I recently attended a conference that was a huge culture shock for me. It was the BMO Capital 12th Annual Back to School Education Conference at the Grand Hyatt on 42nd St in NYC. Let me explain: This was my first conference with Wall Street types. I have gone to many education, children’s literature, and library conferences where the dress code is eclectic if not casual and the population is predominately, if not equally, female. I immediately noticed that this conference was overwhelmingly male (maybe 20 percent female) and about 95 percent of the men wore jackets and ties. It brought to mind something a businessman once told me in regard to my college-aged son who was then sporting an anti-tie button. “When he’s invited into the room where the money changes hands, he’ll put on a tie.” The attendees were primarily private equity people, investors looking for opportunities to park their money in the for-profit sector of the education market.
If the dress code was my first and most obvious clue that I was in foreign territory, I soon discerned other differences from my familiar literary and education worlds. People were silent, polite and seemingly attentive at all sessions. There were no rustling of papers, no up-tempo ringtone interruptions, hardly anyone getting up and leaving for a bathroom break. No one, who asked a question, got up on a soapbox; they asked short and intelligent questions, probing for more information. Conversation among attendees had a buttoned-up quality without gesticulating passions surfacing. It was almost as if revealed emotion signaled vulnerability and everyone had his game face on. It reminded me of how I felt when Neil Armstrong landed on the moon and made his historic comment about the moment with the same vocal inflections as when he chatted with Mission Control about the readings on his instrument panel. Something momentous was going on under the surface and people were engaged yet dispassionate. And, although I arrived with a slight prejudice that “for-profit” and “education” were antithetical to each other, I decided to stay quiet and really listen. After all, I had come to observe and to learn.
First, I had to get my arms around the notion that education is not a small market. It’s estimated to be worth $1.3 trillion, 7 percent of the GDP, second only to the healthcare market! No wonder it attracted a crowd of money people! It is also highly competitive. Most of the sessions were presented by entrepreneurs who had succeeded in doing well by doing good. Some examples: Renaissance Learning is a resource of data on best practices, taking the guesswork out of finding and using instructional materials, Catapult Learning provides consulting services to close the achievement gap, Educational Services of America is a leading provider of K-12 alternative and special education schools and programs for at-risk students, Achieve3000 is a resource for differentiated instruction. These were just a few of the companies showcased and every one of them, without exception, stressed the importance of providing an excellent product. Their CEOs believe that if schools are going to outsource services like professional development, or if they are independent schools charging parents a hefty tuition, they must deliver what they promise. (Hey, I understand this. After all, I’ve been out there in the freelance world most of my professional life.) In other words, if you want to make money, you must deliver excellence.
The problem, for budding entrepreneurs, is the question, “Assuming I produce excellence — how do I make money with it?” The solution to this problem is not a gimme and it’s not the reverse of the last sentence in the previous paragraph. Just because you’re good, it’s not a given you’ll be rich. (We authors know this better than anyone.) And behind it all is the lurking suspicion that if you are producing something for the public good, like education, connecting money to it somehow makes one’s motives less pure.
No one has grappled with this issue more than Chris Whittle, whose pioneering efforts with Edison Schools spearheaded the charter school movement. And the lesson learned through the proliferation of charter schools is that there is no magic formula for a good school. It takes savvy administrators, talented teachers, best practices support and money. Edison Learning continues as a company with solutions for rescuing failing schools and students. Chris Whittle has most recently set his sights on developing an international company of high-end prep schools called Avenues, designed to be a gold standard in education for the 21st Century. The flagship school opened in NYC this fall.
In my confusion about the good vs. evil of profit in education, I asked Mr. Whittle: Is there antipathy towards entrepreneurs who are looking to make education a for-profit enterprise? If so, how would you address these skeptics? His response was tantamount to, “I’m so glad you asked.” He emailed me a recent document he had written for the American Enterprise Institute entitled “Would Steve Jobs Be a Hero If He Had Built an Education Company Every Bit As Good As Apple?” His arguments are very persuasive: Yes, good companies are in it to make money, but that is not their only raison d’etre. (Look at Apple.) He points out that good companies make money for their share holders by building up the equity of the company, not necessarily by siphoning off profits to pay dividends. No, non-profits are not so pure when it comes to money; not all their resources are channeled into educating their students. (Some of it is used for fund-raising extravaganzas; some goes into pensions plans for faculty.) Given the magnitude of the challenges that face us in educating the world’s children, Whittle is adamant that there is no single solution, no single financing option, and he welcomes all innovative comers.
So I spent a day immersed in another culture and found a lot that resonated with me. Here’s my take-away from my encounter with capitalists and for-profit education: Good ideas attract investors, which brings in capital to develop ideas for the market that might never otherwise see the light of day. Then the consumer gets to choose; some investors will get returns and some will take a loss. That’s the game for the money people and entrepreneurs. And the results will be uncounted contributions to the success of our children and some talented people will be able to earn a living. (This is undoubtedly the initial lesson of econ 101, which I probably took in college but it didn’t sink in.) The business of education is not so different from the publishing industry, the source of my livelihood. The competition is a winnowing process. It is definitely not a get-rich-quick scheme and not for the faint of heart.
Kudos to Vicki for being open-minded about the ability of business people to share the desire of educators to deliver an excellent educational product. I know she went into the endeavor with doubt that investors have those objectives, but saw that the guys in suits also deeply care about the quality of the product. And, I will tell you, that it is not just because they are seeking a return on their capital. Most investors interested in education are also passionate about the public benefit of exceptional education. Hope to see you at next year's conference.
Thanks for responding, Susan. It was an eye-opener for me and now that I'm an entrepreneur myself, I REALLY get it.
I would even go one step further to say: if you don't already have content, something to offer, or something to collect, you don't need a website.
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