Classroom Act
Kaplan's business has stood the test of time.
By David Whitford

(FORTUNE Small Business) – Stanley H. Kaplan is 85, and his memory is spotty. For instance, he's not sure how much he got for his famous test-prep company when he sold it to the Washington Post Co. in 1984. "I think ...," he says haltingly, "it was about ...," he pauses, "$35 million." (It was $45 million, cash.) But Kaplan has no trouble recalling how much he charged an hour when he launched his tutoring business while at James Madison High in Brooklyn more than 70 years ago: "25 cents." Or the name of his first client: "Robert Linker. L-I-N-K-E-R. He lived at 3246 Bedford Avenue. I rang the bell, and he opened the door. When he saw me, he ran down the steps into the basement and tried to escape through a window."

Linker didn't get away, Kaplan persisted, and so was planted the seed of a career that spawned a company that conceived an industry. Today Kaplan Inc. is a billion-dollar enterprise, its success fueled by the general fear expressed in Linker's impulse to flee, and specifically in that fear's maximum expression: The whole-family terror surrounding the annual college-admissions game, which crescendos through the winter and is peaking now.

"I didn't think I could make a good living as a tutor," Kaplan explains between bites of a turkey sandwich on rye in the Manhattan office of his charitable foundation. (Kaplan and his wife have given away more than $20 million.) So he applied to medical school, which pleased his mother, who frequently pointed out, "There's a difference between calling yourself a tutor and calling yourself a physician."

But Kaplan didn't get into medical school, even though he was second in his class at City College. "Too many Jewish students," he explains, matter-of-factly. "There was a quota." What softened the blow (for Kaplan if not yet for his mother) was that he had no choice now but to pursue his passion. In 1939 he set up shop in his parents' house. He tutored students one-on-one in his bedroom--any grade, any subject. Like a doctor, he also made house calls. As his reputation grew and commuting ate into his billable hours, Kaplan made a deal with his father, a plumber who was barely getting by during the Depression: "'I'll buy you a car if you drive me in the evening to my pupils.' Good deal for me, good deal for my father."

Then Kaplan fell in love, twice. With Rita, his wife of 56 years, but before that with the SAT, whose popularity grew exponentially as GIs, back from the war, flooded American colleges. What Kaplan loved about the SAT from a pedagogical point of view was that it was a "thinking kind of test, not just a memory kind of test." What he loved about it from a business point of view was the leverage it gave him. Now he could teach the same subject, over and over, to whole classrooms full of students. With that leap, Kaplan's earnings were no longer capped by the number of hours in the day. He had entered the realm of mass production.

"Do kids worry too much about which college they'll go to?" I ask as I'm leaving.

"No. They want Harvard, Yale--it's always that."

"But wouldn't you counsel them to try to relax, just a little bit?"

"No. The people I meet, they relax by getting into the school."

Maybe so, but we all know plenty of successful people who never got Ivy League degrees and never gained access to respected professions, but who managed to overcome the trauma of disappointing themselves and their parents. In fact, some of those folks might never have succeeded quite so spectacularly had their early lives taken a more prestigious turn. Stanley Kaplan, for example.

"Well," he finally concedes, "you've got a point there."