Byju’s Marketing Strategy: Rise to $22B and Fall to Bankruptcy

In 2021, Byju’s spent ₹2,250.94 crore on advertising. Their total revenue that year? ₹2,428 crore. They spent 93% of their revenue on marketing. Not 9.3%. Not 19%. Ninety-three per cent.

One year later, Byju’s reached $22 billion valuation, making it India’s most valuable startup. Eighteen months after that, the company collapsed into insolvency proceedings, defaulted on $1.2 billion in loans, laid off thousands of employees and saw founder Byju Raveendran’s net worth plummet from $2.2 billion to zero.

The Byju’s story isn’t just another startup failure. It’s a masterclass in how aggressive marketing can build massive scale whilst simultaneously creating the conditions for catastrophic collapse. For an advertising agency in Ahmedabad helping brands balancing growth ambitions against sustainable economics, Byju’s offers lessons written in billions of dollars of destroyed value.

Table of Contents:

1. From CAT Coaching to $22 Billion Unicorn
   
2. The marketing machine that defied logic
   
3. Spending 69% of revenue on ads seemed brilliant
   
4. Celebrity endorsements: Shah Rukh Khan to Lionel Messi
   
5. The aggressive sales tactics that backfired
   
6. COVID boom turned into post-pandemic bust
   
7. The acquisition spree that accelerated collapse
   
8. Conclusion
   
9. FAQs

From CAT Coaching to $22 Billion Unicorn

Byju Raveendran didn’t start as an entrepreneur. He was a service engineer who discovered his teaching gift helping friends crack the CAT exam in 2003. By 2007, he’d transitioned full-time to teaching, conducting workshops with fewer than 40 students that grew to 1,000 within seven weeks.

The growth was organic, driven by word-of-mouth from satisfied students who achieved remarkable results. By 2010, Byju’s classes operated across 45+ cities serving students preparing for CAT, IAS and other competitive exams. In 2011, he formalised the venture as Byju’s with his wife, Divya Gokulnath, focusing on K-12 and competitive exam preparation.

The 2015 app launch accelerated growth dramatically. Within a year, 300,000 active subscribers proved the market demand for engaging video-based learning. By 2018, the app had 150 million registered users with 900,000 paid subscribers spending an average of 71 minutes daily.

This success attracted massive venture funding. By March 2022, Byju’s valuation had peaked at $22 billion with over 115 million registered students. The edtech darling had seemingly cracked the code for education at scale through technology and aggressive marketing.

But the foundation contained cracks invisible beneath the growth metrics. The marketing spending that built awareness also built unsustainable economics. The aggressive sales tactics that converted customers also destroyed trust. The expansion that created scale also created operational chaos.

The marketing machine that defied logic

Byju’s marketing strategy operated on a premise that would make traditional CFOs faint: spend whatever it takes to acquire customers, worry about profitability later.

From FY16 to FY22, Byju’s total expenditure reached ₹26,100 crore. Of that, ₹8,029 crore went to advertising, representing 69% of their operating revenue of ₹11,792 crore during the same period. They weren’t investing profits into marketing. They were spending investor capital at rates that made sustainable profitability mathematically impossible. (Source: INC42)

The spending accelerated year over year. FY21: ₹2,250.94 crore on advertising. FY22: ₹4,134.94 crore, an 84% increase. This wasn’t strategic acceleration. This was an addiction to growth metrics regardless of unit economics.

WhiteHat Jr, acquired for $300 million in 2020, burned ₹220 crore monthly on marketing whilst reporting ₹2,877 crore pre-tax loss in FY22, worse than the ₹1,549 crore loss the previous year. The subsidiary spent aggressively on customer acquisition whilst haemorrhaging money on every customer acquired.

The marketing machine created impressive top-line growth. Downloads increased. User counts rose. Visibility skyrocketed. But each new customer costs more to acquire than they’d likely generate in lifetime value. The company was buying revenue at unprofitable rates, creating an appearance of success whilst destroying actual value.

Spending 69% of revenue on ads seemed brilliant

During the COVID-19 pandemic, Byju’s aggressive marketing appeared vindicated. With schools closed and parents desperate for learning solutions, demand for online education exploded. Byju’s heavy marketing investment positioned them as category leaders when the market surged.

Revenue grew. User acquisition accelerated. The valuation reflected market belief that Byju’s had captured a dominant position in a massive addressable market. Spending 69% of revenue on marketing seemed like a brilliant strategy when growth rates suggested imminent profitability at scale.

But the math never worked. Customer acquisition costs remained stubbornly high even as scale increased. The lifetime value per customer couldn’t support the acquisition costs plus operational expenses plus product development, plus the interest on massive debt loads.

Working with an advertising agency in Ahmedabad, basic analysis would have revealed the unsustainability. But Byju’s operated in a growth-at-all-costs mode, where questioning spending levels meant questioning the core strategy.

Investors enabled this dysfunction. Each funding round validated the strategy by pouring more capital into the model. The availability of capital removed the discipline that profitability requirements would have imposed. Why optimise spending when investors keep funding losses?

The problem with spending 69% of revenue on marketing isn’t just the percentage. It’s that this level of spending signals either market-leading margins (which Byju’s didn’t have) or fundamentally broken economics where customer acquisition costs exceed customer value. Byju’s was the latter whilst pretending to be the former.

Celebrity endorsements: Shah Rukh Khan to Lionel Messi

Byju’s celebrity endorsement strategy epitomised their aggressive approach: spare no expense on visibility regardless of ROI.

Shah Rukh Khan signed on in 2017 for approximately ₹4 crore annually. The deal lasted until 2023 when Byju’s finally recognised they couldn’t afford the luxury. Lionel Messi joined as global ambassador for the social impact arm during the 2022 FIFA World Cup for an estimated $5-7 million annually. Within a year, the partnership was suspended.

The cricket sponsorships dwarfed even celebrity fees. Byju’s replaced Oppo as the Indian cricket team jersey sponsor from 2019-2022, paying ₹4.6 crore per bilateral match in India and ₹1.56 crore per ICC/ACC international match. When the original deal expired in March 2022, Byju’s extended it for $55 million through 2023.

They also partnered with ICC as a global partner for three years beginning in 2021, associated with BCCI across multiple tournaments and sponsored FIFA World Cup events. These associations generated massive visibility but questionable returns.

The celebrity and sports sponsorship strategy assumed brand awareness would translate into customer acquisition at profitable rates. But awareness doesn’t equal conversion. Millions knew Byju’s name, but conversion rates and customer economics told a different story.

When Byju’s began cutting costs in 2023, these partnerships ended. BCCI dragged Byju’s to NCLT for non-payment of ₹160 crore sponsorship money, demonstrating that the visibility came at cost the company ultimately couldn’t afford.

The aggressive sales tactics that backfired

Beyond the advertising spend, Byju’s employed sales tactics that generated short-term conversions whilst destroying long-term brand value.

Reports emerged of sales teams using high-pressure tactics, misleading information about educational outcomes and aggressive follow-up practices. Employees allegedly told parents their children would fail without Byju’s programmes, creating fear-based urgency rather than value-based purchasing.

The company offered loans to customers without proper disclosure, meaning parents purchased courses without fully understanding they’d taken on debt. This practice generated revenue immediately whilst creating customer resentment later when loan obligations became clear.

The 15-day free trial became mechanism for aggressive conversion tactics. Sales teams constantly followed up, pressuring users to convert before properly evaluating the product. This created buyers’ remorse and high churn rates as customers who purchased under pressure later cancelled.

Content quality issues compounded sales problems. In 2022, approximately 15% of users reported dissatisfaction with educational material. When aggressive sales tactics bring customers expecting transformative results but product doesn’t deliver, the gap between promise and reality destroys trust.

India’s advertising watchdog ASCI flagged multiple Byju’s campaigns for misleading claims about learning outcomes and speed of progress. The aggressive marketing made promises the product couldn’t consistently keep, creating regulatory scrutiny and customer complaints.

These tactics generated impressive sales numbers in quarterly reports whilst planting seeds of brand destruction. Short-term revenue came at cost of long-term reputation, customer satisfaction and regulatory goodwill.

COVID boom turned into post-pandemic bust

The pandemic created perfect conditions for Byju’s model: schools closed, parents desperate, students at home, massive shift to online learning. Byju’s aggressive marketing capitalized fully on this moment, acquiring millions of customers during lockdowns.

But the boom contained the seeds of bust. The demand wasn’t fundamental shift to online education. It was temporary response to temporary restrictions. When schools reopened, students returned to classrooms. Parents recognized in-person learning advantages. The online education market contracted sharply.

Other edtech companies recognized the shift and adjusted spending accordingly. Byju’s didn’t. They continued aggressive marketing and acquisition spending as if the boom would continue indefinitely. This failure to adapt to obvious market changes accelerated their financial decline.

Simultaneously, interest rates began rising globally, making Byju’s massive debt burden increasingly expensive to service. The company that borrowed heavily during low-rate environment suddenly faced ballooning interest expenses during high-rate period.

Investors who’d been willing to fund losses indefinitely during the pandemic boom pulled back when market conditions changed. Some even initiated legal action. The capital that had enabled aggressive spending disappeared precisely when Byju’s needed it to weather the transition.

By ignoring clear market signals and continuing to spend as if conditions hadn’t changed, Byju’s transformed what should have been manageable market adjustment into existential crisis.

The acquisition spree that accelerated collapse

Byju’s didn’t just spend aggressively on marketing. They spent aggressively on acquisitions: WhiteHat Jr for $300 million, Aakash Educational Services for $950 million, Epic for $500 million, Great Learning for $600 million, Tynker, Osmo and others.

These acquisitions aimed to expand into new markets, add new capabilities and eliminate competitors. But most acquisitions were overpriced, poorly integrated and unprofitable. Rather than strengthening Byju’s, they drained resources and created operational chaos.

WhiteHat Jr exemplified the dysfunction. Post-acquisition, it burned ₹220 crore monthly on marketing whilst posting massive losses. The subsidiary operated independently without proper integration, creating redundant costs and conflicting strategies.

The acquisitions were financed with debt and investor capital during the boom period. When market conditions changed, Byju’s found itself with massive debt obligations, integration challenges and acquisitions that drained cash rather than generating it.

The aggressive acquisition strategy assumed Byju’s could grow into the valuations and integrate assets whilst continuing to raise capital at attractive terms. When those assumptions proved false, the acquisition spree became millstone accelerating the descent.

Conclusion

Strip away the edtech specifics and several universal lessons emerge about marketing, growth and sustainable business building.

Marketing spend must tie to unit economics. Byju’s could have survived aggressive marketing if customer lifetime value supported acquisition costs. When CAC exceeds LTV, increasing marketing spend accelerates value destruction regardless of top-line growth.

Brand awareness doesn’t equal business success. Byju’s achieved massive brand recognition through celebrity endorsements and sports sponsorships. But awareness without profitable conversion and retention creates expensive vanity metrics rather than sustainable business.

Aggressive sales tactics destroy long-term value. High-pressure tactics, misleading claims and fear-based selling generate short-term revenue whilst destroying brand trust, creating customer churn and attracting regulatory scrutiny.

Market conditions change faster than business models. The pandemic boom was temporary. Byju’s failure to adapt spending when market shifted demonstrated dangerous inflexibility. Sustainable businesses adjust to reality rather than pretending temporary booms are permanent.

Debt accelerates both success and failure. Byju’s used debt to fuel growth during boom times. When conditions changed, the debt burden accelerated collapse. Leverage works both directions.

Acquisitions must create value, not just scale. Byju’s acquisition spree created appearance of growth whilst destroying actual value through overpayment, poor integration and unprofitable operations.

Investor capital isn’t free money. The availability of funding created illusion that unprofitable spending was acceptable. When funding dried up, the unsustainable economics became fatal.

Ethical practices aren’t optional. Aggressive sales tactics and misleading marketing might generate revenue temporarily, but they destroy brand value, attract regulatory scrutiny and create customer backlash that undermines business fundamentals.

Vasim Samadji

Vasim Samadji is a partner at Flora Fountain, where he leads the Business and Marketing Strategy divisions. In a world where everyone is used to sugarcoating, his directness is often considered rude. But that shouldn't be a problem if you like the no-nonsense approach. Because he is a seasoned professional...