Clown School: When Media Companies Pile into Education, Money Vanishes

By Petersen, Julie Landry | Education Next, Summer 2017 | Go to article overview

Clown School: When Media Companies Pile into Education, Money Vanishes


Petersen, Julie Landry, Education Next


Class Clowns: How the Smartest Investors Lost Billions in Education by Jonathan A. Knee Columbia University Press, 2017, $29.95; 288 pages.

In his new book, Class Clowns, Jonathan Knee wraps up his case studies with a list of lessons he frames as "cautionary reminders, empirical observations, and hopeful exhortations." It's a humble but accurate summary of the book overall. Although Knee is a business-school professor and former investment banker, his book reads less like a coherent analysis of the prospects of education businesses and more like a few standalone cautionary tales.

Knee profiles four large education companies--Edison Schools, Amplify, Houghton Mifflin, and Knowledge Universe--that either received investments from or were acquired by players in the media and entertainment industry in which the author formerly worked. His main argument is that despite a genuine desire to improve education, these companies and their investors dreamed too big, had flawed assumptions about the nature of the market, bungled many operational details, and failed to hedge against the realities of the market as their dreams dwindled. "These mistakes have often flowed from a basic misunderstanding of the education ecosystem specifically and the importance of industry structure more generally' Knee writes, adding that the lessons he draws can "help not just investors and business people but also policy makers and administrators avoid some of the more treacherous and persistent pitfalls."

If only Knee had taken this observation to heart and provided the reader with an upfront analysis of that education ecosystem. This broader context and the resulting strategic lessons are often obscured behind a laundry list of criticisms that range from the tactical to the personal. By contrast, the author explains little about the way public-education spending itself works, let alone about the customers' decisionmaking processes or the skills required to manage and scale these businesses.

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Knee does capture some unique journalistic details, taking the reader behind the curtains of businesses whose founders' ambitions were often hazy and grander than would prove attainable. These details are sometimes useful to understanding the business itself, while in other cases they obscure the real picture of what went wrong. The first chapter centers on Edison Schools, a company that sought to take over the management of public schools. Here, the author expends more energy on personal attacks than on market analysis. Knee, like many other writers, portrays founder Chris Whittle as a lavish spender heavy on vision and light on operational expertise (a combination that Whittle himself dubs "robust naivete"). Despite the reputation of its leader, Edison attracted significant capital from top-tier investors and went public in 1999, only to be sold four years later for pennies on the dollar. In the interim, Edison found more resistance than revenue as it tried to persuade states and districts to turn over management of their schools to a private company using a new, unproven school model.

The following chapter, on Amplify, is a more successful analysis of a market and the company's challenges in serving it. It starts with an extended discourse on Rupert Murdoch's rocky investment history and tendency to pursue things he liked without respect to their likely value. Knee then hits his stride, showing how these factors played out when Murdoch's News Corporation acquired the learning analytics company Wireless Generation in 2012 to create an ambitious new "Amplify" division focused on educational tablets, games, curriculum, and data. Here, in contrast to his approach in other chapters, Knee illustrates well the politics that affected Wireless Generation and Amplify, and shows how Amplify's management team underestimated the challenges of curriculum development and adoption while spending aggressively to expand its narrow product focus. …

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