In mid-2019, online learning platform Unacademy approached Testbook, a government exam preparation app, for acquisition. The talks as always were led by Unacademy’s ambitious founder Gaurav Munjal, known for his get-it-done, no-nonsense, approach. When the founders of Matrix Partners-backed Testbook said they did not want to sell, Munjal was not amused.
“Finish them off,” he told a human resources executive, according to a person directly aware of the matter. As he couldn’t acquire Testbook, he wanted to bleed it dry.
Munjal instructed his team to hire almost all of Testbook’s educators. Unacademy recruited about 20 educators, 90 per cent of them. Testbook did not reply to a query seeking comment.
In another case, when an entrepreneur turned down an acquisition offer, Munjal threatened to shut that company down, said no investor in town will fund it, and used language that he is “now not proud of,” said another person who was involved in the negotiations.
Munjal, an unabashed fan of Apple and Steve Jobs, has modelled himself and his company on the legendary but mercurial founder. He has emulated Jobs’ approach of designing standout products, integrating technology into them, and pushing employees to the brink in pursuit of this grand vision. Employees have been scared of Munjal, his brutal feedback and the pressure that comes with working at Unacademy, similar to Apple and Jobs, according to people familiar with the company’s operations.
Munjal’s approach of prioritising growth over culture, setting valuation benchmarks internally and leading what some consider an opulent lifestyle is from the startup playbook. It has won him admirers, led some of the world’s most powerful investors — Sequoia, SoftBank and General Atlantic among them — to back him at generous valuations, led over 750,000 students to pay for Unacademy’s various education products and made Munjal one of India’s best-known new-age entrepreneurs.
India’s online education space is dominated by Byju’s, valued at $22 billion and funded by investors such as Sequoia, Prosus (Naspers) and General Atlantic. It has made acquisitions worth billions globally, with an unprecedented ambition to dominate the space.
But Munjal, a distant second even with his famed aggression and vision, wants to “kill Byju’s” and surpass it, according to five investors Moneycontrol spoke to. Killing and/or beating Byju’s forms a key part of his pitches to investors, these people said.
Munjal’s single-minded pursuit of victory at all costs has also antagonised employees, led to a troubling work culture, and incensed some investors who wonder whether being brash was necessary to build a business. In one case, when an investor suggested that Munjal raise debt along with equity, he said, “Don’t waste my time. I can raise equity at whatever valuation I think of,” a person said, requesting anonymity because the talks were private.
Billionaires and successful entrepreneurs are famous for their quirks, and investors sometimes even look for these quirks specifically while evaluating an entrepreneur. They have long argued that these eccentric people creating original products do not fit the corporate stereotype, although many have grown into those rules to become successful and stable leaders later.
It is still unclear whether the severe or stony demeanour some founders adopt is a feature or a bug. More so, if building a large company comes at the expense of alienating key stakeholders, and when the business model is still far from proven, then how worthy is the original cause?
For this profile of Munjal and Unacademy, Moneycontrol spoke to over two dozen people, including investors, bankers, lawyers, entrepreneurs, his friends, mentees and rivals. To speak candidly, and in some cases, because they would be violating confidentiality agreements, the people requested anonymity.
Munjal and a spokesperson responded to Moneycontrol’s detailed queries, contested some of the characterisations, and, in other cases, did not comment.
Early days
Munjal, 31, doesn’t come from the top engineering colleges, business schools or consultancies that typically coat the CVs of most startup founders. Schooled in St. Xavier’s Jaipur, he started coding at 12 and pursued computer engineering in Mumbai. The fascination with coding is a feature at Unacademy even today, where Munjal venerates the power of a good product and chides employees and fellow-founders about India not having enough good tech products.
Investors regard Munjal highly for his product chops and vision, for trying to build Unacademy to be a ‘platform’ similar to Netflix, enabling the creation of content and not a mere education company. Unacademy is not in the education business — it is in the motivation business, Munjal has told senior employees.
The comparison to the Los Gatos, California-based streaming service helps Munjal sell his vision and raise money. However, a Netflix-like product is still a work-in-progress, Unacademy insiders said. Unlike Netflix, Unacademy is not profitable and whether its education and upskilling courses can be differentiated enough like Netflix’s content remains to be seen.
After working with serial entrepreneur Bhavin Turakhia’s DirectI in 2011-12, Munjal started Flat.chat, a real estate platform for college students and bachelors. He sold it to CommonFloor in 2014, which was acquired by Quikr in 2015 and shut down.
Unacademy was already run as a YouTube channel by Munjal since 2010. He made it a full-time job in 2015 with Roman Saini and Hemesh Singh as a YouTube channel for college entrance exams, which drew a million views a month then. Unacademy’s first pitch to investors said it will “move fast, break things,” borrowing Mark Zuckerberg’s maxim from Facebook’s early days, a philosophy that also contributed to chaos later on.
Much before the fame, fortune and unicorn tag, Munjal was feisty and did not back down from confrontation.
When Rahul Yadav, the high-flying but mercurial founder of SoftBank-backed Housing.com, was fired in 2015 for misconduct, which included a toxic culture, open threats to top venture capitalists and an atmosphere of fear, most founders and investors distanced themselves publicly from the issue.
Munjal tweeted: “In case your CEO got fired and you are looking to join a better and more sane company, @flatchatapp is hiring (and disrupting rentals):-)”
Around the same time, Yadav called food delivery firm Zomato a “company scanning menus from the last 7 years and doing no innovation.” Munjal replied to Yadav’s post, saying that by the same logic, Yadav is a “real estate photographer who gets occasional fits.”
By mid-2019, Unacademy had raised over $90 million and had over 13 million learners (not paying) and 10,000 educators. It still wasn’t making a dime in revenue but its growth thrilled investors. The growth was also driven by Munjal’s pugnacity, never taking no for an answer, dreaming up new products, marketing tactics and building a brand.
Munjal has long said he is obsessed with creating ‘iconic’ products and brands. This includes making sharply edited, quick-cut viral videos with Sachin Tendulkar and MS Dhoni as brand ambassadors and having a brand book created around Unacademy’s Series B round, which has minute details including font sizes and serif sizes (a serif is a decorative line or taper added to a letter).
A brand book is a document containing a company’s core values, principles and style. It defines how the company will make its identity as a brand. “At the first board meeting I ever went to, Gaurav showcased a brand book. And I was like, ‘Woah, you have a brand book?! You are a young company!’ And a physical brand book. And, everybody was stunned that this little, young company has a brand book,” Sequoia India’s Shailendra Singh said in Sequoia’s Moonshot podcast.
Munjal acknowledged that he was “an angry young man” in his early days. “I always have been a very aggressive founder who had very strong opinions about everything. And who used to get very, very highly pissed if something was not done his way,” Munjal said in a podcast.
And while he says he has evolved over the years and has become more patient, current and former Unacademy employees – even in the past two years – paint a different picture. The company employs over 3,500 people. Moneycontrol spoke to half a dozen of them across functions and roles and all had similar experiences to share.
Their grouses include micromanagement by the bosses, aggressive deadlines and uncertainty about their future in the company. So doubtful are employees about their prospects that 11 months into the stint, when one staffer had a month left for stock options to vest, she said, “Let it actually happen. I don’t know whether I will last one more month.”
A top-down culture exists at Unacademy, where 4-5 leaders decide everything. In the design team, for instance, the smallest of decisions is made by senior leaders, including whether a button should say ‘Let’s start’ or ‘Let’s get started.’
Mid-level employees sometimes get called 18-20 times a day to check on progress. When one employee pushed back, saying an update would take time and he can’t push his subordinates, his boss suggested that he call them 18-20 times as well.
Saturday night calls are routine. Employees often carry their laptops to pubs or bars, they said. Unacademy’s HR department recently started setting expectations for people to work 2-3 Saturdays a month. Another peeve is appraisals.
“They have performance reviews in front of everyone. You are rated in front of your team, by your seniors, in front of your juniors. How will you garner any respect if there is even some negative feedback?” one employee asked.
While Unacademy pays top dollar and offers relatively generous stock option plans, employees are frustrated by the lack of authority they have. A base-level employee would have built a relationship with an educator over months and agreed on certain terms of engagement after discussing with his boss, but a new senior sometimes hijacks the conversation and the relationship.
“They want people who can execute, not people who can think,” said one former employee who says he was treated harshly and decided to leave. “When you serve your notice period, it is as if they don’t know you and you have contributed nothing so far. Even when I need help for a negotiation that will ultimately benefit them, they won’t help. You’re treated like a total stranger.”
These factors prompted 7-10 people to leave Unacademy daily in early 2021, employees said.
“Gaurav is a little better to employees today than 3-4 years ago, but his aggressive nature creates unnecessary stress. You will grow there only if you comply with diktats,” a former employee said.
An Unacademy spokesperson said many of the points raised are “isolated incidents” from which a larger narrative seems to have been drawn and emphasised that the company has tried to build a very high-performance culture since day one.
“A crucial part of that is how transparent we are and whether we are setting the right expectations. We are driven by merit and have a strong leadership team who believe in our values, and help shape the culture,” the spokesperson said.
“At the same time, Unacademy has a very empathetic culture, with some of the most industry-leading people practices when it comes to policies around leave, benefits, wellbeing, engagement, etc. We believe both (high performance, yet empathetic culture) can easily co-exist,” the spokesperson said, citing its $335 million ESOP pool and $1 million Covid relief fund, among other things.
The spokesperson also said according to Amber, an internal tool measuring employee happiness, in the last three months, results have been “85 per cent positive”. In the same period, the eNPS (Net Promoter Score) in the product and tech divisions was 89 per cent, higher than industry standards.
To be sure, these results are very recent, with cultural issues dating back to the company’s origins. “A great culture cannot be built overnight. It is a process and a lot of experimentation goes into finding the right fit for the organisation,” the spokesperson said.
Munjal is very clear that Unacademy is not a place where people come to work to experience warm, fuzzy feelings. It is not about loving and caring. It’s very Alpha, that’s what it is.
Munjal is nothing if not a maverick. He has spurned lucrative acquisition offers from a bigger rival, positing that he should be running the combined entity, and not the other way round. He believes Unacademy in a few years will be worth $100 billion
Munjal’s aggression takes shape in unconventional ways, such as when he poached a physics teacher from edtech Vedantu about two years ago. While the educator, a star in his own right, earned Rs 2 crore a year, Unacademy forked out 10 times as much, nabbing him for Rs 20 crore when a smaller sum would have sufficed, people said. Vedantu did not comment.
At a lecture delivered to Sequoia’s Surge entrepreneurs, Munjal extolled the virtues of aggression. He spoke about relentlessly chasing Zomato’s Deepinder Goyal and Zeta’s Bhavin Turakhia (Munjal’s first employer) for a meeting for months. He sent daily and dozens of WhatsApp messages and followed up repeatedly until they relented. Both sit on Unacademy’s board of directors today, a source of great pride for Munjal to have two entrepreneurs he deeply respects by his side. The relentless messaging can rub some the wrong way but Munjal seems to disregard that.
Buyout frenzy
Munjal has publicly said that his habit of becoming obsessed is both his greatest strength and weakness. He doesn’t deal well with rejection and can become cranky like a child, an investor in Unacademy said. This is clearly reflected in his acquisition strategy.
Unacademy has acquired 11 companies so far, rivalling Byju’s 16, although for smaller amounts. The reasons for buying them vary – in some cases only to shut them down and build something else – as evidenced by the Testbook anecdote. Munjal wants every deal he targets to be done at any cost. He is also happy to try and charm founders into selling their companies.
In one case recently, the founder of a small edtech firm, along with a banker and senior executive, landed at Bengaluru airport to meet Munjal. They were picked up at the airport and taken in two BMW cars to a top hotel where they were handed the keys to a suite. They were told that all expenses would be taken care of by Unacademy and they could stay overnight. The founder met Munjal at a luxury villa later where he was surrounded by security guards. Munjal asked the founder to “name your price”.
Munjal also often takes entrepreneurs through the list of contacts on his phone, highlighting names and numbers of Sequoia India’s Shailendra Singh and cricketer Sachin Tendulkar, showcasing his access and proximity to power. If the charm offensive doesn’t work, he sometimes resorts to threats, telling them that no other investor will fund their company and it will be forced to close.
In another recent acquisition where the founder was to receive stock in Unacademy as compensation, Munjal negotiated highly non-standard terms, including the pay out of the stock over four years and that if the founder leaves within two years, he gets nothing.
Because investors sometimes force mergers and because Munjal has the ear of Sequoia India head Singh, at least three Sequoia-backed edtech founders have inserted or considered inserting a clause in their shareholder agreement that prevents Sequoia from selling its stakes in their companies to Unacademy, founders and investors said.
A Sequoia spokesperson said such terms are standard for many companies and that Unacademy itself has similar terms in its shareholder agreement.
The Unacademy spokesperson said that there is a push to grow fast, build great products and be a platform-first company.
“That attracts a certain kind of talent and companies. Going by the points mentioned, it would seem that Unacademy would have a very poor M&A track record. But the opposite is true,” the spokesperson said. “We have acquired close to a dozen companies and almost all of those teams are still with us. Many of these teams such as Relevel and PrepLadder have done spectacularly well after joining us.”
Investors
Munjal’s hostility and bellicosity have even incensed some of his investors, who largely toe his line to keep their star founder happy, while some privately bemoan the company’s poor work culture and Munjal’s lifestyle.
Four investors acknowledged Unacademy’s poor work culture, but were hesitant to bring it up with him or do anything about it for fear of spoiling their relationship with him. Some believe that only dynamic and belligerent leaders can grow fast and build large companies, and consider everything else worthy collateral damage.
Munjal is crystal clear on who he wants on Unacademy’s cap table (a list of a company’s investors and their rights) and what position (stake) he will accord them. Elevation Capital (formerly SAIF Partners) owns only 3.4 per cent in Unacademy, far less than peers Sequoia, Nexus and even Blume Ventures, which runs a far smaller fund.
That’s because when SAIF invested with Sequoia in Unacademy’s Series B round, it wasn’t fully convinced about the company’s prospects.
“Unacademy was still pre-revenue. That made SAIF a little nervous because how do you prove you make money from this? Sequoia was very aggressive though. But Gaurav did not like how SAIF dragged its feet and came in without conviction. You want your investors to back you to the hilt,” an investor said.
SAIF invested more in Unacademy’s Series C round, although Munjal and former Freecharge and RedBus executive Alok Goel, SAIF’s investor and board representative, were said to not get along. Munjal did not like Goel’s “working style” and the firm’s earlier lack of conviction grated on him, people said, due to which Munjal did not want the firm to increase its stake or have a significant say in the company’s business.
Goel eventually left and co-managing partner Mukul Arora oversees Unacademy now. The two share a cordial relationship but the incident shows his disposition to do away with detractors of any kind.
Munjal denied this version of events.
“I know Alok from my CommonFloor days and I have a great relationship with him. But once Unacademy entered into categories where Toppr (another edtech SAIF had funded earlier) was present, it was a conflicting situation because Alok was on the board of Toppr. So we took a mutual decision to create a Chinese wall, and that’s how Mukul came on board while Alok stayed on at Toppr,” Munjal said.
Elevation Capital declined to comment.
Munjal’s predilection for speed means everyone has to fall in line, whether they like it or not. In one funding round in the past two years, he gave an investor five days to go over and sign all the legal documents to close a deal, a process that usually takes a month, with lawyers vetting every single term, agreement, right and implication on the future of the investor and company.
“You have five days. Get it done,” was his curt message. The investor was shocked, but obliged because he saw it as a chance to invest in one of the hottest companies going around.
His need for speed also means that he has travelled in private jets on at least two occasions, people said.
“We have very cordial relations with all our investors. Existing investors like Sequoia, Nexus, SoftBank, General Atlantic, and Tiger Global have always increased their stakes in the subsequent rounds because they believe in our vision and our ability to execute against it,” the spokesperson said.
In another case, because deal talks were dragging on, Munjal offered to pay lawyers a few lakh rupees extra to work over the weekend and close the deal. The lawyers hadn’t received such an offer before or after and were not amused by his hard-charging approach. The approach of throwing money at a problem also highlights another key tenet of Munjal’s personality – that some consider him to be a spendthrift.
Poker, private jets, five-star hotels
Investors and fellow entrepreneurs have questioned or remarked upon what they consider Munjal’s flashy, expensive and sometimes eccentric lifestyle. He has, on occasion, rented a suite for 20 days at a time at The Oberoi, Bengaluru, among the city’s top hotels, favoured by him for its hospitality. He tells close associates that staying there helps him be productive.
In the early days of the pandemic, he stayed there for six months because working from home was not conducive and hotel tariffs were less expensive than usual. He informed the board of directors about the expenses and the reasons and they accepted it.
“I book a suite at Oberoi when I just want to be alone and think,” he told entrepreneurs at a virtual session organised by Sequoia, an attendee said.
Munjal said he secured a discounted deal at Oberoi, which is why he and employees were working out of the hotel.
In another case, some founders travelled from Bengaluru to Singapore for a Sequoia event in 2018. Of the founders on the Jet Airways flight, only three travelled business class – Munjal and his cofounders Saini and Singh.
Once, at a poker party with venture capitalists and entrepreneurs, Munjal is said to have bet Rs 10 lakh, playing a high-stakes game. He considered it a calculated bet and won the money back, although his total returns from the game are unclear.
He has also used private jets with 5-6 other entrepreneurs and investors, people said. Even when fully occupied with about 10 people, a private jet ride per person costs about 3-4 times a business class ticket on a commercial plane, they said.
When asked by investors or close associates about his spending, Munjal demarcates the company’s money from his wealth and has said that how he uses his money or what he does with it should not concern them beyond a point.
He recently justified a private jet expenditure to a colleague saying every hour of his is potentially worth as much as $100,000 (about Rs 76 lakh rupees), so if he spends say $50,000 on a jet, he is in fact saving $50,000 because of the time it saves him.
Investors sometimes like their entrepreneurs to live comfortably but frugally, believing this will keep them motivated and hungry to succeed. And while Munjal has certainly shown hunger, frugality is not his style, as evidenced by the BMWs dispatched to the airport during a potential acquisition.
To help with productivity and build focus, he has only communication apps on one phone and no communication apps on the other. He often cites Jobs as an idol, one explanation for his aggression, some believe.
Munjal’s productivity hacks include hiring a ‘reading guy’ – a person whose job is to read business and management books (Munjal hardly reads fiction) and summarise them in 10 pages to save Munjal time. Such a surgical approach takes away the pleasure of reading and the unstructured learning that a person could have, but it tells you about his manic focus on productivity.
Unacademy did not comment on Munjal’s lifestyle.
Byju’s vs Unacademy: The definitive battle
Nothing sums up Unacademy and Munjal’s approach better than his contests with Byju Raveendran in recent times. Munjal’s pitch to most investors is that Byju’s aggressive sales tactics and poor products leave open an industry ripe for disruption.
For Munjal, perceived to be a product messiah and a staunch believer in the power of cutting-edge technology and slick products, Byju’s offerings of a basic tablet, SD cards and books do not constitute the makings of a good technology company. And yet, Byju’s is valued at $22 billion and beat Unacademy to at least two acquisitions – WhiteHat Jr. and Doubtnut.
Unacademy and Byju’s rivalry has been growing and the two even discussed a merger last year, which did not go through due to the two founders’ egos, among other reasons, according to The Morning Context.
“Last year, there was a full-blown rivalry [with Byju’s]. They also got into the K-12 segment in bits and pieces. The question that kept coming up was, ‘Can we do what Byju’s is doing?’ Gaurav wanted to acquire WhiteHat Jr. and Doubtnut, but it didn’t work out. Byju’s got the bigger deals because they had the money,” a source told The Morning Context.
Besides the mergers that Byju’s won, it also is in the upskilling category, where Unacademy’s newest product Relevel competes with Byju’s-owned Great Learning.
Unacademy has expanded beyond its core thesis of test preparation classes. Relevel, which provides jobs after short term courses in coding, development and analytics is one such example. Relevel aims to disrupt the jobs and hiring market, solving for India's broken hiring market where colleges are aplenty but lack quality teaching or skilling which jobs require.
Unacademy allocated $20 million for Relevel last year, its most ambitious project yet, and is being personally overseen by Munjal.
Relevel started monetising in November last year, and recorded Rs 2.5 crore in revenue in February, around 3-4 per cent of Unacademy's overall revenue that month. It expects to touch a million dollars in monthly revenue by April, people aware said.
That said, whatever faults Byju’s may have, it is profitable, and Unacademy is not. Byju’s posted a net profit of Rs 50 crore on a consolidated revenue of Rs 2,400 crore in FY20, filings show.
The Unacademy Group, including all its acquisitions, got Rs 1,000 crore ($135 million) in revenue in calendar 2021, but it burns upwards of Rs 150 crore ($20 million) a month and has a contribution margin of minus 20 per cent, people said. A company’s contribution—sales minus variable costs—is meant to indicate how soon a product can break even.
“I have personal respect for Byju Raveendran,” Munjal said. “In fact, I have personally chased him for our first meeting back in 2016 when I was a young edtech entrepreneur. The reference (note: to investors/in general) I’ve always made is that I want Unacademy to beat Byju’s and become the No. 1 edtech company in India. So there is healthy competition between us, which is good.”
The strategies of India’s two largest online education firms and their boundless ambition will decide the fate of the sector even amid possible regulation to clamp down on unsavoury practices – ethical or otherwise.
Educators
When pitching to investors and even while hiring senior people, Munjal says one of Unacademy’s biggest differentiators from Byju’s is how it attracts students—its sales strategy—and that it is less sales-driven than Byju’s.
The thousands of Byju’s sales executives who go door-to-door selling subscription plans is simultaneously a big reason for its success and its biggest problem, its detractors say.
Unacademy attracts students differently. Its educators also serve as marketers and have the responsibility of attracting students. While online education itself needs more sales and marketing chops than offline education does, Unacademy also hires educators whose specific job is to convert free students from YouTube to paying customers on Unacademy’s app.
“It is not that Unacademy is less sales driven, just that it is done differently. An educator gets a fixed salary plus a bonus based on how many students he gets. And if in 1-1.5 months you are not able to attract as many people as expected, you are let go,” said a former Byju’s and Unacademy employee who has worked closely with educators.
Educators are core to the success of an education company and Unacademy’s strategy is largely to hire well-known ‘star’ educators by paying them large sums of money, rather than grooming them from the ground up, which some other ed-tech firms do and which may be more sustainable.
“When parents review an edtech, they talk about the quality of teaching. Great education products are based on service. It is not about how many clicks it took you to reach the class or how slick the app is – stuff that Unacademy looks at. Unacademy thinks the user interface is as important as the educator, but I think they need to groom educators organically and focus more on that,” another edtech entrepreneur said.
How far can it stretch?
Munjal’s obsession with dominating, quashing rivals and increasing Unacademy’s valuation has come at the cost of antagonising rivals, his own employees, some investors and educators. That isn’t surprising because bull-dozing your way to success is the ultimate Silicon Valley mantra, à la Uber, Airbnb, WeWork and others.
Unacademy’s investors have a complicated relationship with Munjal because they respect his ambition, but privately question the methods behind fulfilling that ambition. They struggle to ask him the tough questions because he has already made his early investors significantly wealthy, people say.
Munjal’s lifestyle has also attracted their attention because Unacademy’s business is far from stable. Its acquisitions haven’t proven themselves core to the business. Its culture is improving from four years ago but is still in turmoil and not profitable.
“Early on, we decided that we will play the high-risk, high-reward game. We will not be a ‘good company.’ Either it has to be a great company or it has to be an utter failure,” Munjal said in conversation with Sequoia’s Singh.
The reward part of the risk-reward equation has been evident so far. The risk part is only coming to the fore.
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