The world is changing fast and to keep up you need local knowledge with global context.
Episode six of the Biznews podcast which exposes new investment opportunities and offers fresh ideas on moneycraft features Neal Froneman, the man who built what is now the R150bn mining giant Sibanye-Stillwater. The forthright miner explains why he believes South Africa is a poor destination for global capital. Valenture Institute’s founder Robert Paddock shares insights into the boom in online learning, its difference with the online education forced on schools, and why his new venture is a great alternative for high school pupils. Veteran market commentators David Shapiro and Peter Major apply their mind to the surge in delistings on the JSE; and we pick up on the latest Netflix quarterly results to assess whether the $50 fall in the share price presents a buying opportunity. – Alec Hogg
This episode of Inside Investing is brought to you by Valenture Institute – A High School Experience like no other. Learn Online. Or on campus.
Alec Hogg: Robert Paddock is the founder of the Valenture Institute, one of our business partners. For you, Robert, it’s a second act really in the online education sector. GetSmarter.com?
Robert Paddock: It is Alec, and what a privilege to be in the education sector again. We’re really having a great time.
Especially at this time, during Covid-19, where perhaps people are discovering online in a completely different perspective.
I think these are things that you can’t necessarily foresee and I guess what’s upsetting is that Covid-19 has been so unbelievably unsettling and caused so many complications for great businesses that been run for a long time and been run responsibly, and just could never have foreseen this. We, as an online high school at the Valenture Institute, happen to be one of the businesses that’s experiencing a very positive upswing, as a result of Covid-19. Like they say, never let a good crisis go to waste. We’re certainly putting the hammer down and really going for it.
You did sell GetSmarter to 2U, listed on Nasdaq. 2U is (because of your relationship, I investigated it, did my research) a member of the BizNews portfolio. Do you think I’m doing a smart thing there?
It’s a great business. That business alone is on track to educate, I think the numbers are almost 80000 learners this year, from 154 countries around the world. It is a business that continues to grow really fast. It’s working with truly the world’s top universities, offering highly relevant industry skills to working professionals around the world. It’s a fantastic business. I’m very proud of what we built and how the team has taken that forward since since we departed.
Reading the last quarterly results from 2U, the CEO was saying that during Covid-19, they started being approached by people who previously wouldn’t have even spoken with them. It’s been a different world that they’ve moved into.
That’s absolutely right. I guess there’s two factors there that have been compounded by Covid-19. The one is that naturally, Covid-19 has meant that institutions around the world have had to, if they weren’t already making big moves into online or having to really fast track that movement. Secondly, the economic pressure that these institutions are under. So, part of the value proposition of both to you and GetSmarter is that the businesses take the commercial risk for the partnerships and for the projects. As you can imagine, for these university institutions, is very appealing that a private sector partner with private sector capital can come in, take the capital risk, and they can share in the upside as part of a revenue share.
It’s been very interesting to see the development of the online education sector during Covid-19 in particular because a lot of schools have now suddenly had to send their pupils home. It reminded me a lot of the early days of the Internet where newspapers had to go online, but they had what we called shovelware. They would just take stories that were in the papers and stick it into an online environment. Is it similar in your sector now?
I would say so Alec, and I think the first thing we need to recognise is that for the brick and mortar schools and the leadership of those schools and the teachers within these residential schools, this is a paradigm shift and a leap and it’s not anyone’s fault that they weren’t prepared for this. I think that many teachers around the world have done a truly heroic job of doing the best that they can in the time that they’ve had. Nonetheless, it is very far from being a purpose-built online, educational experience. This is really kind of replicating some facets of what happens in the brick and mortar classroom in the online domain. These sort of consistent themes that we’re seeing coming back from parents and from students who are in these brick and mortar schools that have made the leap to online, are factors like Zoom fatigue (they’re called…inaudible) They sit in front of a computer all day. They are literally being talked at in these big, online Zoom classes from kind of 8am till 3pm. Again, this is not pointing the finger at teachers, but it’s a truly separate discipline. For an institution like us, we’ve had the privilege and the benefit of having purpose-built online education environments, understand the intersection between technology and pedagogy, understand how to structure our organisational structure or to support this. Things like learning analytics to keep track and monitoring of individual learners. These are all things that, unless you’ve purpose built this online educational experience, it’s very difficult to just kind of stand up and offer a high quality experience.
Synchronous learning, in other words, learning at the pace of the individual. My word, I wish that had happened when I was at school because I’d often find myself daydreaming, and of course, the marks reflected it. How do you do that in the Valenture Institute environment?
There’s two really important factors there. The one is that if you provide complete, what we would call kind of adaptive learning and personalised learning, one of the trade-offs for that is that you often miss the opportunities for learners to engage collaboratively and to be put into project groups and so on. However, if you have every single learner operating at exactly the same pace, they’re all taking exactly the same lessons on the same days and they’re being paced from one term to the next, exactly the same pace. Well, of course, you have the experience that you’ve had, which is that you might be actually quite far ahead of the curriculum, that you’re being slowed down because for the ease of the administration, you need to be maintained at the sort of cadence and frequency of the rest of the class. What we’ve really sought to do at the Valenture Institute is to balance those two. So, there’s a combination of what we would call a synchronous learning, which is learning in your own time at your own pace, with high quality pre-created materials that learners can work through. If they work through them fast, that’s great. They can fast track if they need extra time and extra support. We provide the mechanisms for that. But then, there are a certain amount of live sessions where students are engaging in real time in small tutorial groups with teachers, particular on collaborative project-style learning where they’re actually being forced to solve real world problems. Again, I think one of the factors that has defined so much of education over the last hundred years is that it’s largely about content assimilation in order to repeat it under exam conditions. One of the things that we’re really proud of at the Valenture Institute is that we’re moving far more towards projects and challenge-based learning where learners are actually applying their skills to real world challenges. They’re having to work collaboratively in groups virtually across multiple geographies, multiple cultures, working together in order to solve problems. Really, that’s how learning works in the real world. We encounter a challenge or a problem that we care about. We don’t have the prerequisite skills in order to meet that challenge. We go and we learn what we need to in order to meet that challenge and ultimately get the outcome we’re seeking. At least for us, we have to be thinking differently about what constitutes the educational experience, even at a high school level, because the leaders of tomorrow are not ones that can recite the periodic table. They’re the ones who can engage creatively, collaboratively, be effective communicators, problem solvers and so much more. Really, those are the skills that we feel we’re doing a great job developing in our students.
It would open doors to great universities as well.
Yeah, absolutely. I think that’s a feature not only of the kind of T-shaped professional that [inaudible]we speak about, the hard skills and the soft skills, but also the accreditation standard that these learners are working towards. So with us, we’re offering an international version of a British standard curriculum, which is recognised by truly the world’s leading universities. What we’re trying to do is create opportunities for our students to gain access to the world’s top institutions globally. We’ve just been speaking about the fact that so many of these top institutions are going online. We can stop having to think about the fact that if we want to go to Harvard, we have to move overseas, we need to move to Cambridge, Massachusetts. There increasingly are options from South Africa, from Singapore, from wherever we are in the world to be able to study with these top institutions. But you still have to meet the entrance requirements in order to do it.
So you can live in South Africa and end up going to MIT if you are good enough?
That’s exactly right. And things are moving incredibly fast, Alec. To the point that you made earlier, the amount of institutions now if they were lagging somewhat online, I can assure you that it is anything but. Both in the experience we’ve had at GetSmarter and 2U, as well as another business that I was part of founding called Hubble Studios, we service multiple/tertiary institutions around the world and the influx of enquiries for us to help take them online, I mean, we’re busy standing up for 15 different degrees for the University of Bristol right now, multiple degrees for the London School of Economics. Really exciting stuff that’s happening and these institutions are moving fast.
Robert, from your perspective, you started Valenture Institute, which is targeted at high schools only last year. Next year, rather, you are going to have a campus in both Johannesburg and Cape Town where high school students who study with you can, in fact, go in and be a bit like what we do here at BizNews. We’re in WeWork and we’re in a co-working space. Am I getting it right there? Would they go in and not sit in classrooms but actually just connect?
You’re exactly right. This has been one of the interesting things, like you mentioned, we launched in September of 2019 and we’ve been very grateful to have students from all around the world; South Africa, Singapore, Hong Kong, Malta, Belgium, UK, US, Australia. It’s been wonderful to see the resonance. But increasingly, one of the things that we found from parents is the fact that this is online is fantastic, but don’t you have somewhere, where we can drop our kids off during the day? You can understand this from a parent’s perspective and from a student’s perspective, the desire to socialise, to have in-person activities and extracurriculars and so on is incredibly strong. For us, the opportunity then is to think about creatively how we could meet meet that requirement. In thinking about this, one of the things that we realised is that learners can be placed in a space where all of the academic can still be taking place online. So we kind of think of these spaces almost as co-learning spaces, because all of the core academics are still taking place online. Learners are still connecting with a global network of fellow students. They are being supported by a distributed group of teachers around the world. They’re getting access to faculty from Harvard, Stanford and so on, with guest lectures and fireside chats and much more. But they’re still able to be dropped off at these beautiful spaces during the day where they can socialise with their fellow peers, where they can engage in all sorts of extracurricular activities. We’ve got things like yoga studios, gymnasiums within these spaces, smoothie bars and much, much more. Really, I think one of the opportunities here is to think differently about what a school looks and feels like because I think we all have it in our minds; the residential model where you come into a school; it’s this kind of single purpose building with long corridors and individual classrooms. We need [inaudible] if we ever to think about standing up a school and there’s a separate conversation about the tough economics of brick and mortar schools. But we can afford now to think very differently about schools. We can have micro schools with 30 students in them. We can have these Boutique campuses with 60 students and we can locate these schools hyper conveniently for parents in any suburb in any country around the world. And that for us is a really exciting prospect that we can really start to drive convenience and ease of location for these school premises.
The New Year or academic year in South Africa starts in January 2021. When do people have to sign up for Valenture Institute to make sure that they’re actually in the classes when they begin next year?
Yeah, for the Boutique campuses, jeepers. For anyone who’s listening, the signups are happening very fast. I would encourage you to get on that very quickly. There are very set space requirements with online. There’s a lot more flexibility there. I would say if in the next two, three weeks you haven’t secured your place at Boutique campus in Dunkeld or in Newlands, you probably, unfortunately, would miss out on the opportunity for 2021. But we have, of course, our fully online offering, which is also available in January 2021. Students and parents will have right up until the middle of January in order to sign up, there’s a bit less time pressure on that.
Is there a price difference between the Boutique campuses and the pure online option?
There is about a 10 to 15 percent price difference. Really, what we’re doing is seeking to cover our costs of the physical space on top of the online programme and provide for some of the key extracurriculars. One of the things I should have mentioned is that in terms of adult supervision and pastoral care; in these Boutique campuses, the role of a mentor, which we typically provide virtually is actually physically present in the space, providing that critical adult supervision, pastoral care, psychological counselling and so much more. For us, that’s been a really lovely intersection of the online and the in-person.
Finally, the price point. How does it compare with schools like Michaelhouse and Kearsney and then the Curro private schools?
Yes. We’re comparable if not a little bit more expensive than the Curro private schools. We generally come in at about R65,000 per annum. It does depend as you get to the higher grade levels, it does depend on exactly what combination of subjects you choose. But it’s generally in the sort of range of R65,000 to about R85,000 per year, and again, depends on the number of subjects and the complexity of those subjects.
This episode of Inside Investing was brought to you by Valenture Institute – A High School Experience like no other. Learn Online. Or on campus.
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