Education Week - September 26, 2012 - 11

EDUCATION WEEK

SEPTEMBER 26, 2012

www.edweek.org

ent 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 tuitionbased. Not only is Mr. Whittle aiming to execute his vision on tuition dollars alone, the model is also predicated on Avenues’ making a profit.

“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.

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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.”
Amanda M. Fairbanks is a freelance education writer based in New York City.
A grant from the Bill & Melinda Gates Foundation helps support coverage of the education marketplace and new approaches to schooling in Education Week and on edweek.org.

‘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 selffinance 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.

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Education Week - September 26, 2012

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