How The Paddock Brothers Launched & Successfully Sold GetSmarter For R1.4 Billion

Through a collision of ideas, brothers Rob and Sam Paddock launched online learning platform, GetSmarter in 2008.

Initially, the ed-tech startup offered a single online course in wine evaluation, fast forward 14 years later, GetSmarter now offers over 170 online courses to thousands of professionals across 195 countries – while employing 500 full-time staff.

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The foundation for this growth has been a wide range of courses developed and offered in strategic partnerships with the University of Cape Town, the University of the Witwatersrand and Stellenbosch University.

In 2017, with a team of over 300 employees, GetSmarter was acquired by 2U, a Nasdaq listed digital education platform, for over $103 million(R1.4 billion) – the biggest for any South African company in the ed-tech landscape to date.

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Background

To better understand the story of GetSmarter, let’s take it back to 2005, when Professor Graham Paddock and his wife Mandy, launched Paddocks, a law firm based in Cape Town.

Prof Graham offered training for property managers around the country but didn’t really enjoy the traveling part. He then 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.

He called Sam, who was cycling in Ireland at that time, and asked if whether he could help him set up an online platform for the law firm’s Sectional Title Scheme Management course.

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Sam agreed and started working on the project. He installed the right program, and found himself bursting with ideas about the marketing and IT aspects of the course.

His expertise, together with his father’s reputation, brought around 180 students for the very first Paddocks course.

During that time, Rob was in Australia working on construction projects after several years of travel. He had some success with a corporate drumming business in London, and his business experience later proved invaluable.

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Sam called him to come help out with a new venture that involved property development in Paddocks. Rob was ready to settle into some substantial work and threw himself into the growing family business.

They formed a formidable team and brought tech & marketing expertise to the firm – and were also involved in other areas too, including consulting, property development, conveyancing, and education.

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GetSmarter

Seeing the short course having the fastest growth and best margins, it opened their eyes to another world – Sam realised that the best opportunities are the ones closest to you.

He then started an e-commerce wine site with a friend called GetWine, and it was enjoying a nice, steady growth. He started thinking about how they could leverage the wine business and its database.

He came up with an idea of doing a short online course on wine evaluation. They approached a professor from the Stellenbosch University and he agreed to come on board with them.

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According to Sam, it didn’t really make sense to run a wine evaluation course under the family’s Paddocks brand, it was better that it be a standalone venture.

Coming to the naming part, they wanted to stick with the ‘get’ concept of GetWine, which led to the name GetBrains – but Graham disagreed the second he heard it, and managed to convince them to rather settle with GetSmarter.

They started marketing the course at the end of 2007 while still working at Paddocks, and it went live under the GetSmarter banner in February 2008.

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According to Rob, the course did better than they had expected, up to 281 students signed up and it was only the two of them and one sales person working on the project – it was crystal clear there was an untapped potential with online education.

The brothers soon exited from Paddocks to focus exclusively on their new baby, GetSmarter.

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Growth

From the beginning, the brothers clearly recognised that the success of any ed-tech venture depended on the partnerships they could secure.

Over the years, they built partnerships with the University of Cape Town, the University of Stellenbosch and the University of Witwatersrand based on this ideal.

The courses have been mostly successful because they combine affordability with an attractive institutional brand that adds value to people’s skills and CVs.

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Provided students put in 10 hours a week on their studies, the team has created a favorable environment for them to complete their courses – by having success managers who guide them through the process, a 24-hour tech support team, and by being placed in small tutorial groups, which creates an intimate and personal learning environment.

By focusing on the holistic needs of their students, GetSmarter has seen an 88% completion rate, one of the highest in the world of online education.

The successful track record they had with local institutions came in handy when they decided to expand internationally after 7 years.

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Their proven capability to deliver high quality courses as well as financial returns was a value proposition that international partners in the UK & United States positively responded to.

In early 2016, GetSmarter’s first international course launched in collaboration with MIT. This was followed by courses with Oxford, Harvard, Cambridge, and the London School of Economics.

Today, GetSmarter boasts a team of 500 that services a thousands of students in over 190 countries from their headquarters in Cape Town and London.

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Marketing

GetSmarter has a hybrid sales and marketing strategy that uses Facebook, Google AdWords and LinkedIn to generate inbound leads.

They mainly target professionals who’re in their mid to late 30s.

The inhouse digital marketing agency uses analytics, maths and statistical data to understand who’s more likely to sign up for their courses, and what conversations they need to be having with them in order to make that happen.

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Not everything they tried worked out though.

In the early days, they experimented with extending GetSmarter’s services to high-school students, and it failed terribly.

Even after the failure, Sam still didn’t rule out a market for ed-tech in primary and secondary education.

To him it only meant that at GetSmarter, they chose to focus their energy exclusively on the working professional market, and continuously refined their offering to provide them with the best possible service.

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2U Acquisition

One day, one of 2U’s founders and CEO, Chip Paucek, was surfing through Facebook and saw an ad pop-up on his computer screen, where GetSmarter was running a course for MIT.

The reason why this caught his attention was because MIT is renowned for mostly for investing in their own resources to deliver online education, so seeing GetSmarter came as a huge shock.

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He was surprised and at the same time impressed, and said to himself, “who’s this company that’s partnering with MIT? I should find out” – that started the acquisition conversation.

He called them, and when they realised how aligned their businesses and philosophies were, it kicked off a series of face-to-face conversations around what they could acheive together.

In the end, they realised that if they worked together, they could service both ends of the market, and their combined reach would be incredible.

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According to Sam, although they’ve been approached by interested parties over the years, they’ve never seriously considered selling the business, as they were too focused on achieving their internal goals, and didn’t see the value in selling the company.

But when 2U came with the R1.4 billion offer in 2017, it changed their mind because the deal was different from the pack – it directly tapped into their purpose and had means to help the brothers accelerate their objective of improving 1 million lives by 2030.

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