ONLINE ENTREPRENEUR

The Baltimore Sun

Douglas L. Becker, the 41-year-old Baltimore entrepreneur who built a billion-dollar business operating online and foreign universities, is facing the next big challenge of his nearly 25-year career. With a $3.82 billion buyout of Laureate Education that closed on Friday, Becker, Laureate's chief executive officer, is moving to Hong Kong, where he plans to oversee the newly private company's expansion in Asia.

It's a risky venture, but one with significant potential opportunities, as East Asia and the Pacific are seeing the fastest enrollment growth in the post-secondary education market, according to analysts. Becker is eyeing markets such as China, South Korea, Japan, India, Vietnam, the Philippines and Singapore.

"Creating a company that has international in the DNA has been incredibly interesting," Becker said. "It's very much the way the world is moving. ... It's been an incredible experience to really build a truly boundary-less, colorblind company in every sense."

Becker was only 17 and attending the Gilman School in Baltimore when he and a friend started a technology business. Two years later, they sold the company.

Several years later, the pair bought Sylvan Learning Systems Inc., the predecessor to Laureate.

In 2003, Sylvan sold its pre-kindergarten-through-12th grade tutoring business to focus on higher education and became Laureate. (The tutoring business became Educate Inc., which also became private this year.)

Laureate operates Walden University, its U.S. flagship online institution, and about two dozen colleges and universities abroad in countries including Spain, France, Mexico, Chile and Brazil.

Becker overcame opposition from large shareholders such as Baltimore's T. Rowe Price Group and complaints of conflicts of interests to take the company private. Becker said the move was necessary because it allows the company to pursue aggressive expansion plans without quarterly pressures from Wall Street.

Becker and his family were set to leave for China yesterday.

Between packing and preparing for his move, Becker sat down for an interview with The Sun last week at Laureate's new headquarters in Harbor East. He talked about the company's evolution and his own as an executive and his goals for relocating to Hong Kong for the next year. He also talked about the mini-controversy involving city tax breaks for the company's new digs and Laureate's future in Baltimore. Your U.S. business essentially consists of Walden University. Do you have plans to expand in the United States?

I do think there are specific niches in the U.S. market that are interesting. And so you will find us continuing to invest and grow in the U.S. But the majority of our activity will be outside the United States. ... There are some specific niches in the U.S. even in the campus-based arena that do interest us -- areas that we feel are more difficult for traditional competitors to get into, or maybe a little bit small for our U.S. competitors to care about. I think I probably won't go into the details, only because we have competitors. I don't want to say this is exactly what we are going to do. Speaking of your competitors, a lot of them are also looking to expand overseas. What differentiates Laureate from the rest?

We have done it and other people are just talking about it. That's the whole thing in a nutshell. We built the company to be an international leader from the beginning. ... And our competitors are U.S. companies that I think are going to find the international markets to be very different. That's not to say they won't make investments or be successful. But it's one thing to try to change your company to move into the international market. It's another to build a company from scratch to be a leader in the international markets. Does it help that you'll be on the ground, so to speak, in Asia?

I'm used to being on the ground anyway. I travel a lot and [have] been to almost every place where we've invested. The challenge for Asia is the time between trips is too long for me. I think we'll be able to react much more quickly by having me on the ground there. ... We have strong management everywhere. The delays in attending to Asia [are] holding us back. What are your specific goals for your time there?

I have three goals that will tell me a year from now if I've accomplished what I hope.

The first is that we should have a clear strategy for how we're going to develop in Asia. We have a strategy, but I want to refine that strategy, I want to test some assumptions, and I want to come back with something that we could fully commit to.

The second thing is I would like to have a platform of some core higher education businesses. This could be partnerships or acquisitions. That will give us a base to work from.

The third thing is I like to have a management team that has had the experience of working directly with me and gotten to know them because the decisions that need to be made will require a lot of confidence from headquarters. Because Laureate does most of its business overseas and it has campuses and employees around the globe, does it still make sense to be headquartered here in Baltimore?

I think we have found Baltimore to be a good place to work and live. We can recruit talent here. And we're very decentralized. What you see in Baltimore is primary our U.S. online business.

It is true that the global headquarters could be anywhere. But it's here. I live here, and we care about the community. And we intend to stay. You just moved into bigger offices at the new Harbor East development on South Exeter Street, which was the source of some controversy last year when the developer asked for tax breaks from the city to lower rents for you. (The city awarded H&S; Properties a $3.5 million tax break for the $201 million project.)

Looking back, what are your thoughts on the situation?

I didn't really understand this. We were making a huge commitment. We signed a long-term lease for a lot of space, and the landlord was making a bigger commitment. Our lease commitment might have been $60 or $70 million. And the landlord's investment was $200 million. And what was being asked from the city, from what I recall, was $4 million in tax abatement.

Given the magnitude of the commitment to the area, it seemed to me like a very reasonable investment on the part of the city. The city was investing future taxes that they wouldn't have gotten if the project hadn't gone forward anyway. So I never really understood why there was so much discussion around it. But obviously, the key leaders all agreed it was a good idea. Considering the evolution of Laureate, how have you changed as a leader?

I think that one of the challenges for me has been to reinvent myself to meet the needs of the company, partly to reinvent the company to meet the opportunities I see in the marketplace.

For me, that means every year I have to reassess the needs of the company and make an honest judgment as to whether I have the skills needed to take the company to the next level. A lot of that has to do with understanding the strengths and weaknesses of the team.

I've been lucky that I could supplement my own limitations by knowing them and hiring really strong people. And if I notice weaknesses on the team, then I don't have to just develop my own skills. I really have to make sure the team itself has the balance and the skills to be successful. That's one thing that a CEO can actually be pretty lucky. A CEO can adapt the team to compensate for his or her weaknesses. That's what I've tried to do over the years. Where do you see Laureate in five years?

I would love to see a much more substantial Asian business. And I think it will take five years to really build it to the level that's possible.

There [are] no short cuts in our business; everything takes a long time. Many times, people will say to me, 'But Doug, it will take five years.' My answer is, 'Well, you better start now.'"

.. What about yourself? Will you still be leading the company?

I really love the company. I really love the business potential and the social impact. That's always been important to me. ... What I love about Laureate is that I think higher education is the key to social mobility. And in many emerging countries, they don't have much in the way of a middle class. If we could really play a role in expanding the middle classes and bringing prosperity to the emerging markets, that's so fulfilling to me. So I do see myself here in five years, but the question will be, what's the right role for me five years from now? That's five times I'll have to ask myself the question: Am I still the right person for the company?

But as long as the company keeps adapting and I keep adapting. ... We acquired Sylvan in 1991, so that's 16 years. So I have no reason to believe that five years from now, I wouldn't be passionate and involved.

hanah.cho@baltsun.com

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