50,000 crores of EdTech scam economy. So in today’s video, we will break down some things in detail. First of all, what went wrong in Byju’s collapse? Second, why did Unacademy downfall? And what are they doing in today’s date? Third, the coding bubble created by White Hat Jr. What impact did it have on people like you and me? And what is the dark truth that has not been.
Revealed to you? So let’s start with Byju’s rise and fall. Byju’s was a name that used to be in every student’s phone. But today, Byju’s employees have not received salaries. They have been unpaid for so many months. The valuation has crashed from $22 billion to $100 million. And the company is being investigated. What was the company doing wrong that it is not.
Giving salaries to so many people? But why is all this happening? To break it down, we have to go back in time. So let’s go back to 2011 when Byju’s started after the cat-talk. Earlier, they used to teach students in their auditorium. But gradually, they moved to a segment where their focus shifted to normal students.
That is, from 8th to 12th grade students. For which they raised a lot of funding. From 2020 to 2022, Byju’s raised $5.8 billion in funding. With this, Byju’s went on an acquisition spree that no one had seen in India’s edtech world. Byju’s acquired Akash Institute for $7.1 billion. Then acquired White Hat Junior for $2.3 billion. They acquired many other applications like Topper, Great Learning, and.
Osmo. But what was the behind-the-scenes of all this? Let’s look at them. The behind-the-scenes will blow your mind. The first thing is fake revenue recognition. Byju’s did this. Byju’s bought the product on loan. Byju’s showed the total amount of their loan to their revenue figures.
So that their valuation increases. So that they can raise more funding from investors. By using that funding, they were able to fund more acquisitions and expansions. They did one more thing. Aggressive sales call. If you go back to the time when Byju’s was aggressively expanding. You get so many calls from Byju’s that you can’t.
Even imagine. They threatened their parents. They manipulated their parents and sold their courses. They trapped their parents in a loop. Even today, their parents are repaying their loan. And the most important thing. When they scammed White Hat Junior for coding. It became an eye-opener for many people. The promise to learn Python from a 6-year-old.
It’s so unrealistic. But they showed the ads of White Hat Junior. That 6-year-old kids are learning coding. And they are getting jobs in Google. Which is completely impractical. What happened to Byju’s by 2023? Deloitte stopped auditing their company. Employees were unpaid for months. Byju’s didn’t even give salaries to people.
Founders are in Dubai. Directors quit the company. A startup that made the biggest IT tech startup in the country. It was selling dreams to people. Now, it’s running around the courts. So that they can avoid liquidation. What did White Hat Junior do? The first thing they did.
They targeted an emotional weakness of the parents. Which was the guilt of the parents. If you see their ad campaign. You’ll see that the kid can become Bill Gates. If you make him code. The kid can become Elon Musk. The kid can get a job in Google. And this was putting the parents in guilt. That we are not teaching our kid coding.
And stopping his growth. Maybe our kid can go to a company like Google. And we are feeling guilty. That we are not getting our kid enrolled in this. And this thing. By selling dreams to people. They sold a course for 30,000 rupees. Showed fake testimonials to people. Which don’t even exist.
And brought teachers who didn’t have a tech background. Because of which the kids were learning to drag and drop. But what were they sold? That they’ll make them coders. They’ll teach them Python. They’ll teach them how to make AI from scratch. And the biggest lie. 9 year old Kunal has made an app.
And earned 20 lakh rupees. These things were sold to the parents. Because of which the parents started feeling guilty. And they got their kids enrolled in these courses. And the biggest thing. The parents have a lot of competition with each other. Our kid will do this. Our kid will do that. And when such ads come.
The parents feel. That the next kid. Who will bring fame to this society. Should be mine. And to make him do this. I’ll do whatever I can. And here. A lot of people have lost so much money. Which no one can even imagine.
When the journalists wanted to show the truth. Then the white hat junior filed cases against them. And stopped the journalists from raising their voices. Gave so much pressure to the sales representatives. That they had to make 150 calls a day. Made their refund policies so vague. That even if they wanted to take a refund. No one got a refund. And they used dark scripts.
Meaning. You are delaying your kid’s future. His future is in danger. The kid who lives next to you. He will get ahead of your kid. And if you don’t want this. Then get the white hat junior right now. And this is what people did. People came to their helplessness.
And purchased these things. And in today’s date. Their money has also gone. And the company has also been ruined. So if this is not a scam. Then what is it? Now after listening to this. You must be thinking. Did all the startups do this?.
Well, it’s not like that. But in this entire ad tech industry. A very bad practice was going on. And the example of that bad practice. You will see from Unacademy. Who ran ads. Burned a lot of money. And in today’s date. The company itself is on fire.
Let me explain how. See. Unacademy. In the beginning. Gave free education. Which was a very good thing. Gave lectures on YouTube. Gave test preparations. For UPSC and NEET.
These people still do the same thing. Which is a very good thing. But as soon as these people got funding. These people started doing IPL sponsorships. Started bringing Ranveer Singh in ads. Allocated an annual ad budget of more than 100 crores. Means they will spend so much money on ads. In which. These people raised funding.
More than 880 million dollars. And the valuation. Reached more than 3.5 million dollars. But when this thing happens. So after that. A very big war of offline coaching starts. In which even today. Unacademy is doing its best. Now see what happened.
When these people planned to open coaching centers. So all the coaching centers. The chains that were already existing. Like Allen etc. Those people gave them a very tough competition. And those people started coaching their faculties. And these people also did not do anything good. These people also. All the offline coaching centers.
From there. All the faculties. To bring in their Unacademy centers. Started coaching. They were offered more packages. They were offered different facilities. They were given car incentives. And because of this. A very big war started.
That was the salary war. These people. These salaries. They were inflated so much. That now the old coaching centers. Neither they can afford these teachers’ salaries. And in today’s date. When companies are not getting funding. And such companies are struggling.
So these people are also not able to afford those teachers. Now you think about it. If you have coached a teacher. And today you are giving that teacher. 10 crores a year. And tomorrow if you are not able to give him 10 crores. Then he will go somewhere else to do a job.
Then those people will also not be able to give him 10 crores. So the teacher comes into trouble. Because in today’s date. The money that the teachers were used to earning. Now they are not getting that money in this industry. Why? Because the investors are not getting enough money. So that the teacher’s rates.
Can be tolerated by anyone. And this is what is happening. Now they have increased the burn rate a lot. They were burning more than 700 crores per year. More than 3000 employees had to be fired. Because of this problematic situation. Which they created. And many centers had to be shut down. And in today’s date.
If you see innovation in the product. Then there is zero innovation. In 2023. Gaurav Munjal himself admitted. That we have made a lot of mistakes. We have actually overspent. And the damage has been so much. That now we are trying our best. To control this damage as much as possible.
And this brings us to the next thing. All these things together. In our country. This 50,000 crore. The bubble of Edtech. The whole scam. How did this scam crash? The analogy of its crash. Is very interesting.
During Covid. Edtech startups raised a lot of funding. There was a tsunami in funding. Many venture capitalists. Started putting money in Edtech. Because they were seeing scope in Edtech. From 2020 to 2022. More than 12 billion dollars. Was raised by all the Edtech platforms.
Tiger Global. Softbank. Sequoia. Process. Many investment banks. Put crores of rupees. But what happened in 2023? The market started crashing. Results didn’t come.
The money they had put. They didn’t get that much return on investment. Because these Edtech startups. Burned so much money. That in the long term. To shift it on a sustainable model. Became impossible for these startups. Because of which. These startups started firing.
Why? Because there is no funding. If there is no money. How will you give money? And founders. The more noise they were making. After 2023. Startup founders. Who are working in Edtech.
They stopped making noise. Because there is nothing left to make noise. Where did the investor’s money go? I will tell you. Where did the investor’s money go? In opening fancy offices. In doing celebrity advertisements. In doing IPL sponsorships. And toxic sales hiring.
That all the sales employees. Were poached. Teachers were poached. That too on very expensive salaries. But they got used to it. This was very wrong. Here their money went. And the worst thing. They made wrong acquisitions.
To expand their company. To expand. They made such acquisitions. By turning these acquisitions around. To bring them on a profitable model. They didn’t make any plan. Without that plan. Without making those acquisitions. That’s why India’s Edtech bubble.
Has crashed so badly. After listening to all this. You must be thinking. I have accepted all this. It was a crash. It happened. But what difference does it make on me? What difference does it make on my life? It makes a lot of difference.
I will break it down. How does it make a difference? There was a big betrayal. Understand this. On one hand. Startup founders planned the IPO. And on the other hand. Parents were paying EMI. There was so much pressure on the kids.
The kids lost their mind. They were not able to code. Because they were sold something. That doesn’t enable coding. That is a different thing. And all the sales representatives. They were having a mental breakdown. Because the salary they are used to. They are not getting that salary.
And they are not getting any other job. Byju’s had increased the rate of people. Byju’s had increased the rate of people. That they are not getting any other job. And this problem. The normal middle class people. Who were connected to these startups. By buying products. Or by working there.
They are struggling in their life. I will tell you a real story. With which your eyes will open. Sunita aunty was from Jaipur. Do you know what she did? She told herself. That we were not promised. That we will get a job. For which we paid 45,000 rupees.
But no response has come from these startups. And if you read the reviews on Glassdoor or Twitter, you can see it on the screen, people have written a lot that it is a toxic culture, worst sales ethics, there is no ethics at all, they just want to sell the product, no matter how it sells. And no one is respecting the educators here. Educators are treated as if they are peons, while actually they are the ones who teach the students.
The edtech, it promised a lot to the people, it empowered them, but it could not deliver. So what did it do? It exploited people. It promised things that it never intended to deliver, or it could not deliver. And here, a loss of 50,000 crores was made. Now you must be thinking, where did this money go? Where does this figure of money come from?.
So let’s understand where this money went. Now look at this table very carefully, because there is a 50,000 crore worth of math hidden in this table. How many funds did Byju’s raise? 5.8 billion dollars. How many funds did Unacademy raise? 880 million dollars. White Hat Junior raised 300 million dollars, plus the acquisition.
They got. So they raised 300 million dollars anyway. Their total valuation was more than 500 million dollars. How much did Vedantu raise? More than 200 million dollars. If you combine their total burn, how much money is being made? It is more than 50,000 crores that they burned. But there was no accountability, no audit, no regulations, no.
Refunds. Private equity firms kept taking exits. They said, we don’t want to work in the IT tech industry. Thieves are sitting in front of everyone. Founders crashed and what was left in the end? People don’t trust IT tech anymore. All the youth got burnt. People are struggling for a job.
This is the reality of the IT tech industry in our country. This is what we need to learn. This will help you for life. Set these four things in your mind if you are going to do any business. 1. Product before profit. Make a good course, not just hype.
Develop a good product. Profit will follow you. 2. Ethics over earning. Keep your ethics above money. You need trust in sales. If you are selling, sell truthfully. It is not right to sell by manipulating and creating fear.
It is an unethical practice. If you do it in the short term, you will be ruined in the long term. 3. Frugality is always bigger than funding. It is easy to earn money. But it is a skill to use it properly. Use the funding properly. Use the money you have to create maximum value for.
Your customers. 4. Scale sustainably. There is no point in scaling in a way that you can’t handle. Grow small but solidly. Grow in a way that you can maintain. Not in a way that you can’t handle. In India, education is like religion.
People value education a lot. Treat it like a business. Move away from responsibilities. Focus on the business line. If you run in a country like India, you will fail. Business is important. But education should be prioritized. What value is the person getting?.
If he is not getting value, no matter how good you are in business, you will fail in the long term. We get lessons from this. What is the truth? Edtech sold dreams to India. To earn money, they broke the trust of parents. Today, parents don’t trust online education. They want to study in an offline coaching center.
But they don’t want to study online. This is happening in our country. If you talk to your parents, they are against online education. This created a bubble. It broke people’s trust. Can you imagine, if Baiju and Unacademy recover, will people trust them again? Tell us in the comment section.
If you got value from this video, please like and subscribe. So that you don’t miss such powerful videos.
