BYJU's, once a beacon of the edtech industry in India, has faced significant challenges in recent times. From layoffs, to board members resigning, to the big question about the eventual viability of the company, BYJU's hasn't had an easy run. Arjun Mohan, the ex-CEO of BYJU's, talking recently in a podcast, shed light on some of the critical issues that led to the firm's downturn. His candid insights reveal underlying governance problems and strategic missteps that contributed to the company's decline.
Reflecting on the differences between BYJU's and other well-governed organisations, Mohan emphasised the importance of a functioning and diverse board. "A well-governed organisation should have a well-functioning board. It is the most important thing. And you should have diversity," Mohan stated. He highlighted how companies like UpGrad have benefited from having board members from various backgrounds, including academia, successful CEOs, and investors. In contrast, BYJU's board primarily consisted of the founder, his family, and some investors. "That's a mistake. I mean, in the sense that it is what they were comfortable with. They went with that because it was more about their thing."
The repercussions of this approach became evident when key investor-directors resigned simultaneously, creating a significant disruption. "One of the biggest things which acted as negative to BYJU's was three of his investor directors resigning on one day," Mohan recalled, marking it as a pivotal moment in the company's unraveling.
In July last year, the edtech firm -- which at one point had a valuation of over $10 billion, and has, subsequently, seen its valuation erode -- received a major setback when three prominent board members resigned due to differences with founder Byju Raveendran over key operational issues. The departing members were G V Ravishankar of Sequoia Capital (now Peak XV Partners), Vivian Wu of the Chan Zuckerberg Initiative, and Russell Dreisenstock of Prosus.
Mohan also touched upon the importance of timely decision-making and strategic governance. He acknowledged that his personal growth and spiritual journey influenced his perspective on leadership and governance. "I know that if I don't build leaders and keep a board of directors in my system, and if I run alone with my family, the mission or vision I have for this company will not be fulfilled," he admitted. This realization highlights the broader issue of leadership and the need for robust governance structures.
The former CEO noted that governance issues were not unique to BYJU's but were also seen in other major Indian companies. "There were two big companies where governance problems came in right. One was BYJU's and the second was Paytm," he observed. This trend points to a larger systemic issue within the Indian corporate landscape, where governance practices have often lagged behind rapid business growth.
Mohan cited the example of Zomato, where strong governance practices were instilled due to the influence of their investors. "When Zomato was going for IPO, the founder mentioned that because India InfoEdge was an investor in their company, the governance practices of Zomato were like a public market company," he said, illustrating the positive impact of stringent governance standards on a company's success.