Daybreak - Tutors have a troubled relationship with Unacademy. Here's why

Episode Date: August 20, 2023

Last week, the edtech unicorn Unacademy fired Karan Sangwan, a law teacher for asking students to vote for educated candidates during elections in one of his video tutorials on YouTube. According to the edtech, Sangwan had breached the code of conduct by sharing his 'personal opinion.'While this case is of a slightly different nature pertaining to one individual, Unacademy's relationship with its educators in general hasn't been great either.With dwindling sales and a funding crunch, edtechs like Unacademy have made tutors their new sales force. Teachers are being forced to make viral content to meet targets but for many, it is too much to handle.Tune in.RecommendationThe product-market-fit hole in Unacademy’s SaaS offering, CohesiveDaybreak is produced from the newsroom of The Ken, India’s first subscriber-only business news platform. Subscribe for more exclusive, deeply-reported, and analytical business stories.

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 an alert as soon as we release our first 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. Change times we're living in. On Academy, the Ettech Unicorn fired one of its educators recently.

Now, that is not something new. In round after round, the company has been laying of its employees since last year. But this one was different. This was one man being sacked. And what did he do? According to Anacadami, he allegedly breached the Code of Conduct. The man's name is Karang Sangwan and he runs a YouTube channel where he teaches students' law.

In one of his videos where he could be seen wearing a black Anacademy t-shirt, he asked his students to vote for educated candidates during elections. And that is how it all began. In this video, he had been talking about the three new criminal law bills introduced by the central government in the monsoon session of the parliament this year. It wasn't long before the video went viral and hashtag boycott Unacademy started trending. And then Roman Saini, an academy's co-founder, tweeted this. We are an education platform that is deeply committed to importing quality education.

To do this, we haven't played. a strict code of conduct for all our educators with the intention of ensuring that our learners have access to unbiased knowledge. Our learners are at the centre of everything we do. The classroom is not a place to share personal opinions and views as they can wrongly influence them. In the current situation, we were forced to part ways with Karan Tsang Wan as he was in breach of the Code of Conduct. End quote. We've all seen too often how politics and social climate often come in the way of business. But how businesses deal with it varies. Remember the Zomato case? A customer had tweeted that they had cancelled their order because the Zomato delivery guy was a

Muslim. The company refused to replace him and also declined to refund the order. And then they tweeted saying, food does not have a religion. It is a religion. But it was a risk and not everyone can afford to take it. Coming back to Sanghwan's firing, there's been quite a backlash against Roman Saini's tweet too. But I'm not here to tell you about that. I thought today is a good day to tell you about an academy's relationship with its teachers or educators instead. You see, ed tech companies have been in a frenzy to boost sales after offline coaching centers reopened and the pandemic-induced revenue growth slowed down. And this brought about a new pattern that is quite unprecedented and a bit scary to be honest. Teachers were being made the new sales force in Ed Tech and Unacademy was at the forefront

of this new trend. Welcome to Daybreak, a business podcast from the Ken. I'm your host, Naga Sharma, and I don't chase the new cycle. Instead, thrice a week on Mondays, Wednesdays and Fridays, I will come to you with one business story that is worth understanding and worth your time. Today is Monday, the 21st of August. An Academy was an online learning platform started by Gorov Munjal along with Roman Seni and Hemesh Singh in 2015. At first, it was a YouTube channel meant to help students prepare for medical and engineering college entrance exams and other tests. It became popular pretty fast and by 2020, its revenue crossed the 60 crore rupees mark. The tech was following a simple strategy for growth.

It was attracting students by hiring the most popular teachers from YouTube and other coaching platforms. And then came the pandemic. While it caused pain and loss for many, for ed tech platforms, it was like a boon. Online learning was the only way to go. Swan Academy began spending a lot of money to build its presence and went on a hiring spree to meet the skyrocketing demand for online learning. Two years into the pandemic, the ed-deck was still growing quite fast. Its operating revenue crossed 750 crore rupees.

It also made a bunch of acquisitions to push growth. But the dream did not last very long. After the pandemic, Unacademy saw an acute dearth of funding and slow revenue growth. Marketing budgets were slashed and to push more sales, Unacademy pulled up its educators to the front online to get more students, no matter what it took. Stay tuned for more. In 2020, when things were still good, Unacademy started giving a team referral code to its teachers who were working on particular channels. This worked so well that year that later, the management came up with individual referral codes for the educators. But this system of referral codes

led to competition within teams in Unacademy. And to add to that, the EdTech company began ranking its teachers on the basis of watch time and subscribers. More views meant more sales for the EdTech firm, and it almost seemed like Unacademy was operating with Blinders on. And this is when the downfall began. In its frenzy to increase 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 a category, then 10 channels would lead to 10 times the revenue. But as you may have expected, things did not quite go according to plan. Instead, it created confusion for students and led to a drop in 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.

Coming up next, how did this pressure affect teachers at Unacademy? A chemistry faculty member who quit Unacademy in May last year, when according to him the pressure was hitting the roof, told again that teachers were getting emails every month with revised sales targets. For example, a teacher with a monthly basic salary of $1,000 was expected to make sales of 30 to 40,000 every month, and none of this was mentioned at the time of hiring. The sales targets would inch up every month. Another teacher said that there was a point when the target was over five times the basic salary of a teacher. 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 dropped to 10 to 15% and now it is a bare minimum. What is worse, that those who did not hit the 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 entire revenue for the year, which was a little more than 300 crores. It was marketing gimmicks galore. So in the race to get more views, teachers had to resort to making viral content and promotional videos on social media. And Unacademy's social media team too often used unconventional ways like creating teachers' fan pages on YouTube and Instagram.

And if a star teacher left a rival platform 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. It almost seemed like the ed tech forgot the education part of its job for some time. An IITJE teacher that the Ken spoke to put it quite succinctly.

Ed techs have to realize that their rivalry cannot be about pricing wars or about onboarding popular faces like OTT platforms. And he's right, because unlike OTT content that is designed to grab eyeballs, education cannot and should not be that way. 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 Snigda Sharma, your host, and today's episode was edited by my colleague Rajiv Sien.