BIT Mesra alumni Karan Bajaj

BIT Mesra alumni Karan Bajaj sold his 2-year-old start-up to BYJU's in $300 million

Updated: Sep 4,2020,11:41 AM IST

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Mumbai :  An alumni of BIT Mesra Karan Bajaj, son of an army man, after passing-out from IIM Bangalore, has spent his working life in the United States and better known as an author and the chief executive of Discovery Networks India. Until two years ago he was not a well-known name in startup fraternity. After the blockbuster sale of WhiteHat Jr for USD 300 million to Byju's last week, Bajaj hit the headlines. And now Karan Bajaj says, he is a ‘wanderer’ who will neither go back to creating another startup, nor follow in the footsteps of other entrepreneurs who dabble in the space as investors after a successful exit.

Trend setting Journey of Whitehat Jr

Since the Covid -19 pandemic has disrupted the normal lifestyle of people across the globe, the virtual world has come to the rescue. Amongst many education institutions have also shifted from traditional way of teaching to virtual platforms to conduct classes online.There is no doubt about that lower to middle and finally higher level education is a big business in the country. The parents are having no regret to spend huge amount of money on children to give them decent education. Here’s a fast-growing company with a savvy marketing engine and great unit economics in a hot sector where larger competitors are steeped in an intense land grab. If one doesn’t acquire the company, another might.

Valued at over Rs 2,250 crore in 20 months

The company started is hardly 20 months old was valued at over Rs 2,250 crore. That’s about Rs 400 crore more than the combined market capitalization of NIIT Ltd and Aptech Ltd, two of India’s oldest and largest companies that taught kids of our generation coding. Second, the company has raised only $11 million from venture capitalists. If you look at all the new-fangled online learning companies — the “edtech” category — this is an incredibly little amount of money raised. For instance, Unacademy has raised close to $200 million. Byju’s has raised $1.5 billion. Topper has raised some $112 million. That is, Whitehat Jr seems like a capital-efficient company on steroids. Third, going by reports, the company has been cash flow positive for the last five months and has an impressive $150 million in annual revenue run rate.

Karan Bajaj says will not build another startup after WhiteHat Jr sale

Bajaj said he is a minimalist who does not think a lot about money and stressed that all his investments are long-term ones where he does not fret about those. Earlier this month, Bajaj's edtech venture was acquired by Byju's in an all-cash deal for USD 300 million within 20 months of its incorporation in one of the largest deals in the upcoming space. I feel there is an end point of a journey. With this chapter, I'm kind of putting a lot of myself into it, and I feel I reached a very logical end of the journey and I won't do a startup again,the New York-based Bajaj said during an interaction on professional networking site LinkedIn.

I am not the best investor for a startup

He said startup investing requires very active engagement and he will not be a good investor because he likes to build and tinker with things.  So I'm actually not the best investor for a startup. So I think I will most likely not invest, he said. Bajaj said he gets into things which interest him at a point of time in life, and cited his previous stints as a writer, where he wrote two novels and vowed to never write fiction again, and also as the chief executive of media company Discovery later.  I am not a person who repeats what I've done. So I'd probably do something in a completely different field, like I like to build stuff, create stuff, he said.  For some people, life journeys are about building expertise and verticalisation in a single field, he acknowledged, before adding,  I was always a bit of a wanderer. Bajaj said he left FMCG major Procter & Gamble when he was in his late-20s to backpack in South America for six months.  He admitted the decision was a little intimidating because people his age were talking about their first jobs or marriage plans on the internet. After the first leap, it becomes progressively easier, he said, admitting that it was very difficult to find a job after he returned from his travels because Lehman Brothers had collapsed, triggering a global financial crisis. I kind of lived the worst case scenario of taking a leap. I came back to pretty much jobless, not having too much money and stuff, or no money at all, Bajaj said, adding things worked out eventually and he also got a job with Boston Consulting Group later.

 

Building a startup has two phases

Building a startup has two phases, he said, citing his WhiteHat experience. 

1. The first is marked with patience for building a great product where one has to be very frugal, Bajaj said, pointing out that the size of his team was only seven or eight people in the first seven months.

2. The next phase is impatience for scaling up, Bajaj said, adding he was doubling the business every month during the pandemic. WhiteHat Jr had 400 employees before the pandemic, which went to 3,000 in the last four months, and the number of enrolled teachers reached over 6,000 from 1,000.  Revenues also got scaled up in a similar manner to a yearly runrate of USD 150 million now, as against USD 10 million during the start of the pandemic, he said.

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