An Educational Venture That Flunked
Billionaire investment banker Herbert Allen is known on Wall Street for his annual gathering of media bigwigs in Sun Valley, Idaho, and, of course, for having brokered some of the media industry's biggest deals over the past quarter-century, including Walt Disney Co.'s purchase of ABC.
Allen says he won't discuss money in interviews and that his failures are too numerous to mention -- except one, Global Education Network.
That was a venture he funded in 2000 for a reputed $20 million. The undertaking was a for-profit, online education company that would eventually offer courses rivaling the top-drawer education students get at institutions such as Harvard, Stanford or Williams (Allen's alma mater).
It was a flop. Even so, he says, it gave him a close-up view of the inner workings of some of the nation's top colleges. The experience led him to conclude that the way higher education is structured in this country -- particularly the tenure-track system -- makes it impossible to introduce change at top schools, at least for the foreseeable future.
The venture, which Allen predicts was two decades ahead of its time, closed last year after a five-year run without gaining any significant business from major universities, institutions Allen had hoped would use it to offer courses at lower costs.
Beyond insights into higher education in the United States, Allen says he learned little other than what he's always thought: He puts the same effort into every venture he tries, so what distinguishes his successes from his failures is, to use his words, "simple luck."
And by luck he means people. Business gambles require taking chances on people. "Invest in people, and you'll make a lot of mistakes, as I have," he says. "You can't predict it."
-- Kathleen Day