Business Model of Byju’s and a lot more

With the IPL comes one more thing. The barrage of TV advertisements of Byju’s.

“Come, make your kids fall in love with learning” says SRK. One of the most expensive stars to hire for a TV Commercial, SRK generally charges 3.5-4 crores for a day’s shoot. Makes you wonder, where does Byju’s make money from and what’s its Business Model.

In this article, we will dive down into the Business Model of Byju’s, the inspirational story behind it, various funding and valuation rounds, and tell you whether or not it’s making any Profits.

Let’s start with the story behind it, shall we?

The Inspiring Story behind Byju’s

Byju Ravendran was born and brought up in Azhikode, a coastal village in Kerala. An engineer by qualification, his last job was an an engineer with a UK based company. His job required him to spend most of his time outside the country.

In 2003, he was in India on a vacation. He helped some friends in Bangalore to prepare for the CAT exam for MBA for taking admission into IIMs. A lot of his friends aced the test and were selected into the IIMs. He too gave the test just for the sake of it and scored 100 percentile.

Dude, are you kidding me? This person scores 100 percentile by just giving the exam for the sake of it! Must be insanely intelligent.

He went back and 2 years later, the same thing happens. His students loved the shortcuts he taught and he got a lot of positive feedback.

“If people love my teaching so much, doesn’t it make sense to quit my job and start teaching full time?” Surely, this was in Byju’s mind then. He quit his job and started coaching students to take up the CAT exam. Initially, the students were small. But, they loved his teaching methods and soon he started teaching them in Auditoriums! Don’t believe me?

Byju’s teaching in an Auditorium

His classes took off and soon he was delivering lectures in 9 cities in a week. He also used VSAT to deliver his lectures. In 2010, his formed students, after graduating from IIMs came to him with the idea of scaling up Byju’s and in 2011, ‘Think and Learn Private Limited’ was born.

Byju’s app development was started in 2011 and Byju’s himself continued to give his CAT classes to keep the Company funded. It took 4 LONG years to get the app operational and finally, in 2015, Byju’s The Learning App was launched. In the first year itself, the app had a few million downloads. Just imagine this. It took 4 years to launch the app and all this while just think of the patience Byju’s must have kept. Luckily, we did not have lesser attention spans at that time to distract him 😉

Business Model of Byju’s

With the story behind us, let’s now understand what rakes in the moolah for Byju’s.

Byju’s operates on a corollary of the Freemium Model, the Free-Trial Model. A lot of websites say that Byju’s operates on a Freemium model but that’s where they get it wrong.

Zoom is an example of Freemium. Some things are free for life but for a higher or more number of features, you need to pay. Byju’s is a paid app from Day 1, just that you get a 15-day free trial. Think it of like Netflix or Amazon Prime. You can use the service ENTIRELY for 30 days and beyond that, you need to pay.

Byju’s has three streams of revenue.

  1. Subscription Model (Beyond the Free trial)
  2. Tablet Model (Same courses installed in a tablet where the student has to buy the tablet and they can learn offline without using the internet)
  3. Offline Courses (Byju’s Offers offline courses at some locations like Delhi, Noida, etc.)

So, the business model is simple. It’s like Netflix. The ‘Free Trial’ Business Model.

Is Byju’s making Profits?

As a startup, this is like an offensive question to ask. It’s like asking a lady her age, or a man his salary. Isn’t is obvious? Startups don’t make Profits. So, obviously, Byju’s is NOT profitable. Or is it?

First things first. Byju’s is PROFITABLE. In FY 18-19, it had a revenue of Rs 1306 cr with a Net Profit of Rs 20.16 cr. Till date, we don’t have access to the FY 19-20 numbers but it is estimated that it has a revenue of Rs 2800 crore or double than the previous year.

So, Byju’s is Profitable. So does this mean it’s not a startup anymore?

Funding and valuation

How can we not talk about a startup and not talk about its Funding rounds and valuation?

Till date, Byju’s has raised $ 2.1 Billion or Rs 15589 crores. It’s latest funding round was in September 2020 where it raised $ 500 million at a valuation of $ 10.5 billion or Rs 77957 crores. Yes, 77957 freakin’ crores.

It is now a Decacorn in startup lingo. Decacorn are startups valued at $ 10 bn or more. I know you already got that.

Let’s Conclude?

With internet adoption in the country increased in the Post Jio era and yet 44 crore Indians yet to come on 4G, there is still a long way ahead for Byju’s. Surely, it is going to do well as it has Economies of Scale which comes with any internet startup. Plus with its recent acquisition of Whitehat Jr, Byju’s is trying to monopolize the Sector. Or maybe Duopolize it. It has a big headstart in terms of funding and market share. But, Byju’s will face strong but indirect competition from Free learning websites like YouTube as they are completely ad-supported and a student has access to a variety of professors and learning material for free.

Last Point?

We have made a small video on YouTube explaining the Business Model and a lot of other stuff of Byju’s in Hindi. We’ re sure you’ll love it. Have a look?