“Byju’s is a contract between the valuations, investors and the founders and valuations can change overnight from 100 all the way to 10 also. In this age, what companies need to aspire for is measured growth, valuations and very robust processes. That is the missing across many of these companies,” says Shriram Subramanian, MD, InGovern Research Services
What is your take on what went wrong with Byju’s? They have been at the receiving end of a lot of flack for very aggressive marketing and sales as well. A bulk of the 2,500 employees are being let go from their sales and BDA teams. Is this a course correction or is there something fundamentally wrong that is yet to be identified?
There was a tailwind during the Covid years and due to the excessive funding, companies like Byju’s really did grow phenomenally. That being said, if despite the tailwinds in its heydays, the company was not profitable or did not create a buffer, then how is it going to weather even a simple storm? That is the hard hitting reality.
What is your take on what went wrong with Byju’s? They have been at the receiving end of a lot of flack for very aggressive marketing and sales as well. A bulk of the 2,500 employees are being let go from their sales and BDA teams. Is this a course correction or is there something fundamentally wrong that is yet to be identified?
There was a tailwind during the Covid years and due to the excessive funding, companies like Byju’s really did grow phenomenally. That being said, if despite the tailwinds in its heydays, the company was not profitable or did not create a buffer, then how is it going to weather even a simple storm? That is the hard hitting reality.
There is definitely a marketplace for edtech across the education value chain but it did not grow in a measured fashion and from that perspective, now is the time to make deep cuts. I do not think the measure that was taken yesterday is sufficient; probably much deeper cuts are required. Probably all aspects of their business processes need to be reviewed and which business segments need to stay also needs to be reviewed. They need to hunker down and work towards profitability and measured growth.
Can you be creative in the way you calculate your revenues? I know you need creativity to run a business but shouldn’t revenues be in black and white?
I think this is a fundamental mistake that many large unicorns are making. If you are the size of a unicorn, you are a potential listed company and you still have not put in processes and lost values in the search for valuations!
As you said, they are creatively treating revenues. Even today, one listed company,
, is talking about EBITDA without accounting for ESOP cost. What does that mean? That is their non-GAAP line item. So all I am saying is that these companies are defending their own metrics whereas accounting standards essentially are those for comparing apples and oranges and that is standardising accounts and standardising metric so that external people can measure these companies or can get a prospective on these companies.
At the end of the day, Byju’s is a contract between the valuations, investors and the founders and valuations can change overnight from 100 all the way to 10 also. In this age, what companies need to aspire for is measured growth, valuations and very robust processes. That is the missing across many of these companies.
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