How and when did knowledge, education, gyanshalas become a business? Technology came as a boon for spreading education, then why did this collapse? An accident that happened in the Edtech space is one-off or the entire ecosystem is under threat?
There are three Goddesses in ‘Sanatan Dharma’ also called Tridevi – Maa Lakshmi, who represents wealth, Maa Parvati, who represents power and Maa Saraswati who represents knowledge, Gyan, Buddhi, and education. For a good life, all three are always needed, but one can live reasonably well if one has the blessings of any two of them. Amongst all of the three, Maa Saraswati is imperative as without Buddhi sustaining wealth is impossible for longer periods of time. Having power without the right perspective and right wisdom can destroy the self as well as can cause harm to others.
An ancient shloka, a couplet, a verse in Sanskrit brings forth the same bhav or drishtikone or viewpoint.
‘‘न चोरहार्य
न राजहार्य
न भ्रतृभाज्यं
न च भारकारि।
व्यये कृते वर्धति एव नित्यं विद्याधनं सर्वधनप्रधानम्।।’’
It means, “it cannot be stolen by thieves, nor can it be taken away by rulers or kings. It cannot be divided among brothers and carrying it, does not even cause a load on one’s shoulders. If spent, it multiplies and it indeed always keeps growing. Thus the wealth of knowledge is the most superior wealth among all.”
Changing Paradigm of Education
With the commercial advent of the internet in the 21st century, every B2C segment erupted (most believe it to be-disrupted), propelled and excelled in demand. The education and knowledge sector behaved in a similar fashion with the internet availability through cheap mobile data with economical smart handsets promising that the lowest strata in the socio-economic pyramid too, get the benefit of world-class education at zero or affordable rates.
The Business Model
Edtech thus emerged with four business models Freemium Model: Basic course being free, and once the person gets glued on the course, the upgraded paid course makes money for the edtech firm
Marketplace Model: Get educationists to create content and offer it on the marketplace or platform and as users use the content by paying for it, a portion is taken away as the platform fee.
Advertising + Ad free Subscription Model: Creating content and learners using it with advertisements or paying a small fee if they wish to have content free of cost
B2B (Institutional) Model: Creating products or procuring content and offering it to institutions like schools, universities etc.
With these business models, edtech started to pulverise the established education system built on brick & mortar format through centuries. The economics for a virtual classroom both for the business and user made sense as the content was the same. Most edtech companies played on the weakness of the existing education system that manifests a parallel tuition and/or coaching classes system which even the disadvantaged India and lowest strata of society are forced to pursue for their offspring.
Growth was impeccable and the Indian market presented a promising opportunity both for money-oriented educators as well as for tech entrepreneurs in a country, where every parent is willing to spend obnoxiously large sums of money on health and education.
India, with a young and large population and favourable demographics, emerged as the second-largest e-learning market after the United States with a potential pie of 6 billion USD in size. India is poised to become a USD 10 billion e-learning market by 2025.
The start was slow, but the life of the edtech world was about to change. Edtech saw only one Unicorn till about 2019 in India and then the Pandemic changed the way people learn, people grasp and people take lessons. The result is obvious, today India has six Unicorns with a billion-dollar-plus valuation.
Gold Mine to a Graveyard
The size of the opportunity expanded the horizons but varicose the rapacity.
In 2021, when the cheap money thronged the capital markets and the unlisted markets alike, the edtech got its fair share of flesh with funding swarming up to four billion USD +, the most amongst any other start-up sector in India.
The pandemic left us with no option for anyone and everyone, but to go with the digital mode to take learning instructions or lessons. As COVID-19 receded, the hybrid became the norm rather than the exception.
Within the next few months, Byjus the first startup Unicorn in the Indian Edtech space added a new feather in its cap of being the most valuable Startup in the world being priced at 22 billion USD. As the valuations jumped, the grace of education and knowledge turned into a Game of Greed. No more, it remained pertinent or important what the child or youth is learning but selling, pushing and forcing content became the key. One is well aware that education is one of the simplest methodologies seen as the golden passport to break the chain of poverty, moving a household to the middle class and giving hope to the middle class to move upwards to a rich, luxurious, elite class.
A few edtech companies need to realise and then sustain the trajectory of higher and higher valuations made aspirations of parents as soft targets as parents believed that these edtech could be game changers for their progeny and wards. The thought was seeded that if one is not learning from the expert of one of the edtech companies then one is missing out on life. They used popular money-minded celebrities as well to propagate the message instilling FOMO and hitting the last nail in the coffin through influencer marketing.
The edtech companies also started to collect a lot of data about the person taking up the course and then painted a picture of the parents’ socio-economic profile. Using that profile, they figure out the insecurities that these parents go through with regard to their child and subsequently tailored products to encash these insecurities such that the first one-time engagement results in repeated sales.
Cheap Money & COVID-19
The pandemic brought cheap money from venture capitalists and private equity firms to these edtech firms. These edtech firms were witnessing a rapid acceleration in their user base and believed that growth would continue to remain at a similar pace, forever. Easy money and greed from the few edtech founders led to mega hiring by edtech startups envisioning to encapsulate the hockey stick growth. Layoffs, the pressure of sales, and the strain on revenues turned education platforms and businesses completely turn into mercenary sales machines, which led to the making of the boiler room in every segment of the company, from the employees to the educators, to content providers, to the students, to the parents, to the financiers, to the CXOs and finally, that led to the collapse of edtech firms. One has seen major layoffs from these edtech companies, and lots of them got defunct and shut despite millions of dollars of funding including Lido Learning, Udayy, SuperLearn, Crejofun etc. 25 well-funded firms shuttered in 2022 in edtech space that were even funded in 2022 itself. Despite all chaos a few edtech companies are emerging as winners, who are playing on content, quality of content and creating pull side demand.
The story of edtech is too early to be written off as this is the chance for the world to have the best teachers be made available to the remotest corner of the world. But one should always remember ‘Artha’ should always be acquired through ‘Dharma’ (ethically, morality, righteousness), else it doesn’t take time for ‘Artha’ to turn into ‘Anartha’.
