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The TRUTH Behind Unacademy's Decline

The video discusses the challenges currently faced by Unacademy, a major player in India's ed-tech industry, and explores how the company has arrived at this precarious situation. Unacademy was initially launched by Gaurav Munjal as a YouTube channel focused on technical subjects. It was not until 2015, after meeting Roman Saini—a highly accomplished individual who had cracked India's toughest entrance exams—that Gaurav expanded Unacademy into a platform for competitive exam preparation. This pivot marked the beginning of Unacademy's journey as an ed-tech company. The company adopted a business model similar to consumer-tech startups, investing heavily in customer acquisition with the expectation that these initial investments would lead to long-term profitability. This approach is likened to companies like Uber and Netflix, which spent massive amounts of money upfront to build a loyal customer base, eventually leading to sustainable profits. However, Unacademy's foray into this strategy in the ed-tech sector did not yield the desired results. The COVID-19 pandemic brought a surge in demand for online education, leading Unacademy to aggressively expand its operations. The company raised significant funding—over $640 million—between 2020 and 2022. During this period, Unacademy diversified its offerings by acquiring several companies, aiming to build a comprehensive ed-tech ecosystem that covered everything from test preparation to K-12 education and skill development. However, this expansion was built on the mistaken belief that the pandemic-driven demand for online education would be sustained post-pandemic. As the pandemic subsided and schools reopened, the inflated demand for online education began to wane. Unacademy's massive investments during the pandemic, which included spending on acquisitions and customer acquisition, did not translate into sustainable revenue. The company's financials reflect this, with total revenues of ₹1,117 crores in FY-21 and FY-22, but expenses amounting to ₹5,733 crores, resulting in a burn of nearly ₹4,600 crores over two years. Unacademy quickly realized that the education business is inherently different from other tech businesses due to its low retention rate—students typically leave the platform after preparing for specific exams. As the ed-tech bubble burst, Gaurav Munjal responded by implementing cost-cutting measures, including laying off more than 50% of Unacademy's workforce, reducing the headcount from 6,000 to less than 3,000. Recognizing the limitations of the online education market, Unacademy began exploring offline expansion by opening physical learning centers in several cities across India. However, this shift posed significant challenges, including competition from established offline players like Allen and Aakash, and the logistical complexities of running an offline business. Facing mounting pressure to sustain growth, Unacademy is exploring several options for its future. These include potential mergers or sales with larger education companies and experimenting with new products and business models. Gaurav Munjal has held talks with companies like Allen and PW regarding possible mergers, although he reportedly prefers to avoid such outcomes if possible. In parallel, Unacademy is also diversifying its offerings beyond education. The company recently launched a language learning app, positioning itself as a global competitor to products like Duolingo. Additionally, Unacademy is venturing into the AI space with products like Cohesive AI, which aims to assist content creators using generative AI technology. Munjal’s approach reflects a willingness to experiment and pivot, reminiscent of the strategies employed by companies like Amazon. Despite the challenges, Unacademy has the financial resources to explore these new avenues. Munjal's resilience and adaptability are seen as critical factors that may help the company navigate its current difficulties and potentially succeed in the long term. Connect with us: Twitter:   / bwmillionaires   Instagram:   / backstagewithmillionaires   Podcast: https://open.spotify.com/show/5rGPalo... #unacademy #startup #entrepreneur #byjus