Look bigger than you are
“Without mentioning that I was alone in a garage, I told them I was an Internet security firm in South Africa.”
Justin Stanford was in his early 20s, working alone out of his garage and hacking into client websites to find their security flaws, when he came across ESET, at the time a small Slovak Internet security software developer.
“I knew there was huge potential, and so I contacted them. Without mentioning that I was alone in a garage, I told them I was an Internet security firm in South Africa, and that I was really impressed with their tech. With some tweaks, I thought it could be a great fit for our market.
“They agreed to give Stanford sole distributor rights in southern Africa, but he still needed to look bigger and more serious to clients. He had one employee, an intern, Carey van Vlaanderen, and they shared a desk and a phone line.
“Because we did most things online, no one knew how young I was. When we got a call, we would put the person on hold, and put them through to the ‘department’ they wanted, which was really just me handing the phone to Carey.”
Read more: Justin Stanford: 4Di Group’s Risk-taking, Convention-bucking Lunatic
Tenacity creates opportunity
“If our sales rep called and was denied an appointment, he’d call back later with a different accent, which meant he could take a few shots at the same companies.”
- Peter Bauer and Neil Murray launched Mimecast in 2003.
- It is now an international business with R1 billion of annual turnover.
One of Peter Bauer and Neil Murray’s first hires when they were building Mimecast in the UK was a sales rep.
“He had massive self-confidence and an almost inexhaustible ability for cold calling. For the first four months he cold-called for nine hours a day, week after week. His rejection rate was 98%, but because of the volumes of his calls, that 2% built our business from 50 clients to several hundred. He also had a neat little trick with accents. If he called and was denied an appointment, he’d call back later with a different accent, which meant he could take a few shots at the same companies.
“We also used the fact that he was Canadian and had an American accent. It made us appear bigger than we were. A lot of companies assumed we were a US firm launching in the UK. Once they met us they realised the mistake, but by then we had our foot in the door and could show them what we could do.”
Read more: These Are the World’s Top 10 Young Billionaires
Never take no for an answer
“‘No’ is not the end of a negotiation. It’s the beginning of one.”
- Ran Neu-Ner and Gil Oved are the founders of The Creative Counsel, a R700 million + agency.
When Ran Neu-Ner and Gil Oved launched The Creative Counsel, they did so from a 15 m2 office decorated with garden furniture. All they had for leads was the Yellow Pages, and so they started cold calling.
“I hate cold calling. I don’t know if anyone enjoys it. It’s a terrible, awful thing to have to do,” says Oved.
“I kept a spreadsheet to record each call and interaction with the person. Most of the time I spoke to PAs. I learnt very quickly how to be warm and likeable over the phone in 20 seconds, and I’d try to find out anything I could about the person I was talking to, so when I next called them the call would be more personal. In the end, they’d feel sorry for me and schedule a meeting.
Neu-Ner adds: “Never, ever, ever give up. If someone tells you that they don’t meet with suppliers, call back. And call back again. And again after that. Break down their resistance until they’re dying for an opportunity to see you just so they can tell you to go away. Often, what separates people who succeed from those who fail is the willingness and ability to overcome whatever hurdle is placed in their way.”
Read more: It’s Brilliance or Nothing for The Creative Counsel Co-Founders
Learn to be lean
“My solution was to find affordable talent. We found an international company that places volunteer interns in your business for a few months.”
- Mike Silver is the founder of Stretch Experiential Marketing.
When you’re starting out, you need to be as lean as possible. “Even though I had some money saved up, I quickly learnt that launching a business takes longer than you expect it will, so I had to find a few other tricks. We worked out of a cheap and tiny room with no windows… and we relied on interns. I found an international company that places volunteer interns in your business for a few months.
“They were here to discover South Africa and get some work experience, but because they were on holiday visas, they couldn’t be paid. So our only expense was to the agency they were sourced through. Although it was a mixed bag of talent, and a complete hit-and-miss exercise, we had about 30 students working with us over a five year period – some being incredible, others barely speaking English. Ultimately, though, it meant we had employees that could run the front end, while also keeping our expenses incredibly low.”
Read more: How Mike Silver Became The Next Best Brand And Marketing Guy
Everything you’ll ever need to achieve your wildest dreams, you’ve already got
“Entrepreneurs are crazy. Certifiable. If you’re not crazy enough to think wild things, and have the courage and will to pursue them, you’re not going to make it, because start-ups are tough.”
- Vusi Thembekwayo is the founder of Motiv8 and the Watermark Afrika Fund.
- He was also a ‘Dragon’ on Dragon’s Den SA.
- At 24, Vusi Thembekwayo left the corporate world with a nice sum of money that he could use as seed capital.
“I’d taken my savings and signed the lease for an expensive office in Centurion, furnished it and hired an assistant, because I thought that’s what you do. I’d also heard somewhere that you should never answer your own phone. Turns out, none of those things actually helped me to land clients. I used all my savings on the business’s rent and salaries, which meant I couldn’t afford personal rent, pay my car off, or even buy food half of the time. The bank kept trying to repossess my car and I kept fending them off. I needed that car to drive around and drum up business. Plus, I was sleeping in it in my office park’s basement. It was the dead of winter, so I had to start the engine every few hours to warm myself up, but it was a place to put my head down. Then one day, I got back to the office after 6pm and my PA was still there. ‘You won’t believe it,’ she said. ‘Somebody just called. They’re going to book you.’”
Read more: Vusi Thembekwayo On Being Better Than Your Competition
To look bigger than you are, you’ve got to dress the part
“I’ve always dressed in the best suits I could afford, and, as it was financially possible, I bought a Range Rover. Sometimes, landing big business is about impressing big decision-makers and giving the impression you’re bigger and more successful than you actually are.”
- Ephraim Mashisani is the founder and CEO of Nyalu Communications.
- Started as a part-time business in 2009, it’s grown to a R50 million company.
What Mashisani is alluding to, is that looking successful plays its own part in being successful.
Wearing a good suit brings an air of confidence and success, and when trying to land big corporate clients, they’ve got to perceive you as being established and successful before they bring you their business. But, before you go buying that Porsche or Range Rover, know Mashisani runs a very tight ship and knows his numbers.
The key point is that he did business with small businesses while he was small, and only bought a flashy car to impress the bigger businesses when he could afford it.
Read more: How Nyalu Communications Began as a Side Business but Grew to Success
Lessons from the boot of a car
“When John Hunt and I started the business, we didn’t have flashy offices to invite clients to, which is what most agencies had. So we turned the ‘impress your clients with your offices’ thing around and told clients we’d come to them, like we were doing them a big customer-service favour. Then we’d pack all our material into the boot of my car and head off to do our presentation.”
- Reg Lascaris is the co-founder of award-winning advertising agency Hunt Lascaris that teamed up with international giant TBWA.
- He’s also the author of Lessons from the Boot of a Car.
In your early stages, while gaining traction, keeping overheads to an absolute minimum is essential for business success. Always look for ways to spin negatives into positives. Don’t have flashy offices? Visit your client or arrange to meet in a hotel lobby.
There are many established entrepreneurs out there who can appreciate the start-up stage you’re in and will cut you some slack for the lack of flash. If not, get creative in the smoke-and-mirrors department.
Read more: Reg Lascaris On Horse Sense and Winning Hearts
Think outside the phone box
“I quickly discovered a useful trick: By calling the operator and claiming the machine had eaten my change but my call had been cut off, I was often able to get free calls. Plus, the operator was able to put me straight through without the tell-tale phone box ‘pip-pip’ sound. As an added advantage, the operator sounded like my secretary! ‘I have Mr Branson waiting for you.’”
- Richard Branson is the creator of the Virgin Group empire, a conglomerate of companies spanning a dozen industries and generator of ₤15 billion in revenue in 2013.
- He’s also the author of several books, and record setter of daring stunts.
Let’s face it, start-up is hard and what little money you have is going to be spent on getting the business going. Richard Branson is the true embodiment of an entrepreneur: When faced with a problem, don’t just find a workable solution, leverage it for all its worth.
In this case, he learnt how to get calls reversed for free, and make himself sound more important than he was, thanks to the assumption that the call receiver would make in thinking he had a secretary.
Read more: Successful SA Entreps Share Their Most Valuable Business Advice Ever Received
Reduce, reuse, recycle
“In our first store we’d re-use bottles because we couldn’t afford to buy new ones, but it also happened to be a time that Europe was starting to go ‘green’ and people were drawn to this.”
- Anita Roddick was the founder of The Body Shop.
- Starting in a tiny shop sandwiched between two mortuaries and a product range of 25 items, today it has over 2 500 stores in 61 countries.
- The brand also pioneered cruelty-free cosmetics and ethical business practices.
There are many stories of brands being innovative and creative to try and cut costs or work with tiny budgets.
When starting out, look for ways you can develop inexpensive and eye-catching packaging, for example, that doesn’t compromise quality, value or brand-building efforts. And always keep scale in mind.
While re-using cosmetic bottles worked in the early days for The Body Shop, it wasn’t sustainable.
Read more: 10 SA Entrepreneurs Who Built Their Businesses From Nothing
Sometimes it’s good to run out
“Waste is expensive, so we set ourselves goals of 100 servings, and work towards that. It inadvertently created exclusivity and demand because people who would arrive late at the market would be disappointed they’d missed their shot at a Balkan Burger.”
- Borjan and Lidija Ivanonic are the founders of Balkan Burger.
- What started as an experiment at a farmer’s market has grown into a full-time, highly profitable and successful business.
Let’s face it, consumers are attracted to scarcity and exclusivity.
Balkan Burger cleverly leveraged their desire to reduce waste and spin it into FOMO – fear of missing out. Rather than market-goers passing by their stand to look around and then return for some food, the fear of missing out would see the sale happen immediately.
Late-comers were then told which market they’d be at the following day, and told to get there early!
Read more: 4 Ways Entrepreneurs Can Become Truly Great
Sennergi’s David Hounson 4 Tools To Help Weather The (Entrepreneurial) Storms You Will Face
David Hounson understands the school of hard knocks. He’s an alumni, having learnt the hard way the emotional toll entrepreneurship can take on you. Here’s how he’s weathered the storm.
- Player: David Hounson
- Company: Sennergi
- What they do: Entrepreneurial inspirational speaking; entrepreneurial events and product manufacturing
- Visit: www.sennergi.co.za
David Hounson believes that there are two types of entrepreneurs in this world, those who roll up their sleeves, and those who don’t. “There’s a different energy between the two, and for me, hands down the winner are the business owners who roll up their sleeves,” he says.
That’s the entrepreneur who is emotionally invested in the journey, which can be a strong success factor. Unfortunately, it also leaves you exposed when things get tough, as David discovered the hard way.
“Entrepreneurship can be an incredibly fulfilling and at the same time painful journey,” he says. “You need to build the mental tools necessary to not only survive, but thrive in this environment.”
David and his wife, Taryn Human, have spent the last three years developing a low GI drink that they will be taking to market in 2018. It’s been a long journey, filled with hardships and heartbreak, and yet through it all, David didn’t give up. Instead, he built the mental tools he needed to keep pushing forward. He’s now sharing those lessons with fellow entrepreneurs, paying it forward in the hope that he will in some small way drive entrepreneurship in South Africa.
Building the tools that will achieve personal success
TOOL 1: Build your confidence
David’s background is in sales and marketing. He was a school drop-up, but built up a career, first in the UK, and later in South Africa, based on his talent for connecting with others. In short, David had a big mouth and could talk his way into — and out of — anything. At first, he just had the gift of the gab, but as the years progressed he learnt the value of authenticity, transparency, and adding value to your clients.
By 2012 he had built up a solid reputation, and was approached by a manufacturer who wanted to produce a low GI drink, but needed a sales and marketing partner. The offer sounded good and would include shares. Instead, it was David and Taryn’s first introduction to what it means when you give your power to someone else.
“There were a lot of internal politics that we ignored. We should have listened to our gut, but instead, we saw their money and supposed expertise and took everything they said at face value. Never go into a partnership where you aren’t on an equal footing, even if that footing is completely in the mind. We were insecure, and this created a situation where we could be taken advantage of.
“You need to have confidence in who you are, and what you bring to the table. Know your worth. The greater your confidence, the harder it will be for others to take advantage of you. The great thing about confidence though, is that it’s like a muscle. If you work on it, you will grow it.”
It took David and Taryn time to walk away from their first partners, but they made the tough decision to cut their losses. The partnership would never be equal, promises were not being kept, and they realised they needed to take back their power.
It was an expensive move. They’d put a lot into the business and were now going it alone with a two-year-old toddler at home, bills to be paid and a lot of debt.
It’s not always easy, but sometimes the first step towards success is taking ownership of your destiny and holding yourself accountable. Take back your power, choose to be the architect of your own success, and then gradually build up your confidence.
DO THIS: Focus on your power and where you draw it from. This doesn’t need to be based on money or even academic partnerships, but what you uniquely bring to the table. And then build on this. Confidence is a muscle — you need to work it. Don’t become arrogant; build a quiet surety that believes in your own self-worth.
TOOL 2: Focus on the long-term rewards
For David, despite over a decade of building a career, reputation and a measure of success, the move took him back to his childhood years when every cent counted.
“As a kid, I was brought up with no money. Everything was scarce. Now I was experiencing this again in my 30s. We’d eat a can of baked beans for dinner. My wife made us stretch everything, which is how we made it — and also how we stuck to the dream and didn’t throw in the towel. We made ends meet, even if it was just barely.”
It was a deeply personal and painful journey for David though, bringing to the surface memories of suffering he’d experienced in his youth and thought he’d left behind.
“When you have a goal, it’s amazing what you’ll do to achieve it, but you have to stay focused, and keep the destination in mind. Taryn was integral to the journey we’ve travelled to reach this point. We’ve invested in developing the drink, and we wouldn’t have been able to do any of it, particularly in the early days, without being uncompromising and rigorous in how we spent our money.
“We were broke, we needed to formulate the product with a credible food technologist — who we paid upfront — we weren’t interested in another partnership, and we needed to pay our personal bills. It was a delicate balance. We could have thrown in the towel, found jobs and given up on the dream. Instead, we chose short-term suffering for long-term reward.”
At the time, David realised that the business needed an additional revenue stream, so he went back to his marketing roots, offering marketing and printing services to local businesses. “We’ve built up some great retainers and we outsource printing, flyers, embroidery and anything else our clients need for their marketing campaigns.” This has grown into a more holistic marketing solution, including entrepreneurial events and helping businesses determine how they access markets and work as teams.
DO THIS: Start at the destination and reverse engineer how you’re going to get there. Focus on every aspect of the journey, and what will take you to the next pivotal moment in your business’s success. This often requires short-term pain for long-term gain. Be clear on what you’re willing to sacrifice to achieve your goals, and then stick to the plan with grit and determination.
TOOL 3: Patience is a form of action
As a salesman and marketer, much of David’s professional career has been built around targets. Sales is not by nature a patient profession. Entrepreneurship is very different. It’s a long game, and as David discovered first–hand, sometimes you have to give things the time and space they need to happen.
“I learnt that patience is a form of action too. For three years I had to have the patience to let things come to fruition. I had to become mindful of where I am, where I am coming from, and where I am going.”
David used this time for self-reflection and personal growth. “I needed to find self-belief. No one is going to do this for you. You need to build your own resilience, courage and patience.
“We’re all so busy chasing targets, deadlines, goals and sales that we don’t stop and take the time to connect with our inner selves. I discovered that the time I took to really question who I am, why I’m here and what my greater purpose is not only helped me become more focused and centred, but better equipped to handle the rigours and challenges of entrepreneurship.
“We spend so much time focusing on how to build better businesses, that we don’t give ourselves enough attention.
“The reality is that when you do things from an internal space, you’re not just more centred, but you’re aligning the heart with the brain. It’s incredibly powerful. If you can love all of your imperfections, understand yourself and how you react to the world and shape things around you — and why — you’ll not only find alignment in everything you do, and every personal and business relationship you nurture, but you’ll find an incredible untapped resource of power as well.”
DO THIS: External factors are important, but don’t let them drive you without also focusing on the internal factors. Start working on your EQ, or ‘heart energy’ as David calls it. “That’s the power of the heart. 40 000 neuro cells per second travel from the heart to the brain.
“The heart has its own power and intelligence, we just need to learn to listen to what it’s telling us. Take notice of the energy in a room — good or bad — and learn to trust it. Intentionally allow the heart to send signals to the brain for alignment. Intuition, gut feel — this is the heart talking. We need to expand our ideas of the tools available to us, and what we can do with them.”
TOOL 4: Share your journey
When David was near his lowest, practicing patience and trying to envision the success of the low GI drink that he and Taryn had worked so hard to achieve, one of his marketing clients, a car dealership in Krugersdorp, asked him to give a talk to their sales team.
“The marketing manager loved my story, energy and passion. She understood that there were still mountains I was climbing, but she also loved the fact that I had already begun to approach what we were doing from a positive place, and not a place of fear.
“She understood what sales people go through, and asked me to share my story. It was the first time I gave a talk on the lessons I’d been learning, internalising and using in my life. I was open about the fact that I was still on the journey, and didn’t have all the answers, but this was where I was, and what I could share.
“The response was incredible, but I also realised how much value I got out of sharing my story. Entrepreneurship can be lonely. When we share, we not only learn from each other, but add value to each other, and feed our own sense of purpose.
“I started speaking to corporates, sales people and entrepreneurs. Entrepreneurs in particular need assistance, and so I developed corporate-sponsored entrepreneurial events that give brands access to entrepreneurs, and entrepreneurs access to each other. We have two speakers on the evening — myself and a guest profile who has real business successes and lessons to share. They focus on business development and pushing through the hardships, and I focus on the soft skills and emotional intelligence — the inner turmoil entrepreneurs need to work through to find success.
“These events take place in Soweto, the CBD and suburbs, and the goal is to bring entrepreneurs together, share stories, support one another and learn. This isn’t a business driven by profits, but is a purpose-driven passion project. If we can help others find significance, I believe that will help us find our own significance.”
Today David is a coach, mentor and speaker, largely because he’s willing to share his story, and wants to help others find their inner-strength and success.
DO THIS: Find a way to share your journey. Join an association or entrepreneurial forum, or if you’re an employed professional, an industry group where you can share your journey and learn from your peers. The goal is personal growth, and the act of sharing your story and learning lessons from others can help you push the needle. You just need to be open to the idea and willing to network.
To get started on your journey of personal development, consider these five tools:
- Keep a notebook and jot down your emotions throughout the day. Recognise the emotion that keeps popping up — is it fear, risk-taking, money-related? If the same thing keeps coming up, you need to recognise it and face it.
- Start meditating. Meditation uses quiet time and breathing exercises to help you become mindful. This is the foundation of more focused mindfulness.
- Exercise daily. Besides the fact that it’s good for you to exercise daily from a health perspective (and healthy entrepreneurs have more energy and focus), this also teaches you discipline, one of the most basic fundamentals of success. Put a system in place and follow it — learn to stick to things and follow routines, and you’ll be amazed by how this will naturally impact your life and business in positive ways.
- Restrict TV. Watch YouTube instead. It’s an incredible lesson channel. Search by topics and subscribe to TED Talks instead of falling into the trap of randomly watching TV with no clear benefits.
- Look at your emotions as you would any other muscle. Work it out. Build it up. Focus on it and recognise it as a tool that can help or hinder you. Remember, when you build up an emotional muscle of strength, if someone asks you to do something, the answer always becomes yes, even if you don’t know how it will be achieved. Will you get it done? Yes! How? I don’t know, but I will.
15 Wise Insights From 15 Entrepreneurial Icons
Here are 15 wise insights from entrepreneurial icons.
Starting your own business is harrowingly hard. In fact about half of all businesses fail within the first five years. You may feel paralysed from the amount of freedom, responsibility, failure, and success concomitant with business ownership.
Luckily, you’re not alone in conquering these fears. Some of the greatest entrepreneurs have plenty of wisdom to share to help guide you.
Here are 15 wise insights from entrepreneurial icons:
GetSmarter With Sam Paddock And Rob Paddock
Brothers Sam and Rob Paddock believe there’s a lot of luck involved in building a great business – but you need a clear strategy, great people and strong partnerships as well.
- Players: Sam Paddock and Rob Paddock
- Company: GetSmarter
- Launched: 2008
- The Deal: Sold to NASDAQ-listed company 2U for R1,4 billion
- Visit: www.getsmarter.com
How do you build a business that is not only the leader in its sector locally, but attracts the attention of an international, listed company, concluding in a R1,4 billion deal? Brothers Sam and Rob Paddock believe there’s a lot of luck involved in building a great business – but you need a clear strategy, great people and strong partnerships as well.
This is their story
Here’s the fascinating thing about truly successful businesses: Speak to founders that have secured investments, sold their businesses or built high-growth organisations, and you’ll notice they have two things in common. First, they have a strong purpose other than money motivating them. Second, their focus is on building a robust, high-impact business, and not on how they’re going to find a funder or sell their company. Interestingly, by not focusing on these factors and working on the business instead, funders, buyers and success are often the end result anyway.
GetSmarter is a perfect example of these laws in action. Co-founders Sam and Rob Paddock’s purpose is to improve one million lives through online education by 2030, and even though they’ve just concluded an incredible deal (believed to be the biggest in the South African edtech landscape to date), they actually had no intention of selling until Christopher ‘Chip’ Paucek, CEO and co-founder of 2U, contacted them in 2016.
“We’ve been approached by interested parties over the years, but we’ve never seriously considered selling the business,” says Sam, CEO of GetSmarter. “It’s flattering, but we were focused on achieving our internal goals, and didn’t see the value in selling some or all of the company.”
Related: How GetSmarter Got Smarter
So why was 2U’s offer different? In a nutshell, because the deal will actually help the brothers accelerate their objective of improving one million lives by 2030. In other words, it directly taps into their purpose — and it’s that purpose that made the business attractive to 2U in the first place.
“It was a chance meeting,” says Sam. “Chip was surfing Facebook and came across an advert for an MIT course we were running. It was our first international programme, and since 2U is in the online education space, he immediately wanted to know who we were. He called me, and when we realised how aligned our businesses and philosophies were, it kicked off a series of face-to-face conversations around what we could achieve together.”
“Both of our target markets are working professionals, but while we offer non-accredited short courses, 2U offers fully-fledged degrees,” says Rob. “So, while in many ways the businesses are almost identical, they are also not competing with each other. 2U offers degrees from highly ranked institutions such as Yale, the University of California Berkley and New York University. We offer short courses from UCT, Wits, Stellenbosch, MIT, Harvard, UChicago, Oxford, Cambridge and the London School of Economics. We realised that if we worked together we could service both ends of the market, and our combined reach would be incredible.”
Sam and Rob have built a solid, sustainable business that has enjoyed incredible growth over the past few years, but what really attracted 2U was a shared sense of purpose. “
There’s real cultural alignment between our two businesses,” says Rob. “Culture has given us a real competitive edge, and it’s the guiding force behind the principle and values we’ve built the business on.”
The lesson is a simple one. If your values and purpose are clear, you’ll naturally attract like-minded people to your organisation, from employees to investors and even potential partners and buyers.
A shared sense of purpose gets the conversation started, but it doesn’t secure the deal. 2U is an international company that’s listed on the New York Stock Exchange (NASDAQ), and has a fiduciary duty to its shareholders to purchase businesses on more than an emotional whim.
GetSmarter had to go through a rigorous due diligence process before the deal was concluded. The foundations that Sam and Rob have put in place over the last decade have ensured that they’ve created more than just a vision: They’ve built an asset of value that isn’t dependent on its founders, and offers a strong value proposition to a listed business.
That value proposition began in 2008 when the brothers got their first partners on board: The University of Stellenbosch and UCT. The partnership with UCT started with Rob and Sam’s dad, Graham Paddock, one of South Africa’s top sectional title lawyers. Graham had collaborated with UCT’s Law Faculty to build an online course that could be accessed across the country, with a final in-person workshop component. The course was one of the most profitable activities that Paddocks, Graham’s law firm, was involved in.
Sam had designed a virtual campus while completing his degree in business science, and the success of Graham’s online course cemented the impression that there was a real business opportunity in online education that could also add real value to the South African market place.
“I love tech and marketing, Rob is passionate about education, and has a background teaching music, and Paddocks already had a great partnership with UCT’s Law Faculty,” says Sam. From the beginning, both he and Rob clearly recognised that the success of any online education venture lay with the partnerships they could secure.
“Our courses have been successful because they combine affordability with an attractive institutional brand that adds value to people’s skills and CVs,” says Rob. “We built partnerships with UCT, the University of Stellenbosch and Wits based on this ideal.
“In our sales and marketing collateral, the academic institution’s branding is front and centre, not GetSmarter’s. Our job is to give students the confidence and competence to advance their careers. We do this through high-touch courses that support them throughout the learning process. Those courses are designed with career advancement in mind in collaboration with our partners.”
“The real success has come in the value proposition we offer the universities we work with,” adds Rob. “Essentially, we take on the vast majority of the commercial risk. We take on all marketing and sales activities, course administration, learning technology, student support, technical support, but the courses are very much led by the university in terms of IP, and they have full quality control over the course at all times. The commercial model is that the university receives a percentage of revenue share.
“The biggest lesson we’ve learnt since launching this business is that you need to understand who you are partnering with and what their objectives are. The relationships we have with the universities we work with is at the heart of our business model. How we serve our university partners, students and employees is the foundation of our success — and pulling all three together is what creates an offering that the market both wants and needs.”
Success is the greatest precursor to further success
Building up trust doesn’t happen overnight. For Sam and Rob, it’s been a ten-year journey focusing on delivering exceptional online courses that add value to learners and their university partners. This dedication to creating the right formula for online courses has had two distinct results. It’s built solid relationships with the local academic world (and a valuable network that the brothers could tap into when they started investigating international partners), and it’s resulted in an 88% completion rate, which is exceptionally high in the world of online learning.
“We’ve very carefully structured and developed the high-touch style that differentiates GetSmarter courses,” explains Rob. “We focus on the holistic needs of our learners. They need to put in ten hours a week and to help them do that, and get the most from the course, we have success managers who guide them through the process, a 24-hour tech support team, and everyone is placed in small tutorial groups, which creates an intimate and personal learning environment, even if there are 1 000 students taking that particular course. Our learners constantly get the sense that their learning is being nurtured and facilitated. We believe it’s this level of support that has resulted in such a high completion rate.”
Compare this to the extremely low completion rates of MOOCs, often in the range of 3% to 15%. The New York Times named 2012 the Year of the MOOC. The world believed these Massive Open Online Courses would democratise learning, and render higher education institutions obsolete. Everyone jumped on the bandwagon, and some of the most revered names in the higher education space added their courses to the mix of content that anyone in the world could access for free.
And then two things happened. First, although the idea was to find a business model that could monetise MOOCs, while still allowing people free access to the content, this has not yet happened. And second, the completion rate of courses is incredibly low. People sign up for MOOCs, but they don’t finish them.
“We absolutely support the idea of free open content for the world to access,” says Sam. “But we don’t see MOOCs as fundamentally disrupting higher education. A vast majority of the people accessing MOOCs are already highly qualified individuals in the US and the UK.
“More importantly though, making content available gives people access to it, but there’s a big difference between starting a course and completing it. This has been a huge focus for us — how do we get people to complete online courses? These are working professionals with a lot of responsibilities, and our courses typically require an additional ten hours a week. We’ve found that a high-touch framework supports our learners in their journey, guiding them through the content, and resulting in our 88% completion rate.”
This was the value proposition that Sam and Rob were able to present to international universities when they started focusing on international growth in 2015. “Our local growth drives were to increase courses within the verticals we focused on, so that learners could keep increasing their skills, and to build on the number of courses we offer. The greater our portfolio, the bigger the market we can appeal to, across industries and professions,” says Sam. The next step was to go international. “When we started the process, we had a seven-year track record of success in partnering with the top three institutions in South Africa and a high completion rate. We also offer our university partners significant financial returns,” says Sam. “We believed that our proven capability to deliver high quality courses as well as financial returns was a value proposition that international partners would respond to.”
The brothers knew it wouldn’t be a simple process however. “There are a lot of start-ups in the edtech space. Harvard is approached weekly by companies claiming to be the future of education. We needed an additional ‘in’, and that came from the partnerships we had built in South Africa,” says Rob.
“We sweated our networks hard. Luckily, the world of higher education is small and connected. Our networks were able to introduce us to the right people in the UK and the US, and then we worked harder than we ever have in our lives. We did a roadshow in 2015 where we had five meetings a day for three weeks in a row. I checked my passport recently — I travelled to Boston 19 times in 18 months. It takes time and energy to establish the right relationships. The introductions were just a foot in the door. We needed to take that gap and really make it work.”
In February 2016 GetSmarter’s first international course launched in collaboration with MIT. This was followed by courses with Harvard, Oxford, the London School of Economics and Cambridge. Today, GetSmarter’s team of 400 service a pool of learners in 140+ countries from their offices in Cape Town and London.
Using your differentiators to make a difference
Over and above the trifecta of systems, operational support and pedagogy that has made GetSmarter courses so popular in the market, is the strong sales and marketing focus that has been integral to the brand’s growth strategy since inception.
“We have a hybrid sales and marketing strategy that uses Facebook, LinkedIn and Google AdWords to generate inbound leads,” explains Sam. “Our target audience is in their mid to late 30s, midway through their career and upwardly mobile, and we reach them via their digital network. Our inhouse digital marketing agency uses analytics, maths and stats to understand who is likely to sign up for our courses, and what conversations we need to be having with them to make that happen.
“Once a potential learner has shown an interest, they are signed over to the sales team, who begin high quality conversations around whether the course is right for them or not. The process is high touch and very people focused.”
This same high-touch sales and marketing process has also helped GetSmarter to successfully enter international markets. “We’ve learnt a lot from marketing in Southern Africa,” says Sam. “Working professionals in South Africa, while culturally distinct, are similar to working professionals in the EU and US. Local guidelines are also working in those markets.”
The business’s acquisition by 2U will increase this reach even further. “We can now apply 2U’s advanced marketing analytic capabilities to understand how to reach a larger audience. The big markets for us are the US, the UK, Hong Kong, Singapore, the Middle East and of course South Africa, which is still currently our biggest market base, although this will shift in the future.” Interestingly, while the inclusion of international courses to GetSmarter’s portfolio has triggered international growth and the deal with 2U, South Africa’s growing appetite for international programmes is driving local growth.
“In a recent Cambridge business sustainability management course that we ran, 10% of the students were from South Africa,” confirms Rob.
Building on great foundations
The key factor behind the international growth and the acquisition, is the team Sam and Rob have built around them over the past five years.
“Culture has always been a competitive advantage for us,” says Sam. “Our people are GetSmarter’s life-blood. Four years ago, the business’s strategy lived in corridor conversations with ‘Sam and Rob’. We were the funnel that everything in the company ran through. If we wanted to achieve next level growth, that needed to change.
“One of the lenses we view business through is that human performance precedes operational performance, which precedes financial performance. That means in order to achieve any success, you need to first build a higher human capital base. We started by expanding our executive team, bringing people on board who were better than us in their respective portfolios.
By the time we were prospecting with international institutions they were running their divisions without our daily input. We were able to focus on international growth and strategies because we had the right team in place.”
“Without that foundation, none of this would have been possible,” Rob agrees. “We could focus on travelling and building international relationships — and even on the 2U deal and due diligence, because of our executive team.”
Over and above the executive team are 400 highly capable people based in Cape Town, serving students from around the world. “We work with awesome people,” says Sam, “and that’s helped us build this business and work towards achieving our purpose. You can’t impact one million lives by yourself. It takes a strong, cohesive team. We’ve built a company around that, and now we’ve joined an international industry leader based on the same principles.”
Choosing to Sell
How do you know it’s the right time, and what should you do if you’re considering the sale of your business? Sam and Rob offer the following advice:
- Make sure you like and respect the acquirer. Everything starts here. It’s a long, slow, complex process. You need to like each other.
- During the acquisition process, you need to rapidly develop a new set of skills, and that’s not always possible. You need a team of professionals to help you navigate the deal. This includes deal advisors and attorneys. Deals of this nature are complex, and you want to set everything up for potential success in the future.
- Make sure there’s real synergy between the businesses. What do you offer each other, and how will the acquisition help both businesses grow? If you can’t answer this, you probably shouldn’t be doing the deal.
Listen to the podcast
Matt Brown interviews Sam and Rob and discusses the strategies that have supported GetSmarter’s international growth and sale to 2U for R1,4 billion.
To listen to the podcast, go to mattbrownmedia.co.za/matt-brown-show or find the Matt Brown Show on iTunes or Stitcher.
The Matt Brown Show is a podcast with a listenership in over 100 countries and is designed to empower entrepreneurs around the world through information sharing.
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