Why Founders and VCs Misunderstand Edtech as a Category?
The Reality Check
Edtech isn’t a sales-driven game – it’s a brand-driven one. This fundamental truth has been overlooked by countless founders and investors chasing growth through aggressive sales tactics. But here’s the harsh reality: trust, not sales, drives sustainable success in education.
A Revealing Insight
A few years ago, I interviewed a former Byju’s sales manager. When asked about his strategy, he said, “I don’t prefer leads from Tier-1 cities. There, everyone already knows about Byju’s, so we don’t get conversions. Tier 2 and 3 leads perform better.”
This was a stark revelation. Even with massive marketing campaigns featuring Bollywood and cricket stars, Byju’s struggled to convert audiences already aware of their brand. The issue? Awareness doesn’t equal trust.
The Core Problem
Edtech founders and VCs consistently underestimate a critical truth: education thrives on trust-based branding, not sales-driven marketing.
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Education is Sacred: Like religion, learning is revered. Trust in the institution or educator is paramount.
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The Oxford Phenomenon: Oxford has endured for over 1,000 years because it represents trust, not transactions.
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The Byju’s Mistake: Attempting to replace trust with aggressive sales leads to unviable CAC and eventual stagnation.
Brand vs. Sales: A Tale of Two Outcomes
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Physicswallah (PW): By prioritizing brand trust, PW has built a loyal base with sustainable economics.
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Ankur Warikoo: As an individual educator, Warikoo generates enviable profits through branding, not sales tactics.
Compare this to Tier 2/3 institutions and average Edtech players, which struggle to survive under the weight of CAC-driven growth models.
The Opportunity in Edtech
Education businesses offer high gross margins, brand premiums, and positive working capital. The path to success? Build trust. Be patient. Play the long game.
Key Takeaway
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Top education businesses invest in brand trust.
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Average ones burn out chasing sales numbers.
Edtech has all the right ingredients for explosive growth but only for those who get the fundamentals right.