Good morning. folks, it's Vedica here with the update today. I've been under the radar for the last few days, so only caught up today on the brouhaha regarding WhiteHat Jr, which is what I'll be talking about in our update today.
➡️ Ed-tech start-ups in India have probably been the biggest beneficiaries of the pandemic. Education is one thing Indian parents are willing to spend on, because it is a clear means to upward mobility, and because the Indian state's failure in education means parents often have to supplement their children's education. If anything, the pandemic has only widened the gap. With universities and schools closed, India's edtech sector has rushed in to fill the space, with millions of students going online and professionals seeking to upgrade existing skills or obtain new ones.
➡️ WhiteHat Jr is one of these massive ed-tech success stories. The Mumbai-based company helps kids aged 6 to 14 years build commercial-ready games, animations and apps online using the fundamentals of coding, all taught online. In August this year the company was acquired for $300M by Byju's the ed-tech behemoth, which is now valued at ~$12B. WhiteHat Jr had only been operational for 18 months at the time of the acquisition. Covid had given the business a big boost with the company reportedly growing 100% month-on-month in India and the US, with a revenue run rate of $150M.
➡️ WhiteHat Jr's success in such a short time frame is clearly impressive. But in the months following the acquisition tech reporters and consumers have raised questions about some of the company's less savoury operating tactics. The company decided to go on an aggressive marketing spree with some eyebrow-raising TV and social media ads pushing coding classes for kids.
➡️ For example, the company’s ads use images of well-known tech CEOs like Bill Gates, Steve Jobs, Sundar Pichai etc., with the not-so-subtle messaging that coding is the way children can follow their footsteps. Messages aimed at parents on the company's website read: "Your kid will be on the next flight to Silicon Valley, USA". In October, the Advertising Standard Council of India (ASCI) asked the company to pull its advertisements because it made dubious and unsubstantiated claims.
➡️ Not only is the company's messaging false, its also distasteful in many cases. Still the fact is that the company has a ready audience of Type A parents who are willing to buy the dreams it is selling. That is unfortunate, but caveat emptor as they say.
➡️ More problematic is the company's willingness to combatively silence dissent. News outlets like The Ken, Morning Context and Forbes India, amongst others, have reported on how multiple people who have criticised the company’s campaigns and/or product have found their posts swiftly wiped off platforms like YouTube, Quora, Reddit, Twitter and LinkedIn on the grounds of ‘copyright infringement’.
➡️ It is this thin-skinned response to any criticism that has led to the company's founder, Karan Bajaj, filing a suit against one of the company's most vocal critics Pradeep Poonia. Poonia, an engineer, has publicly criticized the firm for its marketing tactics, the quality of its courses, and its aggressive takedowns of criticisms.
➡️ The details of the allegations are worth a read for background. In short, Bajaj is suing Poonia for copyright and trademark infrigement, defaming and spreading misleading information about the startup and its founder, and accessing the company’s private communications app. The lawsuit also accuses Poonia of publicly sharing phone numbers of WhiteHat Jr employees and making accusations such as likening the startup’s marketing tactics to “child sexual abuse.”
➡️ It's a messy case, and I'm not a lawyer so we will see how the Delhi High Court rules. I have seen Poonia's twitter account where he shared screenshots of WhiteHat Jr's internal slack channels, and felt uncomfortable that these were being shared without anonymizing the names of the company's employees. I think that might make not sit particularly well in the courts.
➡️ That said, WhiteHat Jr's behaviour has been pretty abominable. I think it's appalling that the company basically created a 12-year-old child named “Wolf Gupta” and claimed that the kid had landed a lucrative job at Google in its ads, going so far as to create a LinkedIn profile for him. There was no disclaimer that this child is a fictional character. It's only been in the defamation suit that the company has ironically admitted this, even though this was exactly Poonia's allegation all along.
➡️ Whatever the court's outcome, this whole affair has definitely taken a sheen off Indian ed-tech. A company's culture matters. We have seen that with the likes of Uber and WeWork. Growth is important, but growth at any cost isn't. In a country like India where there is an in-baked distrust of private companies in any case, investors, founders and employees would also do well to ask themselves if companies are actually helping change that perception or not. That is important for the ecosystem as a whole. The case of WhiteHat Jr isn't a good indicator.
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