Byju’s, an Indian edtech, is by most measures a runaway success. The company, which provides interactive educational programming for children, swiftly rose from scrappy beginnings in 2011 to unicorn status in 2018, and is now the most valuable privately-held startup in the South Asian country.
And its fortunes appear only to be improving. The Bangalore-based online platform, which is also the most valuable edtech startup in the world, is reportedly in negotiations to go public in New York through a SPAC deal valuing the company at $48 billion. India's government does not currently permit companies to list directly outside the country, so the SPAC deal would serve as a workaround to let Byju's tap overseas cash, according to Reuters.
If all goes to plan, already-wealthy founders Byju Raveendran and Divya Gokulnath will be billionaires many times over, and Byju’s will likely become a household name around the globe. There is just one nettlesome issue for the company as it pushes toward these goals: a relentless drumbeat of comments on social media claiming the company rips off customers in India.
“Sales is an honourable profession because good salesmen try to add value to the user’s life,” one of these naysayers, Dr. Aniruddha Malpani, tweeted Dec. 25. “It’s the mis-selling by EdTech startups like #Byju’s which give selling a bad reputation.”
A day earlier, he retweeted a story from Indian business news website The Ken describing a “loan crisis at Byju’s” created by sales agents “pushing multi-year subscriptions and ever-larger consumer loans on unsuspecting customers.” Malpani added the comment: “How #Byju's traps lower-income parents into educational debt traps - but passes the buck to financial intermediaries like #bajajfinserv!”
These companies “prey upon the aspirational poorer people who want to give their children a better education” and act “like loan sharks,” Indian lawmaker Karti P. Chidambaram said.
Malpani, a fertility specialist-turned-early stage tech investor, is among the most persistent of the company’s critics. Another is Pradeep Poonia, a Cisco employee who was sued by a subsidiary of Byju’s in India for defamation and trademark infringement over his YouTube and Twitter posts. The Byju’s subsidiary withdrew the case in May.
Numerous other people claiming to be Byju’s users, would-be users, or friends and relatives of users regularly tweet criticism to the company’s customer support account, accusing the edtech of not honoring cancellation requests, engaging in high-pressure sales tactics, providing misleading information about costs, and driving families into debt, among other complaints. (A representative from Byju’s replies quickly and courteously to every comment, promising to address the concerns.)
One writer in New Delhi tweeted a thread claiming the company was “virtually running an extortion racket,” and describing his parents’ experience being “fooled” by a company representative. Separately, a 16-year-old student in India told us in an email that his family felt pressured by a Byju’s salesperson into taking on a roughly $1,400 loan to pay for a learning program, and they were unable to cancel.
The complaints have not gone unnoticed. Earlier this month, Indian lawmaker Karti P. Chidambaram called upon the country’s parliament to impose more regulations on edtechs, making a reference to Byju’s as a “$21 billion company” (its current valuation).
These companies “prey upon the aspirational poorer people who want to give their children a better education” and act “like loan sharks,” Chidambaram said.
Why edtech has taken off in India
There is a confluence of factors driving the rapid growth of edtech in India, and also making it a hot-button topic in the country. The nation has one of the youngest populations globally, with an average age of 29 compared with 38 in both China and the U.S. School-age children and college-age students make up almost a third of its 1.38 billion people. About half of households in the country are now connected to the internet, compared with just about 4 percent in 2007.
School closings as a result of the pandemic, and a widespread cultural view of education as being the key to social mobility, also spurred interest in online learning products.
Despite rapid proliferation of product offerings, the cost of educational platforms is still steep for many Indian citizens. Prices for some of Byju’s products in India have an introductory rate of about $27 per month, and there are reports of lengthy contracts costing as much as $800 or more than $1,000. That can be burdensome given that the median salary in India is about $392 per month.
Byju's is expanding at home and around the world
Though its roots are in India, Byju’s has grown well beyond its home country. Promising “highly adaptive, engaging and effective” learning content, the company now offers programming in the U.S., the U.K., Australia, Indonesia, Mexico and the Middle East.
Its flagship product The Learning App, geared for grades 4-12, has over 100 million registered students and 6.5 million annual subscribers. Earlier this year, Byju’s struck a licensing deal with Disney allowing it to include the entertainment giant’s characters in its programming. It has also poured investment into developing AI and other innovative technologies.
The company is funded by a long list of prominent investors, including Sequoia Capital, Sofina, the Chan Zuckerberg initiative, Tiger Global, Lightspeed Venture Partners, Tencent, General Atlantic, Naspers, Owl Ventures, and Qatar Investment Authority. Michael Klein’s Churchill Capital is now rumored to be considering taking it public through the $48 billion SPAC deal, which would be the largest SPAC merger to date.
"All organizations have rigorous but fair sales targets and Byju's is no exception," the company told the BBC.
Byju’s has forcefully disputed claims from critics, including about whether it misleads customers or pushes them into unwanted learning packages. On a website for a U.S. product, it offers refunds of unused credits at any time “no questions asked.” A website for a Byju’s test preparation product in India promises a refund if the request is made within 15 days of delivery. Both provide access to user-friendly complaint and customer care portals.
The Business of Business has been in contact with representatives for Byju’s over the subject matter of this article since October. We followed up and gave them more specific details on Tuesday. As of the time of publication, they have not yet provided a comment in response.
Earlier this month in an article published by the BBC, the company further asserted that it does not use overly aggressive sales tactics and said its “employee culture does not permit any misbehavior or bad behavior toward parents” and that “all rigorous checks and balances are in place to prevent misuse and abuse.”
The company added in its comments to the BBC: "All organizations have rigorous but fair sales targets and Byju's is no exception.”
Little else has been published in Western media highlighting complaints about Byju’s. According to Malpani, the edtech has been trying to silence activists like himself — or at least limit their reach. He says he was kicked off LinkedIn last year after posting numerous comments about Byju’s, and he suspects the edtech is to blame. (Although Malpani invests in some educational-related startups, he told us none competes with Byju’s and his motives are purely public service-oriented.)
A spokesman for LinkedIn confirmed the account was restricted and added: “LinkedIn is committed to keeping our platform safe, trusted and professional. We have clear terms of service and professional community policies that we expect all of our members to adhere to.” He did not provide further explanation.
Undeterred, Malpani has continued to post about Byju’s on Twitter nearly incessantly. Just since Dec. 24, he has tweeted more than two dozen times about the company. He has also written a blog where he suggested that the Indian government require edtechs like Byju’s to offer only monthly subscriptions (rather than for longer terms) and stop auto-debiting payments.
“I care because I think Byju’s is damaging India’s human capital which is India’s global competitive edge,” Malpani told us in an email. “I think it’s important for startups to grow, but not at the expense of taking shortcuts and being unethical.”