Byju Raveendran has turned over every stone to keep BYJU'S afloat, but nothing seems to be working
How often does a company paying salaries make the headlines? But that’s the state of BYJU’S today.
Like this past week, when the company clearing the salary backlog for March 2024 was widely reported. The caveat is that only some employees within the company have been paid, and not others — we’ll get to that later.
While a lot has been said about BYJU’S in the past year, it still does not answer the question of whether the company can survive the storm. Cofounder Byju Raveendran has turned over every stone to keep his company afloat, including the new BYJU’S 3.0 plan, but seems to have fallen short on most accounts.
So the question is: Can BYJU’S even be saved? We will look to answer that, but, as usual, after a look at the top stories from our newsroom this week:
- The Payment Aggregator Rush: Why have the likes of CRED, Groww, Pine Labs, PayU, mSwipe and others entered the payment aggregator field despite increased regulatory scrutiny and higher burden of compliance? Here’s an explainer
- 30 Startups To Watch: The 46th edition of Inc42’s much-anticipated ‘30 Startups to Watch‘ is here, and, with it, we are once again turning the spotlight on the most innovative early-stage startups in the country today. Take a look at the list
- Swaayatt’s Story: Bhopal-based Swaayatt Robots is looking to take on automobile giants in the autonomous vehicle space and claims to have a lead on much of the competition. Is this hype or reality?
No Salary, No Future
Let’s start with the headlines this week around the company settling some salaries.
First, there were reports about the company suspending monthly fixed salaries for its sales team. According to reports, the company would only pay the sales staff on the basis of their weekly sales. This change essentially puts the sales team on the chopping block, according to two current employees at BYJU’S.
“It’s impossible to earn a living by trying to sell BYJU’S courses at this point of time. We have to sell test prep and other online courses, which is not something customers want because offline learning is the better option right now,” one current business development associate in Bengaluru told us.
This after the company laid off many employees from its sales team in pursuit of the inside sales strategy last year. Under the inside sales strategy, associates were paid incentives on the basis of their performance, but now the basic salary is being linked to performance.
Employees claimed the company will only pay a percentage of the weekly revenue generated by each member of the sales staff at the end of the seven days. The policy will continue till the end of May 2024, but that’s the current status, and no one knows whether this will be extended for longer.
Another employee revealed that currently most sales employees are working from home given that BYJU’S has given up most office spaces. “There is no infrastructure which is needed for inside sales, so the new performance-linked salaries is just one way of telling us that our time with the company is running out. There’s no future at this company.”
A couple of days after the salary changes for the sales team, reports claimed BYJU’S had cleared the March 2024 salaries, but this did not include the salaries for the sales team. What’s important to note here is that this is just a portion of the employee dues.
Not to mention, the frequent changes in salary terms and contracts for employees is bound to have a demoralising effect on the current workforce, leading to higher churn and attrition.
Can BYJU’S Stay Alive?
Employees who were laid off in late 2023 and early 2024 are yet to be paid salaries as Inc42 had reported earlier, and even the most recent salary payments do not include the backlog for February and March for many employees.
The only people who have been paid are part of the management team and handle administrative functions that are needed for everyday operations, not related to sales. In other words, the employees needed to keep the corporate entity alive are being paid, those in the sales team allege.
Reports claimed the monthly salary burn for the company is between INR 40 Cr ($5 Mn) to INR 50 Cr ($6 Mn), and that’s not even counting the backlog of salary and the dues owed to the various vendors, which we have covered in detail here.
While CEO Raveendran has claimed that the delay in salary credits is due to the company being unable to access funds from its recent rights issue, the reality is that $200 Mn will not go a long way towards compensating employees.
In this regard, the BYJU’S 3.0 plan — which includes lower salaries for new hires, consolidated operations for verticals and other cutbacks — does not seem to infuse much confidence.
Sales is critical for BYJU’S to prove that it’s not dead. It’s not enough to keep the corporate entity alive and working with no revenue coming in.
Even compared to past years and BYJU’S sales-first DNA, there’s a lot more pressure on the sales team today. Only now, the pressure is not coming in the form of words or targets from the management, but rather on the basis of the pay itself.
And is it even fair to ask the sales team to sell more when the BYJU’S brand has suffered a pretty big hit in the past few months?
The Fall Of Brand BYJU’S
A CEO of a rival edtech company, which also has a significant presence in the offline space, told Inc42 this week that BYJU’S troubles have not only harmed the company but also the Indian edtech sector. “We were only able to achieve 40% of the targets set for online courses, while offline coaching has seen more students each year.”
This after upGrad’s Ronnie Screwvala also claimed that due to ‘one rotten apple’ the industry is seeing reputational damage. “If people had asked questions, they’re now beginning to ask, four years back, it would have been a very different story,” Screwvala had said during February’s ASU+GSV & Emeritus Summit.
Of course, it’s not just BYJU’S that’s having trouble selling online learning as a proposition, but the industry as a whole is seeing some headwinds. From Physicswallah to Unacademy to Vedantu and others, most of BYJU’S competitors are more focussed on the offline business and hybrid online-offline models to bolster revenue.
PW’s cofounder Prateek Maheshwari said that online learning grew 80% YoY in FY24 compared to 115% growth for offline learning. The startup plans to open 50 more centres in the next two years, Maheshwari said in February this year.
For BYJU’S, competing with these startups on offline learning expansion is next to impossible. The company has no money to pay employees, let alone look at expanding its offline presence. Indeed, the cutbacks under BYJU’S 3.0 extend to the BYJU’S Tuition Centres as well as the online learning side.
Several educators at the BYJU’S Tuition Centres (BTCs) in Delhi, Bihar and West Bengal have been let go. In their place, the company has roped in educators at lower salaries who have been asked to work for longer hours and also have to do online lessons in addition to offline coaching.
“Reputation is everything in education and once there are questions raised about the legitimacy of institutions, these tend to stick around for years. Look at what happened with IIPM or even now with influencers who use online platforms to lure students,” a founder of a Delhi NCR-based student counselling platform and a veteran in the education sector, told Inc42.
In other words, BYJU’S as a brand is on the death spiral and very little can be done to salvage any reputation in the short term. It might take years for BYJU’S to become a reputable platform again, and as things stand, the company does not have the luxury of time.
Sunday Roundup: Tech Stocks, Startup Funding & More
- Funding On The Rise: May 2024 has started off on the right track for the ecosystem, with a total of over $316 Mn being raised by startups this past week, well higher than the weekly average of the past few months
- New Era At Freshworks: Freshworks cofounder Girish Mathrubootham has stepped down from his role as CEO after 14 years, with Dennis Woodside named as his successor
- Apple Boom: The tech giant saw record revenue in India during the March 2024 quarter, with CEO Tim Cook once again claiming double-digit growth in the country
- Rejig At Paytm: Amid the regulatory storm, Paytm has seen the exit of president and COO Bhavesh Gupta and a new CEO taking over Paytm Money
- FirstCry’s Fresh IPO Bid: FirstCry has refiled its DRHP for an IPO where it will look to raise INR 1,816 Cr through fresh issue and an offer for sale of 5.4 Cr equity shares
