What is a brand? A question for Unacademy, Bira, and the Indian startup ecosystem

Both Bira and Unacademy are at the verge of getting firesold after having raised $450M and $850M over the course of 10 years, respectively. But they say that they've built a "valuable brand". What does that mean?

What do people mean when they say they've "built a brand"? What is a brand, really? What does it mean from a business, financial or economic standpoint? How do you know if a brand is really "valuable"? What's this jazz all about?

Fundamentally, a "brand" is an intangible asset that enhances the value of a product in the eyes of a customer. That's it. It's something that enables a company to extract a premium for its offerings, so it can make more money than everybody else. In other words, a brand is something that leads to a better 'profitability profile' for the product and company. Nothing more, nothing less. It's that plain and simple.

For example, "Kayam Churna" costs ₹89/100 Mg, while an unbranded "Koyal Churna" selling on the street could be available for ₹69. Now both the products could be absolutely identical in form and make, but Kayam commands a "brand premium", making Sheth Brothers rich, while the founders of Koyal Churna could be struggling to make both ends meet. That's the power of a brand. More sales, more margins. While the competition pays more, just to stay afloat.

Considering that, how exactly is Unacademy a brand? The company lost ₹436 Cr at a revenue of ₹826 Cr in the last FY - its 10th year of operations. When did its "brand premium" ever play out? Forget about net margins, the company could barely sell anything at a positive contribution margin throughout its history, despite getting ~₹6000 Cr and 10 years to make it happen. Its sales grew, only when it spent more. As the marketing spend dried, so did the revenue. So where did the "brand" thing happen exactly?

Or Bira for that matter? For everything, its state is even worse.

Are these people mistaking "the number of people who know about the company", for "brand value"? Because that's not what it means. That's BS.

Consider this. If someone gets ₹6,000 Cr to "build a brand", and they start a business around selling actual BS, calling the brand "Gobar". Do you think after 10 years and having burnt most of that cash, they won't be able to generate some buzz around the company? What can you not do with ₹6,000 Cr! You can hire the best brains in the country, do some "innovation", spend crazy amounts of money on sales, sponsor TV Series, get popular standup comedians for your events, and even fund IPL! The opportunities are endless!

After all that, would it be a surprise if Gobar becomes a household name in some shape or form? No. But would that make Gobar a brand? Also, no.

Unless the popularity of the company doesn't lead to a lasting effect on the its bottom line, Gobar will not be a brand, it'll only be Gobar.

So while upGrad buys UA in a firesale and positions it as a brand to boost its stock as it goes for an IPO. Let's not forget what it all is. Or was.

Unacademy and Physicswallah, a contrast in the world of "brands".

P.S. You just read an honest (and hopefully valuable) article for free. If you like reading my writings, consider making donations. Amounts don't matter, gestures do. Here's a big cheers to all my Patrons!

Read more articles here.