13 highlights
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Vedantu, Krishna’s edtech venture, had doubled its scale in the two months to May, clocking a cash collection run rate of nearly $60 million as of last month, and a month-on-month growth of just under 50%. (Cash collection is the money collected through bookings in any particular month plus pending collections from previous months. It is a far better measure of business than bookings simply because it takes into account cancellations.)
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Even if you account for these being good months for edtech businesses, thanks to the pandemic, these numbers jump out. They are what startup dreams are made of. And, no offence, but not too long back, associating such numbers with Vedantu would have cracked people up. Because most people had written the company off.
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But the beauty of the edtech business in India is that there are no clear winners yet. Sure, Byju’s is light years ahead of the competition right now, but there is still a fair distance to go before it can breathe easy.
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First, marketing. While bigger companies took on big-bang events like the Indian Premier League, Vedantu went ahead with the less expensive and more sustainable Kaun Banega Crorepati, or KBC
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The edtech industry runs on booking value. Think of bookings in edtech as gross merchandise value in e-commerce. Actual revenue figures may change based on cancellations, but bookings get the most attention.
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If you’re desperate to meet your target, you’d ask your friends and family to make bookings and then cancel in a few days. Showing inflated bookings is a common practice among sales personnel and is a mostly accepted sin of edtech.
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The talk about learning outcomes in an industry reverberating with the cacophony around fundraising and valuations over the last 15 months is like finding an oasis in the middle of a desert. The only other entrepreneur who speaks as passionately about learning outcomes is Sumeet Mehta of Lead School.
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For an education company to be sustainable, the system must be bigger and greater than any individual teacher. Otherwise, it becomes a marketplace,” says Krishna.
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Krishna doesn’t like talking about valuations and fundraising. He is the antithesis of the flamboyant tech entrepreneur. But speak to him about processes and he can go on and on.
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Education, however, is not a winner takes all business, says a venture capital investor from California who has invested in the sector and followed it across the world. “Look at China. All the big three edtech players are now listed on Nasdaq,” he says.
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Education is also not a business where you can dump money. Unlike e-commerce, you can’t use discounting because that doesn’t help scale an edtech business. Also, unlike hotels or cabs, you can’t capture supply and build a company because there is no supply constraint in education. It is a unique situation. Capital can’t be employed to shape demand or capture supply. So, after a point, it becomes irrelevant how much a particular company is raising. If you are not using the capital to fortify the system, advertising can only take you so far.
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“I still think offline is the biggest competition,” says Krishna. “I don’t think online is a competition because all of us put together still make up a tiny part of the education sector.
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At the Rio Games, P.V. Sindhu became India’s first badminton player to reach the finals. Before she landed in Rio, she said she wanted to play her best game. She kept repeating this match after match until the finals. Then she said she wanted to win the gold. Her outlook changed. The weight of expectations of a nation of 1.3 billion people got to her. She lost in the finals. It is still cited by sports psychologists as a classic example of building pressure upon oneself.