This Part 2 of my interview with Fred Swaniker, founder of Africa Leadership Academy (ALA), Africa Leadership Univerity (ALU) and ALX (among others). Fred is one of Time Magazine’s Most Influential People in the World and has done the requisite mainstage TED talk. I believe this is the only time he has publicly talked about marketing.
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Transcript:
Edward: This is part two of my interview with Fred Swaniker. Today, we're going to dive into his experience leading ALX. Fred, ALU is Africa Leadership University; ALA, Africa Leadership Academy; ALN, Africa Leadership Network. What does ALX stand for? Does it stand for anything?
Fred: We wanted ALX to really stand for disruption. It's the anti-university, anti-high school, and we wanted to establish a new category of higher education and the future of learning, et cetera. It actually stands for whatever you want it to stand for. If you want to call it Alternative Learning Exchange, you can call it that. You want to call it Audacious Leadership Experience, you can call it that. Anything that you see as disruptive and unconventional, you can put that label on ALX. That was really the idea behind, like Google has Google X. We want to say this is a very different thing from traditional education.
Edward: Explain to me what ALX actually is today.
Fred: Think of ALX as a lifelong learning platform with programs that people can take at different stages of their lives. One of the things we believe is that the world has changed so fast, that what you learn in college quickly becomes outdated. You need to keep adapting your skills and learn new things, so you can remain relevant. But yet today, if you want to learn, you either go back to graduate school for two years or one year, or you're left with watching TED talks.
So we thought we would build something that was more structured, that could walk with you along different stages of your life. We have different programs where you might have one program for recent college graduates, which is a six-month boot camp where they learn the skills that they should have learned in college, but they didn't. That would actually make them more highly employable, and then they get their first job.
Edward: What are examples of those skills? Are you teaching them to code? Are you teaching them to do project management?
Fred: Absolutely not. They're learning critical thinking skills, communication skills, leadership, how to manage projects, how to analyze data and make good decisions with it, how to manage themselves, how to manage up [...]. Basically, what you wish every entry-level grad would have, that they just know how to get stuff done, they ask good questions, they show up every day at work, and they're very driven and understand that, and are really open to learning new things.
Let’s face it. There are very few jobs straight off college where you need to be a specialist in anything. Investment banks will hire people who've done classics in history and engineering, and then they'll train them into what they want. What you're looking for is that adaptable person who's hungry to learn, and really has got these traits that make them highly employable. That's what we’re trying to do within that program.
Edward: How much of that is the person versus the training? How much is ALX that they're signaling, hey, I'm the type of person who likes to learn, and I want to come work for your company and I'll learn there, versus actual skills that they need to learn before they can start.
Fred: It's a bit of both. We take them through a lot of learning by doing and giving them all feedback in ALX. One of the things we believe is that—there was a lot of research that shows—only 10% of any skill can be effectively learned in the classroom, 20% comes from your peers and mentors and coaches, and 70% comes from doing. But yet today, most education is only focused on that 10%. We try and really give people this simulation of the workplace for six months and we give them feedback and then they learn there. By the time they show up for work, they've really got the skills.
We’ve basically done the work for an employer, that they would have had to do in upskilling someone for the world of work in their first year of employment. That aspect with ALX is the brand that we give because what we're signaling to the employers is that we have taken this person to a very rigorous selection process. We only admit about 1% of the people who applied to ALX. The employer knows that we filtered through a lot of folks so that immediately makes them take our talent more seriously.
Edward: Why are they buying ALX? Are they effectively buying access to a job?
Fred: We try and advertise that. We're saying that you're getting access to skills and networks that can create a lifetime of opportunities for you. You're also joining a club and lifelong community because the peers that you meet in ALX can open doors for you throughout the rest of your life and they can support you, et cetera.
We are going to be your partner at different stages of your life. As you progress and you become a manager, you can come back to ALX for manager training. Then three years later, you need to learn data science, you can come up for ALX. We're constantly giving you feedback and identifying development needs, and we're walking with you throughout your career. That is what you're buying when you apply to ALX.
Edward: Who are the buyers? Are they all university grads? Or before they graduate? Are they unemployed people? Are they trying to accelerate their existing careers?
Fred: We have two main target audiences. One is the fresh university graduate. For example, in Kenya, it takes the average Kenyan college graduate five years to get a job. Many people have got a degree, they've got the theory, but they don't have the networks and skills. That’s our target market for the first category. The second category are mid-career managers who want to accelerate their careers. We've got programs for those two different types.
Edward: How are they finding ALX? How do your customers find you? How do the students find you?
Fred: What's been really exciting is that most of them, the first cohort found us simply through three main ways. One is at the African Leadership Academy and African Leadership University. The two institutions that I built before ALX that built significant brands with them.
We used to get thousands of people applying to both of those institutions for just a couple of hundred slots. We obviously had a lot of people who had tried again to ALA and couldn't get in. Tried again to ALU, couldn't get in. That’s when we started ALX. Part of the reason they couldn't get into the ALX, ALU would also relate to cost. When we brought ALX to their city, then then they said, I've been trying to get into your institutions for several years, and now you're here in my backyard.”Many people just jumped into our ALX because of what we’ve done before.
The second way in which they may have found us was through partnerships. We established lots of partnerships with universities because they have a problem. They're graduating kids and they're not getting jobs. We were a nice compliment to them; we're not competing with them at all. Youth groups and companies that are trying to connect with youth, et cetera.
Finally, my personal brand. Over the years I have been able to build a following amongst young people because of the work I’ve been doing. I have about 200,000 followers on social media, so I just literally went and posted on those different platforms. That immediately spread and young people wanted to be part of it all.
We didn't have to spend much money on marketing at all, to attract the first cohort. For the second cohort, they came because of word of mouth from the first cohort. We literally had kids who were standing in the streets of Nairobi telling everyone that they could meet, that you need to go to ALX because it's changed their lives. Their parents were telling their friends that you need to go to ALX because it changed their lives. At ALU, a customer acquisition cost was $3500 per student, at ALX it was $4 per student.
Edward: Was that $4 per applicant or $4 per accepted student?
Fred: Per accepted student.
Edward: And you were only accepting 1 in 100 students? One in 100 applicants?
Fred: Basically, we took 200 out of 14,000 applicants.
Edward: So your cost per applicant is on the 6¢ range?
Fred: Exactly. Basically, we spend almost nothing on marketing.
Edward: Why are you accepting so few? Are they just not qualified? Or you just don't have the capacity or the throughput to put them in?
Fred: A couple of reasons. One is we wanted to test the model first. We had to build up our capacity, our technology systems, people, et cetera. Two, we also want to make sure that we could place them into employment and entrepreneurship pathways, et cetera. We didn't want to have produced too much talent and not be able to…
Edward: Meet your promise.
Fred: Meet our promise, exactly. We wanted to just go a bit slower, develop the concept. But now, we're scaling significantly. We're going to train two million people in the next decade through ALX. We are really taking it up. Next year alone, we want to take about 50,000 people through ALX.
Edward: How many of those applicants that came in, that you rejected, are you going to be able to accept in the future?
Fred: Of those 14,000 I'd say we could probably have accepted 3000–4000 of them. I would say 20%–30% of them would have been eligible.
Edward: The ones that aren't, is because you don't think you could train them well enough to get them a job after your program, and you just don't want to make that investment when you can't deliver?
Fred: We have the luxury of choice, so we might as well just choose the top when we have so many applicants. It's generally easier to work with the best talent than the second-best talent. Since we have the choice, we might as well take the best talent.
It's part of our brand as well, for the other side, for the employees, one of them if we can say, you can rest assured that we have only taken the top 5% or the top 10% of applicants. It enhances our ability to place them because the employers, the investors who might want to invest in them into their ventures, know that they have been through a very rigorous selection process. Therefore, it actually makes it easier to place them.
Edward: You're in a place right now where you don't need to make any marketing investments really at all because you have a backlog of people, your operations are your bottleneck, not your marketing. But presumably, if your aspiration is two million people through your program, you're going to need that marketing muscle later on. How do you work on that marketing muscle when there's no acute need for it?
Fred: I’ve recently built a significant marketing team, I brought in a CMO and digital marketing expert, a content expert, and marketing automation, et cetera. We've got about (now) 20 people and a marketing team. We are now going to be more deliberate in spreading the word to allow us to build a massive funnel for us to be able to scale as fast as we can and as much as we'd like. We are doing that, but we still don't expect our customer acquisition cost to be very high because we're finding that our product has a really excellent product-market fit. What we've done is we've also flipped the entire pricing model. You don't pay upfront for ALX. You pay for it afterward only when you have a job.
We've got an interesting subscription model. Essentially, the upfront cost of going through ALX is zero, so we've got a perfect product-market fit, you can say that. We are building a marketing function. We are also about to launch something that we call the Do Hard Things Challenge. Because we have so many more applicants than we can accept, we're putting a barrier in the process which is to say, we will change your life when you join the ALX. You will get connected to an incredible network and you'll get skills that will support you for the rest of your life. But before we invest in you and give you all these opportunities, you need to show us that you're a doer and that you are someone who is a self-starter.
The Do Hard Things Challenge is basically asking young Africans to show us over a three-month period that they can get a job, any job. Go and volunteer, do anything, and hold it for three months. Start a venture or start a project in your community. If you do well in that, then we will consider you for our application. That's going to both build the buzz around what we're doing and it's also going to signal the kind of brand that we stand for, that we are a place for doers and not just talkers.
Edward: I think you have the luxury of being able to invest in your brand because you don't have that acute fire that you need to put out next week. You're growing things for the long term, which is allowing you to invest for the long term.
Fred: Exactly.
Edward: That said, one of your important acute channels is universities and having the universities flow students into your program. How do you work with universities?
Fred: As I mentioned, universities in Africa have a big problem because about 45% of university graduates are unemployed. In Kenya, it takes five years for college graduates to get a job. In Ghana, it takes up to 10 years to get a job. So we are solving a problem for them.
When we started in Kenya, for example, I leveraged my relationships and my reputation to visit some of the different universities. The vice-chancellors literally rolled out the red carpet for me. They had me speak to all their students. They shared mailing lists of all their alumni and they sent out blasts to all of their alumni saying here's an incredible program that you can go to and that will help you find opportunities. They were a natural partner because we had what they needed.
We also partnered with various youth groups and media organizations, anyone because youth unemployment is a massive problem in Africa. Because we were providing a solution to that issue, many, many partners wanted to collaborate with us.
Edward: Who led those relationships? Did you call in the chancellors yourself?
Fred: In some cases, I did that. In other cases, my team just went and visited different universities and met the career development center, the alumni centers, and formed those partnerships. But I didn't need to open the doors. Our offering was so compelling that they welcomed us with open arms in most places we went to.
Edward: I find that when you do these partnerships, oftentimes you can get the top-down support, but then when it comes down to bottom-up and actually delivering on it, they sometimes drop the ball. How did you ensure these universities actually followed through and gave you the support they needed? Did they hand you the email addresses or they send the emails up themselves? If so, how did you make sure they were sending out the right emails to the right people?
Fred: In some cases, yes. They handed out the email addresses. In Africa, we don't have these crazy data protection laws, but in some cases, they did that. I mean, this is a few years ago; I think now we would do things differently. In other cases, they send it out on our behalf. The way we made sure that it wasn't just some fluffy agreement at the top is that I made sure that I went into these relationships with people who could then do the follow-up with their next [...].
I made sure I got a commitment from them about who exactly in your organization should we work with to execute this? Can you let them know that you have made this commitment? Also in some institutions, we built the relationships bottom up because we went straight to the person who actually had that email list or whose job it was to find jobs for the graduates. They were obviously struggling, so we went to them with a solution and it was definitely not a hard sell.
Edward: Do you have an account management team that continues to oversee each of these relationships at these schools as you scale?
Edward: Not formally. We are going to set up something like that, but again, because of the word of mouth of the first batch of students, those relationships over time become less and less important because we now have our own graduates to vouch for what we're doing. We have a net promoter score of about 85 and Harvard Business School has a net promoter score of 42.
Edward: So your word of mouth is going okay for you.
Fred: Yeah, it's going all right. Yeah.
Edward: It's really fantastic what you're building, Fred. Before we go, I want to talk about your Quake book, but in your case, it's not really a book. It's more of a blog post, is that right?
Fred: Yeah. It's this blog post by Paul Graham, the founder of Y Combinator, which talks about things that don't scale. It’s his advice to some of the founders that go through Y Combinator, that in the early days, they should really focus on creating outstanding customer experiences and getting a few customers to love them.
Then from there, you can actually get to scale. Actually, the first time I heard that concept was from Brian Chesky, the founder of Airbnb. I was attending a conference where he was speaking, and he was talking about how, when he had joined Y Combinator, they'd ask him, they said, where are your customers. He said, well, I've got about 100 customers on the East Coast. So, Y Combinator was like, why are you here? Get out of this office. Go to the East Coast and find out why those 100 love you.
Brian and his co-founders went and spent six months in New York, living in those Airbnbs with those hundred clients, and understanding why they like Airbnb, what was working, what wasn't working, and they figured out all kinds of things. For example, if you take a picture of the apartment and put it online, you're going to have more people wanting to book, et cetera.
From that, they perfected their product. Then a few years later, they had millions of customers. Brian was saying how, when most founders start companies, they try and get to scale immediately. They're trying to be big [...] doing stages. The first stage is you need to create your product. In the second stage, you need to get love, which is a few people really, really loving your product. That's doing things in very unscalable ways for those first 100 people. Once you have love, you finally get scale.
That philosophy goes back to where we started in our podcast yesterday where I was talking about the different stages of relationship-building, where you need to go from connection to continuous interaction to trust, and then finally collaboration. It's really saying get those first 100 customers to really love what you're doing. Then from there, you can get to scale.
Edward: Tell me about how marketing is dead.
Fred: One of the things that I'm increasingly of the opinion is that we have lost control of our brands. Well, not exactly. We need to think about how we build our brands differently. Fifteen, 20 years ago, you could put up a billboard or TV advert or whatever, and claim whatever you wanted about yourself. But with the advent of social media today, we live in a world of Tripadvisor, where no one actually believes what you say as a brand.
I believe that the way to build your brand right now is only through customer experience. You have to deliver exceptional customer experience and then let your customers be your ambassadors. Our job is to create platforms that enable our customers to tell others about the brand because whether it's your brand as an employer, no one will believe what you see on your website, they'll go to Glassdoor or they'll go to LinkedIn and find someone who works with you and ask them what it's like to work with you. If your brand is a hotel, no one will believe what you say. They'll go to Tripadvisor. Any other products, they're going to look for product reviews online, Yelp, et cetera. Especially as we become more and more digitized, it's so easy for anyone to set up a website, set up something, and claim whatever they want to claim.
I was looking the other day about how many ecommerce sites exist. There are seven million ecommerce sites that exist, and yet Amazon has been able to build a business with a billion customers and a $1.7 trillion market cap. Look at Netflix and all these guys. They've been able to do that only by focusing on the customer experience. Because there's so much competition, everyone is out there claiming whatever they want. The thing I really believe is that in today's day and age, the only way you can truly build a sustainable brand is by delivering exceptional value to your customers. Anything else, any other claim that you make, you'll quickly get found out and then you lose trust with your customers.
Edward: And I think it's almost a red queen situation in that, in many cases, features and benefits satisfy customers, but in overall customer satisfaction and user experience, customers are never satisfied. The bar is always increasing and getting harder and harder and harder, which means there's always work to be done.
Fred: Exactly.
Edward: Awesome. Thank you, Fred.
Podcast: Fred Swaniker, ALX Part 2