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Sunday, December 28, 2008

Chris Whittle Tries It Again, Starting the Private and Exclusive Nation's Academy

Chris Whittle (picture above from New York Magazine) has a new venture. The Upper East Sider who pumped TV news and junk-food ads into high schools with Channel One and tried to make money on public education with his Edison Schools is now launching Nations Academy, an international chain of for-profit elite private schools to compete with the likes of Brearley and Dalton. They’ll cater to people who want the best educations money can buy, and Whittle says they’ll turn a profit by running their schools more efficiently, finding economies of scale in their chain of large schools, and cutting down on typical private schools’ phalanx of teachers, counselors, and other staff.

Working with Sunny Varkey (pictures at right) —a Dubai businessman

who runs an expanding network of for-profit schools in the United Arab Emirates, Great Britain, and his native India—Whittle is putting one of his first two schools in Manhattan. (The other is in Bethesda, Maryland, outside D.C.) The plan calls for a $150 million, 220,000-square-foot campus on a patch of land that Douglas Durst controls on far West 57th Street. Construction in New York and Bethesda should start next year.

For this venture, Whittle has reteamed with his old pal Benno Schmidt (pictured at right), now CUNY’s chairman. The two first joined forces in the early nineties, when Whittle lured Schmidt from the Yale presidency to help launch Edison, but both were pushed aside in early 2007. Edison landed Whittle and Schmidt in Vanity Fair, and at its peak had a market capitalization of nearly $2 billion; it had fallen so far their ouster barely made the news. They now hold ceremonial titles with little responsibility, and the new managers have announced that the company is changing its name to EdisonLearning and diversifying into education software, after spending sixteen years and some $500 million trying to turn a profit on public-school management.

Whittle plans 60 campuses worldwide by 2021, producing up to $3 billion in annual revenue. The New York and D.C. schools are scheduled to open in 2011, each enrolling around 1,700 students from preschool through high school, some studying the International Baccalaureate curriculum; he’ll offer teachers up to six-figure salaries. Whittle plans to charge the same tuition as the high-end private schools in his markets. In New York, that’ll likely be around $40,000 by the time Whittle’s school opens.

Durst to Build Private School on 11th Avenue
by Eliot Brown, The NY Observer, February 19, 2008

Joining forces with the onetime owner of Esquire, developer Douglas Durst is getting into the education business, building a large private school on a West Side lot a block from the Hudson River. (See more here about The Furst Organization -Ed)

If a zoning change goes through as planned, a $200 million-plus, six-story competitive primary and secondary school will rise on Mr. Durst’s property at 623 West 57th Street, the start of what its backers say will be a global network of the internationally focused institutions.

Called the Nations Academy, the venture is being led by Christopher Whittle, the founder of education management company Edison Schools and the owner of Esquire magazine in the 1980’s. Mr. Whittle, who is partnered with former Yale president Benno Schmidt in creating the schools, said the goal for the Durst site is to create a school for more than 1,700 students from pre-kindergarten through 12th grade, one that ultimately would seek to compete with the city’s top private schools.

The focus of the curriculum, however, is more global than that of a Dalton or a Brearley, Mr. Whittle said, and about 20 percent of the students are expected to be from outside the city, many the children of expatriates.

“It would be competitive with the finest schools in the city,” Mr. Whittle said. “Obviously, that takes time to establish, and we know that, but we plan to be a great school on opening day.”

Along with a school in Washington, D.C., the Manhattan school is scheduled to be finished by 2010, marking the first and second completed schools in what Mr. Whittle imagines as a 12-school global network by 2012.

Before Edison, Mr. Whittle owned Esquire. He sold it to the Hearst Corporation, and founded Channel One, a free educational television network for students. “Most of my activity in media was related to schools,” Mr. Whittle said.

Nations Academy will have a long-term lease on the West Side building, which will be about 240,000 square feet and will be built by the Durst Organization. Durst, which has a long-term lease on the entire block, will also build and own a parking garage underneath and about 20,000 square feet of retail at the school’s base.

The development firm built a 600-unit rental building on the east end of the block in 2005, the Helena, and plans have not yet been finalized for the western-most section, according to Durst spokesman Jordan Barowitz.

Nations Academy is also seeking a considerable sum—more than $200 million in tax-exempt bonds—from the Industrial Development Authority, a city-administered agency that issues the bonds.

From Betsy: more on this deal is below from the Schools Matter blog:

Saturday, December 08, 2007
Chris Whittle and Schooling for the Future Oligarchs
For those who have followed the career path of Chris Whittle, you know that he has made his fortune from failure, managing to walk away unscathed from each subsequent example of burning corporate wreckage. From his failed media/advertising empire in Knoxville, to his Channel One flameout and ditching, to his Edison, Inc. corporate welfare venture, Whittle has shown a consistent capacity to generate, through savvy marketing, enough excitement to corner a few million for himself before the blush on each new business model is spoiled by a rotting from within.

Now as the enthusiasm for giving corporations tax dollars to run our public schools has begun to track the same trajectory as Bush approval ratings, Whittle has been one of the first to notice and the first to take a sagging idea, repackage it to appeal to investors with more money than good sense, generate a great deal of free publicity, corner a few more million for himself, and then watch the fun unfold. Market savvy as always, Whittle is now keen to develop a new kind of chain store school, but this one is based more on the easy extravagance of an educational Neiman-Marcus than the penny-pinching Target model of Edison, Inc.

Whittle wants to educate the children born from money without boundaries, from wealth of international corporations unrestrained by the parochialism of national borders or the low pedestrian loyalties of the non-wealthy. He is marketing the idea of a school to ensure a future Praetorian Guard for civilized world empire, a crown jewel of schooling unsullied by economic restriction. Wow, Chris--I'm getting cold chills!

From WaPo:

The prospective buyers of the former Grosvenor Estate in Bethesda, (pictured above) who had declined to identify themselves as rumors of the deal swirled in recent months, announced a plan yesterday to turn the 35-acre site into an internationally oriented private school with 14 grades and more than 1,600 students.

Two educational entrepreneurs, Channel One founder Christopher Whittle and former Yale University president Benno Schmidt, were in Bethesda to lay out plans for the school, which they hope will be the flagship for 60 similar campuses around the world.

Nations Academy will offer an International Baccalaureate-style curriculum from pre-kindergarten through 12th grade to the children of expatriates, diplomats, international businesspeople and others. A student admitted to any of the schools could enroll at another Nations Academy if the family is transferred, Whittle said.

"Every time these families move, they go through all the stress and trauma of finding new schools, and their children go through the trauma as well," Whittle said during an interview at the Bethesda Marriott, where he and Schmidt were holding meetings to announce the project. "We see it as the first truly global school."

Whittle said his company, also called Nations Academy, has an agreement to buy the property from the Renewable Natural Resources Foundation, which maintains an office park of environmental groups on the land. Whittle would not reveal the selling price or say whether the deal was contingent on the buyers' ability to secure the required county approval to open the school.

"Let's just say that we have an agreement and that some money has changed hands," Whittle said.

He described the costs of the Bethesda school as "a nine-figure project." Whittle and Schmidt, who together founded Edison Schools, an educational management company, said they hope to open the Bethesda school by fall 2010 along with a second campus being planned in Manhattan. Those would be followed by four others in 2011 and six in 2012 in cities including London, Shanghai, Paris, Hong Kong and Los Angeles. . . .

Unfortunately, Whittle's new focus on private equity says everything about the exhaustion of the public treasuries.
Posted by Jim Horn at 8:19 AM
Labels: private schools, Whittle

Tim said...

Just what we need in this area: another high-priced, over-hyped private school. This one sounds like it will also cause all manner of traffic problems in an area that has plenty right now.
5:42 PM

Anonymous said...
Our association has reviewed this plan and find it totally without substance, financial viability, or common sense. This insight into Mr. Whittle makes it much clearer. Thank you

And here is Elizabeth Green's article:
Schools Expand Globally, Educate Locally
By ELIZABETH GREEN, Staff Reporter of the Sun | October 2, 2007

At a Lower Manhattan nursery school the other day, some of the 4-year-olds were outside scooping water from a tub when a helicopter whipped by overhead. Such unplanned interruptions are part of the design at the British International School of New York, a new academy just off the FDR Drive on the East River that is adding SMART boards and global conference calls to round out its fast-forward curriculum.

"A child can look outside our windows, they can see sea planes, barges, tug boats. They see bridges spanning between two land masses," the school's director of finance and administration, Allen Wechter, said. "Ultimately we feel that it is an international world. The children should be able to share in that."

The school is one of a growing number catering to the sons and daughters of the modern international business class. Whereas the last generation's top executives might have left their children at home when posted abroad, today many are taking everything with them.

Schools such as British International are responding to the portable, pick-up-and-go work schedules with lessons that not only mirror the executive lifestyle — Mr. Wechter described as "interfacing" the conference calls his children conduct with children at a sister school in Britain — but also are calibrated to international curricula.

"Let's say you're a parent and you're living in London, but you've been asked by the company that you've worked for to spend three years in Hong Kong," the founder of for-profit public school operator Edison Schools, Chris Whittle, who is launching a new chain of schools called Nations Academies, said. "Literally you just pick up the phone and say, ‘I'm coming to Hong Kong,' and you'd be guaranteed admissions in Nations Hong Kong."

A mother who moved to Lower Manhattan from a London suburb just four weeks ago, Sallie Floyed, said she decided to come last April, after her husband's firm offered him a position in New York with a minimum two-year stay. A generation ago, Ms. Floyed said, the couple might have put their children in boarding school. Half her peers at the English boarding school she attended were in that boat, she said.

She never considered it for her own children. "It's quite old-fashioned, the whole boarding school thing," she said. "I think parents just want to be with their children."

For a modest request, it is often difficult to realize. The London school the Floyeds's oldest child attended recommended finding a New York school with a matching curriculum. Options were scarce; by the time the move was set, admission at nearly every private school in the city had long since closed.

Finding the British International School, which in its second year has not yet reached full enrollment and, like other schools in the city that serve international clients, has a rolling admissions cycle, was "a real relief," Ms. Floyed said.

Elizabeth Perelstein, the head of a company that helps families relocating to other countries find schools, School Placement International, said competition is so intense that even schools that have added rolling admissions to accommodate international families are often overbooked.

To surmount such competition, Ms. Perelstein's clients are willing to pay: School Choice International charges $1,200 for a four-hour consultation; a full placement costs $2,750.

Businesses whose expanding operations are sending families all over the world also seem hungry for help. An investment bank, Lehman Brothers, shouldered half the cost of a recent report that explored the shortage done by the American Chamber of Commerce in Hong Kong; four other financial firms, Goldman Sachs, Morgan Stanley, Barclays, and Société Générale, covered the rest.

In New York City, investors seem to sense an opportunity. Borrowing an idea popular in Asia, groups are forming for-profit companies to start schools. The British International School is for-profit, as is another new Lower Manhattan school that attracts international families, Claremont. So is the Dwight School, a Central Park West academy that was the first in North America to offer the International Baccalaureate curriculum. Mr. Whittle's company is a partnership with Dubai-based Global Education Management Systems.

The schools' models are all similar; most follow the International Baccalaureate curriculum. British International and Nations also tout communications technologies that include SMART boards — interactive computer screens that act as digital chalkboards.

At the British school, administrators say the experiment is working. Although the school is not fully enrolled, the number of pupils has doubled this year, reaching 115.

Most of the British International mothers interviewed said the school was one of their only options because their husbands had been transferred at the last minute, but all said they were pleased. One, Lucy Cornell, who moved her children from Paris, was turned off by other schools' requirement that her children take an intelligence test. "We would have had to fly three children over with jet lag," she said. "It seemed ridiculous."

Another bonus is that, if families leave the city in two or three years — as many said they plan to do — their children can transfer smoothly to any of dozens of British International Schools around the globe. Manhattan is also proving to be a point of attraction. Describing weekends she and her family have spent so far enjoying New York City's parks, restaurants, and cultural venues, Ms. Floyed weighed her move.

"London just doesn't compare," she said.

Chris Whittle
FORBES, 01.23.08, 6:00 PM ET

We have 15 million children in the U.S. who are at marginal levels of literacy or lower. That's a problem. Fifteen million is a staggering number--it's like you have 30,000 schools in which every child is at sub-literate levels. It's a country within a country of children that we as a society are not sending on their way with an equal start.

Pop quiz: Would you rather fly American Airlines or AeroFlot? American is for-profit; AeroFlot was owned by the Russian government. But American had the better safety record by far. We, as citizens, should be agnostic as to whether a provider is for-profit or not-for-profit. A citizen should care about one thing--is it a good service or not? And in the case of school operators, the focus should be not on whether we happen to make money or not. Parents don't care if we're making money. They care how their children are doing.

Competition raises all boats. When we're asked to manage a school, we know we have to do it well. If we don't do it appreciably better than the school down the street, why are we there? This argues for the concept of a multiple-provider model, and children are the winners of that competition. I'm not arguing private vs. public, I'm arguing scale vs. no scale. The only way Edison makes a profit is if we run a good school. If we run a bad school, we're going to get fired. If profit is such a horrible thing, let's take the computers out of the schools, and the books, the pencils. Let's tear down the buildings that were built by private companies. There's nothing in schools that wasn't brought in by for-profit entities.

The federal government must get into the education innovation business in a way that it just has not done. There is no large-scale research and development in the U.S. in education, and schools don't just magically improve. We spend $27 billion on health-care research, but we spend $260 million on education research. We cannot leave innovation and education to local school districts because they're not big enough. Neither are states. America spends half a trillion dollars a year on public schools, and virtually nothing on how to change them.

If you're not investing in change, you won't get any.

-- Interviewed by Zack O'Malley Greenburg

Chris Whittle is the founder and chairman of Edison Schools. Established in 1992, Edison has served more than 250,000 K-12 students as the country's largest private manager of public schools. Whittle is the author of Crash Course: Imagining a Better Future for Public Education, published in 2005.

Why Edison Doesn't Work Chris Whittle still dreams of transforming the nation's public schools--and making lots of money too. Good luck.
(FORTUNE Magazine)
By Brian O'Reilly With Reporting by Julia Boorstin
December 9, 2002

(FORTUNE Magazine) – The idea sprang fully formed from Chris Whittle's mind about a decade ago, and it was a stunner: transform public education in America with a chain of 1,000 or more for-profit, privately run grammar schools and high schools, all crisply efficient and brilliantly designed, and all paid for with tax dollars and school vouchers.

Entrepreneur though he is, this was no get-rich-quick scheme on Whittle's part. Rather, the venture that came to be called Edison Schools--which currently runs 150 learning institutions in 22 states across the country--was a strange combination of idealism and opportunism, propelled by the idea that business could succeed where government had failed. Alas, instead of the bold assault on bloated, corrupt, and failing school bureaucracies that Whittle envisioned, it has turned into a long, slow, bloody war, like Napoleon reeling through Russia, with few tangible successes, enormous controversy and resentment, and hundreds of millions of dollars in losses since the company opened its first school in 1995.

Whittle, 55, who calls his CEO job "grinding," miscalculated how tricky and expensive it was to run a school. He expanded too far, too fast. He badly underestimated the suspicion and opposition he would arouse among parents, school boards, and school staff. As Edison's forecasts of huge leaps in academic achievement have failed to occur, a wave of unhappy clients has begun to terminate contracts with the company before expiration. Edison stock, which hit nearly $37 a few years ago, now trades at less than $2. Though Edison posted record revenues of $525 million last year, it also had record losses of $86 million, and it carries a heavy $160 million debt load. "Whittle was never willing to be a niche player," says Dan Quinn, an analyst at Morningstar. "He wanted to be king of the world. Now it's all come collapsing around them. I don't know where they're going to get the money to pay off their debt."

We can all agree that it would be great if Edison were a success. After all, few things in this country need improvement more than our public schools. But Edison has been in business for seven years now, and the verdict is clear: It doesn't work.

Education, in some form, has been in Chris Whittle's blood from the beginning. His father, a doctor in rural Tennessee, was president of the local school board. While Whittle was at the University of Tennessee, he started a series of guides and magazines aimed at college students, which became the basis of one of his companies, Whittle Communications. At 32, he and a friend bought the venerable but ailing magazine Esquire. Later he launched a controversial ad-supported classroom television network called Channel One. As he visited innumerable schools to sell them on the network, Whittle became increasingly dismayed by what he saw: self-serving unions, uninspired administrators, ill-prepared students. All this could be fixed, he decided, with for-profit companies running public education.

When he made speeches about for-profit education before various conferences of state governors in the early '90s, many implored him to take over their troubled public schools. His gubernatorial fans--largely Republican--included Lamar Alexander of Tennessee, Tom Ridge of Pennsylvania, and George W. Bush of Texas. (William Weld, former governor of Massachusetts, later joined Edison's board.) Venture capitalists and investors became enchanted with the idea, too, lured by presentations from Merrill Lynch, an early Whittle backer, that spoke of an inefficient secondary-education industry that spent $1 billion a day, only half--half!--of which was spent directly on education. The rest, it was implied, was pork and featherbedding, easily trimmed by sharp-eyed, reform-minded businesspeople.

Backed by $45 million of early financing, Whittle pulled together a raft of academics and education experts in 1992 and spent three years researching the best ways to teach and run schools. The plan that emerged was ambitious. Lots of teacher training, longer school days and school years, enormous attention to reading. Foreign languages, art, dance. Home computers for every kid. Big schools reorganized into smaller "houses," with the same cluster of kids and teachers together for years. Lots and lots of benchmark testing designed to let schools know which kids needed help and which teachers were having trouble. Incredibly, it wouldn't cost the school district any extra money, Whittle's team figured. Edison would accept the same per-pupil allotment that the district was already spending, and profit from the efficiencies it would impose.

Whittle's first mistake was to count on the nascent school voucher movement of the early 1990s. Vouchers--where parents get a few thousand dollars from the government to spend at any school--were never popular. And Whittle's plan turned out to be extraordinarily difficult to sell. Middle-class suburbanites, it turned out, were almost always satisfied with their local schools and didn't want a for-profit company educating their kids. Teachers and teachers' unions objected to the longer hours, lower pay, and lack of tenure that Edison generally proposed. Existing administrators and support staff, who faced wholesale firings, were predictably unenthusiastic. Whittle "didn't realize how hard a sale it would be," says Henry Levin, head of the National Center for the Study of Privatization of Education at Columbia University. "They landed maybe one or two schools for every 20 they romanced. It was incredibly naive."

Whittle's second mistake was to position Edison, which went public in late 1999, as a growth company. To get big fast, Edison started making deals that have turned out to be foolishly expensive. The company signed several contracts that charged so little that Edison was practically paying school districts for the right to teach. Worse, the deals often allowed local boards to terminate agreements at any time for any reason--which could cause the company to forfeit much of the millions in startup costs it pours into each new school. If Edison wanted to get the contract to run a budding charter school, it often had to lend millions of dollars to the founding school board to construct or renovate each school building. Accordingly, Edison shelled out $200 million to dozens of charter schools and guaranteed loans worth another $20 million. In Las Vegas a few years ago, Edison was so sure that philanthropists would donate $10 million to establish its schools there that it guaranteed the contributions to local officials. The philanthropists didn't cough up, and Edison was on the hook.

Now Edison is desperately short of cash, with $80 million in charter school loans still outstanding. "The company needs to refinance those loans if it wants to keep growing beyond 2004," says Brandon Dobell, an analyst at Credit Suisse First Boston. "And its stock will have a hard time gaining ground until that happens." With Edison's track record, it's unlikely the company will be able to refinance at anything close to market rates.

Thanks to resistance from schools in middle-class areas, Edison's eventual customers wound up being vastly different from those Whittle had first imagined. The takers were charter schools started from scratch within existing school districts, and desperately troubled inner-city schools with rock-bottom test scores and little money. Says Adam Tucker, a spokesman for Edison: "They were the ones most willing to take the chance, who felt they had nothing to lose." But even troubled school systems were ambivalent about Edison. School boards were reluctant to give up control, unions were often vigorously opposed, and parents feared Edison "profiteers" would cut corners at their kids' expense.

In fact, Edison was spending ridiculous sums on its students. For example, at Boston Renaissance, a grammar school that Edison helped establish, the company gave home computers to all 650 students in 1995. The giveaway proved a fiasco. Not only did the computers cost nearly $1 million, but many parents--poor and poorly educated--didn't know how to set them up. Edison's tiny technical staff was swamped trying to install, maintain, and repair them. Nevertheless, Edison continued for years to provide home computers to most students in its other schools. Whittle concedes that he was slow to abandon the idea. "We couldn't afford any early failures," he explains, so "our schools were oversupported and overengineered at the beginning." He adds, "The costs of classroom technology--purchases and support and networking--are close to the entire losses of the company." That's more than $338 million to date.

Other losses are more recent. "I told Chris Whittle he wasn't going to make any money here," says Thomas Persing, a gruff ex-Marine who heads the school district in Chester, Pa., a deeply distressed town just outside Philadelphia. "But he said that if Edison could take Chester--urban, troubled, black--and show academic success, he could use it as a marketing tool and really make big money." Persing figures Edison lost $14 million in Chester in 2001, the first year it was there. Edison says its startup costs were closer to $11 million.

What about all those efficiencies Edison had promised to find? It seemed to have a hard time locating them. When managers did attempt to cut costs, they sometimes made embarrassing, even dangerous, blunders. For example, in Philadelphia last October, Edison eliminated all the so-called nonteaching assistants who monitor students in the hallways. Disaster ensued: Fights and fires broke out, and police had to be called into one school to restore order until staffers were rehired. As for the company's central office in New York, Whittle acknowledges that its expenses--originally expected to run about 7% of revenues--have been considerably higher than planned: 23% of revenues two years ago and about 15% last year. "We are still working," he says, "to drive them down." Last July he vowed to slash the central office's then-300-person staff in a "reengineering." So far he's cut 45.

As if Whittle didn't have enough problems, last May the SEC declared that Edison was confusingly inflating revenues by including salaries paid directly by Edison-managed public schools to teachers. Edison argued that doing so didn't violate Generally Accepted Accounting Principles. After spending millions to defend itself, the company backed down. It agreed to restate revenues, lowering them by a total of $77.6 million over the past four years.

You'd be a lot more willing to overlook Edison's financial results if its educational results were outstanding. The company insists that its students' improvements on standardized tests are substantial and significant--an average of five to six percentage points a year--compared with one to two percentage points at most big urban schools. But to many, that difference just isn't dramatic enough. In Boston's Renaissance school, "the superior academic performance that the board sought never materialized," says Dudley Blodget, the school's COO, who nevertheless takes pains to praise Edison's extraordinary effort. "We were moving a lot of children from low achievement out of that category, and doing that more than most schools. But we were not moving children up to a higher level as much as we'd like." Renaissance terminated its contract with Edison, effective next June--three years early.

The Dallas school board announced last August that it was booting Edison prematurely too. The problem there wasn't declining test scores; they were up at six of the seven schools Edison runs. It wasn't that the schools were shabby either. A tour of Medrano Elementary near downtown reveals a sparkling place with friendly, uniformed students walking quietly, single file, hands behind their backs. The school board was unhappy because, in standardized tests, kids with similar backgrounds at other schools in the area did even better than kids at Edison. "I really wanted Edison to succeed," says Ken Zornes, president of the school board, who notes that Edison schools cost the district 10% more than other schools because it has longer hours. "If they proved their concept, it would have been worth it. But we did the numbers."

The biggest blow for the company this year came in April. Whittle had spent years negotiating with Pennsylvania governors Tom Ridge and Mark Schweiker, both staunch Edison supporters, and state education officials about taking over the entire 264-school Philadelphia district. But Philly mayor John Street wasn't so keen, threatening to barricade himself in a school to protest a deal with Edison there. Edison wound up getting a contract to manage just 20 schools, a fraction of what it had been hoping for. Investor confidence collapsed, sending the stock as low as 15 cents a few months later. Meanwhile, cash-strapped Edison had to scramble to raise money at a whopping 12% interest rate to buy supplies for those schools. (The Philly public-schools superintendent held up payments to the company until October, when he extracted a promise that the district could keep the textbooks and supplies if Edison went belly up.)

Perhaps the simplest reason Edison doesn't work, though, is that for-profit education just isn't a very good business. Though a dozen or more competitors have sprung up in recent years--most much smaller than Edison--about the only profitable ones are $15.6 million Nobel Learning Communities, which runs mostly private schools, and National Heritage Academies, which runs 28 quasi-religious schools. For-profit schools are "low margin no matter how you slice it," says Steven Wilson, who started Advantage Schools in 1996. Economies of scale are almost nonexistent, says Columbia's Levin: "Schools have very high variable costs, and as school systems get larger than 6,000 students they actually become less and less efficient." Edison, ten times bigger than the optimum-sized district and with schools scattered thousands of miles from its New York headquarters, has especially high costs, he says. Then there's the quality of the education. For-profit schools have to be orders of magnitude better than their public-school rivals in order to overcome the political opposition that confronts them. And so far that hasn't happened.

No one doubts that Whittle is passionate about his educational mission. "The changing of human institutions," he says, "happens to be one of the most important ideas." The team he's assembled seems to be equally committed. "I have a chart I stare at in bed at night," says Richard Barth, Edison's senior vice president in Philadelphia. "There's an elementary school in the city with 1,200 students, where only 3.5% are proficient in math. I will change this or die trying."

At the same time, no one doubts that Whittle would have loved to get rich from Edison. His holdings include a mansion in the Hamptons and a townhouse on Manhattan's Upper East Side. His chic Italian wife is a member of Fiat's wealthy Agnelli clan. And one of his former companies had two jet pilots on the payroll. Whittle is a complicated fellow, says a former colleague. "Is he a schemer or an idealist? I think he is both. Chris is a dreamer with a highly developed business sense: seriously interested in education and seriously horrified by what he has seen of public schools."

Edison's decline has left Whittle, who holds more than 14% of the company's shares, financially soaked. "I own only one stock," he says with a sigh. Last summer he was forced to put his huge Hamptons house on the market, for $45 million. "That was painful," he says. "It's where my children grew up." It remains unsold. Meanwhile, the company Whittle founded continues to bleed, prompting some analysts to predict that if things don't pick up dramatically next year, Edison won't be around much longer--at least in its present form.

But you won't hear that from Whittle. "Things are much better than you might guess," he insists. He points to growing revenues and growing enrollments: Edison currently educates 80,000 students--6,000 more than last year. He talks of scaling back the company's growth to save startup costs at new schools. He predicts that a new federal law, No Child Left Behind, which requires school districts with failing test scores three years in a row to change management, will boost demand for the company's services. Edison will show a profit in the fourth quarter ending next June, Whittle insists. "There are 15,000 school systems out there," he muses. "If we get 1%, that will make us a FORTUNE 500 company." Chris Whittle is clearly one die-hard dreamer.


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