CEO lunch with Rod Jones

Co-founder/CEO of Navitas, Rod Jones, joined Business News at Julio’s for a wide-ranging discussion on his personal journey and the future of education in Australia.

Rod Jones is a pioneer in every sense of the word.

The oldest of four children, Mr Jones was born in Fremantle, with his father operating a rural distribution business, buying goods in bulk and selling supplies to retailers in the country areas.

Mr Jones was in the first student intake at Attadale Primary School in the 1950s. At that time, the area was mainly bushland and there were plenty of brumbies and kangaroos running around.

He moved on to Melville Senior High School in year eight, again, among the school’s first cohort of students. As Melville only offered a three-year middle school, he was one of the few in his year to move onto year 11 and 12, at John Curtin College.

“I was an interesting student. I would be off surfing whenever I could,” he said, adding it was an activity he continued well into his 50s.

“Later this year in fact I am off to surf at Telo Island, Sumatra, with my boys and a couple of other mates. I haven’t surfed for a few years now.”

Mr Jones went to university to take an agricultural science course, but did not last long as he spent too much time distracted by his love of surfing.

Despite often giving in to the temptation to chase waves as the 1960s came to an end, Mr Jones managed to land his dream job at the Department of Agriculture.

“This was the best job in the world,” Mr Jones told Business News.

“I was a field assistant, the lowest level in the department. They gave me a car, and told me to go out and plant trials and report back every Friday. I soon worked out that if I could work 12 hours a day, I could knock everything off mid week and spend the rest of the time surfing at Yallingup.”

He moved into education in the mid-late 1980s, working as the deputy director of the Tertiary Institutions Service Centre, the organisation that processes university applications in Western Australia.

During his time at TISC, Mr Jones helped establish the centre’s first international educational institution, Sunway College, which ran year 11 and year 12 courses from the WA curriculum in Kuala Lumpur, Malaysia. This provided expats and Malaysian students with a clear pathway to enter WA universities.

Following the success of this initiative, the state government increased its efforts to assist WA universities promote themselves overseas.

“In 1990, WA had almost 25 per cent of all overseas students in Australia,” Mr Jones told Business News.

“We pulled all the unis and colleges together like a club. It was like a spider web, (because) if anyone walked in, they would hit one part of it, and then be helped to find their best course. But that all broke down as unis started to go their separate ways and compete against each other rather than with the other states.”

The idea

Amid these changing dynamics in education, Mr Jones spotted the trend that would lead to the creation of what became Navitas.

“I noticed that there were more and more (overseas) students coming to the universities, but their failure rates were really high and it had nothing to do with academic ability,” Mr Jones said.

“They were failing for all the wrong reasons, (particularly due) to the transitional issues they faced. There had to be a better way.”

Mr Jones left his government job and joined Beaufort College, with Peter Larsen joining as academic principal a few months later. After trying to convince the directors to change strategy, Mr Jones left to pursue his own direction, and asked Mr Larsen (who had since left Beaufort College) to join him in setting up what was then called the Perth Institute of Business and Technology.

“I approached some of my good contacts at Edith Cowan University and proposed to them that we could look after the first-year uni students (who were) most at risk and help them pass successfully into year two,” Mr Jones said.

Here again was Mr Jones at his pioneering best, asking the university to partner with a brand new private provider in a new manner. Moreover, the plan called for the university’s existing students to be taught in its own classrooms by ECU teachers, with the institution then sharing some of its income. Naturally, it took some time to win ECU over.

However, a deal was struck in August 1994 and Mr Jones went on a promotional drive. The first program went live in February 1995 at ECU, with 195 students.

“We had great results right from the start,” Mr Jones said.

“Instead of failure rates as high as 30 or 40 per cent, the students given this new program would pass into year two university 90 per cent of the time. The success rates for the at risk students were better than the university overall.”

After the proven success of the first cohort, Mr Jones approached Macquarie and Deakin universities, both of which signed up for a 1996 start.

Mr Jones had secured his first deal with a UK university (there are 12 there now) in 1998, followed by Curtin University in 2000. Each new arrangement involved setting up a new company.

By 2004, after further growth, the structure had become too cumbersome and some owners were requesting an exit from the business. Around this time, New York-based education provider Kaplan approached Mr Jones about his business.

He thought it might be worth $100 million, but after some negotiation Kaplan offered $280 million. However, not long into discussions with the American suitor, Mr Jones sensed the opportunity for an even bolder play on his behalf.

“Within a few minutes of discussion with Kaplan, we realised they had no real understanding of what we do,” Mr Jones said.

“Every discussion was going back to Warren Buffet, a shareholder in The Washington Post who owned Kaplan, so we realised there was probably more here to be had.”

The listing

After turning down the Kaplan offer, Mr Jones and his team decided to roll all the businesses into one organisation, Navitas, which would be listed on the ASX. On the day of listing, Mr Jones watched the opening share price rise from $1 (which valued the business at $350 million).

“I thought if we could do $1.50, how good would that be?” he said.

“Yet in the last few minutes before trading it shot up to over $2 and closed day one close to $2.40.”

The business was valued at more than $800 million after that first day’s trading, while the share price today is around the $5 mark, with a valuation of $1.7 billion. Navitas now operates worldwide, providing services to more than 80,000 students.

Mr Jones believes there will be major changes to the educational landscape in coming years.

“There is a movement towards short, unaccredited courses, be it leadership training or skills-based learning,” Mr Jones said.

“Job ads are asking for non-technical skills these days. It will be very interesting to see how the educational landscape adapts, as in five or 10 years’ time I think it will look very different to what it is now.

“The international education industry continues to grow and demand keeps coming at us.”

International education also feeds into tourism, Mr Jones argues, as students’ family members visit two or three times each.

Laid back, but decisive

As for his leadership style, Mr Jones describes himself as operational and decisive, but also approachable.

“I’m a very easygoing sort of guy, I’m not into hierarchy,” Mr Jones told Business News. “I’ll treat the receptionist the same way as the second in charge. I have an open-door policy. I don’t care who you are, if you’ve got something to say, you can walk into my office and say it.”

Mr Jones does not greatly enjoy every aspect of running an ASX-listed company, however, such as talking to fund managers. He is a bit different to many CEOs, he argues, as he owns a significant part of the business.

“When I get these (analysts) trying to tell me how they could double my business in the next three months, I remind them that I am also a significant shareholder, and if they don’t like what I am doing then they should take their money and invest in something else.”