South African entrepreneur Robert Paddock is one of the driving forces behind the Valenture Institute, a South African organisation that is radically transforming the way online education is delivered. Instead of trying to re-engineer classroom learning and teaching, the Valenture Institute has started a new model with the learner at the centre. Its digital education strategy entails “thinking outside the classroom”. The Valenture Institute is a private online high school, offering a home-schooling curriculum recognised by the world’s leading universities, with international GCSE and International AS-Level subjects including mathematics, English, business, physics, chemistry, biology, history and French. Paddock is the founder of another hugely successful digital education business, GetSmarter – which was snapped up by a Nasdaq-listed company, 2U. Paddock speaks to BizNews founder Alec Hogg about the disruptive education business model and how demand for Valenture Institute places is soaring. – Editor
In December last year, I last spoke with Robert Paddock, one of the co-founders of the Valenture Institute. Robert, the Valenture Institute is a global online, private high school but your history in online education goes back a lot further than that. GetSmarter, which many South Africans do know about, which you and your brother Sam built up and sold off to the Nasdaq listed 2U. I must ask you a little later about, by the way, whether we should be buying the shares. When you guys launched what seemed like a brilliant idea, what has happened during the Covid pandemic, have you found that demand for the Valenture Institute has increased?
Certainly, Alec. We launched the business in September of 2019. We had spent six months before that building up the leadership team, raising some capital and really potting the path forward for the Valenture Institutes, that we launched publicly in September of 2019. We had our inaugural cohort start with us in January of 2020 and then Covid hit in March of 2020.
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We certainly couldn’t have foreseen that such a global pandemic was coming our way and that was going to fundamentally disrupt the entire education sector and very specifically in our case, the junior and high school sector. It has had a fairly pronounced impact on the interest in the uptake of Valenture Institute.
The interest has been off the charts, the amount of interest in the Valenture Institute and on online schooling generally. Parents are looking for a sustainable solution as they look to the future. We don’t see a solution or a vaccine anywhere in the near-term horizon. One of the things that parents are looking for, for themselves as well as their children, this is just consistency and certainty and unfortunately, brick and mortar schools can’t offer that at the moment. My heart goes out to brick and mortar schools because none of us could have foreseen this coming. We’d been really thrilled with the interest, the uptake locally and abroad has been really substantial. We’re now on a fairly substantial growth path right now.
If you can, share with us what your projections were like and how they Covid 19 pandemic has changed those.
I wouldn’t be able to share specific numbers with you, but based on our initial projections, our uptake has increased about 100% on top of what we had had previously expected. It’s been really wonderful to see. Understandably, a lot of parents, particularly when the pandemic first hit, were kind of biding their time, trying to figure out how serious is this?
Is it worth taking my kid out of school and placing them into an online high school? Let’s just see how it goes with the existing brick-and-mortar schools trying to make their transition into online. What’s been very interesting for us is particularly as we look forward towards our September and our January intakes, those numbers are looking exceptionally strong. More than 100% on top of what we had previously expected.
The penny has really dropped, that this pandemic is not going away, that even though schools are reopening, there are countless examples of brick and mortar schools that are reopening right now. Unfortunately, what happens is that when you cram a thousand kids into a single space, it just takes one student to start that infection process. What ends up happening is that schools are opening, closing down again, reopening, having to close down just a few days later. It’s causing immense disruptions for the learners as well as for the parents. We’re seeing a lot of parents are saying enough is enough, we need to find a sustainable solution here.
Robert, just for a recap, what ages do you take?
We are a full high school, we take students currently in grades 8, 9, 10 and 11. We’re busy building out our grade 12 and our one-year post-matric programme as well. We are hoping in the next year and a half, max, to also build out a grade seven option for our students as well.
What is the difference between their attendance of Valenture High School and perhaps some of the brick and mortar schools that are now also offering online options?
Yeah, it’s a really important question. It’s important to remember that brick and mortar schools have been operating in the same fashion for a very long time. The nature of the teachers who have gravitated towards those institutions to be trained in a particular paradigm of education.
This is a seismic shift for a lot of these schools to move into an online modality. What ends up happening and again, this is not a dig at brick and mortar teachers because this is what they’ve been trained to do, this is what they have done for a very long time. When they make the transition into online, what ends up happening is basically just very long, very didactic Zoom classes.
There might be some integration with something like a classroom or MS teams where students can submit their assignments and they might even be some discussion forums and so on, but the nature of online education needs to be fundamentally considered and built from the ground up. If you want a truly rich and engaging learning experience that actually starts in the learning design process far before you’ve ever had your first students join your classroom.
You’re designing for the context in which these learners find themselves very specifically. The sorts of examples that would play out with that, one needs to think about the fact that these kids are all sitting at home and that one of the things that students crave both of their developmental processes and just for their own enjoyment is social engagements.
If you don’t provide the tools in the meaningful opportunities for learners to engage with each other, be that in collaborative project work, be that in virtual clubs and so much more, you’re going to miss out on the critical dynamic of what the school experience is about. Unfortunately, in the rush for a lot of brick and mortar schools moving online, those sorts of elements are just being completely bypassed.
Again, with full empathy for what teachers are going through right now, they’re just trying to survive and try to get through the material, as it were. One other thing that I would say, is that the support mechanisms that are put in place for learners in the online environment need to be fundamentally considered again, given the context in which these learners find themselves studying online.
As an example, we have dedicated teachers whose sole responsibility is facilitating online learning. There is a totally separate team of administrators who deal with the plethora of back end administration that ends up coming up in an online learning experience. There’s a totally separate team of mentors.
These are education psychologists and counsellors who are engaging every single day with the learners, tracking their learning analytics, tracking their progress, proactively intervening to keep them on track. Then, of course, making sure that they have time for socio-emotional development, psychosocial development and that’s something that you actually need to schedule into the calendar.
In the traditional school system, it just kind of happens in corridor conversations on the side.
Or you notice that Jonny is looking a little bit disengaged at the back of the class, let me go have a conversation with Jonny after class. Those kinds of data points again unless you designed specifically for the online learning environments mind, are totally missing.
In our environment, we’ve had to set up incredibly sophisticated learning analytics tools to make sure that we can track and monitor the individual progress of every student and proactively intervene where we see them falling behind or make sure that we create opportunities for those proactive interventions along with pastoral care or academic interventions and so on.
There is a separate team for project management. There’s a separate team for technical support and so on and so on. This modality of online education, if we are designing it for the context in which these learners by themselves actually in terms of the organisational structure, is very different from the brick-and-mortar school system.
Sounds a little bit like when Elon Musk decided to design an electric car, he didn’t start with the internal combustion engine first. He went directly to that, whereas the old fashioned car makers are trying to re-engineer to go into, that must be a huge learning curve. Are there parallels?
There are absolutely parallels. The user-centred design and, again, I keep using this word context because it is so important.
The context of the learner when they are sitting at home, the needs of that learner are fundamentally different from what you would find for a learner who is and who is coming to a brick-and-mortar classroom every day and so on. The parallels are bang on.
We have spent an incredible amount of time, energy and have to employ very specific professionals with the right experience in order to design and develop an experience for our students here at Valenture Institute and again, with absolutely no judgement of brick-and-mortar teachers, because the context has been so consistent for a very long time and for you just not well suited to do this work.
That’s not to detract from the heroic efforts of a lot of teachers, but unfortunately, the substandard experience that a lot of parents and students are experiencing in this, what I would call kind of remote learning right now, I get it. I can see where it comes from. Yet what I would say is that there is an online education experience that is so engaging, so contextually appropriate, when you come to a purpose-built institution like Valenture Institute.
You guys never advertise. I guess you never have to, but in this Covid period where people have had to work from home and children or the learners have also had to try to learn from home. I’m sure anybody who knows about you would very quickly have said, look, I’m not made to teach my children. How do I get into Valenture Institute? I see you closed off yesterday, another group. How does that whole process work, how has it been working and have you able to take more people in when they do reach those kinds of crisis situations in the home?
We’ve been trying to be as flexible as possible while still making sure that we set our students up for success. You’re absolutely right, we have a new cohort which their applications just closed yesterday. We are making a plan and what we can’t guarantee that we will be able to accept any student that applies between official cohorts start dates, but we are doing our best to try and accommodate students who come to us and what we would call kind of midstream intakes.
As an example with this group that has now started yesterday, if students for the next two or three weeks, parents of students contact us, we are doing our best to make a plan to make sure that we do the diagnostic assessments in time. To make sure that we have a dedicated team to onboard those learners and to try and get them set up for success. If they’re not able to get hold of us soon, we would need to look towards a September cohort intake.
We’ve had our first cohort in January, had a July intake, now in September intakes. Thankfully, there are these three periods every single year where we’re bringing students in. For us, it’s really important that learners have a social experience in the online learning domain. For that reason, this is not a start anytime, finish anytime, kind of progress with the content as you see fit.
As you have the inclination, this is a very highly structured, highly supported, socially rich learning experience. So students come on as a cohesive student cohort. They are immediately put into small tutorial groups where they have the intimate support of their expert teachers, of mentors, like of mention technical support officers.
There’s a huge emphasis on collaborative project work for all of these learners. We’ve found that we’re actually able to create an incredibly rich social environment for these learners.
To go back a little, GetSmarter. When did you get the idea and when did that begin?
It started in 2007, my brother and I joined what was then my father and mother’s property law firm, and we helped them to take a series of property law programmes online with the University of Cape Town.
Back then online learning or e-learning as it was called then, was kind of seen as the dirty word. We really took it upon ourselves to prove that, in fact, it’s possible to achieve substantial academic results and very high student satisfaction rates and create a really commercially attractive revenue stream for our university partners.
That idea was really forged in 2007. We continued to then launch a number of property-related courses out of my father’s business. It was about 2000 and late 2008, early 2009, we recognised that there was an increasing demand for programmes that were outside of the property sphere.
We needed to launch an appropriate business in order to provide the solutions we launched GetSmarter, we were very lucky to work predominantly with the University of Cape Town for our first few years. We broadened out slightly to the University of Stellenbosch, University of the Witwatersrand as well, predominately offering short courses entirely online to working professionals with our university partners.
We actually grew those partnerships to start to offer a number of Masters degrees, postgraduate diplomas and so on, all entirely online, which was fairly groundbreaking for the South African education system at the time. In about 2014, we started looking around, very ambitious and we wanted to grow. We thought that what we were doing at GetSmarter was something fairly unique and at least our academic achievements were unparalleled at that time. We started reaching out to the world’s best universities, start living on a plane, just knocking door to door.
Eventually, we got lucky with the Massachusetts Institute of Technology. We launched a Fintech course right at the time where cryptocurrency and so on was really taking off. On our very first course with MIT, we had over 2,000 students from 154 countries around the world studying with us. MIT it was, in fact, the highest netting revenue online programme that they had launched to date. It opened up just a world of opportunity for us.
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After that, with other universities – such Stanford, Oxford, Cambridge – and that business is an incredibly good state right now. I am thrilled to say we sold to a Nasdaq-listed company called 2U back in 2017. My brother and I both left the business at different points in 2018, but the businesses got an incredible local leadership team and I’m thrilled to say has continued to go from strength to strength, it’s going to be achieving record numbers this year. It would be unfair of me to share publicly, but is doing exceptionally well right now.
So 2U would be the online education equivalent of Zoom? It’s one of those companies that just isn’t the right place at the right time.
Completely, I would say that at least in terms of share price, there still is still a lot of upside potential in that business. It’s a very attractive business to look at from an investment perspective.
From your perspective now you’re giving back to South Africa, you are helping people in this country go into the online area where I suppose it might even matter more than at the university level. At the school level, how much runway do you have? How much capacity do you have? I’ll ask this question because many are saying here the opportunity now in the darkness for government to completely reassess how it’s education to the learners of South Africa.
This is a really important question, and for us, it’s been a key consideration from the outset in launching Valenture Institute. To be clear, Valenture Institute, we’re incredibly proud of what we are doing. It’s this high touch, socially rich, internationally accredited organisation with students from all around the world. The price point is in the region of $4,000 to $6,000 per student per year.
Whilst that is incredibly attractive for a lot of individuals in South Africa, for the vast majority of this country and indeed this continent, that is completely out of reach. From the outset, we have had a strong social initiative. We partnered with the Principles Academy right from the outset to launch a not for profit trust.
Really what we’re trying to do there, is prove that there is another way of thinking about education and other blueprints for scaling quality education in South Africa to those who need it most. Online only for low LSM groups is not a suitable initiative, I just want to put a little bit of meat on the bone there.
When we talk about online education and we think about, putting a tablet in every learner’s hand and give them instant access and somehow magically that’s going to solve the problems of education, that is just wrong. It is wrong at a very high level, it’s low resolution thinking.
We’re not understanding, again, the context in which a lot of these learners find themselves. Home is not a particularly conducive environment and certainly not safe for a lot of individuals who would otherwise be a kind of low feel fee-free schools. Truly, one of the functions that schools perform in those in those sorts of regions is that of safe harbour from the harsh realities of home.
We have to be thinking about a blended learning solution when it comes to that kind of socio-economic bracket where we really need to effect change. I won’t bore you with the details, but we did some experimentation at GetSmarter and I brought that forward into the Valenture Institute with blended learning initiatives, which effectively have all of the academics taking place entirely online, but you still coming into a physical space every day and you have the oversight of the adult supervision of someone on the ground who performs that kind of pastoral care function, who’s recruited from that local community.
With the Western Cape Education Department, we actually launched our first Trust project and classroom in Mitchells Plain in January of this year. That classroom is a previously un-utilised caution that was being used as a storeroom.
We turned it into what we call a digital classroom. Learners come into that space every single day. It looks more like a co-working space of this desk, set up laptop computers for the learners. They come in and they complete all of the academics online. One of the biggest benefits of that is that we’re able to link great teachers wherever they are located around South Africa, all the world, with these learners.
That’s something to be clear on, is that high-quality teachers can have disproportionately good outcomes or can achieve disproportionately good outcomes for they learn, as the issue is that for a lot of the most challenged and challenging schools, good teachers don’t stay very long because the circumstances are just so dire.
The pay is better if they move to form Model C schools or the private sector, they can go live and work in nicer areas. Why would you stay in rural Eastern Cape if you could go and live in a metropolitan area and enjoy a better quality of life and enjoy better pay?
Unfortunately, what ends up happening and this is just a systemic issue that’s not going away, is that the students who need the highest quality teaching and learning end up getting the unfortunately amongst the lowest. For me, one of the key mechanisms and ideas here is we need to find a sustainable way of linking high-quality teachers with learners, regardless of where they are individually, geographically located.
The model that we have in this blended learning classroom is achieving exactly that. In addition, though, what we recognise is that learners still need adult supervision, that coming into a space, they need pastoral care. They need someone who cares about them as an individual who culturally can identify with them and who can support them on their journey. For that, we recruit what we call local mentors.
These are kind of mothers of the community that don’t need to be highly qualified teachers. What we’re looking for is empaths, people who genuinely care about these learners. At a ratio of one to 30, we’re able to put these mentors on the ground and provide that critical pastoral care in addition to the high-quality academic support that these students are getting online from their network teachers around the country.
It’s working. It’s really exciting to see the progress this year. When Covid hit, they couldn’t come into the blended learning class many more but because all of the academics are taking place online, this group is one of very few students of the sort of quintile of school, who have managed to continue with their studies, completely uninterrupted throughout Covid. We’re launching a number of additional classrooms around the country.
Our biggest hope is that in the long run, we’re going to be able to get government support and funding behind this project because the good news, and this is really the key piece here, at scale, we’re able to achieve high-quality education that can scale up costs at R20,00O per learner per year.
The government currently spends R19,000 per learner per year, excluding capital expenditure. It cost somewhere between R40 to R60 million to build a school, then there’s still upkeep of the physical infrastructure and r19,000 in the year, that we’re currently spending to achieve incredibly unimpressive outcomes and educational achievements right now. We’re really excited to be collaborating with the Western Cape Education Department on this project, and they’ve been incredibly dynamic and supported thus far. So we’re looking forward to seeing where that goes.
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