My guests on this episode are Andrew Sohn and Michael Novielli, co-founders of Due West Education. Due West counsels and helps Chinese students apply to top American universities and study abroad programs. I visited China in college on a school trip and it was one of the most incredible experiences I’ve ever had. Since then I’ve been looking for interesting businesses abroad to study and invite on the podcast. Andrew and Michael are incredible examples of US entrepreneurs creating new businesses in other countries around the world and I think you’ll love our conversation.
We discuss China’s cultural view of US education, tailwinds pushing Due West’s business along, how data factors into process of helping students apply to the most elite colleges, fighting inherent incentives in the education industry with great internal communication, and how their business might be impacted by moves against after school tutoring in China.
Think Like an Owner Sponsors
Live Oak Bank – Live Oak Bank is a seasoned SBA lender focused on search funds, independent sponsors, private equity firms, and individuals looking to acquire small companies. Live Oak has closed billions of dollars in SBA financing and is actively looking to help more small company investors across the country. If you are in the process of acquiring a company or thinking about starting a search, contact Lisa Forrest or Heather Endresen directly to start a conversation or go to www.liveoakbank.com/think.
Hood & Strong, LLP – Hood & Strong is a CPA firm with a long history of working with search funds and private equity firms on diligence, assurance, tax services, and more. Hood & Strong is highly skilled in working with search funds, providing quality of earnings and due diligence services during the search, along with assurance and tax services post-acquisition. They offer a unique way to approach acquisition diligence and manage costs effectively. To learn more about how Hood & Strong can help your search, acquisition, and beyond, please email one of their partners Jerry Zhou at --@----.com
Oberle Risk Strategies – Oberle is the leading specialty insurance brokerage catering to search funds and the broader ETA community, providing complimentary due diligence assessments of the target company’s commercial insurance and Employee benefits programs. Over the past decade, August Felker and his team have engaged with hundreds of searchers to provide due diligence and ultimately place the most competitive insurance program at closing. Given August’s experience as a searcher himself, he and his team understand all that goes into buying a business and pride themselves on making the insurance portion of closing seamless and hassle-free.
If you are under LOI, please reach out to August to learn more about how Oberle can help with insurance due diligence at oberle-risk.com. Or reach out to August directly at --@----.com in sponsoring? Send me an email at --@----.com transcript:
Thanks for joining me, Michael and Andrew. Good to talk to you guys and hear about Due West education. We haven’t had any China focused businesses on the podcast and certainly for the international angle, so there’s so many different angles that I’m excited to talk about. Would first love to hear about both of your backgrounds and dive into how you started Due West Education and what your missions are overall. Andrew, do you want to start with you?
Andrew Sohn: First of all, thank you again for having us on the podcast. My name is Andrew Sohn, I am the co-founder and CEO of Due West Education. I’m from the U-S, went to Columbia university, that’s actually where I met Michael and the two of us studied abroad in China, which is where we fell in love with the Chinese culture, as well as the language. It was our first time to China, which was in 2001 on an exchange program between Columbia university and (inaudible) university, but at Columbia I actually majored in English literature and studied Chinese. After graduating from college, I was unsure what I wanted to do, so I did what many confused Columbians do. I went into the finance industry, worked at JP Morgan in the investment banking division there for a couple of years, and then moved to private equity after that, but always had a passion for education. I did a lot of mentoring and some volunteer teaching as well, even while I was working in finance and always wanted to be involved in the education space. I had an opportunity in 2009 together with Michael to move to China and co-found our business.
Michael Novielli: My background is, I was also at Columbia studying East Asian studies and history. I fell in love with campus life and how universities work and decided to then pursue a master’s in higher education, basically like a one-year mini MBA on how universities are run at Harvard’s graduate school of education. I enjoyed the experience academically, but missed New York and missed my undergrad Alma Mater, so then returned to Columbia, that time as an administrator, and worked in different management roles in student services. Everything from housing, dining, health, student financial services. My last role at Columbia, I served as our vice president for campus lives, chief of staff, we call the chief of administration, and at the same time, one of the great benefits of working for a university is you get tuition exemption, so I was able to do another masters at Teacher’s college, focused on Columbia’s teachers, college focused on comparative international education.
Then like Andrew said, moved to Beijing in###-###-#### For us, our mission was always to inspire, mentor, and guide the next generation of future leaders and scholars, and to really be a bridge between the U-S and China, and now between the U-S and Asia. In terms of educational exchange, we started off our business on the study abroad side, providing ethical college counseling and boarding school counseling for students who want to go to top U-S and U-K universities, also focused on the fit. Andrew maybe could speak more to some of the work that we’re doing here, but to really make sure that students are finding a school that is a good fit for them. Obviously in this part of the world, there’s an obsession with rankings, and we understand that, because rankings do have some impact on educational success and career success, but at the same time, you want to make sure you’re at a school that you’re going to be comfortable in, thrive in.
Yeah, be able to spend four years of your life. We’ve really been focused on through our curriculum, through our programs, helping students to navigate that process and to find the right program for them and to grow academically along the way. Recently, we’ve been expanding to beyond just China, so we have clients throughout Asia. We have a U-S office in Boston, an office here in Singapore, and we’re working to bring innovative branded curriculum and programs from the U-S and the U-K to the community here in Asia.
You used the term, “Ethical counseling,” early in your response. I’d be curious, what’s the landscape look like for education services in Asia, and are there a few bad actors within that marketplace as well?
Andrew Sohn: Yeah, I think when we first moved, Alex, to China and wanted to focus on the education space, we noticed that obviously there was a lack of resources###-###-#### China was a very different place than China is now, and because of that lack of information, but a real interest (inaudible) could financial investment from families to study abroad, there were players who were definitely taking shortcuts and probably didn’t necessarily have the best intentions in mind for their clients, particularly around fit, as Michael was mentioning. Placing students in schools that they didn’t even know about or doctoring documents. Some of this is not necessarily because they had bad intentions. As an example, most Chinese schools don’t give high school transcripts, and in 2009, certainly there were fewer international programs and whatnot, so if you were a student who wanted to study abroad, particularly in the undergraduate schools, you needed a high school transcript and China couldn’t give that to you.
You found a company that could help you do that, and along the way that company, even sometimes without students knowing, would just make upgrades. We obviously didn’t approve of that, but some of that was just because of a lack of information. It wasn’t because students and families wanted to do things that were unethical, but we wanted to provide an alternative. We wanted to make sure that students were doing things the right way, and we also wanted to make sure, as Michael mentioned, that students were ending up at the schools that were the right fit for them, because as we know, if you end up at a school that’s not the right fit for you, it’s very difficult to graduate. To really have the experience for us. As we studied abroad in China, experience is not just sitting in a classroom studying, it’s the relationships that you build outside of the classroom.
Not only with friends and classmates, but people you meet along the way on that journey. We wanted to make sure that students could have that in their international education experience, that’s why it was important for us to make sure that we were doing it ethically as well, and making sure that they were at the best fit location. Luckily, to answer your question, as the market has become more educated and frankly more competitive, I think families have realized, along the way, that doing things ethically actually get you better results, because admissions officers believe your results. They understand why you may have challenges, because you don’t have the same resources, but how hard you’ve worked to overcome those challenges. The market has cleaned itself up, I don’t think that we would say Due West is responsible for all of that, but we’ve been very happy to be part of that and to guide our students through what is, oftentimes, a somewhat opaque process.
Michael Novielli: The example Andrew just gave, I would add that we aim to be a resource to both sides. Obviously our team is based in China, so we’re educating parents, providing information to them, but given our background and our team, many of our managers were former admissions officers so they and we are quite connected to the U-S side too. We aim to provide information about what’s happening in China and the reality of schools throughout Asia to admissions officers there. Some of the examples of whether it’s transcripts or letters of recommendation, especially at that time if you’re at a large public school, magnet school. Obviously the focus of that large magnet public school in China is to prepare students for the national system, with the gaokao and other things.
If a teacher has 50 students in the class, and they’re not usually writing letters of recommendation, it’s quite unreasonable to expect them to write in English a native letter of recommendation, to understand the forms, or navigate all of that. We try to communicate the real situation and some of those challenges to the admission side and many universities have adapted. They have admissions officers who can read and speak Chinese, they have implemented other interview processes to get around. Obviously they want to know more about the student than just the grades and the S-A-T, but they have to adjust their strategy, because China obviously is a huge admissions market.
Can you talk about the Chinese cultural view of U-S higher education?
Andrew Sohn: Yeah. That’s developed immensely as well. It’s not just China, overall Asia. One of the things that excites us about this market is people are really committed to education, not only in its traditional form, but obviously other outlets as well. Education is at the forefront of what parents are thinking about for their children, not to say that we in the west don’t think that way, but I think in terms of actual financial investment and time investment, there’s significantly more being poured into education in this part of the world. With that, the opportunity to study in the U-S is the cherry on the sundae. The jewel opportunity for people, particularly at obviously the most prestigious institutions here, they’re globally recognized brands. That has shifted quite a bit, when we first got here, the opportunity to study abroad helps differentiate you significantly as a graduate.
Although people here really appreciate and value education, also they look at it practically in terms of, “I know if my child can have this experience, it will certainly allow him or her to have a better job opportunity coming out the other side.” Previously, if you just had studied abroad and maybe had English ability, your job prospects would improve significantly. Now the market has become even more competitive as people become more aware of all of the opportunities, and families are becoming obviously brand aware. That has made the market even more competitive in terms of the business landscape. Obviously, as the market has grown, more and more players have entered the market, and everyone’s fighting to give an advantage to their clients at the most prestigious universities in the U-S.
As Michael had mentioned, obviously these universities have also become much more aware of the Chinese student population, so their process has become more focused on getting the students who are, at core, truly extraordinary, and it has made it more competitive as well but more and more people here continue to really value that study abroad opportunity. The only significant change we’ve seen maybe in the last five years related to that, though, is most families still hope that their child can study abroad, but now as the job markets have shifted a bit, many students who previously might have gone to Columbia, studied there, then tried to work in the U-S for a couple of years, and then maybe thought about coming back to China, are actually now coming directly back after getting bachelor’s. Many of them try to get a master’s right out of school and then try to come back, because the job markets have really exploded as well. There are so many Chinese companies that are operating internationally as well, who value employees with that experience too. That’s been a big shift in the landscape.
Michael Novielli: The term guanxi is often overused when folks speak about China, but it does matter a lot. Obviously the fact that by going to United States, you may be able to network with a future business partner or someone that you’ll work with in other capacities. Families do value that a lot. That’s something we really try to encourage in our students, obviously. When you’re in a foreign country that default, the most comfortable thing is to hang out with people who speak the same language as you. Certainly I think we were guilty of that partially when we were studying abroad in China in 2001, but I think we made an effort, and the program forced us every day to spend time with native Chinese speakers. We really valued the friends we made and the relationships we developed, and we encourage our students to do so, because again, you may be meeting the former head of a country, the former CEO of a major corporation, and having that experience and developing that network when you’re in your late teens, early twenties is pretty invaluable.
Could you describe the business model for Due West a little bit more, and also the makeup of your team? Is your team mostly counselors working one-on-one with students, or are there other members of your team who help and then backup support on research, or print out the other documents for students? What is the business model look like, and then how’s the team constructed?
Andrew Sohn: Yeah, that’s changed a lot, Alex, over the last 10 years as well. Our traditional business, which is our college counseling business and boarding school admissions counseling businesses, it’s a consultancy. It’s a very intensive work experience. What we’re doing is guiding these students on a one-on-one basis through the whole admissions process. First, the biggest change that has happened with that is, as the market has grown, students are starting much earlier. That was always our intention too, it’s not just to work on the application process and help students craft good admissions essays as an example, but really help them to make decisions early on in their education and help their parents also think about their education holistically so that they’re developing skill sets. When Michael and I first came to China, most of our students would start with us in 12th grade, frankly, and we’re just guiding them through the admissions process.
Now our average student starts with us in 10th grade. In 10th grade, we’re not talking about, “Hey, which college do you want to apply to?” We’re really helping students kind of develop certain skills that we know will not only be important for them in the admissions process, but beyond. Even at skills like self-advocacy, because the whole admissions process is really about advocating for oneself. Reading and writing skills, we are not an English teaching organization, but what we do really focus on is the idea of more reading, more writing, and developing those skillsets over a longer period of time. We also focus a lot on goal setting, so much of the admissions process is about setting a goal, making sure you’re setting the right goals, and then achieving those goals. Finally, time management, which as adults, that is a critical skill set.
If we can get a student from 10th grade, which in China is the beginning of high school actually. In China, it’s 10th through 12th grade. We have a curriculum that focuses on helping these students develop these skill sets, and we are working both one-on-one and in groups over that time period. Our model has changed quite a bit as the market has expanded. Similarly, Michael alluded to this before, particularly as he’s based in Singapore, developing our Southeast Asia operations as well to a large growth plan for us in the future is, has been, and continues to be leveraging the knowledge base that we know, that we’ve developed from working on the admissions side for now 10 years to help develop further programming that would help students have those experiences that would make them more well-prepared for college and beyond. We are partnering with a lot of institutions in the West to develop both after-school programming, summer programming, and even some in-school programming to create more innovative experiences for students, to help them to think outside of the traditional landscapes.
Programs even in arts and music, even in the sciences that might not just be related to your standard textbook science or simple, “I’m learning to play the piano or violin,” music approach, but really taking a much more broad view on these interests and thinking about how you make connections between your academic interests, extracurricular interests, and what’s happening in the world. We think a lot of that is guided, and we’re able to sell this to families because of our experience in the admission side. We know what Harvard might really want, or Columbia might really want out of an applicant four years from now when that applicant is applying. Really, what Harvard and Columbia want are not specific interests, it’s different skill sets. Again, admissions officers know if you have these skillsets, you can definitely do well at their school, or if you have these experiences and you bring them to our school, you can make an impact within our community.
Because of that knowledge base and experience of more than 10 years helping students navigate the admissions process, we feel like Due West is also well positioned to come up with programming that is working together with schools to allow students to have these experiences even earlier on. That’s where the future of our company lies as well. That’s how our program has changed quite a bit. Related to our team, it’s been an interesting experience. From the beginning, we always said, “We’re not an American company operating in China.” As an example, we are actually, because we were founded in China and China is our headquarters. We are a Chinese company that is being led by a group of foreigners. We’ve really worked hard to localize the way we run the company, really help build things out so that many of our senior management is also Chinese as well, and really adapting to the market space while leveraging our strengths as foreigners trying to navigate a Western education experience. Yeah, our team dynamic has changed a lot. When Michael and I first started, our first team was mostly foreigners who were quite interested in China. Now, certainly more than 50%, close to 60% of our team is local Chinese who are helping us develop the organization.
Michael Novielli: Obviously, in addition to the entity in China, we have a company here in Singapore as well, as one in the United States too, which is in line with some of the expansion plans that Andrew just mentioned.
Andrew, you’ve alluded to this data element where, now that Due West has operated for a number of years and seen a lot of classes of Chinese students get into U-S Universities, are you now able to start tracking data on students who get into certain universities and figure out, “Okay, these students got into Harvard, they had these different factors or qualifications,” or, “These are the different focuses they got in. These other students that had different focuses get in.”? I would imagine you’re able to develop somewhat of a data business where over time as you have more and more classes sent over to the U-S, you have more information on what gets you into those schools. How do you track that data? Is it just purely anecdotal or is there some tracking behind it that you’re able to use to help students in your current classes?
Andrew Sohn: It’s actually something that we’re actually fighting rather than embracing. The reason why I say that is, we have all the data and we certainly do analyze the data, but if you talk to anyone who works in admissions, so much of admissions is not so quantitative or rather qualitative. The reason why I say I’m fighting it though is, I think we work in a market space where our consumers, parents, are very quantitatively driven, because the Chinese university admissions process is actually totally quantitative. You get a test score on the college entrance exam, the gaokao, and based on that score you’re going to Tsinghua, the number one school in China. Parents are constantly asking for, “Okay, give us the data. What is the data for Harvard?” The challenge with the U-S holistic admissions processes is, it’s not so data-driven. One of the recent challenges that we’ve seen is, a lot of the newer players in our market are appealing to parents’ needs for data, giving that data, and cutting it in ways where, “Oh, yeah. Okay, I get this.”
We have parents coming to us who have reams of data that they picked up from maybe other organizations even, and they’re coming and say, “Here’s the data, here’s the data, here’s the data,” and I have so much data that could counter all of their data. What we try to balance is, “Yes, we have the data. It helps us make certain decisions that require some level of quantitative thinking,” but for the most part, we try to base a lot of our work more on the student, the challenges, opportunities that he or she may directly have, and educating the market on the simple reality that it’s so important to just make a goal and a game plan based on your individual strengths and frankly addressing some of your weaknesses.
You can’t just base everything off of quantitative. There’s certain basic things that are obviously easy to think through, like testing. That data’s pretty straightforward, but a lot of other things are not as straightforward. Frankly, over the last two to three years, we’ve really been making a concerted effort to combat some of that focus on quantitative data. We see that a little bit less in other regions, but in China, certainly it’s an issue.
Michael Novielli: I think, too, that the case study approach for us, in terms of how we do events, marketing, explaining things to parents, makes a big difference. Parents understand all of the elements that went into it, including the activities, the leadership, how the summers were spent, so it’s the data in a different format than just S-A-T and grades, like Andrew said. Certainly the students at the international schools get a lot of that data already. There’s a platform called (inaudible) and other companies which provide that information. If you’re at UWC, United World College, you’re able to see how your predecessors who had applied to Columbia may have fared, what the average S-A-T was, what the average grade point averages. It’s used as part of the counseling process to say, “Okay, are you sure you really want to apply for this school? Because both of these areas are not within profile,” but obviously families have goals and aspirations.
Also, we’re a service provider, so we balance giving the honest feedback and guidance with doing our best also to help the student be prepared for success.
Andrew Sohn: That leads to another area that’s worth addressing, given the topics of your podcasts. One of the biggest challenges we’ve always had is this whole idea of, “We are a service provider and we want to provide what our clients need and want.” What they want is a service provider too. The challenges in our business is sometimes what the client wants, is not actually what they need. Actually, quite often what they want is not really what they need. Frankly, if they have too much of what they want, they are not going to achieve what their ultimate goal is. We’re constantly having an internal struggle around that. It even comes going back to your question about the team makeup. As we’ve diversified our team to incorporate obviously more local staff here, there’s always this challenge of… The local team and the benefit they bring is they really understand our consumer base, but then they similarly struggle with why we can’t just provide what a client may want. Particularly when your competitors are providing clients with range of data.
This is what you want? Take it. We’ve processed it in whichever way we think is right in giving it to you, and people believe data is what it is. That’s always been a challenge for us as a service provider here, particularly a service provider who is more internationally minded and frankly, more long-term focused. Again, this data can also be used in a lot of ways to forget about the only focus on the short-term and forget about the long-term. If you spend all your time, as an example, just doing test prep to get the best test scores, because you believe, based on the data, testing is the most important thing, then your student might be giving up other opportunities that would not only make them more qualified for a top institution, but similarly also probably more prepared to be successful once they get to that institution as well. It’s hard, it’s always a balancing act. As someone who’s running a business, as well as trying to be innovative in the product’s development, we always struggle with that.
Michael Novielli: We’ve certainly heard situations from other companies where the sales department, the service department, the counseling department are not aligned, where the sales department just wants to close the sale, so they’ll say, “Oh, University of Pennsylvania, no problem,” and then, when the family gets to the counselor and the counselor’s like, “No way University of Pennsylvania, that’s not a realistic reach for you,” there’s a lot of dissatisfaction with the parent, the student, and you’re not doing business a service in the long-term. We’ve always been very mindful of that, our counselors are involved, and Andrew in his role as CEO has really been leading the sales and other teams. We continue to grow every year, but we want to do so in a responsible way to our parents, not to over promise and under deliver, but the other way around.
To be ambitious, but also reasonable with our expectations.
We alluded to it a little earlier in talking about potential bad actors within the space, but there seems to be this natural incentive for you to try to get either a family to believe or just do whatever it takes to get them into one of these really good schools. Even going so far as, Andrew, you mentioned doctoring documents and transcripts and all this. How do you build in counter incentives within Due West to let parents know that, “We’re going to do what we can, but we can’t guarantee you any particular school, and there’s not a set path towards this university. We just follow these steps and boom you’re in.” How do you work against that national incentive?
Andrew Sohn: We have to address two sides of that, frankly, Alex. We have to address our Western staff, who think about that completely differently than our Chinese staff. As Westerners, when we think about education, it might be a little bit less practically minded and maybe more ideological. We do a lot of training with our staff to help them understand. Yes, maybe as Americans we feel there’s really no difference between University of Pennsylvania and Swarthmore College, which are right next to each other in terms of location. Very, very different institutions, but both top ranked. One is a top ranked liberal arts college, the other one is a top ranked, large research institution. In China, University of Pennsylvania, because of its global reach, does have a better brand. When parents are killing themselves and almost killing their child to really want to get their kid into that school… We’re not suggesting that we should embrace their behavior.
We do a lot around mental health for students and making sure that they’re thinking about their decisions in a healthy way, but the first way to provide the best service for them is to understand why this seemingly audacious goal is so important to families. We spend a lot of time around that, and again, going back to data, use data to show our Western staff, why (inaudible). We have an office in Boston as well that helps with students here too. It’s difficult for people who maybe are working internationally to completely understand the cultural element of that, so we do do a lot to help people understand why people think this way in this part of the world. Similarly, with our Chinese staff, we have to do a lot more around educating them more on our long-term approach, helping them understand that.
I don’t think that any of our Chinese staff are looking to trick any of our customers or do anything unethical, but from their perspective too, some of these decisions are seemingly practical decisions, so of course you should do it this way. Helping them understand that, yes, maybe if you only look at this from the view of a short-term need to hit this goal, that might seem very practical, but actually, if you look at it from a long-term approach or from, frankly, a more realistic approach of what will happen in the West, that’s not such a simple decision. We’re always balancing and educating our local staff on how things are actually done in the U-S or the U-K when it comes to education to help them to see, “Oh, this is why we value this long-term approach. This is why it’s important.”
With any company that’s striving to grow and be successful, culture is really important. Driving home what your core values are and why they’re important, not only to the co-founders or the CEO, but everyone in the organization is incredibly important. That’s really how we spend a lot of time helping people understand those core values and training them around how we implement them.
Michael Novielli: Results are very important. The most tangible results that parents will think about are obviously the school to which the student ultimately gains admission, but in developing our program’s services curricula, we also try to include that as part of the program. Even for our younger students, the 9th and 10th graders, where we help them with whether it’s reading, or writing, develop those academic skills to provide regular feedback on the writing throughout, so that parents can see and monitor the progress even before the end result. There are sort of mini milestones along the way, obviously helping them to prepare for end game admission to top summer programs or come up with the right summer internship opportunity or volunteer opportunity so that we’re able to obviously help the student grow, but also demonstrate results and development throughout the way. Being mindful of the market desire, like Andrew said, it’s a little bit different in the United States in terms of what parents are expecting.
Yeah, certainly. We had John Rood on the podcast recently and John started with his wife this education business focused on MCAT test prepping. One thing he talked about was, over time, he shifted his business from a one-to-one counseling type business education, the instructional business, closer to what a content business might look like. I’m curious, is there some sort of content angle with Due West that you’re currently implementing, or as a long-term vision for how you eventually want the make-up of due west to look like?
Michael Novielli: Obviously I listened to that podcast as well, and we went through the same sort of challenges initially. Andrew and I were doing the bulk of the counseling work, and then as you onboard additional counselors, you want to have… He spoke about obviously giving the teachers some autonomy and flexibility, but also not leaving those who are less experienced out to dry. We’ve always been mindful about creating lesson plans, curriculum, materials, which we can use with our team, but also in the future we can provide to schools and to other organizations. It’s definitely a focus of ours to develop and refine our content along the way, whether it’s part of the college counseling, boarding counseling side or academic skills. All of those areas.
Andrew Sohn: Along those lines with the content creation, as I mentioned before, we have been partnering with schools from the U-S to create this actual programming. In addition to internal, we developed Due West content. We’ve also been spending time and investing capital into working together with our partners to create additional content. We’re quite focused on making sure that that content is branded, it also says something about the market here. People really want to make sure that they’re getting access to top brands, and in the education space, those brands are obviously top schools. We’ve been fortunate that through our work, we’ve been able to build good relationships with many premier institutions, as they think about different ways to further their missions, they do see opportunities to be working with the right partners outside of the U-S to develop content that could help the international student community. Content creation is, has always been, and continues to be the next phase of Due West growth too.
One thing that was interesting that we talked about previously was the customer that you sell to isn’t necessarily the person who actually uses it. You’re typically working with the parents of the student who will ultimately be the one who actually benefits from your services, so in a sense of your marketing Due West, it seems like you generally want to target parents. What types of content could you have that’s, even the marketing side of things, aimed towards parents, or is there some benefit to also having some marketing directed at students as well? Is there a blend of both?
Andrew Sohn: That goes right back to our previous point about balancing what we believe is important with what the market wants. You’re absolutely right. Right now in our market in China, all marketing organizations are geared towards the parents, and unfortunately in many, many ways, most students take a passive approach to their educational experience when it comes to decision-making, because the decisions are being made by parents. There are obviously those students who are quite independent and parents who want their students to be independent, so they give them those opportunities, but the larger majority of decisions in education are being made by parents here. We, for the longest time, went with that flow. We struggled with it a little bit, and when I say struggled is, particularly foreigners operating in a foreign market. Although we speak the language and understand the culture to a certain degree, still that communication is not necessarily as comfortable, maybe, as a local organization may have. About a year and a half ago, we made a more specific and deliberate decision to move away from marketing directly to parents.
What we do instead is, as you said, a hybrid. We’re marketing through parents to students directly. We even made the decision last year. We do a lot of events, both online and offline presentations, and we made the deliberate decision, and it was difficult. Our marketing team at first was very much against, in fact, some members I think to this day still are waiting to prove them otherwise. We decided not to invite parents to our events anymore, because what we were seeing was that parents would come and then obviously they’d have great questions, they’re obviously the decision maker, but the student would again, be taking a passive approach. As Michael mentioned, our mission has always been mentoring, inspiring, and empowering these students to go on and do great things, and you can’t do that through another individual.
What we started to do was go straight to the student. We would market to the parents and say, “There’s this great workshop, there’s this great presentation for your student, and unfortunately you’re not able to join, but we promise you that if your student comes, they get access to,” let’s just say, “A former admissions officer or a specialist in a certain area that they wouldn’t necessarily have access to, and they’ll grow.” Honestly, still to this day, it’s challenging, because a lot of parents, what they want to do is come first, check it out first, and see if it’s okay for their students. What we’ve been quite successful about is, the students who do come, they do learn a lot in those presentations and then they oftentimes do work with us. From the beginning, they have this expectation clearly laid for them that this is your journey.
Yes, your parents are here to help you along the way and Due West is here to help you along the way, but you have to be an active participant in your decisions. That’s how we’ve shifted our marketing approach. I think jury’s out in terms of how successful we might be, but a large reason why we were doing that too is… Frankly, this is at the core of my belief for making that decision is, I do think that students are becoming more active in their decision-making process. I think the next generation of parents are parents who… Post 1980s parents, they are parents who are more aware of the importance of allowing their children to be more active in decision making process, and we want to be ahead of that. We want to be pioneers in that, we want to be known as the organization who were true to our mission, and allowing students to be actively involved. It’s been challenging, we’ve seen huge return on it as well.
Michael Novielli: Marketing aside, the parent piece is a big part of our service and has been for quite a number of years too. In addition to the counselors who work with the students directly, we have parent coordinators who provide service to the parents, update them along the way, they have seminars on aspects of the process that they need to know, like the financial certification part of the process in the case of boarding school. Particularly because parents are so involved, they have to interview themselves and write a letter of recommendation themselves. There are a lot of touch points so that the parents are also part of the program too. Obviously the focus is on the students, but we understand that we need to also provide service and support to the parent.
Yeah, it actually seems like a pretty substantial marketing shift away from the traditional decision-maker of the family to the direct customer who will benefit from your services. How does that messaging change when you’re directly addressing the students with the parents as, of course, a key party within that relationship, but primarily going to students? How does that messaging change?
Andrew Sohn: Another reason why we made that shift, frankly, is also because we’re better at that messaging. We’re better at connecting directly with the students because the people who are doing the actual presentations, as an example, are Western educators. Even though the actual marketing team is a local team, but the people who might do a presentation or connect with the students are in deed, our Western team. They’re more comfortable, frankly, connecting with the students. They don’t need a translator, because the students speak English, as an example. They have experienced talking about topics that those students might be interested in. That part has been great, because our Western team can feel more comfortable. Usually, if we did a presentation, the westerner would give the presentation and then there’d be some translation element, which is obviously cumbersome as well. The other part of that that’s been more of a challenge is that we’ve got this universe of thousands of parents who are in our marketing channels.
How do we creatively, through them, get the students in the room? That’s been a bit more challenging. This is again where, at least, we’d like to believe that our focus on our core mission and our core values continues to allow us to also market effectively to what we’re saying to parents, and this is the truth. We really believe this is, “We understand that you want your child to be successful, we understand that you’re worried about your child and that’s why you’re making these important decisions on their behalf, but the simple reality is if they don’t get involved in this decision-making as soon as possible, you’re not going to be there when they go to Harvard, you’re not going to be there when they graduate from Harvard and have to work.”
At the end of the day, all parents understand that. It’s understanding the psyche that a parent really cares and loves their child and that’s why sometimes that leads them to be maybe a bit more bullish in terms of taking the reins. The simple reality is, if you have that message clear and it’s part of your core value, it really does work with families too. It just takes more time. This is where we understand that there is more of an investment that needs to be made, but we feel that the return on that investment is quite significant. It also, frankly, from an operational execution perspective, we realized return on the efficiency of the execution. If you’re getting from the beginning a student who is slowly understanding that they are the driver of this and their parents are aware that they need to start to allow their students to make those decisions then, on the execution side, on the operational side, we don’t have as much miscommunication.
Whereas, when clients come and they might have a misunderstanding of how our process works or how they should be working with their child, there’s always hiccups along the way, which makes the execution of the service more challenging too. That’s where again, hopefully we’re thinking about this in terms of a long-term approach, we’ll continue to see dividends in the future.
One other question I had for you was around China’s moves against afterschool tutoring. It felt pretty timely, coming up to this episode, I’d be curious. Have those types of moves had effects on Due West’s business model? And are there other regulatory changes down the road that might have an effect as well?
Andrew Sohn: The industry is changing and it’s changing quite quickly. I wouldn’t say unexpectedly, because people always knew that reform was coming. Not always, but have known for quite some time. Obviously, the speed at how China does things can be quite surprising. For us, we’ve been thus far quite fortunate that I think the majority of the reforms are more focused on compulsory education, and in China compulsory education is specifically K through nine. Obviously, business wise, there has been some impact in terms of, first of all, when it comes to investors. They’re taking a wait and see attitude in terms of, “Do they wanna deploy more a capital into this industry?” In the future we also need to be aware of how the government and decision makers want to continue to grow this industry, so we’re very aware of that. I think immediate impact wise though, we haven’t seen such an impact thus far. Frankly speaking, given the size of China, the international education market is smaller.
We are talking about hundreds of thousands of students who wanna study abroad, but in the grand scheme of China, that’s peanuts, and a lot of the reform is really targeted more towards the significantly larger population that’s focused on China, and students who plan to remain in China for their educational opportunities. Things are moving, we’re not sure. I always tell our team, “We have to be aware of the fact that these things are happening and get as much knowledge as we can, but continue to do things that we believe are right in the current landscape and move from there.” I think one of the things I would add to that too, and I’ve really learned this from all our time here is, if you really try to continue to look at things from an international or Western landscape while trying to operate in China, you’re going to fail. What you read in Western media and what you might hear are, “How could this happen? What’s going on?” And I can understand why there’s that alarm.
Having operated here long enough, Michael and I do realize that, while certain things may be surprising, this is the way things are done here, and we have to continue to be prepared to be successful. One of the interesting things that happened, as an example, unexpected. All these reforms come out, several of our staff members’ parents call them up and they’re telling them like, “Oh, yeah. Get your pink slips,” or, “You’re going to get your pink slip soon, so maybe you should start looking for other jobs.” Obviously, immediately we had an all hands on deck meeting to address the concerns that people may have when some of these reforms came through, and I was very grateful that we had done that, because immediately parents of our coworkers were giving them calls, “Is everything okay?”
Nothing sucks more than to hear from your mom and dad, “Hey, you should be worried about something,” and all of that. We are fortunate to be able to immediately address these things, and we’ve been fortunate that we haven’t had any negative challenges. Look, education’s not going anywhere in China or in this part of the world. It’s still one of the most important industries, but obviously if anything, this is an opportunity for the industry to continue to grow, be more innovative, and clean up some areas that were probably not so clean to begin with.
Michael Novielli: We continue to develop our client base outside of China as well, including here in Singapore and work on some of the branded curriculum and programs that Andrew mentioned to further diversify the business. In addition to the content that we spoke about earlier.
Certainly. Moving into some closing questions. What college class would you wanna teach? If it could be about any subject you wanted. Michael, do you wanna start with you?
Michael Novielli: Sure. Given the work that we do here, I would think something related to entrepreneurship in China or Asia would be interesting. I know that even some of the local universities here in Singapore have such programs, so I would be interested in teaching that course.
Andrew Sohn: Yeah. On my end, I would love to teach more courses related to… Particularly if we’re talking about undergraduate students, courses related to building a foundation for success after school. We hire so many young folks and I think about myself right out of college as well. We develop these skill sets in college, whether it’s teamwork or leadership, and all of these things, but how they actually get implemented into your work environment, regardless of whether it’s business or something unrelated business, students are frankly, grossly unprepared on how to do that. As an example, communicate with your manager in a way that’s effective, they’re not your teacher anymore. You might be good at advocating for yourself with a professor during office hours, but that’s very different than advocating for yourself with your manager, with the CEO of a company, so I’d love to teach more classes around that. I think it’s very important.
Yeah, certainly. What strongly held belief have you changed your mind on?
Michael Novielli: Obviously the role of a teacher in my mind has changed a lot over the years. I went to public high school on Long Island and had great teachers, but obviously the system… Solomon talks about this, it’s more of the old school, 18th century Prussian model, where it’s meant to make you a good citizen. Obviously, there are lots of rules and a certain distance between you and the teacher. As I went to high school and had some really awesome teachers who wanted to develop that mentorship and that connection with students, and then moving on to Columbia, where faculty referred to you by your first name, it took some time at first to understand that it’s okay to disagree with the professor or to raise questions that when I was in middle school may have been seen as disrespectful or out of line. That notion of what a teacher is, that they aren’t perfect, and that it’s okay to question things or to disagree. The role of teacher and your relationship with the teacher has evolved for me over the first 20 or 25 years.
Andrew Sohn: My view of how we work, how leaders should think about how people work. Michael and I share we’re both from very blue collar families. My parents were immigrants, so I always approached this my work and expected people to approach their work with a similar, “Put your head down and grind mentality, and if we work hard enough, we’ll be successful.” I still continue to believe in the true value of hard work, I really do, but how you work hard can be different. I’ve read so much about the value of taking breaks, even taking naps in the middle of the day, and all these kind of hacks to be even more effective. That’s changed a lot. Frankly, as a leader now, thinking about how to help your team understand that, and how to help them maximize their hard work has really changed for me. We have now flexible office hours, some people work better at night, and they wanna work at night, so we’ve adjusted that. COVID has also really forced people to rethink the traditional office environment. We still do value people being together, and we’ve been fortunate that China opened up at least domestically very quickly, so we’ve been able to continue to see each other, really changed my approach in terms of, “How even I work maximizing your work,” so that’s been quite exciting.
What’s the best business you’ve ever seen?
Michael Novielli: For me, it’s Disney. I’m a huge fan, they’ve been around for almost a century. They have iconic characters, Mickey and Donald, who have been able to still transform and evolve over the years, but still are just as popular as they were before. The service ethos and the way that they make their customers feel when you go to any of their parks. Disney plus is case at point, they’re still able to innovate and evolve with the times, even one century in. Definitely Disney.
Andrew Sohn: It’s gotta be Starbucks in a lot of ways. The reason why I say that, my parents continue to be big coffee drinkers, and I think about how Starbucks has been able to take, at least starting in the U-S… Coffee’s not new, Howard Schult and Starbucks got going, made coffee was in Europe, at least. Even in the U-S, it wasn’t innovative at all, but to take something that was so basic… In the U-S particularly, I remember freeze dried coffee, Folgers, going to New York city and buying from the coffee cart, it was crap, basically. Excuse my French. To able to take that and turn it into something that was a culture around it, an experience and make it something that… Even in China, they almost failed in the beginning and now it’s a cultural icon more than anything, Starbucks.
To take such a simple product and innovate it in that way is pretty incredible. It helps that caffeine, as someone who has drank now my third cup of coffee this morning, is obviously addictive. We often think about innovation as technological. Obviously, Steve Jobs was a genius, Elon Musk is a genius, Bill Gates, they truly innovated, but to take something like coffee, which is water and ground beans, something that people have been drinking for centuries, and to be able to shift the approach to it is also an incredible type of innovation and something that I really, really admire.
Yeah, I completely agree. I love taking old technology and making it into something new. I’ve always love businesses that are able to do that. Thank you both for coming on the podcast, it’s been so much fun. I’ve wanted to have a China focused podcast for quite a while. I found the country fascinating ever since I went as a student in my undergrad, it was so much bigger and more different than I ever imagined. Ever since then, it’s just been so interesting to study. Thank you for indulging me a little bit on learning about China and how your business works in Due West. I loved talking about it, so thank you for sharing your time today.
Michael Novielli: Thanks for having us, Alex.
Andrew Sohn: Thank you, Alex.