Byju’s: Trouble in paradise as a report alleges shady practices

4th September 2021

4th September 2021

Byju’s is Indian, and in just a decade it’s valuation is about to climb to $21 billion, making it world’s must valuable edtech company. It’s Learning App has 40m users and 2.8 million paid subscribers. 

Its investors include a few of world’s biggest, for instance UBS Group ($1.5 billion invested); Abu Dhabi Sovereign Fund, Blackstone Group, Facebook co-founder Eduardo Saverin’s B Capital Group etc. 

In 2021 alone, it bought six other educational startups, including Indian coaching giant Aakash Educational Services for $950 million; Singapore-based Great Learning for $600 million and Epic, an American interactive digital reading platform for children, for another $500 million. 

And yes of course it sponsors Indian cricket team for approx Rs 350-450 crores. 

But all is not well in the paradise. 

A report, based on interaction with a few current and ex-employees of Byju’s, has levelled some serious allegations against this EdTech giant which include, fooling anxious poor parents to sign up for subscription-cum-loans which includes tablets and SD cards besides online classes. The entire spectrum of such an operations makes for very sorry and worrying read. 

(There is a long thread on twitter based on this report which could be read here). 

We all know that parents want their kids well-settled in lives and it’s not possible without good education. But then there are colleges few and far between for this mammoth army of young lives who are left with no option but to take private tuition. The Covid-19 pandemic has shown that you could manage so within the comfort of your home, sometimes at a fraction of price. 

Among other things, Byju’s have a two-pronged approach to their sale. One of course is schmoozing private school principals—selling six-year-olds an offer to code which they don’t need—and the other is approaching parents who would sell their skin to have well-heeled children in life. The trick is in asking kids questions such as which is bigger one by two or one by four and then telling the parents how far their wards lag. Most parents fall in tow. 

The report quotes a former Byju’s employee: “A driver only had $9 (700 rupees) in his account when he signed up for a subscription for his only child—his boss paid the down payment and deducted it from his monthly salary…his wife said `I’ll work 24/7 for this course.” The ex-employee says that was the day when he resigned from Byju’s. 

Initially, Byju’s was for elites. But then it launched the Discovery School Super League, a competitive inter-school game show in 2019, and saw its sign-ups balloon from less-privileged families. 

A formidable sales force was unleashed on these unsuspecting parents, says the report: “Buying a cup of chai from your local chai stall? Ask the seller if he has children and if he wants them to have a better education—and a better life—by signing up for Byju’s. Once users install the App, they’re asked to sign up for a 15-day free trial using a mobile number. Once Byju’s has the mobile number, their sales teams follow up, persuading parents to extend their child’s use of the app through a subscription beyond the 15-day free trial.”

Apparently, this 15-day free trial doesn’t quite work this way. People find it hard to get refunds after the end of 15-day free trial and are unable to opt out, says the report, which adds that a Google search for “Byju’s refund scam” reveals hundreds of customers “detailing trouble with getting a refund through the company.”

Thousands of parents end up having subscription. Byju’s has partnerships with local lending companies for loans. An investigation has revealed that out of 110 consumer complaints, 54 people have claimed they were unaware they were being signed up for loans what they had thought to be subscriptions. This investigation also revealed that an average ticket-size of loans was Rs 66,000. (India’s annual capital income is Rs 140,000). 

The salespersons would move heavens to get subscriptions as the weekly sales target is Rs 200,000 claims the report. “You are asked to do anything just to close the deal and keep it un-refunded for the next 15 days,” the report quotes a former employee. 

Then there is the issue of data. The terms and conditions says the App “may collect certain information automatically,” including the type of mobile device used, the device’s unique ID, its IP address, the mobile operating system and internet browsers used.” This helps the sales persons to use the data to guess a potential client’s socioeconomic bracket. The pitch is made accordingly. 

Sales persons are encouraged to tell the parents, says the report quoting an ex employee: “Your son can be nothing in life if he doesn’t go with Byju’s—and if you, as a parent, can’t secure your kid’s happiness and future…you might as well have not had kids.”

The sales persons work under abnormal pressure which was termed “toxic” as per the report. “Supervisors would keep employees working till midnight…I never had lunch when on field (visits) and never had my dinner before 2 am to avoid abuse,” an ex-employee is quoted. The report quotes another who has posted a recorded audio on YouTube and which makes for awful hearing, full of filthy abuses by seniors to juniors.

Some 10 million girls in India risked dropping out of the school during the pandemic. The digital class room has only spurted this development. Byju’s offers a series of E-learning programmes for students in schools from age 4 onwards, as well as training for competitive exams. Courses are taught through a mix of games, video tutorials, individual tutoring and study resources. 

A Mint report this morning says that most of Byju’s income, as shown in regulatory filings, comes from the sale of its devices. It spent some Rs 277 crores on it and earned Rs 1,334 crores which accounted for 63% of its business in FY 20. 

Otherwise, its losses have swelled 30 times on previous FY19. If it was Rs 82 crores as consolidated losses in FY19, it was Rs 262 crores in FY20. 

It’s annual expense though jumped to 119.50% to around Rs 3,022 crores.

Those on social media are quoting the instances of NIIT and Aptech of two decades ago about the fanfare with which they operated once and are now obliterated from memory. Byju’s is a much better product but if these allegations are put to test and wakes up regulatory authorities, and the allegations are found true, it could all turn very, very ugly. 

 

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