Disrupting What, Exactly?
An essay by one of Network Capital's academic advisors, Dhruva Bhat
This essay comes from the desk of Dhruva Bhat, a Rhodes Scholar, Co-Founder of Lumiere, and one of Network Capital’s academic advisors.
Before you read, make sure to check out his masterclass on inflection points in careers.
In late 2016, Byju Raveendran appeared to be on top of the world. His edtech startup had just raised a reported $50 million from Facebook’s founder and top-tier venture capital firms, even though the app had only 250,000 subscribers at the time. In an interview that year, Raveendran made his vision clear: learning in India was “driven by fear of exams,” a one-size-fits-all system that smartphones would help him “disrupt.” He returned to the word again and again over the years- Byju’s had “positively disrupted our own segment,” it would “disrupt university degree courses through online.”
The diagnosis was not wrong. Enrolment in Indian schools has risen steadily since independence, but less than 45% of fifth-graders in public schools can read a text meant for second-graders. Towns like Kota have become factory floors for entrance-exam preparation, with over a hundred thousand students a year joining full-time coaching institutes. Nearly a third of all Indian students use private tutoring of some kind. As the head of the Prime Minister’s Scientific Advisory Council once put it, India has “an examination system but not an education system.”
For a while, Byju’s seemed to be winning by the startup world’s preferred metric. By the end of 2021, it had raised more than $5 billion, was valued at over $20 billion, and had become one of the world’s most valuable startups, with over 100 million registered users. Its logo was on the Indian cricket team’s shirts. Shah Rukh Khan fronted its advertisements.
But look at what the company actually became. In April 2021, Byju’s spent nearly a billion dollars acquiring Aakash, a 33-year-old chain of brick-and-mortar IIT and medical coaching centres- the very heart of the exam-prep culture Raveendran had set out to disrupt. The following year, Byju’s announced 500 physical tuition centres of its own, aiming to enrol a million students. Meanwhile, investigations into its sales practices found marketing agents signing lower-income parents up for loans they did not understand- an analysis of 110 consumer complaints found nearly half were unaware they had taken on debt- and sales associates reporting that they were coached to suggest to parents that their children were falling behind. In six years, a startup that promised to end fear-driven, exam-obsessed education had become a multibillion-dollar empire of test prep and after-school tuition, powered by the same anxieties it claimed to cure.
During my doctoral research on India’s startup ecosystem- through interviews with venture capitalists and founders, and close reading of the industry’s advertisements, websites and public statements- I came to see Byju’s not as an aberration but as an illustration. The interesting question about disruption is rarely whether a company is innovative. It is: disrupting what, exactly? And who benefits from the claim?
The word has a respectable intellectual lineage. The economist Joseph Schumpeter described capitalism as a process of “creative destruction,” in which innovative newcomers destroy complacent incumbents. Clayton Christensen’s “disruptive innovation” gave the idea its modern business-school gloss. But as the literary scholar Adrian Daub has observed, disruption in the startup sense has drifted a long way from these roots. Schumpeter imagined large companies being destroyed. Today’s startups claim to be disrupting entire industries, human habits, even sectors- like small local businesses or public education- that have far less money and power than the startups themselves. The rhetoric creates a strange inversion: heavily capitalised, elite-networked companies get to play David, while fragmented, often precarious industries are cast as Goliath.
Consider how Indian venture capital presents itself. Sequoia Capital’s “Ethos” page celebrates “the underdogs… the outsiders… the defiant.” The Indian Venture Capital Association’s advocacy literature announces the end of the era when success required “generational wealth” or “a privileged network,” hailing the rise of “Meritocratic Capital for the New India.” This is a moral claim, not just a commercial one: startups and their funders present themselves as correcting an unfair economy, replacing privilege with merit and stagnation with competition.
The reality sits awkwardly beside the rhetoric. Ola Cabs launched to acclaim as the solution to India’s “notorious” autorickshaw drivers. But surveys at the time found the average Mumbai autorickshaw driver earned about 9,295 rupees a month- roughly $120- before paying for fuel and permits. Ola, meanwhile, had raised over $600 million and was valued at $7 billion. Which of these is the entrenched incumbent, and which the scrappy underdog?
And the destination of the journey is rarely more competition. The economics of venture capital demand that a few investments produce enormous returns to pay for the many that fail, which pushes funds towards “winner take all” markets- platforms where scale begets scale and the leader becomes nearly impossible to dislodge. Peter Thiel says openly that he looks for future monopolies. Founders are coached to build “moats” against rivals. One VC I interviewed spoke admiringly of markets where a company must “pour money into marketing and user acquisition before somebody else captures the turf.” When American lawmakers investigated Amazon, Google, Apple and Facebook in 2020, their report reached for a telling comparison: these former underdog startups had become “the kinds of monopolies we last saw in the era of oil barons and railroad tycoons.” The disruptors, given time and enough capital, become precisely the thing they promised to disrupt.
There is a second, subtler gap between rhetoric and practice. Startups routinely claim to be disrupting human bias and inefficiency itself- replacing gut feel with data, instinct with algorithms, the fallible body with the quantified self. Yet the institution that selects and funds these startups runs almost entirely on gut. In my interviews, VCs described their process not in the language of data science but of intuition and romance. One explained that he looked for “the kind of guy who would crawl through broken glass to deliver,” a judgment based on a “rough sense” that “this guy is good, this space is interesting.” Another compared the whole process to dating: “You don’t really know how good or bad the person is going to be unless you spend some time with them. On the first date, you are both the best people around.” The industry that promises to algorithmize the world allocates billions through chemistry, charisma and hunch- the most human process imaginable.
None of this means the status quo deserves defending. Indian education genuinely fails millions of children; plenty of industries genuinely serve customers badly. Some things should be disrupted. But that is exactly why the rhetoric deserves scrutiny rather than applause. “Disruption” is not a neutral description of what a company does; it is a story that does work. It casts the startup as a moral actor before it has done anything, makes its growth seem like a public service, recruits employees and investors into a mission rather than a business, and renders the costs- indebted parents, displaced workers, consolidated markets- as the regrettable but inevitable price of progress.
The language has already escaped the startup world. Politicians style themselves as disruptors of old party machines. NGOs promise to disrupt development. Self-help books urge you to disrupt yourself. The more universal the word becomes, the more useful the question underneath it: what precisely is being disrupted, is it really as powerful as the story suggests, and who ends up holding the power when the disruption is done? In the case of Byju’s, the answer is uncomfortably clear. The fear of exams was never disrupted. It was acquired, rebranded, and sold back to us- this time with a Bollywood star in the advertisements.
P.S. You will enjoy this debate between Dhruva and Utkarsh.