Here's how Physics Wallah solved the edtech riddle and is now aiming for growth

In 2018, Aryan bhaskar was preparing for IIT JEE (Joint Entrance Examination) at one of the top coaching centres in Kota, Rajasthan. His parents had shelled out around Rs 3.5 lakh for two years of test prep. He was doing really well in Physics, but not because of his coaching centre. Instead, it was thanks to a YouTube channel that his dorm mate introduced him to, where a teacher had uploaded all JEE Physics lectures for free. The teacher’s style was thorough; he was responsive to doubts in the comment section; and his content was precise. That teacher was Alakh Pandey.

Cut to 2020, and the Covid-19 pandemic had forced schools, colleges, and coaching centres to shut. Students and teachers were finding it hard to adapt to digital media. Major edtech firms were booming, but their products were not widely accessible because of their hefty price tags. The Founder of PenPencil, a start-up helping edtech companies with technological solutions, realised that this was a pivotal moment and that there was a need for players who could cater to the masses at affordable prices. That Founder was Prateek Maheshwari.

Maheshwari had first offered to build Pandey an app in 2018, but the latter refused because he was focussed on growing his YouTube channel. But in June 2020, the duo revisited the idea and decided over a phone call to incorporate Physics Wallah—named after the YouTube channel Pandey ran. “We did not meet each other for the first nine months after incorporating Physics Wallah. And when we did, over 150,000 students had already been studying with us,” Maheshwari tells Business Today.

Since then, the duo has managed to pull off something unique in the edtech industry: Turning profitable in just a year, even as bigger names have struggled amid a funding winter and as students returned to physical learning centres. They rode on the high demand for affordable online learning programmes, especially for undergraduate entrance exams, amid the pandemic and kept costs down with relative low spending on marketing and advertising. There’s been no looking back since, as growth has been exponential. It now boasts of 50 YouTube channels, 16 online test preparation verticals, and around 100 offline centres.

Built to Scale

The first time they launched their app, it crashed because of the number of concurrent users. Maheshwari says it took them over 10–15 days to scale the technology to meet the growing demand.

“What I find endearing is that the students stayed patient with us. We had promised live lectures from the very first day, but we could not deliver because we had not anticipated that the response would be so huge, but they stayed with us; they made do with recorded lectures for the first 10 days while we figured out scaling the technology,” Maheshwari notes.

One crucial factor behind students’ affinity with Physics Wallah in its early days and even now has been the affordable prices offered by the edtech company.

“Our courses start from between Rs 3,000 and Rs 4,000. When we started, students were unable to believe that someone could help them prepare for NEET (National Eligibility cum Entrance Test) or JEE at such low prices. If you compare our rates with those of our competition, you will see they charge anywhere between Rs 40,000 to Rs 1 lakh for the same product category. We could have done the same or charged relatively less than them, but me and Prateek always wanted to create for the 80 per cent people who probably are not able to perform well in the exams just because they cannot afford the courses,” explains Pandey, 31, who dropped out of an engineering course. NEET is a pre-medical entrance test, while JEE is for entrance to undergraduate engineering courses.

Path to Profitability

Physics Wallah’s biggest strength has been its ability to charge disproportionately lesser than its peers, thanks primarily to its nearly insignificant customer acquisition cost (CAC). “We build communities over social media platforms like YouTube, Instagram, Facebook, etc., and then we monetise them through our app. We have not found the need to spend exorbitant amounts on marketing and advertising,” says 33-year-old Maheshwari, describing the company’s model.

That low cost is the differentiator, explains Avantika Tomar, a Partner at EY-Parthenon, Ernst & Young’s global strategy consulting arm. “Since their prices are so low, they are able to get massive volumes, which is reflected in the revenues,” she says.

Per data from analytics platform similarweb.com, the Physics Wallah Android app ranks No. 1 in India in terms of active users and current installations, far ahead of its peers like Unacademy, which sits at the sixth spot, and Byju’s that comes in at 11th. It ranks ahead of its peers, even when it comes to iOS users.

The founders also credit their hiring strategy for their success. “We don’t look for degrees while hiring. We look at the problem at hand and whether the person would be able to solve it,” Pandey said.

To strengthen its position in the south, the company acquired a 50 per cent stake in Xylem Learning, a Kozhikode-based NEET/JEE test prep platform, in June. It has also been making acquisitions to enter new markets and to bring star teachers into its fold. Where its rivals pump millions of dollars to keep acquisitions afloat, all of Physics Wallah’s buys were profitable as of FY23.

In just three years, the company’s revenue has gone up over 30 times, and its profits have shot up over 11 times. It has made more than nine acquisitions and is valued at $1.1 billion.

Although the company is diversifying, the NEET/JEE online vertical remains the major revenue driver.

But for many learners, online education has become a remnant of the pandemic. They want to visit physical classrooms and interact with their peers and teachers.

Physics Wallah has been working to address this too. It has built physical centres spread across the country under the banners of PW Vidyapeeth (67 centres) and PW Pathshala (16 centres). While PW Vidyapeeth is just like traditional offline classes, PW Pathshala refers to hybrid learning programmes where students are expected to be physically present at the centres while teachers teach them virtually.

Although the prices of offline courses are still lower than those of rivals, there isn’t a huge difference, like in online courses. “We tried keeping prices low, but the economics of running classes offline do not agree with that. Offline is expensive; when our students complain, I tell them that we have not shut down online classes,” says Pandey.

The question now is: Can Physics Wallah replicate its NEET/JEE success in other verticals? The founder of a rival edtech company, who spoke to BT on the condition of anonymity, says it would be difficult for them to duplicate this success in other verticals.

“The pandemic aided them when it came to their NEET/JEE vertical, and that is the segment that is working out the most for them. [One] fatal flaw I see in PW is the fact that everything is built in the name of Alakh. He is the sole face of the brand for every vertical. I am not sure how good that strategy is,” says the founder.

The recent developments in the sector have highlighted that the metrics of success have shifted from lofty valuations via endless venture capital funds, big-ticket celebrity endorsements, and extravagant marketing spends.

The only metric that matters now is students’ results. 

@aakancvedi