The lucrative rewards of lifelong learning
In the first of an occasional series on the business of education, Peter Thal Larsen describes how The Washington Post Company has diversified into the university industry
Many companies make their best moves almost by accident. Yet few cases of corporate diversification have had as inauspicious a start as The Washington Post Company's move into education.
In 1984, an executive at the newspaper group went to see Katharine Graham, the paper's publisher, seeking approval to spend $45m on Kaplan, a small company preparing US schoolchildren to take university entrance exams.
The late Ms Graham's response was blunt. “I don't give a shit about it, but if you think it will be profitable, let's do it,” she recalled in Personal History.
Almost 20 years later, Kaplan is emerging from The Washington Post's shadow. In October, its parent reported a 16 per cent increase in third-quarter revenues to $820m. The newspaper's revenues accounted for $224.9m, less than Kaplan's sales of $293.6m. Barring an unexpected downturn, Kaplan's revenues this year will exceed $1bn.
The numbers are a testament to the growth of the education business and to Kaplan's management team, which has transformed a loss-making test-preparation business into a group whose activities range from training financial analysts to running after-school centres for young children. But Kaplan also owes much of its success to its parent company's decision to invest in the education business rather than expand its media holdings.
In the 1990s, when other media groups were buying into cable television or eyeing the internet, Donald Graham, who replaced his mother as chief executive in 1991, took a different view. With the help of Warren Buffett, the investor who is a non-executive director of the newspaper and one of its largest outside shareholders, he concluded that education was a better financial bet.
“We were always comparing values, and the prices of media companies were unique,” Mr Graham says. “They've been quite high for years relative to the price of any other business you can name. In the education business, we've been able to find good businesses at fair prices.”
But not all the growth has come from acquisitions. Kaplan's revenues have risen more than twelvefold in the past 10 years and executives estimate that about 60 per cent of current sales are due to organic growth.
Now Kaplan is preparing for its latest test by expanding into international markets. In the past two years, it has bought the Financial Training Company, a group that provides training to accountants in London, and a business school in Dublin. Jonathan Grayer, Kaplan's chief executive for the past 10 years, expects further deals in the near future.
Yet it was not always clear that Kaplan had such potential. When Mr Grayer arrived in 1991 from Newsweek, the weekly magazine also owned by The Washington Post, he found a business that was floundering.
Shortly after the second world war, Stanley Kaplan, the Brooklyn-born son of east European immigrants, had revolutionised American education by showing that schoolchildren could improve their scores on standardised university entrance tests if they practised beforehand. That insight spawned a business that was run through a string of test centres, most of which were operated by independent contractors. But the company had expanded too quickly and, after Mr Kaplan stepped down, had lost its way.
For the next few years, Mr Grayer and his team concentrated on restoring the test preparation business. By the mid-1990s, the company was ready to expand. The first acquisition was Score!, which runs centres offering additional schooling for children. When Kaplan bought the business, it had 12 centres. It now has 161.
But the company's boldest move came when it expanded into higher education with the acquisition in 2000 of an Atlanta-based group called Quest, a business offering university degrees for nurses and software engineers. Since then, Quest renamed Kaplan Higher Education Corporation has trebled its revenues and Kaplan is now one of the largest commercial providers of higher education in the US, operating from 68 campuses in 16 states. Kaplan University has a campus in Davenport, Iowa, but reaches most of its 19,000 students via the internet.
Mr Grayer is enthusiastic about the prospects of for-profit universities. “It is increasingly attractive to people who cannot afford or do not want a liberal arts education,” says Mr Grayer, who studied at Harvard. “We're in the business of helping people get better jobs.” But moving into higher education has brought risks. It has increased Kaplan's dependence on the US government, which provides subsidised loans to the vast majority of Kaplan's university students. Also, for-profit higher education has come under scrutiny as several leading companies have faced accusations of overstating student numbers and misleading investors about their growth prospects.
Mr Grayer argues that Kaplan's parent shields it from many of the pressures facing its peers. Mr Graham and his family control The Washington Post through a two-tier ownership structure, allowing it to embrace Mr Buffett's philosophyof long-term shareholder value without worrying about the short term. “We do not think about quarterly earnings . . . and we do not worry about our stock price. These are conditions that are very different at the companies that have had problems,” Mr Grayer says.
Mr Grayer and his colleagues have also enjoyed more immediate benefits. In an attempt to lock in the management team that had revived the business, The Washington Post seven years ago gave 64 of Kaplan's senior managers options over shares in the subsidiary that they could sell back to the parent company. The scheme succeeded, ensuring that Kaplan's team stayed together at a time when many were facing the lure of dotcom riches. Indeed, it proved extremely generous, although Mr Grayer insists that managers took a risk when they joined a loss-making business. “If you came to Stanley H. Kaplan Educational Centres in 1991 to get rich, you were an idiot.”
As Kaplan turns its gaze overseas, it is opening itself to a new set of risks. Professional qualifications differ from country to country, and the small number of commercially-run universities tend to operate without access to government funding. Many career advisers are also sceptical about the financial logic of paying for an education at anywhere other than a top-tier business school.
Mr Grayer remains optimistic about the growth prospects for privately-funded English-language higher education in Europe, particularly now students find it harder to get visas to study in the US. Dublin Business School has opened campuses in London and in Dubai in the United Arab Emirates, and last month, Kaplan signed a deal with Nottingham Trent University to offer pre-degree courses for international students hoping to study there.
As Kaplan gets larger, its growth rate is likely to slow. Nevertheless, despite Mrs Graham's initial views on the subject, her son and The Washington Post Company's shareholders are likely to be paying close attention.
终生学习的丰厚回报
许多公司最成功的行动几乎都出于偶然。但在经营多样化的案例中，像《华盛顿邮报》公司进军教育产业那样出师不利的不多。
1984年，这家报业集团的管理人员去见发行人凯瑟琳?格雷厄姆（Katharine Graham），请她批准向卡普兰公司（Kaplan）投入4500万美元。卡普兰是一家向准备参加高考的美国学生提供培训的小公司。
已故的格雷厄姆女士当时反应生硬。她在回忆录《个人历史》（Personal History）中写道：“我不管这事，但如果你认为有利可图，那就去做吧。”
近20年后，卡普兰正走出《华盛顿邮报》的阴影。今年10月，其母公司的业绩报告显示，第三季度收益增长16%至8.2亿美元。《华盛顿邮报》本身的收益为2.249亿美元，低于卡普兰的2.936亿美元。除非出现意外滑坡，卡普兰今年的收益将超过10亿美元。
不论对于教育产业的增长，还是卡普兰的管理团队，这一数字都是一个证明。卡普兰的管理人员把一个亏损的考前培训公司，变成了业务遍布金融分析师培训到少儿校外活动中心等的集团。但卡普兰的成就也部分归功于母公司，因为它当初决定投资于教育产业而非增持传媒企业股份。
20世纪90年代，当其它传媒集团买入有线电视或关注互联网时，1991年顶替母亲出任首席执行官的唐纳德?格雷厄姆（Donald Graham）却自有主见。在沃伦?巴菲特（Warren Buffett）的帮助下，他得出结论，教育更值得出资一搏。投资人巴菲特是该报的非执行董事，也是最大的外部股东之一。
格雷厄姆先生说：“我们总是进行价值比较，传媒公司的价格是独一无二的。与你能想起的其他业务的价格相比，多年来它们一直很高。在教育产业，我们却能以公平的价格找到良好的业务。”
不过，并非所有的增长都来自并购。过去10年，卡普兰的收益增长逾12倍。管理人员估计，目前销售额的60%左右都源自有机增长。
现在，卡普兰正准备进入国际市场，接受新的考验。过去两年，它买下了向伦敦会计师提供培训的金融培训公司（Financial Training Company），以及都柏林的一所商学院。已担任卡普兰首席执行官10年之久的乔纳森?格雷尔（Jonathan Grayer）预计，近期还将达成新的协议。
可卡普兰的这种潜力并不总是显而易见的。1991年，当格雷尔先生从同样隶属《华盛顿邮报》的《新闻周刊》来到卡普兰时，发现其业务一团糟。
二战后不久，出生于布鲁克林一个东欧移民家庭的斯坦利?卡普兰（Stanley Kaplan）证明，学生通过考前练习，可以提高在标准化高考中的成绩，从而使美国教育发生了革命性变化。这种洞察力催生了一个拥有众多考试中心的企业，这些考试中心大多又由独立承包商所经营。但该公司发展过快，以至于在卡普兰先生辞职后就迷失了方向。
在随后几年中，格雷尔先生同他手下一起集中力量恢复考前培训业务。时至90年代中期，该公司已做好了扩张的准备。第一个兼并的是经营少儿课外辅导中心的Score公司。当卡普兰刚将其购入时，它有12个中心，现在则达到了161个。
但卡普兰最大胆的行动还是进军高等教育市场。2000年，该公司兼并了向护士和软件工程师提供大学学位的亚特兰大Quest集团。自那以来，由Quest更名而来的卡普兰高等教育公司（Kaplan Higher Education Corporation）的收益已增至3倍，卡普兰现在是美国最大的高等教育商业提供者之一，在16个州拥有68所院校。卡普兰大学（Kaplan University）在衣阿华州达文波特有一个校园，但其1.9万名学生却大多是通过互联网沟通。
对以赢利为目的的大学的未来发展，格雷尔先生充满热情。曾就读于哈佛大学的格雷尔先生说：“对于上不起或不愿上文科大学的学生，这越来越有吸引力。我们的业务就是帮助人们找到更好的工作。”不过，进军高等教育产业也带来了风险。这加大了卡普兰对美国政府的依赖，因为政府向绝大多数卡普兰大学生提供补贴贷款。另外，由于几家大公司被指控夸大学生数量，在增长前景方面误导投资者，所以赢利性高等教育也受到了严格监管。
格雷尔先生辩称，在母公司的保护下，卡普兰免受了许多同行面临的压力。格雷厄姆先生及其家族对《华盛顿邮报》的控制是通过两级所有权结构，从而使其可以信奉巴菲特先生的长期股东价值哲学，而不必忧虑短期收益。格雷尔先生说：“我们不考虑季度收益……我们也不担心股价。在出现问题的公司，环境大相径庭。”
格雷尔先生及其同事也是更直接的受益者。为了留住那些重振卡普兰的管理人员，7年前《华盛顿邮报》给予64位高级经理这家子公司的股票期权，他们可以再回售给母公司。这一做法获得了成功，确保了卡普兰许多经理面对网络新贵的诱惑时，都能留下来。的确，事实证明这是一大笔钱，尽管格雷尔先生强调，经理们当时加入这个亏损企业时，也冒了风险。“如果1991年你是为了发财才来斯坦利?H?卡普兰教育中心，那就是个傻瓜。”
随着卡普兰把目光转向海外，它正面临一系列新的风险。各国职业资格教育互不相同，少量商业运作的大学往往也得不到政府资助。除了顶尖商学院外，很多职业咨询顾问对于花钱上学是否划算怀有疑问。
格雷尔先生仍对欧洲以英语教学的私立高等教育增长前景持乐观态度，特别是现在学生更难得到赴美留学签证的情况下。都柏林商学院已在伦敦和阿联酋的迪拜建立了分校。上月，卡普兰同诺丁汉特伦特大学（Nottingham Trent University）签订协议，为有意在那里就读的海外学生提供预科课程。
随着卡普兰不断壮大，增长速度或许也将放缓。然而，尽管格雷厄姆夫人起初并不在意这项业务，但她儿子和《华盛顿邮报》公司的股东却可能会非常重视。
