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How Is a Hedge Fund Like a School?


Greenblatt set to work on a business plan. From the start, he wanted a budget big enough to get the job done, but not so big that it would be implausible to roll out at more schools. “Sure, you could throw a lot of money at it and turn everything into a private school,” he says, “but that’s not a solution for very many people.” He grew attached to the idea of spending $1,000 per child—not a lot, considering the spending gap between wealthy and poor school districts in New York State is said to be more than double that. In the city alone, $1,000 per child would add up to $1.1 billion, or just 2 percent of the city budget, and only one fifth of what a court panel has ordered the state to pay the city in its long-awaited settlement with the Campaign for Fiscal Equity—the group that has famously and successfully sued the state for shortchanging the city schools for decades (Albany, naturally, is still contesting the decision). “If you can teach all the kids in America to read and do math for $7 billion”—$1,000 per kid for the 7 million or so kids in need—“then that would be a bargain,” Greenblatt says. “In an over trillion-dollar federal budget, that’s just not a big deal.”

His next step was to find a reading-and-math program to use at one school as his pilot project. “I wanted a model that was replicable, that made sense, that was cost-effective, and that wouldn’t run out of steam,” he says. In The Little Book That Beats the Market, Greenblatt makes much of identifying the right criteria to discover the diamond in the rough—the company that’s undervalued—then buying into it with conviction. “There, I define a good business as a business with a good return on capital,” he says. “Here, what I was looking for was to make the most difference with the least amount of money.” A friend and former superintendent of the Memphis public schools told him about Success for All.

Created in the eighties by Bob Slavin, a Johns Hopkins professor, Success for All is a reading-and-math curriculum used at about 1,300 elementary schools around the country. In New York, Success for All is best known as the highly structured curriculum used in the Chancellor’s District—a group of deeply troubled schools corralled together for special attention in the nineties by then-chancellor Rudy Crew. The Chancellor’s District did see modest gains from Success for All: From 1999 to 2002, the percentage of students passing the standardized reading test increased from 14.3 to 22 percent. But when the Bloomberg administration instituted its new math-and-literacy curriculum, Success for All was dropped.

Success for All immediately appealed to Greenblatt’s private-sector sensibilities. It was modular and standardizable: Each school day has a detailed script for teachers to follow for both reading and math; each kid, therefore, is assured of getting the same education at the same time. “Immediately it hit me as something you could really roll out,” he says. If, as Greenblatt likes to say, half the employees anywhere are by definition below average, “you could take a below-average teacher and make them an excellent teacher, because they have years of research behind every lesson plan.” The program also has a special focus on reading: For nearly two hours each morning, the kids leave their classrooms and join groups of other kids at their same reading level. It seemed like common sense to Greenblatt that a teacher can more efficiently help 30 kids at one level than 30 reading at a dozen different levels.

Success for All also played to Greenblatt’s fetish for data. While most city schools test their kids’ progress only once a semester, Success for All tests these skills every eight weeks. As he would with a business’s earnings yield, Greenblatt would be able to see clearly what needed improvement not just in every grade or every class but with every last kid, practically in real time. Any child who fell behind could quickly be given help. And the program had a track record: Success for All schools had outperformed comparable schools in dozens of studies and comparisons. Even so, Success for All had never come close in twenty years to getting every student at a school reading and doing math at the right grade level.

When Greenblatt asked Success for All’s Bob Slavin about that fact, Slavin didn’t contest the point—but he noted that the program had never been implemented without a school district watering it down or draining it of funds.

“Is the problem just money?” Greenblatt asked.

“Yes,” the professor said. “It’s just money.”


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