Unacademy moved fast to break things. It ended up with a fracture

Gaurav Munjal, co-founder and CEO of Unacademy.  (Rajesh Kumar)
Gaurav Munjal, co-founder and CEO of Unacademy. (Rajesh Kumar)


  • Unacademy made a string of acquisitions between 2018 and 2022 and launched a series of new products. Many of these products died or have minuscule revenue. Now, the company has narrowed its focus and made a pivot. Can it succeed?

Bengaluru: Ten managers in six months. That’s the number of bosses a sales employee at Unacademy, an Indian edtech company valued at $3.5 billion, worked for, until December last year.

He was first hired for NextLevel, a hiring platform Unacademy started in 2022. In two months, he was asked to join a live streaming project, which was shelved in a month. The employee’s final stop, before being laid off, was Graphy, a software as a service (SaaS) business.

“They laid off employees saying they were not performing," this person, who didn’t want to be identified, said.

While experiments, speed, agility, the ability to start a business and shut it down quickly when it doesn’t work, are considered normal in fast-growth startups, Unacademy, now nine-years-old, confronts an existential question. In the world of Indian edtech, there is a collective realization that the online piece of the market has hit a growth roadblock. Unacademy made a string of acquisitions between 2018 and 2022—about 13 of them—and launched a series of new products. Most of them are now dead, or are operating on the sidelines, nine people, including former and current employees, told Mint. They didn’t want to be identified.

Right now, I want to make the company profitable. I want to focus on two to three projects. —Gaurav Munjal

Gaurav Munjal, co-founder and chief executive officer (CEO) of Unacademy, doesn’t agree with this assessment. But he does believe that the company spread itself too thin. In the new normal of a stagnating online market, and at a time when Byju’s, India’s largest edtech company, has spectacularly imploded, he has moderated his ambition, focusing on fewer products.

“Right now, I want to make the company profitable. I want to focus on my core business and two to three projects that I am working on," Munjal told Mint.

If that is indeed true, the company may have learnt the hard lessons. But the path ahead still remains thorny and uncertain. Unacademy pivoted to offline teaching but that comes with its own set of challenges. The edtech unicorn is also dealing with high attrition and losses. In 2022-23, its losses were nearly double its revenue at 1,678 crore, data sourced from Tofler, shows. Moreover, the company has to justify its steep valuation amid the funding winter in the startup world.

Byju’s recently approached its existing investors for $200 million and had to agree to a post-money valuation of $225 million, Mint had reported. That’s a stunning decline from the $22 billion it commanded just two years ago.

What are Unacademy’s chances?

What didn’t work

The company started as a YouTube channel making educational videos. It grew exponentially during the pandemic, mirroring the trend observed in the edtech sector. As brick and mortar coaching classes stopped functioning, online education gained steam. Investors sensed a gold rush. Unacademy secured a total funding of $877 million from the likes of SoftBank, Temasek, Blume, Peak XV Partners and Nexus Venture Partners among others. Flush with cash, the company went on a buying spree, entering new segments in the education market.

But the tide changed. Brick and mortar educational institutions opened post the pandemic and the growth of online learning platforms slowed.

Of Unacademy’s acquisitions, one—Mastree—is no longer operational. It operated in a space the industry calls K-12, or kindergarten to 12th grade.

Graphy, where tutors can create and sell online courses, is generating revenue but is rather small. It posted negligible revenue in 2022-23, according to company filings sourced by Tofler. Similarly, Rheo TV, a game streaming platform, and Swiflearn, which sells personalized online tuition classes, generate little revenue.

Some products were hyped up and were expected to be hits. Cohesive and Relevel are two of them.

While NextLevel was hyped up as an alternative to LinkedIn, it has failed to create much buzz.

Cohesive went through pivots. The initial idea, according to a former employee, was a DevOps platform—a methodology where the work of software development is automated. This was an attempt at diversification from edtech. Three problems surfaced: absence of readily available talent in India, not many buyers and roadblocks around sales since selling tech products require a different skills set compared to edtech, the former employee explained.

Around April last year, Cohesive pivoted and is now a generative artificial intelligence (AI) product for content writers and bloggers. The future isn’t clear.

“We don’t know the direction that Cohesive should take right now," Munjal acknowledged. “It’s generating some revenue and it’s profitable at a unit economics level. But, we have to take a call on whether to keep investing or shelve it."

The story of Relevel is engrossing, too. Formerly called Tapchief, Unacademy acquired the product in 2021.

It began as a test platform—students passing its tests were placed with employers Unacademy partnered with. Courses to prepare for these tests were launched, for a fee. In 2022-23, Relevel reported a turnover of 26 crore but losses were over three times the number— 97 crore.

“Because the course fee was very low, we needed bigger batches. We just kept on increasing the course fee to be profitable," said another former employee. “Relevel was a service-heavy business and you needed a lot of people inside and outside the company. We needed educators for courses, people to create questions," the employee added.

Unacademy wanted to make the product less people-heavy. It pivoted and called the next avatar NextLevel. That’s a recruitment platform. “Our product allows you to do an AI interview," Munjal said.

What does he mean? For a role, let’s say a sales position, an AI system generates questions which the candidate has to answer. The product then tells an employer if the candidate is good enough for the role. “We realized that we are better at helping people get jobs. So why not be a recruitment platform?" said Munjal.

While NextLevel was hyped up as an alternative to LinkedIn, the professional networking site that also offers hiring solutions, it has failed to create much buzz just yet, former employees said.

But for Munjal, it remains an important project, where he spends “20% of his time". More than 200,000 profiles are being created on NextLevel every day, he claimed.

So, what worked?

On 3 February this year, Munjal posted on X, formerly Twitter, that two of Unacademy’s businesses—Prepladder and Graphy—have turned cash flow positive. In other words, the two businesses have more money moving into it than out of it.

Several people Mint spoke to did confirm that Prepladder is the only acquisition and Graphy is the only product that seems to be doing well for the company.

Graphy increased its turnover from 9 crore in 2021-22 to 16 crore in 2022-23. However, its losses rose, too, from 3.5 crore to 18 crore in the same period. Prepladder marginally increased its turnover in 2022-23 from 115 crore to 144 crore but losses shrunk significantly from 144 crore to 80 crore, according to company filings sourced by Tofler.

The CEO said he doesn’t regret any acquisition. “The acquisitions that didn’t work out were mostly related to K-12, which are Mastree and SwiftLearn. Other than that, almost every acquisition has worked for us," he held.

Several people Mint spoke to said that Prepladder is the only acquisition and Graphy is the only product that is doing well for Unacademy.

Munjal added that the company’s acquisition strategy wasn’t meant to bulk up on revenue. “That was never our playbook. That was the playbook of some competitors," he said.

The CEO didn’t mention Byju’s but India’s largest edtech company imploded because some of its acquisitions didn’t work out. For instance, Byju’s bought WhiteHat Jr, which teaches coding to children, for $300 million in 2020. Losses kept mounting at the subsidiary, hitting the company hard.

Anxiety attacks

‘Move fast break things’, an internal motto used by Facebook until 2014, also found place in Unacademy’s first pitch to investors. While Munjal takes pride in the culture of moving fast, it seems to have backfired.

According to current and former employees Mint spoke to, the culture of rushed experiments impacted employee morale. In the last two years, the company resorted to at least five rounds of layoffs, across Graphy, Relevel, NextLevel and Cohesive. Over 2,000 people were fired in the last one year, media reports have indicated. Unacademy did not confirm the reports.

Anxiety piled on among employees who weren’t fired; attrition increased. “After the layoffs, everything changed. A team that had 10 people before the retrenchments, had only one person left. That person had to handle everything. So, pressure increased," an employee said.

Some senior employees quit in recent months. They include Subramanian Ramachandran, the former chief financial officer, Vivek Sinha, the former chief operating officer and Abhyudaya Rana, vice president and chief of staff at the chief technology officer’s office.

Startups need to focus on the things that are working and avoid getting bogged down in too many experiments. —Mohamad Faraz

Munjal acknowledges the growing attrition problem. When we asked him why people were leaving, he cited many reasons. Work-from-office made employees unhappy. So did late-night meetings. Tighter deadlines and targets—the company is under pressure to grow profitably—added to the stress.

“We went through a shift in how we operate. Earlier, we used to reward people just for growth. Now, growth has to come with profitability. In this phase, some people realized that it (working for the company) is not their cup of tea," Munjal said.

The company currently employs over 2,500 people.

Mohamad Faraz, cofounder and partner of venture capital firm Upsparks Capital, feels that fast experimentation is essential for startups—it allows them to quickly test new ideas and learn from their mistakes. He, however, added that striking a balance between experimentation and execution is also of utmost importance. “Startups need to be able to focus on the things that are working and avoid getting bogged down in too many experiments," he said.

The next pivot

Students attend a session at Allen Career Institute in Kota.
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Students attend a session at Allen Career Institute in Kota. (Mint)

In 2022, Unacademy started concentrating on offline classes. In a post-pandemic world, only a hybrid model would work, the company realized. The offline coaching industry is lucrative as well. According to a 2022 report by IRR advisory, a consulting firm, the coaching market is estimated at $22 billion in India and most of it is informal and offline.

Unacademy, today, has brick and mortar coaching centres in cities like Kota, Bhopal, Delhi, Bengaluru, Chandigarh, Dehradun, Hyderabad, Vijaywada, Jaipur, Varanasi, Srinagar, Meerut and Rohtak. These centres coach students for competitive exams—IIT- joint entrance examination, national eligibility-cum-entrance, union public service commission, staff selection commission and common law admission tests.

One challenge is keeping teacher costs low. The cost of a star teacher can be as high as 1 crore a year.

People Mint spoke to said that the offline venture has worked well, thus far. Munjal, in previous interviews, had claimed that Unacademy’s revenue from offline centres had grown to 400 crore in calendar year (CY) 2023 from 53 crore in CY22.

“We have 37,000 students enrolled in our offline centres and this year, our goal is to touch close to 100,000 students," the CEO said.

Nonetheless, any offline business isn’t that easy to scale up. Unacademy has 63 offline centres as of today and doubling that number—location and cities matter—can be challenging. “Once you go beyond the tier-1 cities, there isn’t a lot of opportunity to have a profitable business going unless you are opening smaller centres," said a former employee.

Another challenge is keeping teacher costs low. The cost of a star teacher can be as high as 50 lakh to even 1 crore a year. Munjal has a workaround. The company has started a a teachers training programme. So, instead of hiring expensive teachers laterally from other organizations, the company is now focussed on creating them.

Then comes the challenge of competition. There are established players in the test preparation market—companies like Allen Career Institute and Aakash Institute. Parents (the decision maker in most cases) and students might gravitate toward the more established players, given a choice.

These challenges don’t bother Munjal. He has enough money in the bank, as of now. “Overall, my cash burn this year would be under $20 million. I have $200 million in the bank," he said.

That’s enough oxygen for more experiments. Indeed, the company is working on a platform that is similar to Duolingo, an American app to learn a new language through “bite-sized lessons".

Munjal has to ensure it doesn’t flop.

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