Zuckerberg or Gates? Billionaires Try Opposite Paths for Online Education in India

Rushi Parmar lives in Keshod, a Western Indian town so small it has one park, a single-screen movie hall and no shopping mall. For clever kids like Parmar, who is 12 and heading into seventh grade, the only option for a decent education used to be traveling to a bigger city at least three-and-a-half hours away. That wasn't happening, so Parmar downloaded an app from the online education company BYJU'S and started learning math and science at her own pace. A year later, she just topped her class in sixth-grade exams. 

“I like to impress my teachers with my knowledge of advanced chapters like monocots and dicots in the biology class and thermal equilibrium in the physics class,” Parmar brags. “My teachers love it.” Impressed with her performance, several of her school friends have enrolled with BYJU’S for the seventh grade.

Online learning is exploding in India, and no company is poised to benefit more than BYJU'S. Its app has been downloaded 8 million times, and more than 400,000 students are paying an annual fee of 10,000 rupees (just over $150) in a country not known to pay for subscriptions of any kind. The company says the app is adding 1,000 subscribers every day and has reached an annual renewal rate of 90 percent. BYJU’S has won several big investors, among them Sequoia Capital, Lightspeed Venture Partners and Sofina. The company is also the only startup in Asia backed by the Chan Zuckerberg Initiative, started by Facebook founder Mark Zuckerberg and his wife Priscilla Chan.

“I want to Disney-fy education in India,” says founder Byju Raveendran in a recent conversation at his Bangalore headquarters. “I want to do for education what Walt Disney did for entertainment. I want to make it engaging and fun not just for the Indian kids but kids everywhere.”

Raveendran grew up in a small village in the southern coastal state of Kerala, where his father taught physics and his mother math at the local school. Young Raveendran was an unconventional student who skipped classes to play football and preferred to teach himself at home rather than listen to his teachers. He later enrolled for an engineering degree, then worked as a service engineer on a ship, sailing around the world for 33 months. Later, while vacationing in Bangalore, he found himself helping friends pass their entrance exams to get into top Indian engineering and management schools. “I’ve always enjoyed learning things on my own and also taught myself to hack exams, so it was easy to tutor others,” Raveendran says.

In 2006, he began coaching students in a college classroom. When the numbers doubled week after week, the classes spilled into sports stadiums. At his peak as a teacher, Raveendran was commuting between five cities each weekend, his classes projected on multiple giant screens for the thousands of assembled students to follow. He recruited his best students to teach and ran 41 coaching centers, setting up Think and Learn Pvt Ltd in 2011. He continued to prep students for college but mostly focused on lessons for school-age children.

Before long, Raveendran decided to move the stadium to the smartphone, two years ago launching a K-12 self-learning app focused largely on math, science and English. The app proved popular in a country where good teachers are scarce and methodologies antiquated and where many people first access the web by phone. Today BYJU’S is India’s largest edutech startup with plenty of room to grow.

“We touch less than 1 percent of the country’s student population today," says Raveendran, who is 39 and speaks with the fierce energy of a passionate teacher, frequently rocking forward and gesturing rapidly. "Even if we cover just 10 percent in the next years, we’ll be setting off a learning revolution."

Experts agree that there’s gigantic potential. As smartphones proliferate and internet quality improves, India’s online education industry is projected to grow five-fold to 9.6 million paid users by 2021, according to the Google KPMG Online Education in India report released last month. The segment is set to become a multibillion-dollar opportunity in India, says Nitin Bawankule, the industry director of Google India.

Dozens of companies have rushed in. BYJU’S competitors include Khan Academy, which offers free YouTube videos; startups such as Toppr ,which mainly focuses on test prep for elite engineering and medical schools; Cuemath, which teaches math; and Vedantu, which offers live online tutoring. BYJU's works to distinguish itself by making lessons engaging and interesting.

Raveendran isn't kidding when he says he wants to bring Disney to the classroom. The app features a mix of video, animation and interactive tools to bring clarity to subjects such as fundamentals of geometry and Indian history. Tutors bring the real world into the act—using pizza to explain fractions, a birthday cake to teach circles and segments, a basketball game to demonstrate projectile motion. Science experiments are overlaid with animation.

In cubicle after cubicle in Bangalore, hundreds of twenty-something filmmakers, musicians, animators and graphic designers create the lessons. It's not Walt Disney studio scale, but content, media and tech teams make up half of BYJU's 1,150 employees, personalizing each student’s learning and allowing him or her to track progress. Two in-house bands compose and perform background scores.

In one studio, Divya Gokulnath, a biotech engineer and one of about a dozen teachers who appear in the videos, is rehearsing for a math tutorial. A chatty woman dressed in a red tunic over jeans, she was once Raveendran’s student, then a teacher and now his wife and board member. The session is on circles and she talks about diameters, tangents and chords, practicing the motions in the air while pretending to hold the shapes in her hand. This is as much a performance as a teaching session.

After 100-plus hours of post-production work, this recording is edited down to a taut two-and-a-half minutes. “The sessions have to be compelling and fun or the kids will simply tune out and switch off the device,” Gokulnath says. The point is to provide a compelling contrast to the content pumped out by most education startups, which consists mostly of teachers standing in a classroom, lecturing away and writing  on a blackboard.

BYJU's approach contrasts with that of the non-profit Khan Academy, which has won the backing of billionaire Bill Gates and his wife Melinda Gates. Because Khan Academy videos are free, they are available to anyone with an internet connection and impose no financial requirements on students. Raveendran respects the effort, but he argues the for-profit startup model has advantages: “We can invest so much more into making the content engaging and personalized.”

Math of Khan Sweeps U.S. Classrooms Winning Bill Gates as Fan

While Khan Academy and its ilk are global, no fee-based online school has successfully crossed boundaries, says John J-H Kim, a senior lecturer at Harvard Business School who recently co-authored a case study on BYJU's.  "I wrote the case on BYJU's because it has many essential assets that may help them be one of the first companies to  accomplish this goal including a very efficient and effective learning app, significant financial resources, supportive investors, and good timing."

It's BYJU’S approach that attracted investors like Zuckerberg and Chan. “I’m optimistic about personalized learning and the difference it can make for students everywhere,” Zuckerberg wrote in a Sept 2016 Facebook post to announce the investment in BYJU’S. “That’s why it’s a major focus of our education efforts, and why we’re looking forward to working with companies like BYJU’S to get these tools into the hands of more students and teachers around the world.”

One of Raveendran's earliest backers was Ranjan Pai, the billionaire who presides over one of India’s largest healthcare and education empires and invests in tech startups through multiple venture capital funds. The two bumped into each other in a café and Pai immediately agreed to back Raveendran. “He stands out as one of the brightest entrepreneurs in the country yet is a teacher at heart,” says Pai, whose early investment yielded 5x returns in two years. He only has a small stake left.

Sequoia Capital came aboard in 2015, followed by a flood of investors impressed at the speed with which technology was taking learning into India’s small towns. Sofina and Lightspeed Venture Partners invested in 2016, along with the Chan Zuckerberg Initiative, which participated in a $50-million round. By early 2017, the app had enrolled 10 or more students in more than 1,700 Indian towns and snared Verlinvest as an investor.

BYJU’S was most recently valued at 45 billion rupees (about $700 million). Given a rapidly growing population and parents' determination to give their kids the best education, the company may soon achieve unicorn status. More children are entering the school system than exiting and Raveendran wants to take BYJU’S to the country’s most far flung corners. One limit to his ambition is the countryside's backward digital and payment infrastructure.

Eventually, Raveendran wants to fly in foreign teachers so BYJU’S can enter English-speaking markets like the U.S., the U.K, Australia and Canada with lessons in native accents. He foresees hurdles. “Asian parents willingly spend on education but will American and Canadian parents pay?” The startup is also scouting for acquisitions in these and emerging English-speaking markets so they can get a head start on K-12 education. 

The app has begun to create content for children as young as three or four years old and going up to the fourth grade. His son is a three-year-old pre-schooler and Raveendran knows he has a lot of work ahead to create engaging lessons for this new crop of youngsters. “This is the smartphone generation, born with devices in their hands.”