School Choice & Charters

Chris Whittle Seeks Global Reach in Private School Venture

By Amanda M. Fairbanks — September 25, 2012 11 min read
Christopher Whittle recently opened Avenues: The World School, the first in a network of elite, for-profit private schools he plans to build around the world.
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Christopher Whittle could finally breathe a sigh of relief.

In February of last year, Mr. Whittle stood before a packed house of parents in Lower Manhattan’s Crosby Street Hotel. Ever the salesman, he was talking up his vision for a new private school—an idea, really—that had yet to begin construction and was still far from completion.

He had spent the prior months on tenterhooks. Even for the veteran entrepreneur, one who had already raised $75 million from two private-equity firms, there was still the acute possibility of failure. It was conceivable that his latest gamble simply wouldn’t resonate with tuition-paying parents—or worse, that no one would bother showing up.

But no sooner did Mr. Whittle begin to speak than he felt an unmistakable sense of redemption. The standing-room-only crowd assured him that if he dared build it, they would come.

During the next eight months, his leadership team convened up to three information sessions a week, and even then, just barely kept pace with demand. Their hard work paid off. Nearly 2,700 students applied for a slot at Avenues: The World School.

Potential Legacy?

Avenues, a for-profit private school in New York’s Chelsea neighborhood, opened its doors during the second full week of September. In an 84-year-old, 10-story concrete building overlooking the High Line, an above-ground park, and previously used by Disney to store television props, Avenues will someday accommodate 1,635 students all the way from preschool through high school. This year’s entering enrollment of 738 students goes up to grade 9. According to People magazine, Suri Cruise, the daughter of Tom Cruise and Katie Holmes, is in the 1st grade there.

Career Milestones

Chief Executive Officer, Avenues: The World School

Current Board Member, Edison Learning Inc. (formerly Edison Schools)

Co-founded Edison Schools, 1992

Created Channel One News, a national in-school news program, 1989

Founded Whittle Communications, 1986

Chairman, Esquire magazine, 1979-1986

Co-founded 13-30 Corp., a publishing company, 1970

The flagship Manhattan location is but one in a series of about 20 global campuses that Mr. Whittle and his team plan to roll out over the next 15 years—at a pace of one or two schools each year. From Beijing to São Paulo to London, the bar has been set extraordinarily high. The aim: to create a global system of schools whose graduates might become bilingual citizens of the world and, its mission statement boasts, “architects of lives that transcend the ordinary.”

For Mr. Whittle, who is no stranger to entrepreneurial success and failure, a lot is riding on this latest venture: his reputation, his integrity, and his legacy. Some private educators and other observers say flatly that his plan won’t work.

“You have periods where you’re on top of the world and periods where you’re not,” said Mr. Whittle, while sitting in the sparsely adorned Avenues headquarters this past July. His manner was warm and genial, his accent thick with Southern charm. He wore khaki pants and a blue and white striped button-down shirt, eschewing his trademark bowtie because of the summer heat.

The former Esquire magazine publisher and Edison Schools co-founder used to believe that important things in life consumed seven to 10 years. He has since amended his thinking. From the germ of an idea to its full execution, he now believes that big ideas swallow up the better part of two decades—or somewhere between 15 and 20 years.

“About five years ago, I started thinking, all right, what’s my chapter three? At the kind of energy they require, I started realizing that I have one more of those kind of chapters in me,” said Mr. Whittle, who is 65. “I have this feeling of unfinished work.”

But unfinished work aside, the question remains: Can he remake what’s possible in private education and in so doing, finally silence the naysayers and solidify his legacy?

Even the relentlessly optimistic Mr. Whittle conceded that it’s too soon to know for sure.

‘Roller Coaster Rides’

Nowadays, Chris Whittle describes himself as wearing three distinct hats: educator, real estate developer, and investment banker—and in precisely that order. In much the same way, his career has spanned three separate chapters.

The first chapter began just after he graduated from the University of Tennessee in 1969. Alongside Philip Moffitt, he founded 13-30, a publishing company that eventually became Whittle Communications.

In later years, the company purchased and turned around a floundering Esquire. Mr. Whittle also created Channel One News, a 12-minute daily news broadcast (10 minutes of news; two minutes of commercials) that was marketed to schools for classroom viewing.

After selling Channel One for $250 million to K-III Communications Corp. in 1994, wrote Mr. Whittle in his book Crash Course: Imagining a Better Future for Public Education, he had come to believe that “up was the only direction we could go. I was wrong—and things went wrong.”

With the founding of Edison Schools in 1992, Mr. Whittle hit his first rough patch.

At Edison, he hoped to create a network of first-rate schools that would also turn a profit. Within a decade, his plan to build a national network of 1,000 such schools (at a cost of $2.5 billion) had crumbled. Edison instead went into the business of managing existing public schools, offering school districts cost savings on administration while sending the profits back to investors. But despite attracting big-name financial backers, the company hemorrhaged money.

Benno C. Schmidt Jr., now 70, was the president of Yale University when Mr. Whittle offered him a new gig: running Edison Schools. Mr. Schmidt sensed in Mr. Whittle an entrepreneur “who knows how to make big ideas reality.” Mr. Schmidt is now Avenues’ chairman. Both men continue to sit on EdisonLearning Inc.'s board of trustees.

Alan Greenberg, 61, who is now Avenues’ president, first worked alongside Mr. Whittle back in their 13-30 days. After the acquisition of Esquire, Mr. Greenberg became its publisher. All told, the two men have worked together for nearly 20 years.

Messrs. Whittle, Schmidt, and Greenberg provided the first round of capital for the creation of Avenues. Although none would confirm an exact dollar amount, the combined estimate is somewhere in the $10 million range.

Mr. Greenberg considers Mr. Whittle’s ups and downs par for the course.

“I don’t care if you’re Steve Jobs or Ted Turner or Chris Whittle, you’re going to have your roller coaster rides,” he said. “Many highly successful people have encountered the same thing. You have to look at the end result.”

Spanish, Mandarin Focus

The origin of Avenues stems directly from the lessons Mr. Whittle and Mr. Schmidt say they learned while running Edison. “We are all products of our experience,” said Mr. Schmidt. “I don’t think Chris and I could have possibly had the ideas or executed around Avenues had we not had the experience of bringing Edison to life.”

The two began to conceive of a new model of schooling, free of the regulatory issues, union politics, and glare of publicity that come with managing public schools. Or, if given a blank sheet of paper from which to construct a new school model, what it was they’d do differently.

It turns out, quite a lot. “Could we create the next generation of schools if we were constraint-free?” Mr. Whittle recalled asking. “Avenues is about as constraint-free as you can get. It’s night and day. And if anyone tells you there isn’t a difference between $40,000 and $10,000 per pupil, don’t believe them.”

Avenues started out as Nations Academy, first designed with a 60-campus global footprint. By the fall of 2008, Mr. Whittle and his team of advisers had amassed nearly $200 million in private-equity money from GEMS Education, a schooling company in the United Arab Emirates. Then the financial world collapsed.

“You couldn’t raise a dollar,” Mr. Whittle said. “So we let the world calm down, regrouped, and started again post-financial crisis.” Shortly thereafter, Liberty Partners and LLR Partners, two private-equity firms, each pledged $37.5 million in seed money.

When it came to deciding upon Avenues’ for-profit business model, Mr. Whittle said it would have been next to impossible to raise $75 million in private philanthropy to launch a nonprofit school.

“I’m a good fundraiser, and I don’t know if I could do it. I don’t know if our whole team together could do it,” he said. “And that’s in America. In the rest of the world, there’s no way you could do it.”

One primary goal is for each Avenues student to become bilingual—and possibly trilingual. In New York, half the parents of students in its inaugural class were born outside the United States. Its immersion program allows for two tracks: Spanish and Mandarin. Depending on the chosen language, half the day of instruction at Avenues is taught in the student’s foreign language. In later years, its students will be able to crisscross the globe, spending semesters studying abroad at various Avenues campuses.

Because of the immersion program, half the teaching staff is fluent in either Mandarin or Spanish. Shortly after the announcement that the school would open, Avenues received more than 5,000 applications from teachers all over the world, Mr. Whittle said. With salaries hovering around $110,000 (well above the average pay scale for a teacher in New York City), 120 teachers began this fall.

Along with an elite and well-paid teaching staff, Mr. Whittle reasoned that Avenues needed to attract high-quality leaders. Robert “Skip” Mattoon and Tyler “Ty” Tingley, ages 70 and 66, respectively, said they both came out of retirement to become Avenues’ co-heads of school. Mr. Mattoon previously ran the Hotchkiss School in Lakeville, Conn. Mr. Tingley oversaw Phillips Exeter Academy in Exeter, N.H.

Of particular interest to both parents and observers is Avenues’ business model. Once the New York campus reaches full capacity, $39,750 in yearly tuition will bring in about $4 million a year (after paying about 30 percent in taxes). Besides a small amount of money for after-school and summer activities, revenue is entirely tuition-based. Not only is Mr. Whittle aiming to execute his vision on tuition dollars alone, the model is also predicated on Avenues’ making a profit.

‘Sizzle, Sizzle, Sizzle’

But Mr. Whittle’s math continues to confound Steven J. Nelson, who heads Manhattan’s private Calhoun School.

At Calhoun, where tuition for the upper school is $39,900, the actual cost per student of running the school is about $2,000 to $3,000 more than the tuition, Mr. Nelson confirmed. To help bridge the gap, the school relies on annual fundraising and earnings on its endowment.

“From my distant perspective, the financial model doesn’t make sense,” Mr. Nelson said of Avenues. “They’re paying higher-than-average teacher salaries, higher rates of compensation at the administrative level, advertising relatively small class sizes, and spending at least several million dollars on marketing and promotion.”

Though the tuition will vary depending on whether students enroll at its Mumbai or Madrid campus, Mr. Whittle asserted that all remaining Avenues schools will similarly follow a tuition-based model of revenue generation. While the leadership team braces to raise a few more additional rounds of capital, the goal is for Avenues to soon self-finance its own expansion.

“The cash those [schools] produce will provide the investment capital for new cities so you don’t have to continually go and raise it,” Mr. Whittle said.

Still, Mr. Nelson remains unconvinced. “If Calhoun had $60 million worth of debt and spent that amount of money on marketing and salary structure, we wouldn’t survive a year. We’d be out of business,” he said. “Either Chris Whittle has lost his mind again or the other schools will be enormous cash generators. Or, alternately, if Chris Whittle hasn’t lost his mind, the investors have lost theirs.”

Mr. Nelson isn’t the only one questioning the business model. “There’s this old advertising slogan: You don’t sell the steak, you sell the sizzle,” said Henry M. Levin, an economics professor at Teachers College, Columbia University. “With Whittle, you’re getting sizzle, sizzle, sizzle.”

Mr. Levin, who heads the National Center for the Study of Privatization in Education, based at Columbia, believes Mr. Whittle is acutely vulnerable as an entrepreneur because he becomes so enamored of his own vision that it ultimately obscures reality—both for himself and for others.

“He’s a person who conjures up images and then works on them and starts to expand on them, and then at some point it gets inside of him and he really persuades a lot of people who, in a sense, abandon their due diligence and allow the kind of hyperbole and high-flying rhetorical images to capture their emotions,” Mr. Levin said.

Shamus Khan, a professor of sociology at Columbia University, similarly thinks Avenues’ financial model doesn’t add up. “The model is promising impossible returns,” said Mr. Khan, who writes about elite schooling.

Business vs. ‘Vision’

Yet others are more impressed.

Susan Wolford, a managing director for the investment bank BMO Capital Markets, sees in Mr. Whittle something many of his critics do not: a visionary. “He has his detractors on the business side, but it’s always easier to find great business people than it is to find great visionaries,” said Ms. Wolford, who was particularly struck by Avenues’ number of entering students this first year.

“Never have you heard of a private school in Manhattan opening with 700 kids,” she said. “When I first heard that number, I was literally dumbfounded.”

For his part, Mr. Whittle is nothing if not accustomed to fierce opposition. As with many entrepreneurs, working against entrenched attitudes is familiar terrain.

Inside the Avenues building in July, he reflected on this, the start of his third chapter, and he seemed aware, even wistful, that there likely won’t be a fourth.

When parents approach Mr. Whittle and ask him what’s his biggest concern, he has trouble separating out his legacy from the success of Avenues. His greatest fear is that all his hard work will have simply amounted to “just another fine private school.”

“Another way of saying it is that you could have a school that’s 100 percent full and you didn’t change a thing,” he said. “If 15 years from now, that’s what I’m looking at, I’d have to be honest with myself and say that that wasn’t what we set out to do, it wasn’t what I set out to do—if that’s what we’re looking at, we didn’t change a thing.”

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A version of this article appeared in the September 26, 2012 edition of Education Week as Whittle Is Seeking a Global Audience for New Ed. Venture


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