SYLVAN LEARNING Systems, the Baltimore-based tutoring and testing company, has grown so rapidly that it is now one of the world's five largest private providers of educational services, with 1997 revenues projected at more than $200 million.
Hardly a month goes by without news that Sylvan has entered another niche in the relatively small for-profit education industry. The company employs more than 8,000 part-time teachers directly or through its network of franchised tutoring centers, and it is the world's largest computerized testing firm. Sylvan also has tutoring centers under contract in 29 Baltimore schools and dozens of others in major U.S. cities.
Education Beat interviewed Sylvan's 30-year-old president, Douglas Becker, in his office in Inner Harbor East, where he moved the company headquarters from Columbia in November.
What are your plans, now that you're located in the city?
I'd like to make Baltimore almost a Silicon Valley for corporations in the education business. Sylvan has gotten big enough that it's one of the few in the industry with critical mass. If we can attract one more significant education company here, others will follow, and we can make Baltimore the world's headquarters for educational services.
The reason Baltimore can lay claim to being a center for the life sciences is that Johns Hopkins has such a huge presence here. We could do the same with Sylvan, which at our current rate of expansion will be the No. 1 company in the business in three or four years. I'd like to leverage this to the betterment of the community.
If we expand the definition of educational services a bit, we already have a start right under our nose with such enterprises as the Johns Hopkins Center for Talented Youth and Calvert School's worldwide correspondence school.
I started thinking of this during the [Education Alternatives Inc.] controversy. Without passing judgment on EAI's program, I thought since Baltimore was at the time the company's primary source of revenue, and Baltimore was the center of the universe in privatization, they owed it to the city to move here.
A superintendent I talked to recently said she could do her own tutoring at the same price Sylvan would charge without having to pay your profit. How do you respond to that?
We base our prices for compensatory services on what the districts are already spending. Most districts provide 45 minutes a day of Title I services [the federal government's primary compensatory education program] on a student-teacher ratio of 6-to-1 or 8-to-1. We propose one hour a week on a 3-1 ratio.
The economics are very similar. The real question is what works better. If you're going to manage a 3-1 ratio, it requires a totally different environment and a different way of selecting and training teachers and a different way of supervising. We can do it at the same price because we're able to manage a large number of teachers, most of them part-time, at a cost far less than that of full-time, fully loaded teachers.
If Title I were to be scratched, would it be a major blow to Sylvan?
Not at all. The Title I business is still a small and relatively low-profit area for us. We really have three businesses. Tutoring centers, our original business, bring in between $150 million and $170 million, although we get only a portion of the revenue. Our testing business is $85 million to $90 million, and our contract Title I business is maybe $25 million to $30 million.
That's wonderful. We've had more success than anyone else. [Title I] is an important part of our responsibility to the communities we serve, but it's not an important source of profits.
Testing, by the way, has become a more and more important part of our business. We do all the testing for nurse licensing, for stockbroker licensing. We do the Graduate Record Exam. If you want to get into business school, you're going to have to come to a Sylvan center to take the entry exam.
What we're seeing is a very interesting blurring of the lines between the public and private sectors. We're clearly earning our stripes when we're trusted by such very conservative nonprofit institutions as business schools.
In 1998 we'll begin worldwide delivery of the test of English as a foreign language that's required to get a visa for entry into the United States. [On Jan. 9] we announced that we'd acquired a chain of English-language schools in Europe and Latin America, with some 180 centers. You know, American education is one of the hottest export items in the world, but right now you have to come to the U.S. to take it. We'll be exporting it.
Won't you run out of niches eventually?
There's no end of niches. In almost all of them we're in some kind of partnership -- whether it's Hopkins or National Geographic or Jostens Learning or ETS [Educational Testing Service]. As long as we prove a reliable partner and don't screw it up, we'll be fine.
So what niches will open up before the end of the millennium?