track record.
Unlike the relatively new internet businesses such as e-commerce and taxi-hailing services, education technology firm have been around in India for over two decades. But most failed to sustain their business models.
For instance, the BSE-listed Educomp, which provides schools with digital products and online solutions, is unprofitable and under massive debt—Rs3,056.99 crore as of Sept. 2015. In January 2016, its lenders were considering acquiring a majority stake in the firm, the Mint newspaper reported.
However, analysts believe demand for technology in education is still high. In India, this market is expected to be over $70 billion by 2017, with the kindergarten-to-grade 12 range estimated to comprise around 40% of this.
“India’s education system is pretty weak, so there is a lot of demand for technology companies to do something extraordinary. But the problem is that none have so far succeeded in monetising from edu-tech businesses in India,” said Yugal Joshi, practice director at Texas-based management consultancy Everest Group. “There is immense scope for any entrepreneur who can develop a sustainable business that has the potential to make money.”
Joshi believes the newer generation of edu-tech companies like Byju’s have certain advantages over the older ones like Educomp. Much of that has to do with increased smartphone penetration in India and cheaper internet.
The road ahead
Byju, however, wants to look beyond India now. Currently, his app is also available in the Middle East. Over the next few months, it will enter the US, UK, and other Commonwealth countries.
But, back home, some challenges still persist.
For one, Byju admits that since credit card penetration is pretty low, Think and Learn relies heavily on the fintech industry for payments. He wants to start monthly subscriptions, but that’ll only be possible with the availability of other digital payment channels with huge reach.
Besides, it needs to scale up, while constantly focusing on innovation.
“Technology will keep changing, and we need to adapt,” Byju said.