Daybreak - How some edtechs are forcing tutors to drive sales

Episode Date: January 16, 2023

With the funding crunch and slow growth, edtechs like Unacademy and Vedantu are giving teachers monthly targets to sell online courses to students.Not meeting sales targets is reason enough for edtechs to fire teachers as part of cost-cutting exercises. Tune in to find out how teachers are being forced to become the new sales force in some edtech companies.

Hi, this is Rohan Dharma Kumar. If you've heard any of the Ken's podcasts, you've probably heard me, my interruptions, my analogies, and my contrarian takes on most topics. And you might rightly be wondering why am I interrupting this episode too. It's for a special announcement. For the last few months, I and Sita Raman Ganeshan, my colleague and the Ken's deputy editor, have been working on an ambitious new podcast. It's called Intermission.

We want to tell the secret sauce stories of India's greatest companies. Stories of how they were born, how they fought to survive, how they build their organizations and culture, how they manage to innovate and thrive over decades, and most importantly, how they're poised today. To do that, Sita and I have been reading books, poring over reports, going through financial statements, digging up archives, and talking to dozens of people. And if that wasn't enough, we also decided to throw in video into the mix. Yes, you heard that right. Intermission has also had to find its footing in the world of multi-camera shoots in professional studios, laborious editing, and extensive post-production. Sita and I are still reeling from the intensity of our first studio recording.

Intermission launches on March 23rd. To get alert, as soon as we release our first video. episode, please follow intermission on Spotify and Apple Podcasts or subscribe to the Ken's YouTube channel. You can find all of the links at the ken.com slash I am. With that, back to your episode. In 2020, the ed tech industry in India saw massive layoffs. In fact, if you go just by the number of layoffs, the ed tech sector has been right on top. And it seems that this trend is only going to continue this year as well. Last week, Anacademy, the country's second most valuable ed tech platform let go of 20% of

the workforce from re-level, which is one of its verticals. In November last year, too, the ad tech giant had fired 10% of its staff. So far, Anacademy has fired more than 1,000 of its employees. In one of his internal emails to employees, CEO Gorav Munjal had cited terrible economic conditions as the reason for the job cuts. He called it unprecedented times. With offline coaching centers reopening and the pandemic-induced revenue growth slowing down, ed tech companies have been scrambling to boost sales.

But within this turmoil, there is a new trend that has emerged that is quite unprecedented too. Teachers are being made the new sales force in ed tech. Ed tech companies are pushing their teachers to create content and make promotional videos based on trending topics on social media and YouTube. In fact, Unacademy even goes to the extent of ranking its teachers based on the number of subscribers that they have. A former Unacademy tutor who left the company in May told again, and I'm quoting, I took a break to remind myself that I am a teacher and it is not my business to sell courses.

End quote. Today, I will tell you why teachers are not just leaving at tech startups. They are going as far as taking a break from teaching. Welcome to Daybreak, a brand new podcast from the Ken. I'm your host, Nick Da Sharma, and in each episode I will tell your business story that is significant, interesting and most importantly worth understanding. Today is Monday the 16th of January.

On Teachers Day last year, Unacademy held its flagship event in Bengaluru. And among the main achievements that C.O. Vivek Sinhal listed at the event were the number of watch minutes and subscribers on their website as well as their YouTube channels. YouTube has played a decisive role for Anacadami. It started its journey on the podcast. platform 10 years ago in 2013 as a free service. And over time, it expanded to 50 channels on YouTube that got 18 million views.

Anacademy hoped that this user base would turn out to be a great way to convert free users to paid ones. So in 2019, it launched the plus subscription model. Anacademy began charging for live classes and access to teachers for resolving doubts across many categories of competitive exams. And since then, it has bet big on bringing popular teachers from YouTube to its own platform. And it does this through two ways. One is by buying the teachers channel itself and rebranding it as an unacademy product.

And two is by paying great money to the teachers and allowing them to teach part-time at unacademy and also run their independent channels simultaneously. Typically, these kind of teachers are offered nearly four to five times more salaries compared to the ones who are not so social media savvy. It doesn't matter even if they have more experience. For example, a teacher who ran an independent channel for IITJE classes on YouTube with nearly 100,000 followers was approached by Anacademy in 2017. They wanted to buy his channel, but he refused.

And a year later, they went back to the same teacher with a slightly different offer. It was for a part-time role for similar content. By 2019, when they launched Unacademy Plus, this offer went up to full time. This particular teacher's channel was eventually rebranded and became a huge hit with over 1 million subscribers. At one point, the channel was contributing about 10% of the company's total revenue. By 2020, in order to push sales, An Academy started giving a team referral code to these teachers who were working on particular plus channels.

This worked so well that a year later, the management came up with an individual referral code for educators. So far, things seem to be all hunky-dory, right? An Academy established itself on YouTube, it was getting millions of views, teachers were being given referral codes to drive sales, and that did so well that they even started giving them

individual referral codes. But this system of referral codes also had a drawback and it gradually began to play out. Competition within teams in Unacademy increased. The Ed Tech Company began ranking teachers on the basis of watch time and subscribers. More views meant more sales for the ad tech firm.

It almost seemed like Unacademy was operating with blinders on. And this is when things took a downturn for it. To further expand views and subscribers, Unacademy introduced multiple channels for similar subjects. The move was based on one assumption. If one channel was doing X amount of revenue in one category, then 10 channels would lead to 10 times the revenue.

Things, however, did not go according to plan. Instead, it created confusion for students and it led to a drop in return. retention rates. Revenue began to dry up and the pressure on teachers to get sales increased. Good teachers failed at selling and there was a growing discontent over the huge salary disparities. And in July 2021, Hotel chain Oyo's Ritesh Agarwal pumped in some money into the company. Following that investment, a lot of senior management shifted from Oyo to an academy. And that added to the pressure.

A chemistry faculty member who quit an academy in May when according to him, the pressure had hit the roof, told the Ken that teachers were getting emails every month with revised sale targets. For example, a teacher with a monthly basic salary of one lakh rupees was expected to make sales of 30,000 to 40,000 to 40,000 rupees. And none of this was mentioned to them at the time of hiring. The sales targets were inching up every month. Another teacher said that there was a point when the target was over five times their basic salary. The teachers had to pitch individual referral codes to students and for each sale they could get a commission of up to 20%. But this was the case in 2020.

In 2021, the commission was dropped to 10 to 15% and right now it is a bare minimum. And what's worse is that those who did not hit these sales targets saw salary cuts. In the year that ended in March 2021, Unacademy's advertising expenses jumped by 248% to nearly 400 crore rupees. This was more than the company's revenue for the entire year, which was at $337 crore rupees. It was marketing gimmicks galore. Unacademy's social media team often resorted to unconventional methods

like creating teachers' fan pages on YouTube and Instagram. For example, if a star teacher left a rival firm, carefully curated videos discussing why they had left popped up on YouTube. A former social media analyst who spoke to the Ken said, and I'm quoting, the idea was to bring up heated content which kids could gossip about, comment on and circulate. End quote. The ad spending has now been slashed and in June last year,

an academy CEO, Gaurav Manjal, said that the company would be be frugal. As a part of this, the founders and the management took salary cuts, certain divisions were shut down and a shift towards organic growth was emphasised. And of course, there were also multiple rounds of layoffs. The thing is, Unacademy is not the only one doing this. Part of the reason why this is happening is also because of the way social media platforms have evolved. Educators in general are quite sought after. X, Y, Z for dummies. 101 on something, explainers, content like this is in high demand. Just think of YouTube.

I bet you know at least five people who use it for learning. Even at Vedantu, which became the country's fifth ed tech unicorn in 2021, similar monthly targets and perks exist. Successful sales play a role in promotions and salary hikes here, but there are no pay cuts. India's most valuable ed tech firm, by Jews, on the other hand, has stayed away from how. hyping up star teachers.

Instead, its 10 YouTube channels revolve around courses. The pressure to sell courses, however, lies on the overworked sales teams whose trials have been well documented. An IITJE teacher told the Ken, and I'm quoting, Ed Techs have to realize that their rivalry cannot be about pricing wars or onboarding popular faces like OTT platforms, end quote. Unlike OTT content that is more often than not churned out to grab eyeballs, education cannot and should not operate on the same principle.

Daybreak is produced from the Newsroom of the Ken, India's first subscriber-focused business news platform. What you're listening to is just a small sample of our subscriber-only offerings. A full subscription unlocks daily long-form feature stories, newsletters, subscriber-only apps and podcast extras. Head to the ken.com and click on the red subscribe button on the top of the website. I am Sniqa Sharma your host and today's episode was edited by my colleague Rajiv Sien.