My response to Truth Matters: A look at the “Tilson Tirade” on Online Learning

Jeanne Allen, head of the Center for Education Reform, posted an article today (see below) entitled Truth Matters: A look at the "Tilson Tirade" on Online Learning, in which she responds to my presentation on K12.

 

I've known Jeanne for many years, we have a very friendly relationship, and I truly admire the difficult work she's done in the trenches over many years fighting for better schools for kids and parents – which is why I'm puzzled that she can't see how K12 (and most of the rest of its industry) have franticly pursued growth at all costs, resulting in an educational catastrophe for the significant majority of kids enrolled in online schools.

 

But it's OK for we reformers to disagree on certain issues. I welcome a healthy debate, so in that spirit, below is an open letter to Jeanne in response to her article:

 

Dear Jeanne,

 

Nearly two weeks after going public with my analysis and conclusions about K12, of the dozens of people I heard from, not a single person had anything positive to say about K12. In fact, it appears that I was very late in discovering what many other people had already figured out: that, if anything, K12 is even worse than I had described (hard as it is to imagine).

 

So it's great to finally hear someone try to rebut my arguments – after all, if I'm wrong, I want to know about it. But after reading your article carefully a number of times, it hasn't introduced even the tiniest bit of doubt in my mind that my conclusions are correct that K12 has run amok, is engaging in a variety of bad acts, and is running schools with the worst academic outcomes I've seen in my 24 years of involvement with this movement.

 

The argument that underlies most of your 10 points is that I cherry-picked information from a handful of disgruntled and/or biased former employees and researchers to draw false conclusions that are otherwise unsupported by the data. The problem with this argument is that, by your own admission, your article is "only a brief expose of what's wrong with the first 5 pages of text" in my presentation. But my presentation is 123 pages long! The first five pages are only the introduction, which is why the title of page 8 says "Summary of Why I'm Short K12's Stock."

 

If the totality of my presentation were just the first five pages, I'd agree that you have a point. Yes, one or two former employees might be disgruntled. Yes, one or two researchers might biased against K12. Yes, the data in one or two states might be flawed. But I present over 100 pages of interviews, investigative journalism reports, research studies, state data, etc. – all of which say the exact same thing. It's not as if 60% of the data points are against K12 and 40% are in favor – it's more like 99% vs. 1%. It reminds me of the old saying: "If it looks like a duck, walks like a duck, and quacks like a duck, it's probably a duck."

 

You would be doing me a great favor if you would, in your promised subsequent article(s), move beyond attacking me and my numerous sources, and present actual data and evidence that rebuts my arguments. Please show me – I really want to know – any evidence that the students at even one of K12's 54 schools are doing well. To be clear, I'm not talking about a few anecdotes – I acknowledge in my presentation that "a few students at even the worst online schools are doing well." Rather, show me evidence that rebuts what one person I spoke with told me: "To be sure, [online schools] work well for some students, but I'd guess only 15% of the ones cyber charters are currently serving."

 

I want to respond specifically to three things you wrote in your article:

 

1) You wrote:

 

I'll limit this to educational facts and data – and let the investing community delve deeper into ethical questions about someone who attempts to malign a company while shorting that company's stock.

 

First, I'm scratching my head at how you use the words "facts" and "data" in your article multiple times, yet I couldn't find a single fact or data in your entire article. Not one! All you did was cast aspersions on my facts and data.

 

Second, your raising the issue of "ethical questions" remind me of two old sayings: "Don't throw stones when you live in a glass house" and "Whose bread I eat, his song I sing."

 

I've openly disclosed my short position in K12 at every opportunity and made it clear that my funds and I will profit if K12's stock goes down.

 

Now I call on you to be similarly transparent about your financial interest in this debate. Specifically, how much money has the Center for Education Reform taken from K12, Connections Education (the second-largest online charter company), and other online charter organizations over, say, the last five or ten years? My understanding is that they have generously supported your organization.

 

I know for sure that both K12 and Connections will be featured prominently at CER's 20^th Anniversary Celebration next week, CER at 20 (the press release about the gala confirms that "Current sponsors of CER at 20 include Charter Schools USA, K12, Inc., Connections Education…"). In addition, two of the honorees at the gala are William Bennett, the first Chairman of K12, and Barbara Dreyer, the Co-founder and CEO of Connections Education.

 

To be clear, I am not criticizing you for accepting their support. But it is highly ironic to raise "ethical questions" about my conflict of interest without disclosing your own.

 

2) You write that I am "opposed to all online schools." Most folks don't understand the nuances between online/cyber/virtual schools, hybrid schools, blended learning, and online learning (confusion that K12 takes full advantage of), so I amended this paragraph on page 6 of my presentation to read:

 

Note that my critique is specifically of K12, not all online charter schools, for-profit charter schools or blended learning schools. While I think the online charter school sector has, overall, run amok, there are a small number of good online schools – and a few students at even the worst online schools are doing well.

 

3) Lastly, in point #9, you write:

 

Finally Whitney gets to academic achievement, which I will explore further in my next edition. However, here are a few notes to chew on.

 

Once again we look at NEPC for data, not any credible source.

 

I find it curious that in a five-single-spaced-page article you completely duck the single most important issue for any school operator: the academic achievement of students. In contrast, I address this issue in great depth across 25 pages of my presentation (pages 34-60), of which NEPC data is only a small part. I eagerly await your "next edition."

 

Then you write:

 

Whitney slams K12 for not permitting outside evaluators to look at their data. Where are his outside evaluators?

 

What do you mean, where are my outside evaluators? Even if K12 were willing to share its data (which it's not), why would it be my responsibility to hire outside evaluators? In light of the criticisms from all directions of K12's dismal academic results, you'd think the company – if it even had mediocre data – would be eager to put these issues to rest by hiring credible independent evaluators, especially since K12 now admits that the Scantron results, which it's been trumpeting for years, can't be relied on (see page 39 of my presentation).

 

Finally, you turn to student churn and write:

 

To be sure, K12 and others do not retain kids well in the first couple of years. There is enormous churn, and some of that might be due to the organization running the school, and some might be due to the kind of situation each student brings and leaves with.  We need to know more… and we simply don't. We need more data, which would have been a noble use of Whitney's bully pulpit.

 

But the lack of data doesn't stop Whitney from accusing K12 of fraud.

 

My response is three-fold. First, to your comment that calling for more data "would have been a noble use of Whitney's bully pulpit," I point out on page 62 of my presentation that CEO Ron Packard said: "we haven't chosen to" disclose churn rates to investors. In fact, K12 is so loath to release the data it has on student churn that it's defied two letters from the SEC demanding that it do so.

 

Second, while you assert that there's a "lack of data," in reality there's quite a bit of data showing shockingly high student churn, which I cover in pages 62-65 of my presentation.

 

Third, I find it interesting that you chose to use the word "fraud" because it doesn't appear anywhere in my presentation (the closest I come is to ask Is K12 Defrauding States Via Lax Enrollment Policies? in the title of pages 31-33). A Freudian slip?

 

Sincerely yours,

 

Whitney

---------------------------

From the Desk of
Jeanne Allen
 
Truth Matters
A look at the "Tilson Tirade" on Online Learning.

http://hosted.verticalresponse.com/1397421/71de7e3490/542540291/5e887f5f42/
 
Whitney Tilson is a self-described reform warrior who from his hedge fund perch disseminates information and opinions – as well as a variety of travel logs about his own escapades around the world – with a wide and growing group of people that just like being "in the know." It's often entertaining, sometimes informative, and in general, everyone gets a kick out of reading about themselves or something Whitney likes that they did.
 
Obviously no one likes reading about something they did Whitney doesn't like. He doesn't mince words. Sometimes when he criticizes he's right. Often, he's wrong. One such example is his tirade against online learning in general, and K12, Inc. in specific. 
 
Presenting to his email audience his 100-page plus Power Point to the Value Investing Congress "proving" that K12 and online learning sucks, Whitney takes the reader through a series of arguments that he is 100% convinced are right.  The fact that he presented to such an esteemed body is worrisome for anyone who thinks he is wrong. Upon further scrutiny, it turns out the Value Investing Congress, while big, was actually founded by Whitney himself, so being invited to present there isn't like getting invited to the Clinton Global Initiative! 
 
But anyone who makes statements like "online education is a cancer" requires more scrutiny, don't you think? To that end, here is just a brief expose of what's wrong with the first 5 pages of text in Tilson's Tirade. (I'll limit this to educational facts and data – and let the investing community delve deeper into ethical questions about someone who attempts to malign a company while shorting that company's stock.)
 
 
THE FIRST TEN FLAWS in An Analysis of K12 and Why It Is My Largest Short Position, By Whitney Tilson, Kase Capital
http://seekingalpha.com/article/1707192-an-analysis-of-k12-and-why-it-is-my-largest-short-position
 
 
#1  —Whitney says he is opposed to all online schools:
 
"The schools I'm talking about are ones in which students are supposedly learning by sitting at home all day in front of a computer, interacting with teachers almost exclusively online."
 
Supposedly? I don't know of many people who make statements about kids "supposedly" sitting in front of computers all day that actually understand how online learning works.  Yes, teachers deliver instruction via the computer. Some are live, many are posted and self-paced.  The best instruction in the world can be online and self-paced. The worst instruction in the world can be online and self-paced.  But this paints the picture that the child is glued to a teacher behind a computer screen when in actuality, the experience can be much richer than that. Regardless, Whitney provides no evidence of this "fact."
 
#2 — In these next excerpts, the writer makes inferences and assumptions about who can benefit and why – and we're asked to think about his logic, his reason, as if this kind of critique is new – and factual…
 
"While online schools can be an excellent option for certain students, it's a very small number – typically those who have a high degree of self-motivation and strong parental commitment. It's sort of obvious if you think about it. Do you think you would have learned more during your K-12 educational experience if you'd sat at home in front of a computer, or gone to school and had daily face-to-face interaction with teachers?"
 
#3  — The next sloppy assertion comes when he quotes a Brookings Institution researcher, Tom Loveless, who has done some good work in the past, and some rather mediocre work. He provides this opinion, which Whitney uses as evidence:
 
"We're talking about high schoolers and young kids. The idea that parents go to work and leave their kids in front of a computer—it's absurd."
 
Just a few sentences earlier Whitney acknowledges that virtual or online schools actually require a coach to be with the student every day. The notion that a parent or grandparent, or hired adult might be working with kids is never explored in this report.
 
#4  — An interview with the former head of the Ohio Virtual School provides much fodder for assertions about K12. Whitney argues that it is this interview that sent him over the edge and on his new crusade.  The former head of this K12-managed charter school says the company was all about making money and growth and didn't care about student achievement. Shocking that a former employee would say something like that.  How many of us have had former employees that loved the job when they had it, but upon leaving – suddenly discovered all sorts of things they really found fault with.  Most professionals would never discuss a personnel matter with people externally, so we really do not know the story behind why his particularly school head left and why he feels compelled to damn his former employer. Maybe he is right to condemn, may he's not, but his opinions about his former employer does not a case against online learning make.
 
#5 — A Teachers College researcher and professor is given lots of credibility in asserting that K12 never cared about kids.  Never mind that Teachers College and its various sub-organizations and researchers have consistently stood against any education reforms that put parents and students in the driver's seat! He told Whitney that
 
"The virtual providers like K12 are now mostly going after at-risk kids, kids on their last straw – if they didn't sign up, many would be dropouts or go back to juvenile court."
 
So of course, it fit the profile, and Whitney took it to the bank.
 
This professor goes on to say:
 
"K12 and Packard use this as an advertisement, saying they're doing noble things and wondering why they're being criticized. It's almost comical. It's so misleading and conniving."
 
This is a teacher of teachers? Putting out opinion as fact? Unbelievable.
 
#6  — One person is quoted as saying that online schools do lots of advertising and enroll kids who don't succeed just for the money. Wow, now that's convincing.
 
#7  — Next Whitney is quoting someone criticizing K12 on "Glassdoor," a website that permits people to post anonymously about a company without any need for verification.  It's like a Trip Advisor or any number of rating systems that anyone can participate in. We're supposed to give such a quote credibility – even when there are dozens of positive comments about K12 on the same page linked to his damning discovery.
 
Whitney tells us that he believes it a "catastrophe" to permit low income students to be enrolled in an online school.  Really? It's a catastrophe for a child whose schools and environment has not served him well and is disadvantaged and has any number of good reasons to do his schooling outside of a traditional classroom?  It sounds like Whitney doesn't believe that what's good for higher income students isn't good for lower income students, even if it's a choice their parents make.  Whether he's right or wrong is irrelevant – he has no data that supports his allegations – again. 
 
And we're only on page 4.
 
#8 — Low spending on teachers is demonstrated by a bar graph the result of data supplied by the National Education Policy Center (NEPC). Hello?? Do you know who these people are?  The NEPC is run by individuals with degrees, masquerading as researchers, who are funded by unions and have since 1994 been involved in "research" that criticizes and finds fault with ANY charter school efforts, companies that work in charter schools and anything without unions at their core. Alex Molnar, Gary Miron and others on the NEPC team have never been credible, and never trusted by anyone left, right or center who really cares about research. They make up what I once called, more than 10 years ago – the Don't Worry, Be Happy crowd – who believe US education has never been better and any attempts to change it are simply self-serving.
 
That said, even if the data NEPC's chart shows about the level of teacher spending were right, there's no connection between the spending on teachers and student achievement. We hear from Whitney about ONE disgruntled teacher that says EVERY teacher had her same experience. Where's the rigor on this? Where is "EVERY" teacher saying this? Shouldn't be too hard to find them all, right?
 
Would you trust a survey in which ONE person said they liked something? Would you not go to a restaurant because ONE person was unhappy? This is the problem with education writ large today. We are so quick to buy into someone's "data' simply because it sounds so darn convincing
 
#9 — Finally Whitney gets to academic achievement, which I will explore further in my next edition. However, here are a few notes to chew on.
 
Once again we look at NEPC for data, not any credible source. Whitney slams K12 for not permitting outside evaluators to look at their data. Where are his outside evaluators?
To be sure, K12 and others do not retain kids well in the first couple of years. There is enormous churn, and some of that might be due to the organization running the school, and some might be due to the kind of situation each student brings and leaves with.  We need to know more… and we simply don't. We need more data, which would have been a noble use of Whitney's bully pulpit.
 
But the lack of data doesn't stop Whitney from accusing K12 of fraud.
 
#10 — Finally - for now - he connects us to state reports in Colorado and Pennsylvania, where he presents "studies" from newspapers that show student achievement low and dollars potentially being misspent.
 
We are given a link to an article about Colorado with some state data about online schools and many comments from reformers commending the reporters for their investigation.  There's information about schools, and analysis of what that might mean, but no actual analysis of student performance over time or SES data, and because it's aggregate data, we don't know who goes to that school and who succeeds, or not.  It's general, it's not a great picture, but we simply don't know what that means for the kids the schools serve.  It might be bad, very bad, as Whitney suggests, or it might be good, for some. I've looked at it and I'm an expert and I know in order to make a conclusion I'd have to do a lot more work and get more data to understand if kids achieve or not.
 
I presume state officials have done this.  As most people know, state officials are on the hot seat for making laws work for kids.  Many work and have great success with chartering and ensuring quality outcomes for kids.  For whatever reason, officials in Colorado -- a state that has mounds of good data about schools -- have not shut down its virtual schools, though the record shows that they have scrutinized and intervened to improve many.
 
A New York Times article is cited as evidence that online schools in PA are very bad and yet again, there is no objective school-by-school data upon which this is based so the conclusions belong to the reporter and to Whitney, not to any comprehensive, proper evaluation. 

But Whitney is willing to make pronouncements, regardless.  He is a friend to good causes and children's needs, and most of the time to education reform, but this new vendetta against online learning in general for kids, and one particularly company, K12, appears to be lacking in real rigor, and content, and truth.
 
*************
Aristotle once said that "our duty as philosophers requires us to honour truth above our friends". I'd say our duty as stewards of sound policy require us to honor truth above our friends.
 
Oftentimes because a person has a big megaphone, they will have an impact on policy regardless of the data they present.  The result is that policy is often made based on someone's opinion, rather than real live success.  Research isn't objective right because it's done by someone who has advanced degrees. It's as flawed as the human mind itself.  We've seen this repeatedly.
 
The most important thing people of principle can do when reviewing someone's words or comments or research, and not having enough data themselves to make a determination of right or wrong is to stop and ask the questions:
 

• Does he have facts and have they been vetted by other people who have no bias in the matter, and no prior knowledge of the issue?

• Has he interviewed a large enough sample of people to know that it's bad, or is he/she just repeating what has been said that confirms his/her deepest suspicions?

• Has the person actually been to see and talk to the very people he is calling frauds or worse, those he is saying have been duped?

• Has the person actually seen the work – the school, the students, the parents, the educators, the actual, raw data — about which he is writing?

• Does he understand data and how it is created?

 
The Internet is a marvelous thing. But it's also produced a parade of acts that entertain and get applauded, often for simply being part of the show. Just as a walk through Barnes & Noble demonstrates that not all books are more than someone's folly, a stroll over thousands of Google results daily demonstrates that just because it lives doesn't mean it should. Sadly, the same problem we work to solve in the schools is a problem outside: namely, the lack of real rigor and content when it comes to learning, using and analyzing information.
 
One example is Diane Ravitch. A lot of people talk about Diane Ravitch. Some consider her courageous for standing up to the people whose work, research and causes she once advanced, wrote about, studied and celebrated.  She liked standards once, and now she just wants her grandkids to have fun and meaning (because I guess standards are just not fun and not meaningful and testing to find out if they have met standards kills childhood).  Diane liked choice once upon a time because she saw the inadequacies in schools and the fact that a student's lifetime could be spent in a bad school with no escape. Now she rallies her growing army of ignorance against anyone who believes in freedom and choice for the poor as social justice. Why she does that is the subject of much debate. I actually think I have the root cause, and her communications to me over the years will help me shape my thoughts I will share in the not-too-distant future (not because I think Diane Ravitch, the person or critic, needs more attention, but because the attention she has created against real educational opportunity for children is morally repugnant, harmful to real people who don't live in an upscale Brooklyn Heights apartment among people who only agree with her, and truly unfounded and inaccurate).
 
I don't have the luxury of stopping everything to read and analyze Whitney Tilson's documents or Diane Ravitch's hundreds of pages of commentary and rants against education reformers.  But in the pursuit of truth, I can do a few pages at a time.  We all can.