Knowledge U-turn

Dec 14 1998

Michael Milken's universe is getting a bit smaller: The former financier's secretive education company has quietly abandoned plans to launch its own online college.

According to Knowledge Universe President Tom Kalinske, the company instead will take a minority stake in the Web-based Knowledge University. The venture will be run by the founder of a Chicago consulting firm with ties to Milken.

"It in no way reflects a lesser interest by [Knowledge Universe] in online education and, in fact, may free us up to make many more investments in different ways of delivering online education to a broader market," Kalinske writes in an e-mail message. He declines to specifically explain the reason for the change in plans. "Trust me, KU will be and is very involved in online education," he says.

The revamped strategy for Knowledge University comes amid the departure of a high-profile academic hired to help develop Knowledge University's curriculum. Under consideration at one time to become the school's chief education officer, Northwestern University professor and interactive learning theorist Roger Schank says he grew disillusioned with the venture.

"I don't understand Milken," he says. "I don't think his vision is of changing education at all. They went from the idea of being innovative to getting something up fast. There isn't a commitment to high quality."

Kalinske has described the online school, which has yet to launch, as one that will offer cutting-edge classes from the nation's academic stars. But Schank claims Knowledge University is now more interested in "electronic correspondence courses."

Knowledge University officials in Chicago refuse to discuss Schank's comments on the record. But Kalinske disputes Schank's statements and describes him as "simply a consultant" who made a minimal contribution to the company. "We're looking for extremely high-quality" courses, Kalinske says. "I've met Roger and found him engaging and articulate. On the other hand, when I looked at what's been accomplished by his group, there's not a lot there."

Since completing a two-year prison term for securities fraud, Milken has tried to remake his image into that of an educational reformer. Milken formed Knowledge Universe in 1996 with his brother, Lowell, and Oracle Chairman Larry Ellison. Over the past two years, the $1 billion start-up has gone on a spending spree; it has acquired computer training companies, 250 preschools, a toy maker, a software publisher, an educational testing service and a stake in a chain of private elementary and junior high schools.

While Knowledge Universe will own only a minority position in Knowledge University, the venture has other ties to Milken. The school is being run by Andrew Rosenfield, a founder of Lexecon, a legal and economic consulting firm. Lexecon principal Daniel Fischel wrote Payback: The Conspiracy to Destroy Michael Milken and His Financial Revolution, a book that defended the firm's most famous client.