Byju’s working hard to achieve group-level profitability in a few months, says co-founder

The answer to that would differ depending on several factors like geography, of the kind of student. Hybrid learning in a country like India will get a lot of traction because parents still want to send their children to school, a physical centre. In the US, the trend is more towards one-on-one live learning. Even in our products, younger age groups prefer self-paced learning.

A big part of Byju’s’ revenue comes from hardware sales, and with the Aakash acquisition and your tuition centres coming up, you will also enter the capex game. Is Byju’s any more an edtech company?

Byju’s is a content company. But it’s more on the lines in the balance sheet, where nothing is called content. It says services and hardware, a combination of hardware and content. A fact of the matter is that hardware is a tiny percentage of our overall revenue. If you look at most of our sales, it is on smartphones primarily owned by the parent or the student. They don’t need the tab, which contributes around 20 per cent. The rest is content and services. In the balance sheet, the line items don’t allow us to bifurcate it the way the world perceives it.

But on Aakash, do you foresee a lot of capex going in?

We have 300 Aakash centres and 300 Byju’s Tuition Centres. We are confident we won’t need to launch too many more in Aakash. But in the tuition centres, yes. One common request is to make more tuition centres closer to people’s homes. Younger kids want it as near to them as possible. So a lot of our investments would go into the K-12 space.

How important would external funding be for Byju’s operational activities in 2023?

For us, funding has always been of inbound interest. All the investment we get will be for our businesses, like the tuition centre we are expanding. But the core business is doing well and running on its engine. The funding will be used more for expansion, only 25 per cent of our students come from overseas. As a business, Byju’s is currently between a hyper-growth and maturity phase Byju’s is now working towards profitability. Maybe the ecosystem has pushed us to think more about profitability a bit sooner than we would have thought about it.

But we are cutting down on our marketing and branding in India by not renewing any existing deals; otherwise, it would have been overkill. A lot of the duplication that happened when we acquired some companies has also been cut down. We are also moving towards an inside sales setup.

Regulating the edtech sector has received bipartisan support in the country, essentially on allegations of mis-selling courses. Parents give a lot of anecdotal evidence about how they were sold courses while not being completely aware of the terms and conditions. Byju’s has also had these allegations against it. Do you acknowledge that and what are you doing to avoid it?

As part of our growth, we pushed for growth, trying to reach more and more people and sales without targets. So there were isolated instances where a salesperson might have reached the house of a customer who could not afford the product. But now that he’s invested his time and effort in that place, he tries to complete it, or he tries to sign them up. But even one year back, no sale was confirmed unless audited by the central team. Today that team has three checks, one of which is an affordability test. If someone falls below a particular category – we have various parameters to decide who is eligible – they are automatically disqualified from being someone can buy the product.

Today, the difference is that they automatically get enrolled on Byju’s education for all. Previously, it would have been cancelled because a parent said she did not know how much money was supposed to be paid. Maybe the salesperson miscommunicated a bit. When you have 10,000 people working remotely, anything is possible, and one person’s mistake gets obviously amplified much more.

Last year, you announced that you wanted to achieve group-level profitability by March 2023 and fired 2,500 workers. A few days ago, some 1,000 people were laid off. Are you far from that profitability target that you had to fire these extra people?

We are working very hard to achieve group-level profitability, and we will achieve it in the coming few months. I don’t want to give you an exact month or date, but I expect it to happen soon. The only subsidiary not doing well right now is WhiteHat Jr.; we are still figuring that out. But in the core business, they don’t even need a significant investment to run. They’re either neutral to positive in terms of cash flow.

On the layoffs front, when we announced a 5 per cent reduction in the workforce, we implemented that in tranches. The recent layoffs are a part of the earlier number. We have more than 20,000 teachers and are going to add 10,000 more. We are creating more jobs, and while it’s unfortunate but also important, when there is no growth for someone, it doesn’t make sense for them to continue.

One acquisition of Byju’s in particular, WhiteHat Jr. has put a lot of pressure on the firm’s balance sheet. Do you think you should perhaps take a one time hit and write the investment off?

It is the easiest decision to do that, but sometimes the easiest decision is not the right one. We are really trying to make it work because the product market fit is very good. We haven’t yet decided what to do, but we are trying to make it work.

But have you considered writing it off?

I can’t comment on it right now.

Edtech companies have promptly adopted self regulation amid criticisms of extortion. Why do you prefer self-regulation over government regulation?

We have to look at what the edtech sector can do for education in the country. For a nascent growing sector like ours, regulation may be an option, but I don’t know, and think, whether the government will take a decision like that for a segment which is in its early stages and promising. There is a potential to do something here from India for the world and we don’t know what regulation would do to it. I would leave it to the government, but in my opinion, maybe, it’s just too early.

Under the self regulatory body, there is an independent process, we are all checking on each other and ensuring that no one is doing anything unethical.

ChatGPT, for all its flaws, has shown promise for multiple sectors including education. Do you see it as a threat or an enabler?

I feel enabled by it in certain senses. But in technology, it’s better to be safe than sorry. Unlike VR, platforms like ChatGPT are highly scalable, and anything which has scale can have an impact, and anything that has an impact on learning, we are ready to experiment with it. If it helps a teacher to make her script better, she can produce more quality work enabled by this.