Allen Vs Unacademy: The Market for "Star Teachers" Is Heating Up

While the average technology company has been battling with technical talent acquisition, ed-tech start-ups have been fighting on two fronts. Like all technology companies, they had to pay higher salaries to attract the right technical talent, but their key issue has been attracting and retaining celebrity teachers or star teachers.

The Teacher’s Brand

In India, teaching is usually seen as a profession of the last resort, with little opportunity for growth or making money. Teaching is usually not the first choice but the last career option left when no other endeavour works out. But, some teachers in the test preparation space have defied the stereotype.

As the name suggests, “star teachers” are teachers with a large fan base among aspirants. The ability to attract the right teachers can often make or break education companies operating in the highly competitive test preparation space.

The education sector is largely dependent on teachers. A high-quality teacher is the business’ real asset and selling point.

Over the last few years, ed-tech start-ups have entered various areas of the education sector. But many ed-tech companies have shifted their focus on the test preparation space, given the large market size in India.

Exams such as IITJEE, CAT, UPSC, SSC, NEET, and bank exams, among others, attract millions of aspirants who wish to crack the exam. One of the side-effects of having a large student base is that popular test-prep teachers tend to have a large number of devoted students.

The stakes are clearly quite high for start-ups, given the intense competition in the test preparation space. Flush with investor money, many of these start-ups resorted to offering multi-fold hikes to celebrity teachers. The start-ups bet on the fact that the wide fan base would follow the teacher irrespective of the platform they teach on.

Teachers have received significant hikes from well-funded start-ups to join them, with some popular teachers reported to be earning eight to nine figures annually.However, the teacher poaching game has shifted from online to offline as ed-tech companies focus on building an offline presence.

Offline institutes are returning back to normalcy as students return to schools and offline coaching classes. Ed-tech companies that had initially focused on remaining online have now quickly ramped up their offline operations.

Offline vs Online

The entry into the offline segment has brought some of these players into direct conflict with older players. A case in point is the recent skirmishes between Unacademy and Allen Career Institute in Kota, which saw Brajesh Maheshwari, the founder of Allen, warning teachers to not leave the coaching institute for more money.

Unacademy is said to have hired some popular teachers from Allen at a significant salary hike, with some teachers being paid crores. But, Kota is no stranger to poaching tactics.

Kota had seen the rise of star teachers, their hefty salaries, and intense competition among institutes, even before these ed-tech platforms were founded. Just like in the online world, some teachers in Kota gained a mass following due to their ability to teach well and their history of having taught students who aced the entrance examinations.

While poaching has been common, the sum of money being spent on acquiring assets (teachers) is unprecedented. Coaching institutes usually put on a public air of confidence when it comes to teachers being poached away, but the constant warnings given to teachers display the dependence these institutes have on star talent.

For instance, in the video that went viral, Allen co-founder Brajesh Maheshwari said that teachers who leave Allen for more money would be blacklisted forever and would never be allowed to return. Previously, he had been seen in another video calling himself the “don” of the coaching industry. After the video went viral, Unacademy requested police protection for the teachers who left Allen.

Are these Payments Sustainable?

Whether these payments are really sustainable over the long term is a major question for both teachers and education companies.

Several prominent ed-tech platforms have begun laying off employees, with an increasing focus on bringing costs under control. There have been some cracks in the hyper-growth narrative of ed-tech companies as some players have already shut down.

Even the highest-valued start-up in India, Byju’s, is reported to have delayed its payments to Aakash Institute’s shareholders. It acquired Aakash Institute last year and was supposed to make the $ 1 billion payment in tranches to Blackstone and Aakash’s founding family.

The reports of the payment delay came amidst media reports of Byju’s and its subsidiary Whitehat Jr. letting go of a significant number of their employees.

Two other prominent ed-tech companies, Unacademy and Vedantu, have laid-off employees over the past few months as well. In a scenario such as this, it is difficult to make long-term predictions about the sustainability of teachers’ payments.

While the market for technical talent was hot until a few months ago, it has been hit by a slowdown in hiring and layoffs. Whether the market for celebrity teachers would revert to the mean remains to be seen.