School & District Management

Software Mogul Helps Guide Calif. Schools

By Caroline Hendrie — February 26, 2003 10 min read
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When the first Silicon Valley software company he started was bought out in 1997, Reed Hastings suddenly acquired gigabytes of two scarce commodities: time and money. So he did the obvious thing: He enrolled in Stanford University to pursue a master’s degree in education policy.

“He could have gone out and bought a gazillion Porsches,” recalled Don Shalvey, who has worked closely with Mr. Hastings to develop Aspire Public Schools, a nonprofit network of charter schools in central California. “But no sooner does he sell his business, than he was thinking about going to Stanford.”

Intended as a sabbatical from the business world, Mr. Hastings’ return to academia at age 36 kicked off a chain of events that has catapulted him to the upper echelons of education leadership in the nation’s largest state.

While studying at Stanford and incubating the idea for his next high-tech start-up, Mr. Hastings entered California’s education arena as the quintessential outsider, mounting a campaign—fueled by $3 million of his own money—to pass a ballot measure aimed at uncorking California’s charter schools.

Five years and many policy battles later, the affable, 42-year-old entrepreneur has become an established insider—the president of the California state board of education and a trusted lieutenant to Gov. Gray Davis—while continuing to back a charter movement eyed with growing resentment by powerful interest groups.

In pursuit of his priorities for improving public schools—which include not only charters, but also test-based accountability and increased facilities funding—Mr. Hastings is pulling an unusually broad assortment of policy levers at once. In addition to writing large checks to the campaigns of state-level politicians, he has bankrolled several major ballot initiatives, helped found education advocacy organizations, and worked directly with legislators to craft bills important to him.

The result has been a series of policy victories, some of which have earned Mr. Hastings the enmity of certain charter school and teachers’ union leaders. But he has also accrued many admirers, some of whom view him as a model for business leaders hoping to make a difference in the nation’s schools.

“I don’t know of anybody in any state who does all this stuff,” said Michael W. Kirst, an education and business professor at Stanford who is himself a former president of the California state board. “I’ve never seen anything like it, and I’ve been around a long time. He’s very interesting and unique.”

Mr. Hastings grew up outside of Boston and Washington as the son of a lawyer who served a stint during the Nixon administration as general counsel in what was then the U.S. Department of Health, Education, and Welfare. Despite that family history, he now describes himself as a “blue-blood Democrat.”

After graduating from the Buckingham, Browne & Nichols School in Cambridge, Mass., and Bowdoin College in Brunswick, Maine, Mr. Hastings went on to earn a master’s degree in computer science from Stanford and then make his career in Silicon Valley. In between college and graduate school in the early 1980s, he taught mathematics in Swaziland for the Peace Corps, and he points to that two-year stint as one source of his interest in education.

‘Puritan Guilt’

He also credits his education for his business success, and believes in “extending the opportunity franchise.”

“It’s a little bit of the old Puritan guilt about suddenly doing well, and how am I going to give back?” he said during a recent interview in Washington, where he had come to meet with federal officials on California’s plan for complying with the “No Child Left Behind Act” of 2001.

Mr. Hastings has squeezed his education work onto an already full plate. After his first company, Pure Software, was acquired in 1997, he founded Netflix, the Los Gatos, Calif.-based DVD-rental start-up that he took public last year and still runs. He and his wife of 11 years, who live in Santa Cruz, have two young children.

As the president of the state board, Mr. Hastings exhibits a leadership style that is an amalgam of the “just make it happen” ethic of high-tech entrepreneurship and the “let’s stay friends” approach of seasoned politicians. By all accounts, he brings keen intelligence to what he describes as “an important job in an important state.”

“He has a strong compass, but he listens,” observed Marion Joseph, a longtime player in California education politics who stepped down last month after five years on the state board.

A close ally of Mr. Hastings’ on the board, Suzanne A. Tacheny, called him “remarkably tenacious and focused.” But he is also adaptable, eager for new information, and willing to “learn out loud,” said Ms. Tacheny, who is the president of the California Business for Education Excellence Foundation, a business-backed organization based in Sacramento that advocates stringent academic standards.

“He’s a very fair-minded chairman,” added board member Donald G. Fisher, a co-founder and the chairman of the Gap Inc.

Mr. Hastings’ willingness to adjust course was on display last November, as the board debated whether the state department of education should intervene in schools that had taken extra funding in exchange for a promise to improve achievement, but then had fallen short of their performance targets. Some of those schools scored relatively high, raising questions about whether intervention was justified.

After examining test data underscoring that point, Mr. Hastings backed off his initial calls for state takeover of the schools and counseled board members to defer action. Over the objections of then-Superintendent of Public Instruction Delaine Eastin, the board went along with him.

“I can’t tell you how much I appreciate your willingness to change your position based on the facts,” Joe Nunez, the board’s vice president, said at the meeting.

The board president then went on to apologize to department staff members who had crammed to prepare for board action on the issue. “I am certainly guilty of impatience in the absence of data, and have given mixed signals, which is a thing that leaders try not to do,” he said at the Nov. 16 meeting. “And I let you down in this case.”

Money and Power

If there’s one quality that sets Mr. Hastings apart from many other corporate executives involved in improving schools, many of his admirers say, it’s his commitment to sticking around. He has taken to heart a lesson Mr. Kirst tried to impress upon him when they first met at Stanford: Education leaders should count on making a bigger mark in their second decade than their first.

“It’s the people who last who make the difference,” Mr. Hastings said.

On the state board, he sees his role as an “outsider” who needs to know a little about a lot. He takes pride in his command of certain subjects, notably charter schools and assessment, but aims to acquire mastery of the full gamut of schools issues before he’s done.

In the meantime, he regularly turns to academic experts for guidance, Mr. Kirst said. “It’s a very different style than saying, ‘Here I am as a successful businessman, and I can fix education, and I’m going to use my money and power to do it,’” he said.

Yet some observers see money and power as the key to why the governor picked Mr. Hastings to head the board in early 2001, just a year after he had appointed him to the panel. In the 2002 election cycle, Mr. Hastings gave $185,000 to Mr. Davis’ re-election campaign, $260,000 to elect longtime state legislator Jack O’Connell as state superintendent, and smaller amounts to many other state-level Democratic candidates. From July to December of last year alone, his contributions totaled nearly $2.3 million, according to the California secretary of state’s office.

“Hey, give enough money to the governor—you can get there,” said Wayne Johnson, the president of the 330,000-member California Teachers Association, an affiliate of the National Education Association. “Reed Hastings without money, nobody wants to talk to. The governor wouldn’t give him the time of day.”

Mr. Johnson said he takes issue with Mr. Hastings’ support of charter schools, as well as his emphasis on holding schools accountable through testing.

“Personally, I kind of like the guy,” the union leader added. “He’s not arrogant or anything like that. There’s some substance there, but people with substance and brains can often be wrong.”

Still, Mr. Johnson calls the union’s relationship with Mr. Hastings “generally positive.”

Mr. Hastings says he is proud of the alliances forged between his fellow business leaders and the teachers’ union, resulting in such victories as passage of Proposition 39 in November 2000. That ballot measure lowered the level of voter support that local school bond issues must garner from two-thirds to 55 percent.

The board president says he donated a total of roughly $5 million to the campaigns for Proposition 39 and a similar ballot measure that failed to pass muster with voters eight months earlier. Several other prominent California businessmen made multimillion-dollar contributions, and the CTA put in roughly $10 million for those campaigns.

State officials now say that Proposition 39 has let $8.2 billion worth of local facilities bonds pass that otherwise wouldn’t have.

Thinking Big

Mr. Hastings’ dealings with the teachers’ union go back to the spring of 1998, when he was mounting the bid to get a measure on the statewide ballot to greatly expand the number of California charter schools. He ended up cutting a deal with the CTA to drop the initiative, in exchange for the union’s support of legislation that raised the statewide cap on the number of charter schools while subjecting those independent public schools to new rules on such matters as certification of teachers.

Around the same time, he helped Mr. Shalvey, who at the time was schools chief in San Carlos, Calif., found Aspire Public Schools to replicate a successful charter in Mr. Shalvey’s district. Mr. Hastings has remained a strong backer of Aspire, which plans to expand its current crop of seven schools serving mainly disadvantaged students in several central California cities.

He also contributes time and money to the New Schools Venture Fund, a San Francisco-based philanthropy that backs Aspire and a portfolio of other projects to create new high-performing public schools. (“Venture Fund Seeds School Innovations,” April 24, 2002.)

“Frankly, sometimes Reed goes out and badgers people to go start more charter schools,” said Lauren Dutton, a partner at the fund. “He pushes people to think big.”

Yet in recent years, Mr. Hastings has also become a leading force for reining in fiscal abuses of California’s charter law. In 2001, he worked with Mr. O’Connell to craft a law that cut funding for charter schools offering less than 80 percent of their instructional time in classrooms, and that earmarked state facilities funding for charter schools in poor neighborhoods.

That bill and other regulatory moves have fueled a schism within the state’s charter community, as well as hard feelings toward Mr. Hastings. (“Calif. Charter- Funding Fight Hits Home,” Jan. 15, 2003.)

In recent months, he has shifted his focus from fiscal oversight of charters to academic accountability. To that end, he has proposed shutting down charters that fare poorly in the state’s test-based school rating system. A bill to that effect is expected to be introduced shortly, and will be pushed by EdVoice, an education advocacy group based in Sacramento that Mr. Hastings co-founded with former state legislator Ted Lembert, who now runs it.

Mr. Hastings’ four-year term on the board is up in 2004, and he says he would probably be willing to serve again if asked. Mr. Lembert, for one, is hoping he will be.

“If we had 500 or 1,000 business leaders like him, he wouldn’t have to do as much as he does,” Mr. Lembert said, “and we could get a lot more done, a lot faster.”

Coverage of leadership issues in education—including governance, management, and labor relations—is supported by the Broad Foundation.

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