Both Arvind Kejriwal and Byju Raveendran can have a future. They will need to reinvent.
For a decade or so, the two were feted, applauded and celebrated as shining examples of what start-ups can achieve in a short period of time: one in the arena of education and the other in the political battlefield. For a decade or so, it appeared as if the two had discovered the magic potion a la the Gauls in Asterix comics. In their ways and in their own strongholds, they bludgeoned rivals into submission.
The consumer seemed to have fallen in love with them. In one case, the consumer was the Indian voter and in the other, she was the anxious parent who wanted her child to have an edge. In 2011, when middle class India was transfixed and mesmerised by Anna Hazare and his India Against Corruption movement, one founder was what the co-author even back then described as Sancho Panza to the Don Quixote in Anna Hazare. Even as Anna & Arvind Kejriwal promised revolution in Delhi, in faraway Bengaluru, the other founder was busy developing a unique business model the promised to bring a revolution in online education. We have already mentioned Arvind Kejriwal, who went on to launch the Aam Aadmi Party in 2012. The other start-up star is Byju Raveendran, a mathematics tutor who launched Byju’s in 2011.
The rise of both Raveendran and Kejriwal has been dramatic; almost meteoric. While both haven’t crashed and come down to earth as the proverbial meteors, the halo around both the start-ups and their star founders has dimmed considerably.
Perhaps the two can still redeem their reputations and reclaim lost glory. Who knows? But their parallel tales and decade long journey could be a cautionary tale for youngsters who nurse dreams of launching start-ups that would become unicorns (companies with $1 billion in valuation) in no time. Perhaps the most important lesson is: at some point, even once loyal consumers begin to take notice and raise questions if there is a widening gap between your promises and what you actually deliver. Both Arvind Kejriwal and Byju Raveendran promised a lot to consumers.
For a while, it looked as if they are indeed delivering on their promises. But then reality caught up. Let’s first look at the case of Byjus. The start-up took off the year Arvind Kejriwal and AAP crushed and annihilated both the BJP and the Congress in the 2015 Delhi Assembly elections. The tipping point was the arrival of 4G services and very fast data download speeds at incredibly low prices.
Byjus developed an app for school children and promised it will help the app users perform much better academically than other students. Indian parents are culturally conditioned to provide the best possible education to their kids. So they were easily convinced by an advertising blitzkrieg and an army of smooth-talking sales professionals who promised the sun, the moon and the stars. Byjus quickly became a unicorn and Raveendran became a darling for many, almost an icon and a role model. There were dozens of stories in the media “analysing” his brilliant entrepreneurial skills.
There were a few who raised murmured voices of protest saying the business model was not sustainable. But the tidal wave of glowing applause drowned those voices. When the Covid pandemic struck, there was another explosion in use of online education and many thought Byjus had discovered a gold mine. Success breeds ambition and ambition can be a strange master if it overwhelms you. In April 2021, when the second wave of Covid was beginning to age India, Byjus announced a $1 billion acquisition of Aakash, a brick-and-mortar coaching institute.
Imagine: one billion dollars for a coaching class. But Byjus looked invincible. After all, investors had valued it at more than $22 billion in 2022. But it has been downhill since then for Byjus. It failed to officially declare financial results. It failed to meet debt obligations. It stated firing people in droves. And sordid stories of salespersons cajoling and pressuring low-income families to buy the Byju app on EMIs stated appearing regularly. The worst was: a lot of students simply stopped using the app. Today, the valuation of Byjus is down from a peak of $22 billion to about $3 billion. The simple reason for this rise and fall is: Byjus failed to deliver on its core promise of improved academic proficiency.
Is the AAP and Arvind Kejriwal case study different? Not really. In the 2013 Assembly elections in Delhi, the newly formed AAP led by Arvind Kejriwal surprised everyone by winning 28 seats in the 70-member Delhi Assembly and forming a government with Congress support. An over ambitious AAP decided to go national and project Kejriwal as the Prime Minister candidate in the 2014 elections to be chastised by the voters. But significant sections of ordinary Indians fell in love with the anti-corruption crusade of Kejriwal.
In 2015, AAP won 67 out of 70 seats in the Delhi Assembly elections. A new superstar was born. There were quite a few who raised murmured voices of protest saying Arvind Kejriwal was a pied piper at best. But a tidal wave of adulation drowned these voices. AAP failed to win Punjab in 2017 but did quite well; also establishing a strong foothold in Goa. AAP won a massive repeat mandate in the 2020 Delhi Assembly elections. It swept Punjab in the 2022 elections. And reached a kind of pinnacle by winning a 13% vote share in Gujarat Assembly elections and becoming a national party. But along the way, cracks and fault lines had become too visible to be ignored.
Allegations of corruption were becoming too widespread. Theatrical protestations by Kejriwal and his supporters that the Narendra Modi regime was deliberately and maliciously targeting them started losing resonance. First, it was the top AAP leader Satyendra Jain who was arrested on charges of corruption, money laundering and illegally obtained assets. There must be something in the charges because he has been denied full bail for much more than a year by courts, including the Supreme Court. The Delhi liquor “scam” that exploded in 2022 has made it worse.
The former Deputy Chief Minister of Delhi and top AAP leader Manish Sisodia is in jail because of corruption charges and has been denied bail even by the Supreme Court. Another top leader, Sanjay Singh is also in prison facing the same charges. Remember: the core message of AAP and Arvind Kejriwal since 2012 has been to lead an anti-corruption crusade. Indian consumers or many voters had faith in this promise. There still are many die-hard loyalists who still believe this. But the fact is: the public at large is no longer impressed by the rhetoric. How can you retain the halo of being an anti-corruption crusader when the top leaders of your own party are in jail facing charges of corruption?
Those who follow business and corporate news in India know that start-ups have gone through a terrible year in 2023. And only those whose delivery matches their promises have a long-term future. Do Arvind Kejriwal and Byju Raveendran fit the bill? Lack of space precludes a more detailed analysis. But both can have a future. They will need to reinvent. They will have to redefine their core USP. Political parties and companies have survived even more devastating setbacks. The question is: do they have the chutzpah to pull it off or will they become one pony tricks?
Yashwant Deshmukh is Founder & Editor in Chief of CVoter Foundation and Sutanu Guru is Executive Director.