In 2019 Byju Raveendran’s eponymous startup became the most valued educational technology company (EdTech) on the market and India’s only EdTech unicorn at the time, valued at almost $6 billion.
Today’s valuation has nearly doubled at $10.5 billion, raising Byju’s status to Decacorn. Already backed by Sequoia Capital and Chan Zuckerberg Initiative, their latest investor is Mary Meeker, founder of Bond, a Silicon Valley-based venture capital firm that supports high-growth internet companies.
Founded in 2011 and headquartered in Bangalore, Byju’s develops personalized learning programs. Was it their business model that differentiated them?
Byju’s business model and overcoming inertia
Unlike Uber type of platforms where users either ride, either drive, Byju’s is a one-sided type of platform where the interaction business model is based on each user to do a single task, learning. The value of such a platform derives from the increase in the number of users, what we call network effects. Naturally, network effects are conducive to inertia for these platforms in their early stage. Undoubtedly, Byju’s had to deal with a type of inertia named penguin problem where the end-users, the students don’t adopt due to the lingering doubt whether other students will risk it as well.
What did Byju’s do to overcome it? Well, part of how they overcame inertia is based on a domino strategy. They targeted a very small market – the top students only – and generated sufficient trust as well as bewildering excitement among students. Their word-of-mouth had far-reaching effects enabling Byju’s to sprightly expand to later market segments and reduce acquisition costs.
Furthermore, its freemium business model attracts students to get familiar with the app via access to free basic features and solely pay for upgraded features.
Today Byju’s is endorsed by 57 million registered undergraduates, graduate-level, and school-going students (K12 – kindergarten to 12th class level).
The education industry certainly needs to catch up in terms of technology adoption, and hopefully, investors such as Mary Meerker propel it into the next stage. But which startups will stand out?
Byju’s’ business model or their means to overcome inertia are not new nor disruptive. But their differentiating factor relies on having made learning enjoyable through gamification, and by doing so, they tapped into core student needs. Having understood that the learning object must be enjoyable to become a life-long learner, Byju’s became the favorite teacher for every student.
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