Fortitude is an important trait investors look for in entrepreneurs. Entrepreneur and venture capitalist Peter Thiel exemplifies this when he says, “Brilliant thinking is rare, but courage is even [in] shorter supply than genius,” in his famous lectures on entrepreneurship at Stanford. While growing, the entrepreneur faces multiple adversities – small, big, and terrible. However big the adversity, an entrepreneur can never give up. He cannot lose his cool, cannot panic and must fight it, and foray his organisation to a new dawn. Byju [Ravindran] epitomised this courage to fight all odds. For him, no problem is big enough to be a crisis, and I have never seen him panicking or taking pressure. It is this cool-headed approach that helped him resolve crisis after crisis.
One such crisis was looming in mid-2016 when the growth run rate was not accelerating as expected, thus increasing burn. By 2016, it was evident that whatever we were doing was working but not at the pace we had anticipated.
Byju, hence, went on a high drive trying to raise more cash to thread the bridge. While he spoke to our existing investors for a bridge round (financing which would help the company tide over till the next investment round), he also started meeting prospective investors, including the CEO and vice chairman of Times Internet, Satyan Gajwani. The Stanford-educated scion of the Bennett Coleman group is not only a successful CEO who is giving a new direction to the legacy print business of Times of India but also one of the most successful start-up investors in India today, with a knack for identifying entrepreneurs with calibre. He bought MX Player, then a lesser-known brand, for $140 million in 2018 and propelled it in the direction of an ad-based free OTT business model.
MX Player saw its series A valuation go up to $500 million in a year and during Covid-19 times, it was the largest OTT in India in terms of subscribers. There were talks of investments at a $1 billion valuation in 2021 for the combined entity of MX Player and MX TakaTak.
It is not surprising that the founder in Satyan saw a founder’s fire in Byju and decided to do a deal with him. But it didn’t end there. Seeing the unique digital model in education and the distance Byju had already traversed, Satyan did an introduction with the family office of Mark Zuckerberg, Facebook founder, and his wife Priscilla Chan. This was an unbelievable opportunity for an Indian start-up and the PR we could leverage from something like this was incredible.
Byju knew this well and started planning for the meeting with Chan Zuckerberg Initiative (CZI). The opportunity finally came when Byju was on the way to the airport with his family for a trip to Kerala. He got a call asking if he could meet the founder of Facebook the next day in San Francisco. Without batting an eyelid, he said, “I will be in SF tomorrow, will meet as per convenience.”
Then he explained to his family the importance of this meeting and bought the fastest ticket to SF at the airport after sending his family to Kerala. Breaking his journey at multiple cities to find an earlier flight, he made it to SF in time and impressed the CZI team with the BYJU’S story. CZI is a unique fund because they do both non-profit and for-profit investments in two domains which the Zuckerberg family is passionate about – education and health. The idea of BYJU’S sat well with the theme of CZI ie, making a change in the world for better.
BYJU’S by then had kids from more than a thousand towns learning from our content. We were offering an opportunity to millions of kids from small towns to learn with the highest quality of content, truly making education accessible. Add to it the aura of a truly home-conceptualised and home-grown product unlike an idea copied from what was working in the US or China; BYJU’S quickly started becoming an investor’s favourite.
With all these investors now lined up, Byju was able to do our series B round at a much higher valuation. Valuation rounds are called series A, B, C, etc. because typically investors who come on board at various stages hold different rights and liquidation preferences. Though the same is not exactly true for most start-ups today, the series names stuck.
For instance, BYJU’S didn’t give investors any liquidity preferences. While we were engaged in some serious marketing and brand building, we knew clearly that the mileage we were going to get for the Zuckerberg story would be massive. So, we planned the PR well.
One of the things that came with CZI funding was a post by Zuckerberg on Facebook from his personal account announcing the thought behind the investment. This meant that in one shot, BYJU’S was going to be seen and read about by millions of the founder’s followers. Most importantly, it came with the credibility of Zuckerberg and Facebook and hence would be celebrated the world over.
The post hit the world on September 8, 2016, and quickly went viral. It hit the 50 million followers of Zuckerberg and got shared by thousands of people in India who took pride in the company. The post did more impressions and clicks than what Rs 10 crore of media money could have bought us on Facebook then. More importantly, the goodwill we got was priceless.
When I joined BYJU’S leaving TAS, my family found it tough to explain to people around them why their son left Tatas for an unknown and funny-sounding company. Of all the people, my sister was the angriest and refused to reveal the name of the new company I worked in. She kept telling her friends, “He used to work in TAS” and limited my introduction to that. When Zuckerberg posted, I took a snapshot of the post and WhatsApp-ed it to her along with the post link saying, “Now you can tell your friends I work for BYJU’S, the only company in Asia in which Mark Zuckerberg has invested.”
By the end of 2016, we were feeling good about ourselves. Our brand was surging ahead and had occupied a special place in our customer’s minds. Our paid customers were super happy, and we were seeing an unprecedented 80 per cent-plus repeat purchases, an important metric for sustainable business. Our marketing spending was optimised and we suddenly became a brand people wanted to be associated with. However, the conversions were still nowhere close to where we wanted them to be. This was putting a lot of pressure on all of us and more burn. Byju knew that he couldn’t keep raising money and the business needed to make money. For this, he was counting on us, and we were clueless. The business needed more ideas and like always, ideas finally came from my favourite people – the customers.
Excerpted with permission from Educating A Billion: How EdTech Start-ups, Apps, YouTube and AI Disrupted Education, Arjun Mohan, Penguin India.