On a weekday morning in the spring of 2002, Joel Greenblatt took a radical detour from his usual commute. Instead of riding the Long Island Rail Road from his home on the North Shore to his office in midtown, the 44-year-old hedge-fund manager hired a car service to deliver him to P.S. 65Q, a small, struggling elementary school in working-class Ozone Park, Queens. Little about his past pointed to this visit. Over the previous two decades, Greenblatt had quietly built a reputation as one of Wall Street’s most successful stock-pickers: He had steered his fund, Gotham Capital, to a 40 percent average annual rate of return (it’s now worth about $1.6 billion), and as the author of investment manuals like You Can Be a Stock-Market Genius (Even If You’re Not Too Smart)—the predecessor to his current best seller, The Little Book That Beats the Market—he’d become something of a guru to a generation of elite fund managers. But that morning, Greenblatt was taking a break from Wall Street to focus on the less glamorous world of New York public schools.
P.S. 65Q had opened several years earlier to serve a growing population of extremely poor South American and South Asian immigrants. Housed in a former airplane-parts factory, the school sits on an industrial street with no homes in sight, in the shadow of the elevated A train. The vast majority of the school’s 540 students couldn’t read or do math at the proper grade level, and their parents were largely too beleaguered or disengaged to help.
At the time of Greenblatt’s visit, P.S. 65Q was staring down the loss of an important grant. Under Iris Nelson, the principal who had started at the school a year after it had opened, P.S. 65Q had secured government funds for a reading program called Success for All. The program had led to some promising gains in reading scores, but the grant was expiring at the end of the year. Greenblatt, who had developed an interest in public education only a few years earlier, had become a fan of Success for All and was looking for a school where he could introduce or broaden the program to boost overall achievement. The Success for All Foundation’s director, Bob Slavin, arranged a meeting between Greenblatt and Nelson to try and make a match.
The principal and her staff hadn’t been told much about Greenblatt—just that he was a wealthy banker interested in discussing a contribution. In Nelson’s office, Greenblatt didn’t let much time pass before making it clear his visit wasn’t about just a grant. “I want to keep spending money,” he said, “until everyone can read.”
Nelson struggled to contain her disbelief. Before long, she and Greenblatt were touring the school. About the only thing that didn’t get settled that day was how much money, exactly, Greenblatt would give. Before he left, he asked Nelson to put together a grant proposal.
For weeks, Nelson fretted over how much to request. Finally, she decided to take Greenblatt at his word: To keep everyone from falling behind, she calculated, it would take an incremental $1,000 per student per year for five years, or $2.5 million.
Greenblatt had clearly done his homework. “That,” he told her later, “is exactly what we thought you’d need.”
Today, thanks to Joel Greenblatt’s friendly takeover, P.S. 65Q is a turnaround story worthy of a Harvard B-school case study. Perhaps no school in New York City has ever bounded so swiftly from abject failure to unqualified success. From 2001 to 2005, the proportion of fourth-graders passing the state’s standardized reading test doubled, rising from 36 to 71 percent of the class—and since then, the students’ performance has only gotten better. Nearly every child who has been at the school for three years or more now reads and does math at their proper level or beyond—even the special-ed kids. Last spring, the school was one of fourteen statewide to win the public-school version of the Nobel Prize: a Pathfinder Award for improved performance. The city schools that usually win are in rapidly gentrifying neighborhoods like the Lower East Side or Fort Greene—what one P.S. 65Q administrator calls “God’s country.”
None of this would have happened, of course, without Greenblatt. It’s true that a certain breed of civic-minded capitalist has argued for years that the public schools should be run more like private businesses. Mike Bloomberg and his school chancellor, Joel Klein, have prayed mightily at the altar of management reform, pushing for top-down accountability and Jack Welch–inspired leadership training. It’s also true that writing fat checks to city schools has become fashionable. Caroline Kennedy has helped solicit more than $300 million in private and corporate donations. And outsiders like Teddy Forstmann have gone the voucher route, paying to airlift kids into private schools. But Greenblatt’s plan is more ambitious. He wants to create an effective and affordable public-school prototype that could be franchised citywide—and fast. “I’m an investor,” he says. “I spend my time trying to figure out whether a business model works or not. I wanted to find a model that worked and roll it out.”