Only Connect Podcast: Is the CMO extinct? Rob Paddock • Ep 4
by Bradley Elliott (@BradElliottSA) Marketing continues to evolve, and lately some of the ‘big guns’ — such as McDonalds and Johnson & Johnson — have decided to rid themselves of their chief marketing officers (CMOs). What does this mean for CMOs in South Africa? Is the role really extinct, or is it evolving? We talk to Rob Paddock, Valenture Institute CEO, in this fourth Only Connect podcast episode.
Full podcast transcript
Bradley Elliott: Welcome to Episode 4 of Only Connect, a MarkLives.com podcast. I’m Bradley Elliott, your host, founder of Platinum Seed and Continuon. Episode Four brings a very special guest in Rob Paddock, the co-founder of GetSmarter, alongside his brother, Sam Paddock. GetSmarter is one of the big success stories in the tech industry in South Africa. The business was acquired by NASDAQ-listed 2U in 2017, for roughly US$120m. And, today, I get to pick Rob’s brain in terms of how marketing played a role in their business, what the role of their CMO was, as well as some exciting news in terms of him starting his next venture. So, Rob, for those people who don’t know you, which is probably not too many, can you just tell us a little bit about yourself, your background and your story to date?
Rob Paddock: Brad, you know, they say flattery will get you nowhere.
Brad Elliott: It works with my wife, so I don’t know about that.
RP: [Laughs] So my background is that I guess I’ve always been an entrepreneur in some form or fashion. I had an entrepreneurial spirit but was drawn to music. And music — whilst a few people will succeed wildly — I would be one of those people who didn’t. But what I was drawn to was a corporate team-building company that was using African djembe drums to do team-building activities. And I joined this company called Drum Café in Cape Town, South Africa, and worked with them for a couple of years and there had the opportunity to work with the founder in launching Drum Cafe in London, which was just the most-unbelievable experience to kind of get an from-the-ground-up experience of building a business, building a brand, getting marketing down, getting operations down, delivery, and really doing that all from the ground up. So, I learned a huge amount from this entrepreneur, Brett Schlesinger, who I worked with for a few years. And then for many reasons, which included the fact that I actually had to stop playing because of a ringing in my ears, I ended up realising that, in fact, what one of the things I was enjoying most about the work that I was doing was teaching music. So, I got drawn to teaching generally, did some postgraduate studies in teaching. And then found myself in a position where, between my brother myself and my mom and dad, we started a business called GetSmarter, which is an online education company that, that in 2007, was working only with University of Cape Town, to deliver short courses to working professionals. And we grew that business over the next 10 years to the point where we were operating with students from 145 countries around the world; we were achieving an average graduation rate of 90%, ie 90% of the students who started their programme successfully graduated. And we were working with universities, the likes of Harvard, Cambridge, Oxford, Stanford and many more top, top Ivy League universities. And, by the time I finished up my tenure, we had educated just over 90 000 students. That was an incredible journey, also very tiring, and we had the opportunity to sell the business in 2017 to NASDAQ-listed 2U. And I continued to work within the business for another year. So, I finished up my time, and [have] taken a bit of time off and [am] now looking quite confidently towards the next thing.
BE: I’m sure we can chat about that in a bit and that’s going to be really exciting to see what you’re onto next, especially given the success of GetSmarter. So, during that journey, if I can just touch on that journey and get a bit of context, our conversation, Rob, is there’s a sort of trend that we’re seeing in the media and there’s a lot of hype in the media around CMOs becoming extinct. That’s the kind of headline or clickbait that’s going around at the moment. So you’ve got guys with really big companies — Johnson & Johnson, Uber, Taco Bell, Hyatt Hotels — all losing the CMO role. McDonald’s recently announced on Monday [22 July 2019] that they’re also not going to be replacing their global CMO. From my perspective, at least, it’s not so much that the role of a CMO is no longer needed; it’s that the role has just changed so much. That the role of marketing has just changed so much, and having gone through this super-hyper-growth journey in GetSmarter, it would be really interesting to see how you structured your marketing departments. [You did] have a CMO, didn’t you? And what was the role of marketing in that organisation?
RP: Perhaps the best kind of perspective that I can give you is quite individual to me, based on my experience of putting together a startup, high growth, very, very marketing- and sales-orientated business. And because we didn’t take on any outside venture capital, our cash flow was the lifeblood of our business. So, if we didn’t get our marketing sales right, the business was going to die very quickly. For us. the idea that you could ever decompartmentalise the general awareness — and let’s call it brand-awareness or lead generation — from the actual ability to sell and convert that into sales, I just couldn’t, didn’t have the opportunity to think at the sort of scale where you’re able to just create general brand awareness, and kind of creative campaigns around your business. Digital marketing has fundamentally changed the game. The fact that we can get the degree of analytics and insight into the efficacy of various marketing channels, means that — I’m sure you’ll remember the old adage, “50% of our marketing is working, we just don’t know which 50%” and that’s certainly not the case anymore, at least as it relates to lead generation. Making sure that your marketing spend is incredibly targeted, and that you’re tracking that spend all the way through to the completed sale, is just absolutely critical particularly for small businesses and startups and more especially in the in the digital domain. So, Brad, I don’t know that if I had to reflect on our CMO function at GetSmarter, under the CMO function always included functions like sales, it included head of digital, it would include a content marketing team, a PR team underneath them. But the entire marketing ecosystem was always very, very squarely pegged around the CMO function.
BE: As you start reading into these articles past the headline of CMOs becoming extinct, they’re actually changing the title of this role to “chief of growth” [chief growth officer] as an example. You obviously come out of a digital domain and a digital product. But what may be interesting to see is do you think this sales function, sitting very closely alongside or even underneath a CMO function, works for more-traditional real products in the real world as well?
RP: Look, my sense is that the full marketing sales cycle, if it’s not seen in one cohesive view, I struggle to see how you could keep any kind of portion of that cycle individually accountable. And I think it’s something I’ve always been keenly aware of: accountability really matters. And, although there’s a lot of areas where there’s collaboration, teamwork, and so on, the fact is that you can’t really view general brand awareness, as an example, or let’s say in another example, social media presence, and not concurrently view the impact that it’s having on sales. I would significantly struggle with that. So bigger companies, jeepers, again, I think that you’re missing out on some absolutely key intelligence, if you’re not looking at the entire marketing cycle, which to my mind, very much includes sales.
BE: Businesses have traditionally siloed those roles and they sort have a hatred for one another, these two departments. You know, sales guys don’t understand how marketing is actually helping them at all, and marketing are like, “Ah, the sales guys, all they care about is selling!” But, to your point, it’s about becoming a lot more collaborative between those departments. And we’ve seen it, and taking lessons from digital products and sort of software service companies, the really good ones tend to make those not one role, not silo them. They work very cohesively and collaboratively. So, I think you’re on to your next chapter, which I’m sure everyone would want to hear about. So, firstly, what is that? And, secondly, do you see obviously the same pivotal role of marketing? Is it going to shift differently? How will you do things differently, given your learnings, your early learnings from GetSmarter? I’m assuming, and maybe incorrectly so, that capital won’t be as much of an issue?
RP: I’m in the process of launching an internationally accredited, private, online high school and I can’t tell you how excited I am about this project. I’ve been keenly aware that there is a growing place for digital education in primary and secondary education, and I believe that that’s on a global scale. Primary education is something I’ve struggled to get my head around — a fully online primary educational experience — I just think there’s too much social and emotional development that’s happening that really benefits dramatically from in-person, and physical-presence, learning experiences. But, at the high-school level, Brad, I’m seeing an enormous opportunity for an entirely online high school, which focuses specifically on solving the world’s biggest problems. Now, that’s a very big statement, so let me unpack that a little bit. We’ve run a lot of market testing, a lot of market research, looking at what is it fundamentally that’s motivating the leaders of tomorrow? And what my primary hypothesis, going into the market testing, was that kids are all about wanting to become too technologically literate; they want to understand the fourth industrial revolution (4IR), they want to understand how they can integrate their educational experience with industry, and so on, and so on. And, as a kind of side-test, I started looking at, well, maybe there’s a possibility that actually they want to deal with dramatic changes affecting their futures, like climate change. But that was really just a side hypothesis. So, we went out and did this market testing and I can’t tell you how surprised I was to see that the next generation are very different from — or let me speak for myself — they’re very different from the way that I was wired when I was 16 or 17 years old. These kids really care about the world that they’re inheriting and they’re not prepared to just wait until some point in the future where, perhaps, they can come of age to supposedly then start to effect the change that they want to see in the world. So, this idea of a kind of purpose-driven high-school experience was forged off the back of that market testing and we’re building out a business called Valenture Institute, which is really focusing on building the change-makers of tomorrow. And it’s a global, private, online high school — we’re going to be launching in January 2020. Our first intake will be at the end of January 2020. And perhaps, just to get a bit more specific to your questions around marketing, something that I’m acutely aware of, particularly with this age group, is that millennials and Generation Z, and so on, are far more-interested in story-doers than storytellers. And I think a lot of marketing, for the longest time, has been about the telling stories, as opposed to just more honestly baring the kind of DNA of your business for others to then judge. And, for me, really, as I think about what has to be absolutely mission critical to Valenture Institute, is that we walk the walk and that, if we are teaching kids about how to solve the world’s biggest problems, around things like climate change, social justice and inequality, health, etc, we need to be contributing in exactly same way; it very much needs to be baked into our DNA. And that’s the way I’m structuring my board, the way I’m structuring my exco team, the way we’re thinking about our work and our role in society; it’s far more than just providing a product and a service. It’s about setting the right example that others can then follow.
BE: That’s really great insight. And congrats — it sounds like an amazing, amazing venture — and I’m sure it’s going to be extremely successful. Just speaking on that, I read an article as well, warning about millennials and Gen Z buying into brand values and not actually buying into the product itself. Also, I don’t know if you know, Dave Duarte from a company called Treeshake — great talker as well/great speaker — he and I actually had a chat not too long ago, and he was saying, “You know, the whole marketing world is talking about storytelling and storytelling and storytelling [and] I think it’s all about story making.” So, you’ve hit the nail on the head there, where businesses actually also need to walk the talk, and start making stories, not just telling stories. On a final note, something that we always like to ask the people we chat to and who have given up their time is, what are your favourite resources for learning? Any podcasts, any great books that you vouch by? I do have a bit of secret intel — well, not secret intel, I think it’s quite public, your brother talks about it quite a bit — around the Rockefeller Habits being a key book in your in your journey. Are there any other any really great reads that you can recommend?
RP: Sam and I flew over to Florida in about 2012, and met with this guy, Dan Devine, who had built a business much like ours but much larger and far more successful. And he said to us, “Guys, just do one thing: read this book and implement everything that’s in it. And that was Mastering the Rockefeller Habits. S,o I’m always hesitant to advise anything other than Mastering the Rockefeller Habits except for the follow-on book which is called Scaling Up, by the same author, Verne Harnish. Brad, it’s an astonishing, and very practical, how-to guide for high-growth businesses looking to manage cash carefully, looking to align strategy with execution across the board for hyper-effective growth, and I really can’t —I’m tempted to talk about one or two other books but really, let’s keep it focused here — Scaling Up by Verne Harnish, is one of the most-powerful books that you can possibly read. And then to marketing, I just love Seth Godin. He’s brilliant. So, I’ve subscribed to — I mean, he’s really good. Sometimes I feel like he’s a fly on the wall, watching me and giving me advice based on what I’ve normally done wrong the day before. And he gives this wise, wise counsel the next day. He is a profound marketing thinker, and I guess, really relevant to the points that we’ve been discussing today. I think Seth is always a number of steps ahead.
BE: Yeah, and I agree with that. Okay, Rob, I really, really appreciate your time. I’m sure all of us are going to be watching Valenture really closely, and I wish you all the best for your journey with that.
RP: Wonderful. Thanks for your time.
BE: Thanks for listening to Only Connect, a MarkLives.com podcast… Please be sure to subscribe so that you can be the first to know about our future episodes. Until next time, keep connecting.
Transcribed using otter.ai and then edited lightly.
The founder of Continuon and Platinum Seed, Bradley Elliott (@BradElliottSA) has created a number of businesses in the digital and technology sectors. He believes that marketing needs to be reinvented so that it becomes more useful to humans and brands. He’s also a collector of fine whisky. Bradley contributes “Only Connect”, exclusively to MarkLives.com. In this podcast, he chats to custodians of the world’s top brands about what matters most to them.