Around nine out of ten startups fail. Why? A startup is prone to failure because to be called a Start-up, the prerequisites are innovation (testing new tech, products, or markets) and potential for exponential growth. But what if despite a successful offering and exponential growth, it fails? This can be better explained through a live case study of Byju’s in the form of an equation. Why Equation?
In this era of short attention spans, no one has time to read long stories. So here’s an attempt to cut Byju’s long story short and express it in the form of an equation explaining how start-ups shoot themselves in the foot and die a premature death.
The Byju’s Story
Founded in 2011 by Byju Raveendran, Byju’s is an Indian edtech firm. In 2017, it became a unicorn valued at $1bn. To stay afloat, it has recently floated a rights issue at a pre-money valuation of $25 million, a 99.9% cut from its peak valuation of $22 billion in 2021. So, here’s what went wrong with India’s most valued start-up and once among the most valued ed-tech start-ups in the world. Let’s explore how and why Byju’s faltered while trying to grow too fast too soon.
The Byju’s Equation
An equation is a formula that expresses the equality of two expressions. The most famous equation is E = mc2. Written by Albert Einstein, it links energy and mass.
The Byju’s Equation lists all the ingredients a startup needs to make the recipe of business failure and can be expressed as
D=(A+B+C)* T2
Where
B=E+F+I
And
A stands for accounting malpractices
B stands for the game of burning cash
C stands for cheating customers
D stands for the founder’s desire to rule the world
E stands for expensive acquisitions
F stands for diversion of funds
I stand for insane marketing spends
AND
T stands for toxicity of work culture
And, where variable D is a dependent variable and is caused by the following independent or explanatory variables:
- Social milieu (m)
- Strength of ambition (n)
- Psychology of money (o)
- Genotype (g)
- Phenotype (p)
- Belief system (s)
- Past Karma (k)
- Duration of staying outside the regulatory radar (r)
- Degree of stupidity of VCs (v)
- Degree of availability of easy money (y)
- Degree of presence of Infantile Personality Disorder(z)
The relationship can be represented mathematically as a function:
D=f(m+n+o+g+p+s+k+r+v+y+z)
Let’s call it the “Law of End-ups” which simply states that failing is not bad but failing for the wrong reasons is surely avoidable.
Also Read:
