by Charlie Mathews (@CharlesLeeZA) The GetSmarter/2U deal is proof that South Africa is capable of incubating tech greats, and attracting significant investors in the ICT space. But how did GetSmarter go from being a startup to being a fully fledged tech business in a high growth industry that was worth over a hundred million dollars? And how has branding played a role?
A month ago, on 2 May 2017, South Africa’s technology scene shook with seismic news: Nasdaq-listed digital education firm, 2U, announced that it had entered into a buyout deal with South Africa’s GetSmarter, for some US$103 million. That’s one of the biggest local tech deals in recent memory.
In 2014, Vinny Lingham’s Gyft was sold to First Data for a rumored US$50 million. Also in 2014, Takealot raised US$100 million from US investment firm, Tiger Global. In 2015, Cape Town startup WooCommerce made headlines when it sold to Automattic for an estimated US$30 million. Of course, everyone remembers the gold standard, when Mark Shuttleworth’s sale of Thawte to Verisign garnered some US$575 million in 1999.
GetSmarter started off as a family business, with Sam Paddock’s father, Graham, mother, Mandy, and brother Rob. Paddock himself was a sectional title lawyer, who was involved in training property managers around the country but found that he didn’t enjoy travelling. In 2008. the internet offered an opportunity to convert this training into a suite of online property law courses, which he and his brother helped to set up, and which did very well.
Before this, Paddock co-founded an online wine store called Getwine, and came up with the idea of offering a wine appreciation course. Created with the assistance of Charl Theron of Stellenbosch University’s Department of Viticulture and Oenology, this, too, was successful. Soon the fledgling company was providing online learning in other areas, from internet system administration to project management.
Today, GetSmarter employs over 400 permanent staff and part-time teachers, and offers engaging online short courses in partnership with some of the world’s most-renowned higher education brands, including Harvard University’s strategic online learning initiative, HarvardX, the Massachusetts Institute of Technology (MIT); University of Cambridge; and Africa’s top three universities, University of Cape Town, University of the Witwatersrand and University of Stellenbosch Business School.
It is a high-growth business — GetSmarter has enjoyed 100% year on year growth — that has served more than 50 000 students since inception, with course-completion rates that average 88%.
What drives GetSmarter’s success is its unique learning methodology which results in excellent outcomes for students. The online company’s blended-learning model combines the use of an interactive online platform with high-touch support. Learners have direct access to their fellow students, a dedicated course coach (an academic) and a course instructor (an industry expert). Technology is the key: learning activities are online, so everything may be tracked. The system notes when learners log in, when they post questions and when they watch video lectures, as well as how much of the lecture they watch, how long it takes for the faculty to answer learner questions and so on.
Those are the numbers, and how GetSmarter works but, to get a real sense why GetSmarter has been so successful, you need to meet its leadership and tour the campus.
Importance of branding
I met Sam Paddock a couple of years back at the GetSmarter campus, an unfurling expanse of interconnected open spaces and meeting rooms, each themed with branded slogans or business values. Walking through the campus one gets the sense of just how important he believes branding is to success. The place is soaked in positive messaging — in an informal dining area-cum-pub, the phrase “PLAY TO WIN” is spelled out in theatrical lights.
Paddock is a convincing brand evangelist, and speaks at double-speed; his content is either about his company’s brand, or education itself. The latter a worthy crusade, given SA’s education challenges.
The open-plan spaces and meeting rooms of this campus are all branded with one, or more, of GetSmarter’s core beliefs. He explains: “These values help our team make decisions, and answer the question: ‘what should or shouldn’t we do?’ These are statements of what we value at GetSmarter, and give rise to a set of attitudes and behaviours that we hire for, fire for, and reward.”
A window of one meeting room sports the words: “Be rude to poor process”. The wall at the rear of the room is bedecked with an arrangement of red and green cards: red for ‘poor processes’ and green for ‘improved processes’. Paddock says that anyone may stick a card up on the wall to stimulate discussion about improving an in-company process. The thinking is innovation can, and does, come from anywhere.
To explain why GetSmarter students do so well, he explains: “If we see a trend with students watching a particular lecture and then completing an optional exercise, for example, and then doing really well on a specific learning outcome, we can start to piece together what sort of teaching content performs best. This is very powerful when you think about all the potential uses of these learning analytics and how they can help us improve teaching.”
One of the key challenges in distance education, he maintains, is keeping the student motivated and on track. Students who fall behind at the beginning of a course may never catch up. GetSmarter’s diagnostic tools ‘flag’ learners who may be ‘at risk’. “For example,” says Paddock, “we can use data to determine if a learner hasn’t prepared sufficiently for an assignment. The result? We can intervene with an email or a telephone call to highlight the potential risk, and help the learner course-correct.”
Perpetual improvement and innovation are important parts of the GetSmarter story, but also an important part of Paddock’s personal growth. When he realised he didn’t have all the skills he needed to run the business, he went looking for a mentor. But not just any mentor.
“Mentorship and coaching [are] important to growth, but [they are] key to have the right coach. At times at GetSmarter.com it feels like we are boxing above our weight. The people who work in and lead this company range, largely, between 27 and 35 years. I am 33. I am fortunate in that my key learning relationship has been with Mark Lamberti.”
The CEO of Imperial Holdings, Lamberti spent 19 years at the helm of Massmart Holdings, is a non-executive director at Business Leadership South Africa and has won many prestigious awards.
How did a fledgling entrepreneur connect with a mentor with such esteemed credentials? For Paddock, it was simply a matter of firing off an email. “I first wrote to him when I was 31. I had a company of 80 people and I was starting to realise how challenging it is to grow a business,” he says. “We were growing so quickly, and I needed to shift from being a chaotic, creative entrepreneur to a leader with a sustainable business model.
“Relationships lie at the centre of learning”
“I believe that relationships lie at the centre of learning, and I needed to have someone who could inspire me — a thinking partner and someone who could just share their insights that I could learn by. He has blown my world open,” he says. Paddock does a quarterly review with Lamberti which means he gets to spend one hour with his mentor every three months.
GetSmarter’s revenue was some R224m for 2016. In a recent ITWeb interview, Paddock says: “We fully believe South Africans are not only capable of playing on a world stage, but can compete with the very best around the world.”
Too true. At a time when SA is looking to jumpstart the economy, the technology sector has a lot to offer in terms of forging a way forward. And great to see that the big players in the tech sector value branding as a tool for growth.