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Published in Print: August 4, 1999, as Education Firm Charts Growth Of Its Universe

Education Firm Charts Growth Of Its Universe

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Using PowerPoint presentation software, Le Whitton puts the finishing touches on a computer "slide show" she has created. The topic: Why teachers at Flanagan (Ill.) Elementary School, where Ms. Whitton is the principal, should take the same technology-training course that she is completing.

"I've created one slide show to persuade my school board we need it, and another to convince the teachers," Ms. Whitton says.

Knowledge Universe Inc.

Founded: In 1996, with a $500 million investment by Michael R. Milken, Lowell Milken, and Lawrence Ellison.

Headquarters: Redwood City, Calif.

1998 revenues: $1.4 billion

Major holdings:

  • LeapFrog Toys: Educational toys that help children learn to read, spell, do math.
  • Knowledge Beginnings: Preschool chain formerly known as Children's Discovery Centers.
  • Teacher Universe: Technology training and other services for educators.
  • Spring: Britain-based personnel and training company.
  • Productivity Point International: Computer training for corporations.
  • MindQ Publishing: Developer of multimedia learning systems featuring animation, 3D graphics.

Significant investor in:

  • Nobel Learning Communities: Chain of private preschools, K-8 schools.
  • Online graduate courses provided to corporations.

Creating sharp-looking documents and spreadsheets is among the tasks she mastered in a five-day training institute run by Teacher Universe, a new company that for the time being is focused on helping teachers integrate technology into the classroom. It also offers technology training geared to administrators, school technical experts, and office staff members.

"Administrators have to be as knowledgeable as teachers," says the principal, whose 550-student district in central Illinois paid her travel expenses, plus the $450 tuition, for the institute here.

Though it wasn't evident to Ms. Whitton and the other eight educators who gathered at an office park near Orlando last month, Teacher Universe is one cog in a rapidly growing education company formed 3 1/2 years ago by former "junk bond" financier Michael R. Milken, his brother Lowell Milken, and Lawrence Ellison, the chief executive officer of Oracle Corp.

Teacher Universe's parent company, Knowledge Universe, owns child-care centers, an educational-toy company, corporate-training firms, business-consulting concerns, and the beginnings of several Internet-based information-delivery systems. The privately held company's stated mission is to offer a broad range of education and training opportunities from childhood to retirement age. It is going about it principally by buying and investing in a broad array of education- and information-related businesses.

"It's clearly one of the most ambitious initiatives in the education market to date," said Michael T. Moe, the director of global growth research at Merrill Lynch & Co.

"Trying to create a dominant brand in knowledge services and education along one's lifetime is both a big idea and complicated," added Mr. Moe, who has closely tracked the education industry for several years.

Cradle to Grave

Knowledge Universe's unstated mission, some observers say, is to help rehabilitate the personal and professional reputation of Michael Milken, who went to federal prison for two years and paid $1 billion in fines for violations of federal securities law. Since his release from prison in 1993, he has focused his energies on the company and on his personal and family charities, which deal with education and cancer research. (Mr. Milken was diagnosed with prostate cancer in 1993; his cancer is now said to be in remission.)

Last year, Knowledge Universe had $1.4 billion in revenue. Michael Milken is its chairman, but the Redwood City, Calif.-based company is not tied to family charities such as the Milken Family Foundation, which gives $25,000 grants to accomplished educators each year, or the Milken Exchange on Education Technology. The Milken Exchange underwrites Education Week's annual report on education technology, Technology Counts.

The Milken brothers declined through company officials to be interviewed about Knowledge Universe. Michael Milken has at times suggested that he is merely an investor in the company and not involved in its day-to-day management.

Thomas Kalinske, the president and chief executive officer of Knowledge Universe, said in an interview that Michael Milken "is more involved when we are interested in acquiring a company."

The Milken brothers and Mr. Ellison "obviously have a lot of other things on their plates, but they also have a lot of knowledge to offer," said Mr. Kalinske, a former chief executive at the toy-and-game makers Mattel and Sega of America.

"Our whole mission is to help improve people no matter what their age," Mr. Kalinske added. At Knowledge Universe, "you've got a bunch of guys who have been fairly successful in other walks of life who are now interested in education. We are trying to find other people who want to help improve education."

Of Knowledge Universe's businesses that are related to pre-K-12 education, most are focused in areas that might best be described as supplemental to core educational services. Knowledge Universe doesn't appear for now to be interested in running charter schools or managing public schools under contract, as the New York City-based Edison Project and a handful of other companies do.

Instead, Mr. Kalinske talks about a Knowledge Universe "brand" that could be available to consumers from prekindergarten through retirement. They might start in child-care centers owned by the company, then experience Knowledge Universe-provided test preparation during high school, corporate training during their work years, and training in new skills for a second career after retirement.

"That's the theory," Mr. Kalinske said. "If we do this smart, you'll have a positive association with the Knowledge Universe brand, and it will take you from birth to retirement."

Arthur Levine, the president of Teachers College, Columbia University, said that Knowledge Universe is emblematic of "the convergence of knowledge-producing organizations."

"What education offers to corporations is a growth industry, particularly in an information society," Mr. Levine said.

The areas of Knowledge Universe most closely linked to pre-K-12 education are Knowledge Beginnings, the child-care chain formerly known as Children's Discovery Centers, and LeapFrog Toys, which makes a popular line of educational toys.

Investment Portfolio

Knowledge Universe recently completed the purchase of Children's Discovery Centers, and under the new name has some 250 preschools, with a growing number at corporate sites.

LeapFrog Toys was started in 1995 and was acquired by Knowledge Universe two years later. Its phonics-based learning toys, which have been sold primarily in retail stores, are now being geared to the school market. California education officials recently granted approval of LeapFrog's Phoneme Awareness Program for Early Reading, a K-2 classroom kit.

Knowledge Universe is also a major investor in an Internet company called, which plans to offer postgraduate lessons electronically to corporations. UNEXT has deals to provide course material from such institutions as Columbia University's business school, for example.

But older businesses such as textbooks and bricks-and-mortar schools have also interested Knowledge Universe. It owns a minority stake in Nobel Learning Communities Inc., a Media, Pa.-based for-profit chain of private schools that is also moving into the charter school arena. ("One School at a Time, Pa. Company Is Dominating the For-Profit Market," Mary 20, 1998.)

And last year, Knowledge Universe bid unsuccessfully for the educational properties of the book publisher Simon & Schuster.

Mr. Kalinske said the company was looking for the right opportunities to get into educational software and educational media.

"All of those things are of interest," he said.

Moving to the Web

While it is on the lookout for education-related acquisitions, Knowledge Universe is also intent on growing its current businesses, Mr. Kalinske said.

The company views Teacher Universe as something of a new start-up, although it has its roots in a small teacher-training company acquired by one of Knowledge Universe's training firms in 1997.

Teacher Universe was launched in January, but this summer is the first time it has offered a major wave of one-week training institutes, primarily in cities on the East and West coasts.

Ms. Whitton, the Illinois principal, was originally planning to attend an institute in Lake Tahoe, Nev. But that session was canceled, so she decided to enroll in the one near Orlando, called Integrate 101.

Several U.S. teachers were supposed to be in the class, but Ms. Whitton ended up as the lone American among several Brazilian educators from the city of Barretos. Some of the Brazilians spoke little or no English, although they appeared to be well-versed in Microsoft Windows and applications such as Word, Excel, and PowerPoint.

"We are learning how to use technology in class better," said Fernando Gomes, a mathematics and physics teacher at a private high school in Barretos.

Teacher Universe instructor Lloyd Spruill focuses on integrating Windows applications into the classroom. (Teacher Universe offers training on a variety of operating systems and applications.)

Creating a PowerPoint slide show about the Brazilian rain forest can lead students to use economics, math, language arts, geography, and other subjects, Ms. Spruill says.

"If we isolate computer skills, that's like having a pen teacher, or having a pen lab in the school," said Ms. Spruill, who was a school district technology director in Bertie County, N.C., before joining the training firm that preceded Teacher Universe.

Despite the numerous one-week courses being conducted this summer, Teacher Universe is primarily oriented toward selling its services to districts and providing training at teachers' schools. And in the long term, the company plans to deliver services through the World Wide Web.

Deborah Bond-Upson, the president and CEO of Teacher Universe, said the company has already trained 25,000 educators, mostly through arrangements with school districts. She aims to build the company into the largest national provider of technology training for teachers. Currently, most such training comes from small local or regional firms or from in-service workshops run by districts themselves, she said.

"If a school has access to low-cost training from the school district, then it is a harder sell for us," Ms. Bond-Upson said. But Teacher Universe is betting that many districts will be willing to pay for its program.

The company also hopes to capitalize on the widely held belief that higher education institutions aren't preparing prospective teachers to use technology as well as they should.

"Universities no longer have full responsibility for the professional development of teachers, and Mike Milken is part of that trend," said Mr. Levine of Teachers College, whose own institution is exploring electronic ways of providing instruction. "Corporations have the money and [information] pipelines, and they have much faster decision times than colleges and universities."

Affinity Cards?

Visiting the Florida training institute, Ms. Bond-Upson pulled out her business card, which charts her company's future directions: "Technology Planning. Professional Development. Instructional Tools. Career Services. Life Services."

"We see Teacher Universe as a wonderful place on the Web for everything teachers need," she said.

Ms. Bond-Upson envisions, for example, a service that matches substitute teachers with districts needing specific skills. The Web site might provide information to teachers about applying for educational grants. Teachers might also be offered "affinity" credit cards.

When it is suggested that the teachers' unions offer similar services, Ms. Bond-Upson responded that Teacher Universe would offer a unique package. "We're really not doing anything that is competitive with the unions," she said.

Ms. Bond-Upson joined Knowledge Universe two years ago after a 25-year career with the test-preparation company Kaplan Educational Centers Inc. She is also a former teacher and Unitarian minister. Her sister, Geraldine Laybourne, was once the head of the Nickelodeon cable channel and now heads a prominent women's Internet company known as Oxygen Media.

"I met Mike Milken and realized there was financial backing behind the right kind of education ideas," Ms. Bond-Upson said.

She helped Knowledge Universe acquire Computer Decisions Inc., the North Carolina-based training firm that formed the foundation for Teacher Universe.

Teacher Universe is licking its chops over the growing amount of money earmarked for classroom technology and teacher training.

The company has divided up the United States into seven sales regions and also has a sales manager for Latin America and the Caribbean, which appear to be a ripe market for its services as well.

"Within those [U.S.] regions, we're looking at the districts with the greatest needs and funding" for the company's services, Ms. Bond-Upson said.

She wouldn't disclose the revenues of Teacher Universe other than to say the company hopes to reach $10 million per year by next year. That makes it a relatively small part of Knowledge Universe, but Ms. Bond-Upson is bullish about its prospects.

"We think we have a model that we can scale up rapidly," she said.

Vol. 18, Issue 43, Pages 1,20-21

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