Johns Hopkins Magazine -- September 1998
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The story of two young entrepreneurs who have transformed a local tutoring company into a global player in the world's rapidly changing education industry.

B A C K  -  T O  -  S C H O O L    I S S U E

Sylvan's Fast Learners
By Joanne P. Cavanaugh
Photos by Mark Lee

On a normally work-drenched Friday, Sylvan Learning Systems' R. Christopher Hoehn-Saric drove north to join a roundtable discussion in Shriver Hall--a spirited give-and-take about Hopkins's current finances, research milestones, and the state of undergraduate study. The event included a short Hopkins history lesson. Hoehn-Saric, 36, needed the tutoring.

That Friday in June was the first time he had focused on the merits of higher education on his alma mater's campus in well over a decade. The chairman of Baltimore-based Sylvan was attending an orientation conference for new members of the Hopkins board of trustees--an honor he hardly expected. The last time Hoehn-Saric was here, he dropped out.

Hoehn-Saric--co-leader of one of the nation's top educational tutoring, training, and testing firms--is in good company. Michael Dell, founder of top stock performer Dell Computers, dropped out of the University of Texas. And Bill Gates, co-founder and chief executive officer of Microsoft, reportedly left Harvard University midstream in the 1970s after a dispute over whether he was using school computers for his entrepreneurial projects. (Two years ago, he was wooed as a big-time donor and gave the venerable university $15 million).

Hoehn-Saric's own partner at Sylvan, co-CEO Douglas L. Becker, was accepted at Harvard but never went to college there or anywhere else. Like the other industry moguls mentioned here, Hoehn-Saric was more focused on business than books when he was an engineering major at Hopkins in the early 1980s.

"My experience at Hopkins is largely a blur at this point. I was working a lot when I was going to school," says Hoehn-Saric, who then worked with Becker at a local computer store. "I was always interested in getting involved in business."

The two young entrepreneurs took over Sylvan in 1991, and have transformed it from a chain of tutoring centers dotting suburban shopping malls to an international education-oriented firm that earned revenues of $246 million last year. Today, the name Sylvan encompasses a federally subsidized tutoring program in public schools; a global network of computerized testing; English language instruction; teacher training programs; and a venture with affiliated Caliber Learning Network, which offers a distance-learning class (via video and computer) with Hopkins's School of Continuing Studies.

Last spring, Hoehn-Saric, who now spends his days tied to the phone or in meetings, got a call from Hopkins board of trustees chair Michael R. Bloomberg '64. "He's a successful person in building organizations, and clearly he can give us management advice," says Bloomberg, founder and CEO of business media conglomerate Bloomberg L.P. "We think he'll be a valuable guy. And his specialty is education; in case everybody forgot, we are in the education business."

The fact that Hoehn-Saric didn't stick around Hopkins long enough to earn a diploma didn't matter much to Bloomberg or the other trustees. "Great academics are not the only determinant of success in life," says Bloomberg. "The perfect example is me. I got straight C's."

But Great Academics--or at least above average scores--is the cornerstone of a business like Sylvan, which made its name tutoring students who have dropped behind in the basics: math, reading, and simply knowing how to learn. What Sylvan and Hopkins seem to have in common, aside from Hoehn-Saric, is a role in the country's rapidly changing education industry. To many, that means students getting a lot more out of the classroom.

"T" is for tokens, part of Sylvan Learning Center's incentive-based tutoring program. The curriculum focuses on the idea of "basic skills."
ON EACH FLOOR OF SYLVAN corporate headquarters, which overlooks Baltimore's Inner Harbor, is a museum-quality display in copper, blue, and green. Literary luminaries and the like are listed, along with inspirational quotes. Shakespeare: "Oh this learning, what a thing it is."

Down on the ground floor is a new Sylvan Learning Center, the first center the firm has opened in downtown Baltimore. The room is bright with primary colors, a sign urging: "Success is Learned." On the shelves are books with titles like Forgotten Algebra, Sylvan's Basic Math Program and a variety of workbooks focusing on number-crunching and reading skills. On another bookshelf is a collection of toys and games accompanied by cards: dominoes 50T, squeezable frog 10T, Mr. Bubbles 15T, NBA basketball, 250T.

"T" is for tokens, part of the learning center's incentive-based tutoring program. The curriculum focuses on the idea of "basic skills." Students, from grades K-12 are tested for weak areas. The typical instructor-student ratio is 1 to 3. To learn specific topics, such as algebra, students work through a series of exercises on increasingly difficult levels, earning tokens along the way that they can save up to "buy" things at the Sylvan store. A lesson at Sylvan--which will be taken by more than 120,000 students across the United States this year--costs from $25 to $50 an hour. Students typically come in a few times a week for one-hour sessions.

The learning centers, created in 1979 by a former educator, are geared to students whose test scores show they're falling behind; other parents enroll their academically solid children in Sylvan in hopes of giving them an edge.

Hoehn-Saric and Becker say they've ended up in the education business because they see lots of opportunity, and because it makes them feel good. "We wanted to be able to wake up in the morning and say we were doing something good that day, not manufacturing missiles," Hoehn-Saric says.

Says Becker in a phone interview from Milan, Italy, where Sylvan is pursuing English-language instruction: "We spotted the education field as being ripe to be revolutionized by technology. There is a global hunger for education."

Hoehn-Saric's first foray into the world of business came early. While still in high school--at Gilman School in Baltimore's Roland Park--he launched a small software company, writing and selling computer games. He dabbled in advertising, and he picked up a little revenue. Becker was also the wunderkind-type, borrowing a briefcase from his father to attend an inventor's convention--at age 8.

Hoehn-Saric, 36, says he used to be embarrassed about being an entrepreneur. No more. Sylvan's revenues last year hit $246 million.
The two became friends while working at a Computerland store in Baltimore, a couple of techno-nerds looking for the next Microsoft-style op. As Hoehn-Saric understates: "We were looking for the opportunity to do something on a bigger scale."

Not long afterward, Hoehn-Saric joined with Becker, Becker's brother, Eric, and a few friends to hatch a deal: they pitched the technology to store medical and insurance data on a wallet-sized card, sort of like the grocery store "membership cards" we use today. Hoehn-Saric says they read about the technology in a magazine.

The product, LifeCard International, was bought by Blue Cross Blue Shield in 1985 in a multimillion-dollar deal (the amount was not disclosed). The mega health insurance company never actually implemented the card, though it did wrap some of the technology into claims processing, Hoehn-Saric says. He left Hopkins, at the end of his junior year in 1983: "I clearly wasn't spending much time on my studies to get this off the ground. It became impossible to pursue both things simultaneously."

The young millionaires --for when they developed the card Becker and Hoehn-Saric were 17 and 21 respectively--spun the money into an investment firm, Sterling Capital Ltd., making a series of deals with their partners that led to the purchase of 50 percent of Sylvan Learning Corp. from financially hurting KinderCare Inc. in 1988. The co-CEOs took over three years later.

Though Becker and Hoehn-Saric did spring for new sports cars, they haven't spent much time fooling around. Sylvan Learning Systems went public on the stock market in 1993; increased its employee payroll from 500 to about 5,000 in five years; doubled the number of learning centers to more than 700 in that time; and expanded computerized testing into 110 countries, including a contract they landed last year with the National Educational Examinations Authority in the People's Republic of China. In China, Sylvan will offer computerized admission exams for students applying to U.S. colleges, among other tests.

Early this year, Sylvan also renewed an exclusive commercial contract with Educational Testing Service (ETS) to provide the computerized version of several exams, including the Graduate Record Examinations (GRE). Sylvan is also piloting computerized testing for the Scholastic Assessment Test (SAT). If the pilot efforts pan out, prospective college students across the nation may one day sit in front of a computer to take the SAT--a potentially huge money maker for Sylvan.

"I can tell you what's funny," Hoehn-Saric now says from his executive office at Sylvan. Behind him is a cityscape view of the Inner Harbor. In the corner sits a ceiling-high wooden Chinese war lord from Hong Kong. "When I got started, the word entrepreneur had bad connotations. It was like saying, 'You can't do anything else, I guess this is what you're doing.'

"There have been a lot of success stories and certainly nontraditional success stories," he says. Now, being an entrepreneur "is the great populist thing for everybody to go and do. I can tell you, 15 years ago I was reluctant to tell anybody."

Today, Hoehn-Saric is Sylvan's behind-the-scenes partner. He is the family man who hoards his free time to spend with his wife and four young children. The more outgoing Becker, by contrast, is the face in front of Sylvan--the jet-setting bachelor who is well-known around Baltimore for his involvement in philanthropic and business affairs, being chairman of the Baltimore Children's Museum, and a trustee or director at the Baltimore Museum of Art; the Enoch Pratt Free Library; Baltimore Reads, a city-based literacy program; and other organizations.

"Everyone knows Doug [Becker]. He's smart, and he knows how to take things and grow them fast and big," says Sally Michel, head of the nonprofit SuperKids Camp, a summer reading, music, and recreation program that works with Sylvan. "Doug is more comfortable on his feet."

Becker, who was in England most of July and August, seems a bit overbooked. He skipped out on one interview with the magazine, ran out of time to do one scheduled by phone, and was finally tracked down about midnight at the Palace Hotel in Milan, Italy, as he was checking his e-mail. Apparently, it's common practice. "He's a very busy man," says his administrative assistant, Martha Whalen.

Becker describes Hoehn-Saric as his "alter ego in the company," and both say they often reach many of the same conclusions. "Chris is a little more self-effacing. He's not as interested in being in the public eye," Becker says after returning from a late night sushi business dinner. "Everything we've done is rooted in a deep and strong friendship. Chris, more than me, lays ego aside to do what needs to be done."

Baltimore Mayor Kurt L. Schmoke lauds the non-stop energy of the two young entrepreneurs whose efforts have been good for the city. In late 1996, the duo relocated Sylvan's HQ from Columbia, Maryland, to Baltimore's Empowerment Zone, the first major public firm to move to Baltimore's center city in two decades.

"You can't ultimately ignore the city," Hoehn-Saric says. "It's the lifeblood of the community."

Last year, Sylvan set up a $7 million nonprofit foundation for education projects, mostly in Baltimore; an amount that has since grown to $11 million. The foundation has given funds to Teach for America, CollegeBound Foundation, Maryland's Promise, and other groups that provide tutoring and other services for inner city families.

"I'm sure they've had some down moments, but I've never seen one," Schmoke says. "They are kind of urban visionaries. They really follow up on their promises and they dream these wonderful dreams for folks in the city."

BALTIMORE CITY SCHOOLS number among the nation's most troubled in a variety of ways common to struggling urban America. Top on the list: in a town that touts itself as "The City That Reads," last fall nearly three-fourths of its 45,000 elementary school children read below their grade level.

In 1993, Sylvan proposed one of the first private, for-profit tutoring programs in a public school district, tapping federal funds slated for remedial teaching for poverty-level students. If The Sylvan Way was working for more affluent suburban children, reasoned Hoehn-Saric and Becker, why not adapt the program for families who couldn't afford private tutoring?

Sylvan's contract in Baltimore is now $3.1 million a year and 28 schools use their services. A Hopkins study of Sylvan's performance in city schools released this summer showed some pluses and minuses to the firm's approach. "We don't say Sylvan is wonderful, we don't say it's horrible," says Sam Stringfield, a principal research scientist at the Hopkins Center for Social Organization of Schools (CSOS).

Stringfield says Sylvan has a strong focus on children's performance. Tutors will track down a student who doesn't show up for that day's lesson, for example. "There's sheer logic in doing that," he says, noting that Sylvan gets paid for the hours of instruction it delivers.

Possible downsides found by the 1993-95 CSOS evaluation: Some teachers were resentful of Sylvan tutors' ability to focus on a few students at a time; not all tutors are certified teachers, as Sylvan promotes; tutors receive relatively low pay, so turnover is common; and some teachers complained that students were being tutored only to pass tests and that Sylvan's teaching methods were rote. All have caveats: "Sylvan gets what it gets not by being gloriously inventive, but by being highly reliable," Stringfield says. "And the logical reality is that if test scores were in the 90th percentile, nobody would think to bring Sylvan in."

The comparison study, which CSOS plans to follow up, shows Sylvan's strengths in some areas: middle school students tutored to pass the Maryland Functional Math Test did better than other students: 43 percent of the 136 students passed, versus 17 percent of a similar group of non-Sylvan students. In other comparisons, Sylvan students showed greater improvements in math but did not advance in reading any more than comparable non-Sylvan students.

Some schools are doing better than others. At Thomas G. Hayes Elementary School in East Baltimore, the majority of fifth-graders this year were on grade reading level--only 13 percent of 65 students were behind, and those by only half a year, officials say. "We've been more than pleased," says Peggy Jackson-Jobe, former principal at Thomas Hayes. "When we look over the kids' shoulders, we see they're very confident, very focused."

Today--just five years after running the pilot in a handful of Baltimore schools--Sylvan's Contract Educational Services has spread to 134 public schools and 670 non-public schools across the nation, with revenues last year totaling $66.5 million. More than 65,000 students are getting tutoring Sylvan-style in cities including Chicago, Detroit, Minneapolis, New Orleans, Washington, D.C., and Compton, California. Tutors are usually on Sylvan's payroll, though some work for local school districts.

Not everyone has welcomed the for-profit firm in public arenas. In the Compton school district, which has some of the lowest test scores in California, local NAACP president Walter Goodin has publicly criticized a $5.4 million tutoring contract awarded to Sylvan in January. Goodin said the privatization of teaching was a "slap in the face" to good teachers. He questioned why the money wasn't instead being spent to upgrade teachers' skills.

"Whether Sylvan is overextended is something Wall Street is concerned about," says Soffen, an analyst with Legg Mason. "But there's certainly no evidence of it yet."
Hoehn-Saric says that Sylvan does help train teachers through the firm's Canter group, which provides staff development materials, graduate-level courses, and programs such as The High-Performing Teacher; those materials are often bought by local school districts. "There are estimates that as many as half of the four million teachers in the country are retiring over the next five to six years," he says. "How do you replenish the supply of teachers?"

Sylvan will try to help answer that question by expanding its teacher training programs and offering teacher certification testing, he says. With all this, and a plethora of other endeavors, some ask whether the company is doing too much.

"Whether Sylvan's overextended is something Wall Street is concerned about," says Scott Soffen, an analyst with Legg Mason. "But there's certainly no evidence yet. The numbers they're delivering have been absolutely spectacular, and have been growing at a consistent rate of 20 to 30 percent.

"The concern is that they're going in too many different directions," Soffen says. "But what the company does in schools is very similar to the Sylvan Learning Centers, and those centers serve as bases to do testing. All those strategies are tied together, integrated, and hopefully synergistic."

Soffen and others call Sylvan's leaders "forward thinkers." Where they are today is no accident, Soffen says: "They saw a need in education that wasn't being served."

The company has proven profitable--for the six months ending on June 30, Sylvan reported a 43 percent growth in revenues compared to the same period last year; and its total net profit in 1997 was $29.4 million. But the expansion has encountered some glitches, or what Hoehn-Saric refers to as "hiccups." In New York, test-takers of the Graduate Management Admission Test (GMAT) were outraged in October because of insufficient computers at popular centers, and some computer snafus in California stalled test taking in December. Sylvan has worked to fix test center problems.

Some educators question Sylvan's tutoring methods. The token system, which some critics call bribery, was even a tough pill to swallow for Hopkins's Institute for the Academic Advancement of Youth (IAAY), which next year is joining Sylvan to offer advanced tutoring for students at Sylvan centers. IAAY focuses on top-performing students through its own advanced summer workshops, for which Sylvan does computerized admission testing via the SAT.

"At Hopkins, we think 'incentives,' eeew," says Rie Cowan, coordinator of the IAAY Sylvan Project. "But we've talked to experts and they say it's a big part of Sylvan--it works. The kids we teach are so intrinsically motivated they don't really need it. So our courses have 'milestones,' and they trade those in to get educational items such as CD-ROMs or books. It's a compromise."

A STORY ABOUT SYLVAN and its leaders is inevitably a story about educational vision--primarily Hoehn-Saric and Becker's shared look at the future. "The fact that we are scurrying around and covering bases means that in five or 10 years, Sylvan will be truly large and successful and prosperous," Becker says.

Among other things, the company considers learning as a lifelong endeavor, a trend already seen in today's colleges. That means more Internet and video-linked classrooms, more admissions and licensure tests, and retraining courses for second careers, such as teaching. Enter Sylvan.

"If you don't keep nimble in a constantly changing business," Hoehn-Saric says, "somebody is going to come and eat your lunch."

Sylvan's CEOs foresee an increased push to go global, including English-language testing and instruction. "English is the lingua franca, so to speak, of the business world," Hoehn-Saric says. "I'll go to a meeting between Japanese and Chinese partners and they'll communicate in English because that is their common language."

Putting its money where its predictions are, Sylvan recently purchased two companies that focus on English-language instruction, including Wall Street Institute, a Spain-based firm that has more than 200 centers in 14 countries, and ASPECT Inc., which delivers immersion programs in 19 schools in five English-speaking countries.

Yet, still, isn't it a bit ironic that education is the catch theme of two guys who skipped the formal academic milestones? Hoehn-Saric explains: "The fact that Doug and I didn't get degrees doesn't mean that we don't value them. I look at my kids; I recommend that they go on to college. It's critically important--something that no one can take away from you."

Hoehn-Saric also knows the value education has had for his own family. His grandfather, Hung-Yu Loh, emigrated from China to get his PhD in physics at Hopkins in the early 1940s. His mother, Evanne Hoehn-Saric, a Hopkins assistant professor of psychiatry, was one of a handful of women in her Hopkins graduating class (MD '61). And his father, Rudolf Hoehn-Saric, is a psychiatry professor and director of Hopkins's Anxiety Disorders Clinic. (His brother, Edward, came through Hopkins too, BA '85 and MD '89).

"Chris has always been inquisitive," says his mother. "When he's interested in something he really focuses, he does wonderfully. If he's not interested, then he won't pay too much attention. That's the way he always was."

She says the family was upset when Chris decided to leave Hopkins before finishing: "Academics were the only thing we knew. In retrospect, he did the right thing. What's gratifying for the family is that he went into education. This way he ends up educating more people."

Now that Hoehn-Saric is a trustee overseeing Hopkins's future, does he plan to finish the equivalent of his senior year here? For starters, even this multimillionaire was a little taken aback by the $22,680 tuition price tag: "Does that include room and board?" he quipped. (Actually, Hoehn-Saric and Becker each earned $254,167 last year, plus a $125,000 bonus, records show. But the bulk of their worth is in stocks: each owned about $50 million worth by midsummer.)

"It's probably not in the cards right now," Hoehn-Saric says. "I'm too busy and I've forgotten so much I'd probably have to start from scratch. I know about five facts at this point.

"I don't even know how much I can help my kids do their homework," he says. "I look at their math and start getting concerned that in a few years, it's going to stretch my knowledge. I tell you, it's scary how quickly you forget everything."

Maybe the chairman of Sylvan will soon be earning a few tokens himself.

Joanne P. Cavanaugh is a senior writer at Johns Hopkins Magazine.