Rob and Sam Paddock’s Cape Town business getsmarter.co.za is exporting education back into the First World through partnerships with two of the world’s great educational institutions – MIT of Boston and the UK’s iconic Cambridge University. They are arbitraging cheap but globally competitive South African skills into the higher education sector. They do this by helping universities offer an alternative to expensive on-site models through a geographically agnostic model. With thousands of international students signed up for courses designed with and accredited by faculty at MIT, Cambridge, UCT and Wits, the SA edutech company is pioneering the disruption of an increasingly archaic higher education model. – Alec Hogg
Rob Paddock from Getsmarter.co.za a company he founded with his brother Sam is on the line now from Cape Town. A fascinating story, but let’s start at the beginning. What exactly are MOOCs?
MOOC stands for Massive Open Online Course and the concept has been around for a lot longer than it’s been hailed in the public media. It’s actually been around since about 2009. The idea is that you can take what is conventionally courses that are only available to the elite few at top institutions and by placing them online and making them freely available to the world you can have a massive impact to a much broader audience than you can in a traditional classroom. This idea of a massive, open online classroom has been around for a long time. However, in 2012, there were two particular initiatives, one was an initiative by professors at Stanford University, the other was amongst a collaboration between the Massachusetts Institute of Technology, and Harvard University called LX. These MOOC providers then started more aggressively taking classes online, marketing those programs, and in fact, the New York Times named 2012 ‘The Year of the MOOC’, so it certainly had a pronounced… This idea that it was time for the higher education system to be disrupted was quite a common narrative around the 2012 era.
It’s interesting you say that because if you have a look at it from the university’s point of view, to open up its education to all in this way, through the internet, might sound like it’s actually cannibalising itself.
I think this is definitely one of the concerns that a number of stakeholders, at universities have come across. The universities being the incredibly rich and diverse places that they are, you’ll find every opinion under the sun about whether MOOCs are a good thing, a bad thing, or something in between. Typically, what you’ll find is that, and at least the data is fairly clear that the students who end up taking MOOCs are often students who wouldn’t otherwise have been eligible to attend that institution in the first place. At least to date, and there’s some wonderful examples of this particularly with the Open University, where there’s been open or education initiatives (open content initiatives), what you’ll often find is that in fact it drives more awareness for the university brand. It drives highly qualified candidates for their graduate programs and for their residential programs than it does cannibalise the existing market. There’s this interesting mechanism at least at the moment that’s taking place where you actually… It’s effectively a wonderful marketing tool for a lot of institutes.
Rob, how did you and your brother get involved in this field?
Perhaps just to make a quick distinction, Alec. Whilst we operate very much in the online education space, we don’t actually offer MOOCs as they would traditionally be defined – MOOCs being massively open and online. We offer certainly online programs. We offer open, in terms of open enrolment. Our class sizes however, are not massive. The programs that we offer are typically ‘paid-for’ programs and part of our value proposition to our university partners, as well as the students, is in fact that these programs will give you the equivalent experience in what you would have in the online residential experience, replicated online. With a high degree of interaction with your tutors, a high degree of interaction with fellow students in small groups (tutorial groups), there’s even personalised coaches allocated to every student, so there’s a very rich and engaging ‘high-touch’ online learning experience.
— finweek (@finweek) January 26, 2016
It’s almost like you looked at what the MOOC’s model was and then said ‘let’s refine this into something that is perhaps going to be even more efficient than going to university itself?
That’s a great question Alec. In fact, we actually started our online programs before the MOOC trend came across. We didn’t actually even know what MOOCs were when we started at the end of 2007. Our approach was, and this working with the University of Cape Town’s Law Faculty, we had the opportunity to work some very progressive faculty within law, to work with what was, at the time our father’s business, Graham Paddock & Associates, to take a property law management course online. The idea, at least at the time was let’s try to replicate the best of what happens in the residential classroom, in the online format. We really started off on that basis and not the basis that we want to open this up to as many students as possible and see what interesting learning technologies we can deliver for learning at scale, and so on. Although those have all been areas we’ve subsequently developed a lot of interest in but the primary cluster at the beginning of GetSmarter, was how can we effectively replicate the residential learning experience, online and in a way that would make it more convenient for working professionals to study part-time.
That’s a big jump from offering a property course to working with MIT.
I was quite privileged and a little bit shocked in fact – I was speaking to a professor at Harvard just a couple of weeks ago and he called me a veteran of the online learning space. I thought ‘what – I don’t consider myself a veteran of anything’. Upon reflection, we’ve actually been in this space for a long time relative to the maturity of the industry. Yes, it’s a great privilege for us for over the last eight years to have progressed to the point where we’ve been working extensively with the University of Cape Town. We’ve worked with the University of Witswatersrand and really, it’s been such a privilege to work with those fantastic institutions. We, about 18 months ago, realised that there was a market for what we were doing outside of the African Continent and we wanted to leverage this asset, in addition to continue to grow our portfolio with UCT and Wits, we wanted to leverage this asset and this fairly unique IP that we’ve developed in this industry. To start offering programs with international institutions to an international audience, hence lots of approaches to a number of different institutions. We’ve started working with the University of London. We’ve had some very successful programs launched with MIT, and I’m thrilled to announce that we’ve in fact just signed with the University of Cambridge, and will be offering a number of programs with them. The marketing will start in a couple of months and we’ll be offering our first programs with them in April next year. The message and the experience that we have, to date, seems to be landing quite well with some of the world’s best universities.
How does it actually work?
The programs are delivered entirely online, Alec. These courses are targeted specifically at working professionals. In terms of the subject matter, one of the things that we realise is that increasingly working professionals, even if they come out with their graduate degree or post-graduate degree, if they finished their studies even ten years ago, or even five years ago quite frankly. The world is changing around them. If you’re a marketer that graduated five years ago – most things that you learnt, although some of the principles may still apply, certainly the actual application of your marketing efforts has got to be fundamentally rethought and in-line with the digital revolution of marketing, and so on. We find that this consistently came across a number of different subject verticals, and there’s this absolute requirement for professionals to constantly learn, unlearn, and relearn throughout their lives. The question that we tried to answer is how we can make sure that we’re offering industry relevant, trending skills, to working professionals, in a way, which means that they don’t have to quit their jobs to up skill themselves. The natural answer that we came across was studying online. The technologies of this online learning space have exploded. We’ve done a lot of fairly sophisticated, technological developments, and advancements ourselves and we’re finding that you can get the vast majority of the benefits from studying in a residential classroom – if you design it very purposefully that can be effectively replicated in the online environment. What it results in, particularly with our partners in the top institutions like UCT, MIT, Wits, University of Cambridge, and others is that you can get, not only the skills through a practical application of an online short course but you also get the certification and the recognition that is so important for advancing your own career. When students come out of, as an example, one of these MIT courses they actually have an original certificate from MIT to certify their skills in FinTech or in Big Data, which are the two courses we’re running with them right now.
Those are incredibly popular areas. How do you find the faculty to actually, teach this?
In terms of the design of the courses, the residential faculty are the ones that we work with, in terms of the design of the courses. I mentioned it earlier in our discussion that we have this idea of a high-touch, a highly personalised learning experience and what that means is that not only do students get allocated a course coach, who is not a subject matter expert but who is an expert in student performance. Also proactively monitoring every student’s progress throughout the week and practically intervening with the students to keep them on track. Separately, these students are engaging within a small tutor group with each other and importantly with a tutor. Now these tutors, what is very interesting are that they’re typically not university faculty on the program. We source our tutors from around the world and we make sure that they adhere to the minimum requirements, prescribed by the faculty in terms of qualifications, in terms of industry expertise, and so on. As an example, right now for the courses that we’re running with MIT we have tutors who are located both in South Africa and abroad, in order to support those students’ learning.
That’s an incredible story and just to go back. Your dad had a business, and you and your brother decided to join. Was that where it all began?
Indeed. My father is very progressive in the field of law. He recognised he was both a practitioner in the industry as well as doing some part time lecturing. He is in fact, a professor at the University of Cape Town. He was doing lecturing at the University of Cape Town and he realised that there was this desperate need for managing agents. The individuals who manage apartment blocks, sectional title schemes, homeowners’ associations and so on, to be effectively up skilled in sectional titles/schemes management. He approached the university and said, “We need to continue to tap into your subject and your faculty expertise but there’s not necessarily the capabilities, within the university, to deliver these programs online and to market the programs, and to create an entire commercial model around these online programs, so let me do that work, let’s share in the revenue. Let’s make sure that you have total and utter quality assurance control over the programs and meaningful integration of the programs.” That really was the start of it, Alec. My brother actually did his final project in his honour’s year, was building an online campus, so he came with that background, and brought the technology. Personally, I’ve come from a music background but developed a strong passion for education over the years, so I came from an education background. Over the years, it all really came together quite beautifully.
From doing that to landing in MIT, which is one of the most difficult universities in the world to get into. How did you make that connection? Was there somebody at the university who liked what you were doing?
Another great question, Alec, we’ve always found that in terms of business development it’s always about in person introductions and referrals. We worked our network quite hard, to make sure that we got the appropriate introductions that set us up for success. Then we worked really hard to make sure that we not only portray what we’re capable off but then also, spend enough time on the ground with the individuals, at these respective universities, to develop the trust that is required. To take this, as you say this enormous leap and for myself, and my wife will begrudgingly tell you, I spend a lot of time on planes at the moment. I’m overseas the majority of my time, at the moment and really split between the UK and the East Coast of the States. It’s a process of building trust and what we found is that you need to be on the ground and spend a lot of time with the respective faculty, in order to develop that trust. Once the relationship starts to gather momentum, we find that we don’t need to spend as much time there, but certainly, business development requires a lot of time outside of South Africa, at the moment.
What are the unique advantages of being in South Africa, and based in Cape Town, in this business model?
Alec, I think there are so many advantages to be in Cape Town. One – it’s just a great place to live, so I know that sounds like a silly thing to say. In terms of the people that we’re able to attract, to work at a company like GetSmarter we’re able to attract people from all over the country, if not the globe to come and relocate to Cape Town, South Africa, because it’s a beautiful place. There’s a huge amount of progression work that’s happening on the ground in Cape Town. I get quite disheartened when I hear moans and groans of people about working in South Africa and the challenges of the landscape. Personally, our take is that there are just the most incredible opportunities waiting for South African entrepreneurs. Certainly, for us one of those is the fact that there is very skilled labour at emerging economy prices. One of the implications of that is that we’re able to offer these MIT courses at $2.300, which if equivalent companies like ours had to try and do it from a cost base, in the States or the UK – those courses would literally be rendered unprofitable. It is not feasible to offer those sorts of programs if your cost base is sitting in a First World economy. We look at ourselves in Cape Town with access to very high quality labour, with a great place to live. We stop to ask ourselves other questions like what time zone, are we in and what other markets can we service within that time zone – of course you look up north and there’s the whole of Europe and the United Kingdom, as a market to serve. We have now started operating a 19-hour a day, so we’re servicing the majority of the time zones globally. There’s a small window for our Australian students, where we’re not available. Increasingly we’re actually able to do that from here. A huge majority of the students are from that UK/Europe region and we don’t even have to change our time zones to service them. It’s an incredible advantage that I think a lot of us aren’t seeing.
— World Wide Creative (@wwcteam) February 1, 2016
Of course being able to arbitrage the skills in a low cost environment, which South Africa is, into high cost environments elsewhere is the Holy Grail for many South African entrepreneurs. You’ve found it and found the notch.
Thank you, Alec. My hope is, and at least what I’m seeing amongst some other tech entrepreneurs is they’re seeing the similar opportunity, and certainly business processing, outsourcing, tech contractors, etcetera. There’s a huge amount of opportunity and, quite frankly at least from a business development perspective, regardless of what industry you’re in we’ve actually found that in our context, which is university faculty. They actually love coming out to Cape Town. You can bring out the faculty. You cannot only do the work that you need to do but they go off on a wonderful safari afterwards. There’s this idea of this package deal that happens when you work with GetSmarter, which is incredible and it’s a compelling proposition. I just wonder how that similar mindset gets applied in different industries and certainly, my sense is that there are a lot more opportunities that we’re not necessarily taking advantage of right now, in South Africa.
How many employees do you have?
We have just over 350 employees. Of those employees, the vast majority are fulltime. We do have, as I’ve mentioned, the role of the tutors. Not all of them are permanently located in Cape Town. In fact, an increased majority of them are located around the world, so for them they’re able to operate remotely but they’re very much part of the GetSmarter team. Depending on how many students there are on a particular course they will either be fulltime or part time, but it’s just over 350 people now.
How many of those would be involved in actually teaching?
Out of teaching, there is typically a ratio of about one tutor to every 200 students. There’s also a similar ratio for the course coaches. In addition to that, on the front end, we have a technical support team, which is available 24/7 to every student. It depends on the volume of students as to exactly how many support staff are allocated to a particular program.
Let’s just understand this. I want to sign up for a FinTech course from MIT. I pay my $2.300, assuming that’s what it costs. How would I go from there and what would I get?
All right, so you would register online. That process takes place entirely online. There are some programs that we offer that have entrance requirements and that would be dependent on the level of technical proficiency required if you’re learning something like Big Data, as an example. Typically, our courses we try to offer as many programs as possible that are open enrolment programs, where your only requirement is to have an internet connection and be proficient in English. You would then sign up for a course. You will get confirmation emails and follow-ups from our sales and course consultants. Now, importantly if you’re just considering taking a course (MIT course), you’d be able to call in or you will get called by a course consultant who is very knowledgeable in the particular field that you’re interested in studying in. You can engage with him or her on whether this course is right for you, what the format of the course would be, how this online learning thing works, and make an informed decision. Once you’ve actually signed up for the course we keep in regular contact with you until the start date of the course at which point, you receive an email with your login details to the MIT Online Campus. You go into that online campus and essentially, you have a week of what we refer to as an orientation module where you are meeting your tutors. You’re meeting the faculty behind the course and starting to engage in your small groups that you’ve been allocated to and a lot of engagement happens either by live Skype or Adobe Connect Sessions, or it takes place in discussion forums. Those are asynchronous forums, which are mostly text based but are multimedia enabled, where you’re engaging with your fellow students and with your tutors.
So you’re seeing them and looking them in the eyes, on your computer screen?
If it’s one of the live sessions, yes, you are looking them in the eye and very much, we often like to compare it to a Skype-like environment on steroids for education. For those synchronous sessions, yes, you’re exactly right but some of the other parts will be text-based engagement that you’re having, which kind of feels a bit like a WhatsApp spread, between you and the students who are part of your tutorial group. Importantly those small groups there are regular engagement with your tutor. Now the tutor is the subject matter expert, who is engaging with you, guiding your learning, and marking your project works. Perhaps just to speak to some of the other types of learning activities. You would watch a number of video lectures, which are directly from the MIT faculty. You will engage in some interactive course work, which could be an interactive info graphics. It might be that there’s a number of quizzes that you need to take. There will always be some sort of applied learning, so you will have the opportunity… If it’s a FinTech course, in this particular course the students are actually building a business case for a new FinTech venture. They’re learning the fundamentals of block chain technologies, so they’re having an opportunity to apply that knowledge in the block chain environment. Your graded work would then be assessed by the tutor and that feedback will come back to you, not only with the grades, but with which feedback on what you did right, what you did wrong, what to improve on for next time, and typically, there’ll be some collaborative project work that you’re doing with your fellow students. This all happens on weekly increments. Typically, these courses are about eight to 12 weeks, and every week a new module is made available to students. Those students work through a series of individual learning activities in the course of a week before they move to the next module, and then the next module. There’s this idea of a cohesive student cohort all working through the same material at roughly the same time, all experiencing the same thing and all there to support each other, and so on. What we find regularly is that the networks that build up between these students are just incredible. One of the things that we’re doing now is organise these global meet-ups, where in cities around the world – we had our most recent one in London. Students from those regions are meeting up in person and having networking sessions and launching businesses together. The spinoff stories of what happens from these online courses are just very inspiring.
How many students do you have signed-up?
On the MIT FinTech course, we’ve got just over a thousand students. I mentioned this ratio between tutors and students, and we had to turn away 600 students in the first presentation because we didn’t have enough suitably qualified tutors to support them on that first presentation. The demand for the FinTech course is just absolutely astronomical. There’s just over a thousand paying students on that. Then on the MIT Big Data and Social Analytics course, we have 900 students on that one.
How many of those would be South African or non-South Africans?
In the MIT courses, the number of South African students has not been particularly high. I’m afraid I don’t have the numbers, exactly, in front of me at the moment but I can tell you that we have students from 77 countries around the world, on those two MIT courses. What we often find is it’s a question A) price point and/or B) relevance of the university brand for individuals. As you can imagine a brand like UCT does incredibly well. In the Southern Africa region, that brand value extends north of the Equator as well as the African Continent. Typically, we won’t attract large amounts of students with UCT as from, as an example, Europe, UK, or US etcetera. However, when you work with an institution like MIT you get this massive concentration of students on the East coast of the States, and that regional recognition of university brands is very important.
When you say they aren’t that many South African students, virtually none is on those two MIT courses?
No in fact, it’s not virtually none and I’m sorry, I wish I had the numbers in front of me. It’s probably in the region of 20 to 30 students.
All right, but of a thousand that is very small and as far as UCT and Wits… the courses that you offer there?
Oh yes, the concentration is almost entirely South African. Again, I think this speaks to the brand recognition of those institutions in regions like South Africa.
Roughly, how many students do you have with those universities?
Right now we’ve got over three thousand students across a number of courses, with those universities. That naturally changes, depending on when our course intakes are throughout the year. Some of our very, popular courses will in fact run a new presentation every single month. Some of the courses, which are less popular, we might only run one or two presentations per year. Roughly, right now we’ve got about three thousand students across our courses offered with South African universities. We’ve got just under two thousand with MIT.
— flip van der merwe (@flipvandermerwe) August 2, 2016
Rob, so just to understand this absolutely, the certificate or certification that comes out after the course is identical to that if you had gone to MIT in person.
It is with the obvious, providing that there are not credit bearing courses, so these are not courses that count or accredited as part of an university degree. They are short courses or stand-alone courses, and they are fully endorsed and the certification comes from the university but they don’t count for credits towards a degree.
So it’s the first step, perhaps in what Clayton Christensen, the father of disruption has been saying, and warning the people at Harvard University that’s going to transform the way that universities operate.
I think there’s so many ways that coincide and might end up manifesting. Certainly, I think there’s this need to refine our understanding somewhat in looking at the different strata of universities that exists for different reasons and certainly, what we’re seeing is that the brand appeal of the world’s best universities is incredibly pervasive. What that does when you take those universities, and place them online and make their courses more readily available to people around the world – I think it’s a reasonably large threat to universities who are perhaps lower down in the rankings. What’s interesting about that and we continue to find that the regional pool and the desire of students within the immediate vicinity of strong universities. Again coming back to the example of South Africa – for South African students there’s still a huge drive to study with the University of Cape Town, with the University of the Witwatersrand, or Stellenbosch. These top institutions within our area, which isn’t necessarily overtly, threatened by these international universities coming in. The psychology of that is we’re still trying to understanding but it seems to be holding fairly true, at least in our own experience.
Surely, if you’ve got an opportunity of studying at the University of Natal and Pietermaritzburg or Cambridge University it isn’t much of a choice, given that you’re going to go this route, the online route.
Yes, and I think that will certainly come down to the individual or to the perspective student. I think your logic is sound. If it’s a similar price point and it’s made available in a similar format and there’s a similar quality behind the program. If you can study with a top tier or a tier-one institution rather than an institution that’s perhaps 400 to 600 in the global rankings. It seems like the value proposition is clear.
You are taking this into the international environment. Are you looking for another partner after MIT and Cambridge?
We continue to be in discussions with a number of very exciting universities and tier-one universities. It would be premature of me to make any announcements on that front but what I can say is that we’re engaging with some of the world’s best universities right now, on other partnerships.
It’s an extraordinary story if you consider that you come from Cape Town. From a country, that’s 0.5% of global GDP. What makes South Africa or why aren’t other South Africans conquering the world in this way?
Alec, I don’t know. I think that South Africans are so capable and I really don’t mean it when I speak about the people at GetSmarter. I mean it as South Africans. One of the benefits for me is that I had the opportunity straight or shortly after school and varsity to live overseas, and I lived in the UK. Whilst there are some incredibly, impressive individuals over there I remember coming back and thinking ‘we’re as good, if not better’. Like just within immediate networks and people that I knew, in terms of business capabilities and technical skills – I just honestly think that it comes down to this there’s this slight inferiority complex that a lot of us carry. That we’re not quite good enough to make it on a global stage and that we’re not… Yes, we’re doing something interesting but let’s just limit it to the South African (or the African) market. I think that’s a shame. Particularly considering some of the unique structural advantages that we have, which you and I’ve discussed in this chat already, but there’s more. I think there’s a hunger and there’s an entrepreneurial mindset that is there. That just isn’t necessarily as pronounced as some of our First World economies. I think the combination of those deep skills and capabilities, with that hungry entrepreneurial mindset is incredibly powerful, if we just overcome this belief that we’re not as good. If there is any message that I would love to leave and certainly, Sam would love to leave with other entrepreneurs is that we are more than capable in South Africa. The real question is, are you brave enough to try.
Rob Paddock, the co-founder, with his brother Sam.