Byju Ravindran and Alakh Pandey
Whatever is happening these days in the world of Indian edtech is no less than a film story. There are two twists in the story which are completely opposite to each other. On one hand, Byju’s, India’s largest startup, is on the verge of bankruptcy and its founders themselves believe that the value of the company has gone to ‘zero’. On the other hand, PhysicsWallah, which provides preparation for competitive exams, has come up with its initial public offering (IPO) of ₹ 3,400 crore today, i.e. from November 11.
This is a moment that has forced the entire startup ecosystem to think. After all, what happened that Byju’s, which was the ‘poster boy’ of edtech till a few years ago, has collapsed today, and in the same period, Physicswala, which started from a small YouTube channel, is going to make its mark in the stock market?
What mistake did Byju Raveendran make?
There was a time when Byju Raveendran and his company Byju’s brand was famous in more than 21 countries. Especially during the Covid-19 pandemic, when the doors of schools and colleges were closed, Byju’s business was skyrocketing. By 2022, the company’s valuation had reached a high of $22 billion (billions of rupees). In this wild success, Byju’s spent money indiscriminately in big acquisitions, aggressive marketing and expansion across the world.
But the story behind this shine was something different. Soon, serious allegations of mismanagement and financial irregularities going on behind the scenes began to surface. In August 2023, a group of US lenders approached the Indian Supreme Court, accusing the company of misappropriating funds worth a whopping $1 billion.
What happened next is a painful tale of degradation. Big and reputed investors left the company’s board one by one. The company continued to delay filing its financial reports and was embroiled in such controversies that its reputation was ruined. Last year, Byju Raveendran himself admitted the bitter truth in a video conference, saying, “The value of the company is now zero.” He admitted that he miscalculated the growth potential and entering too many markets too quickly proved to be a big mistake.
Journey from earning ₹8000 to ₹4500 crore
At the time when Byju was at the peak of its successes, a young teacher named Alakh Pandey in Prayagraj, Uttar Pradesh was making a place in the hearts of students through his small coaching center and YouTube channel. Alakh Pandey’s journey was full of struggles. Despite being promising in studies, he himself could not succeed in the IIT-JEE examination but he made it not his weakness but his strength.
In the year 2015 he ‘Physics guy’ Started a YouTube channel named. The beginning was very slow. As of 2017, his channel had barely 3,897 subscribers. In 2018, he received a payment of Rs 8000 from YouTube for the first time, which gave a new boost to his courage. Alakh Pandey’s simple style of teaching and his way of connecting directly with the students created magic. By 2019, the subscribers of his channel crossed 20 lakhs.
On May 18, 2019, he launched the ‘Physics Wala’ app and received a major investment of $100 million in 2022. Today, Alakh Pandey’s net worth is estimated to be around Rs 4500 crore and his more than 50 YouTube channels are watched by crores of students. This is the same company which is now bringing its IPO.
Alakh Pandey sold trust, Byju sold dreams
Now coming to the most important question, what did Alakh Pandey do differently that Byju Raveendran could not do? Actually, both of them earned name in the world of online education, but their paths and intentions were completely different. Alakh Pandey sold “Bharosa”, while Byju sold “Sapne”. Alakh Pandey came as a ‘teacher’, while Byju came as a ‘salesman’. Alakh taught for free on YouTube for years, built a strong relationship with the children and won their trust. By the time they launched their app, they already had a loyal community.
On the other hand, Byju’s focused all its attention on big advertisements, celebrity endorsements and selling expensive courses right from the beginning. Alakh understood the biggest need of students from small cities and towns of India. ‘Cheap and good education’. He kept his fees so low that children of every class could afford it. At the same time, Byju’s made education an expensive ‘premium product’, which remained largely limited to the reach of only rich families.
The biggest difference in the business thinking of these two was that Alakh first made the company profitable and then raised investment. He built a sustainable company on his own. In contrast, Byju’s burned billions of investors’ money in marketing and deals just to increase the valuation. As soon as investors pulled out, their entire model collapsed like a house of cards.