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The Fall of an Ed-Tech Giant
Indian ed-tech giant Unacademy is laying off about 250 employees, the latest in a series of job cuts at the company after schools reopened across the country following the pandemic lockdowns. This brings the total job cuts to about 2,000 since the second half of 2022.
The Desperate Search for a Strategic Partner
Unacademy is desperately searching for a strategic partner. Most of the companies Unacademy is said to have approached are brick-and-mortar education companies, including K12 Techno, which owns school chain Orchid International, and Allen Career Institute.
The Rise and Fall of Unacademy
In the once red-hot world of ed-tech, Unacademy was the sober alter-ego of the Icarus-like Byju’s. The company said the right things at the right time. It appeared busy taking a variety of corporate actions that smelt and felt right. So, what happened then?
The Co-Founders’ Journey
Gaurav Munjal, the co-founder and CEO of Unacademy, has been on a rollercoaster ride. From pitching to over a dozen hedge funds for their next round of funding to facing rejection from deep-pocketed funders, Munjal has seen it all.
The Eerie Noise
What perplexed Munjal the most was an eerie noise. “It was a loud voice, and all investors said the same thing,” he recalls. The investors were no longer interested in Unacademy’s growth story. They were more concerned about the company’s profitability.
The Realization
Munjal has started to realize that there is no Batman without Gotham. A virtual meeting with Reed Hastings, the co-founder of Netflix, in November 2020 drove home the point that Batman needs Gotham and its citizens. Hastings made Munjal understand that if the job of the employees is to help grow the company, the founder’s job is to help the staff achieve their goals.
The Culture of Winning
Till 2019, Unacademy didn’t have a business model. “So nobody focussed particularly on culture,” Munjal says. Though the edtech startup focussed on diversity, nobody defined culture in the form of a playbook. “There was only one culture, and it was of winning.
The New Sense of Pragmatism
Munjal has started to focus on unit economics and free cash flows. He has made his sales more efficient, has cut brand marketing and advertising spend, focusing a lot on organic growth channels, has closed all experiments and is solely focusing on test prep, Relevel and Graphy. “So unit economics will improve a lot. Ebitda margins will improve by 2x to 2.5x,” he claims.
The Backers’ View
While his backers love the new sense of pragmatism and urgency to get the company in shape, they also applaud the fact that Munjal has not blunted his edginess. “Gaurav is somebody who just moves fast and breaks things fast,” says Sameer Brij Verma, managing director at Nexus Venture Partners, which was the first—and is the largest shareholder—institutional investor in Unacademy. “If it works, he scales.
The Learning Curve
Munjal believes that he asked the right question. “The question didn’t come out of arrogance,” he says. A VC-founder relationship, he underlines, must not be like a master-slave one. “It should be like peers. We should be partners,” he says. One must build a strong rapport with the investors who are backing you.
The Future of Unacademy
As Unacademy navigates through these challenging times, one thing is certain – the ed-tech giant needs to reinvent itself to stay relevant in the post-pandemic world. With its desperate search for a strategic partner and its focus on unit economics and free cash flows, Unacademy is trying to write a new chapter in its story. Only time will tell if it will be able to turn the tide in its favor.
FAQ’s
Q: What did Unacademy's co-founder Gaurav Munjal say about the company's growth trajectory?
A: Munjal assured stakeholders that Unacademy will have its best year in terms of growth and profitability, and that the company has many years of runway.
Q: What was the reason behind Unacademy's recent layoffs?
Q: What was the reason behind Unacademy's recent layoffs? A: The layoffs were part of the company's ongoing efforts to streamline operations and enhance business efficiency.
Q: How many employees were laid off by Unacademy?
A: Around 250 employees were laid off, including 150 sales personnel who were asked to leave for not meeting performance criteria.
Q: What did Munjal say about the reports of Unacademy being up for sale?
Q: Who backed Munjal's response on social media?
A: Business figures like Bhavish Aggarwal, founder-chairman of Ola Electric, and Ritesh Agarwal, founder-CEO of Oyo, backed Munjal's response on social media.