Some relief for victims of KaiEn English fiasco as ChinesePod CEO downplays Ken Carroll's role

 

This is going to be a loooong post on the ongoing KaiEn English fiasco, so brace yourselves. One day before KaiEn's unpaid staff were scheduled to negotiate with the Shanghai Construction Group (KaiEn's Chinese partner), co-founder Ken Carroll's business partner and CEO of Praxis Language, Hank Horkoff, was quick to issue the following clarification on the ChinesePod blog, disavowing all relationships with KaiEn English:

There have been a number of stories in the local Chinese-language press about problems at the Kaien language schools here in Shanghai. It appears to be a very unfortunate situation for everyone involved - students, teachers, partners and management.

To set the record straight, Kaien and Praxis Language are two completely separate entities. The 50+ staff here at ChinesePod/Praxis Language have been unaffected by these external events. In fact, we are very busy working on new lessons, new tools and new services to help our students continue to learn Chinese.

Please let me know if there are any other questions about this.

Thanks,

Hank Horkoff, Praxis Language CEO

This immediately sparked off a flurry of comments which subsequently led Horkoff to downplay Ken Carroll's role at Praxis:
Ken has been a prominent presence in the community and a strong influence on our pedagogical approach, but for most of the past four years he has not had a full time position within the company. He has down [sic] a great job in training our academic publishing team here (John, Jenny, Catherine, et al) and I am very proud in the quality of our lessons. Ken is formally a part-time consultant with the company right now helping us with academics and marketing
As anyone who has been in Shanghai long enough will tell you, Ken Carroll was more than just a "part-time consultant": He was the face and the front-man of ChinesePod. He continues to be on the homepage of the ChinesePod website, and his bio on ChinesePod's "Meet the Team" page clearly introduces him as "one of the founders of ChinesePod". A quick glance at Ken Caroll's personal blog and ChinesePod blog will also give any reader the impression that the man was involved in more than just academics and marketing, but also in almost every aspect of strategic business development.

Concerned ChinesePod subscribers also heckled Horkoff on whether they can get their subscription money back if Praxis should one day run into financial difficulties, AND whether it's true that Ken Carroll and Steve Williams fled China because of the KaiEn mess. Horkoff responded by saying his team would survey other subscription-based websites to see if there was any policy ChinesePod could emulate, but as to whether Carroll and Williams fled China because of KaiEn's closure, Horkoff remained tight-lipped, saying only that ďPraxis is unaffected by their departuresĒ.

What Horkoff was unwilling to spell out so clearly was readily admitted by ChinesePod's frontwoman Jenny Zhu (also Horkoff's wife) in another thread now abuzz on the ChinesePod forums, "Where is Ken?":

Guys, Thank you so much for the understanding and support you've given. When Ken suddenly took off, it was a huge shock for all of us at ChinesePod and Praxis. We had no notice and have limited knowledge of what happened. We are not in a position to speak for Ken. My understanding is that his school was hit hard by the financial crisis and it's a very unfortunate situation. I truly respect Ken's work at ChinesePod and hope he can resolve the situation at his school. I'd also like to say that ChinesePod runs on a dramatically more efficient business model than a traditional school. Ken had been our public face but ChinesePod is not his personal company. We are all very focused on making the service and products better and be here for the long haul.
Making a surprise appearance on the thread is the man at the centre of it all, Ken Carroll, himself:
Guys, Rumors of my demise have been greatly exaggerated. Don't believe everything you read in the newspapers! Most of it is totally inaccurate and none of it has anything to do with ChinesePod, I can assure you. I would appreciate it if we could avoid these rumors here. Such things can only distract people from the real objective on CPod. Thanks!
The Chinese press is all over the story now (with some wondering if the English language bubble has finally burst). We're not sure what rumours in the press Carroll was alluding to that were untrue, but when companies and executives refuse to say anything at all (or become totally unavailable), can anyone blame the media for talking to other willing stakeholders to piece the story together?

With the Shanghai municipal education commission now on this case, there's some good news for Kai En teachers and students. Shanghai Daily reports:

FOREIGN teachers of KaiEn English Training Center, which closed suddenly earlier this week, will receive 20 to 30 percent of their lost salary tomorrow as the first batch of life aid, the Chinese partner of the joint institution announced today.

Chinese staff and students were told to wait until the financial situation of the school was figured out.

Students can either apply for a restored education program or refund, which, however, may take a while.

The Chinese Partner, a training school affiliated to the Shanghai Construction Group, stared to record teachers and students' information from yesterday.

"We will restore the education order soon," said a SCG staff member surnamed Yao, who collected student's information in the school's headquarter in Xuhui District.

They received files from about 20 teachers and 100 students yesterday.

"I learnt the closure from news report," said Wang Kun.

He was still having a class in the school's Pudong branch on Monday evening.

He had no idea of the closure until he learnt from TV news on Thursday. He took a leave from his work to register his information yesterday.

The school's five branches have all been closed.

Foreign teachers said that they are owed at least 2 months of salary ranging from 12,000 yaun to 40,000 yuan, even higher.

Chinese teachers' salaries were delayed even longer on average, though their monthly wage is lower.

Hundreds of students who have paid for tuition, ranging from 7,000 to 10,000 yuan, have not finished or even received any education yet.

Meanwhile, a juicy inside story has emerged, which paints a rather sympathetic picture of Ken Carroll and Steve Williams, plus a not-so-sympathetic one of Brian McCloskey (an image that corroborates with what we read in an ongoing thread on ShanghaiExpat). Former KaiEn teacher Kris Fedorak spills all the beans:
I guess I should comment on Kai En English Training School shutting down since I taught there for about four years. I knew the founders personally, and worked there both when it was small and the big schools like EF were just arriving, and later when it was on the way down.

So itís toast, and while the end was sudden, perhaps with Brian leaving with his family in the middle of the night, the demise took about a year and a half. Sad thing, really. I think it comes down to the big schools moving in with large budgets, advertising like crazy and prepared to take losses. Small schools like Kai En canít really compete with them. It had its niche, but even when it expanded from two to four schools the whole thing was botched, half-hazard, and quasi-legal. It had a decent teaching system, but never achieved its potential. FASHION

Ken and Steve had been out of the picture for a long time. They were on the board of directors and met once in a while about it, but essentially since the founding of Chinesepod, Kai En had become Brianís own personal fief, which Iím sure is the way he liked it. But Brian rightly knew he wasnít a businessman, and wanted a CEO to help grow the school and expand. Unfortunately he chose a horrible person to steer the ship. Alex came in around mid-2008, precisely when sales began to drop, and though he couldnít be blamed for long-term trends, it seems like he sped up the fall. He had helped expand another business into a China-wide enterprise before it collapsed, and Brian somehow thought that counted for experience. DELICIOUS

Anyway, the schools were mostly empty during fall and winter 2008-9 and though that happened normally it seemed like it was far worse. A lot of nights at the Zhejiang branch it was just me and one other guy teaching. So the rents were wasted and there werenít a lot of new faces coming in. The school in Yangpu had always been a dud and the new one in Gubei didnít have many classes. Already students were starting to ask me if Kai En was in trouble. Any teacher who didnít see this coming was deceiving themselves, though itís hard to blame people who got caught at the end. Management blamed it on the world-wide financial crisis, though I thought that was bullshit. Maybe some white-collar type students were worried about their jobs in Shanghai, but by and large they got through unscathed and had money to spend on English training. FAMOUS

Kai En got through SARS, when they had to shut down for weeks and had 0 revenue - certainly they could get through this. The big problem was that after Spring Festival 2009 came and people were flush with cash, things didnít really change. My own idea is that the massive advertising of EF and other schools was finally wearing through Kai Enís little word-of-mouth network, and the big schoolsí spread into smaller neighborhoods was giving them reach. Ken had been the face of Kai En for many years, and his disappearance from the marketing (replaced by Brian) hurt the brand. Ken used to be everywhere included a lot of TV shows, and that helped Kai En immensely - everyone knew about him. His migration to the air waves of Chinesepod really hurt Kai En. The market has moved on from those early days: Disneyís here for the kids, Wall Street for the rich, and EF and New Oriental for just about everyone else. CONVENIENT

So there were no sales and the WEAK attempts at trying to jump start them didnít go anywhere. There was a plan to give teachers these discount cards that we were supposed to hand out to potential students. As if weíre sales reps. I really meet people on the street and ask them if theyíre interested in studying EnglishÖ conveniently and famously. Iím sure Brian and Ken did that at Judyís Two back in 1996. Most English teachers are here for one or two years and the only locals they meet are the ones who work or study at Kai En. As far as I know not a single one of those cards was ever returned to a PRO (the sales staff now called Course Consultants, like theyíre actually consultants). So sales stayed weak into summer 2009. There was some other half-baked plan to quasi-franchise with schools in, say, Sichuan, who could license the Kai En name and logos and get a fully trained teacher from the school. Kai En would train the teachers (Brian was particularly fond of his teacher training team) and then send them out to the sticks. Like I said, half-baked and it never went anywhere. Think the CEO was in charge of that one. I VERY LIKE

Brian had been looking for investment for a while and after getting told to fuck off for the nth time finally figured out that Kai En looked like a mess from the outside. It was a JV with some sort of Chinese group, which as a partner wouldnít agree to anything that Brian, Ken and Steve proposed. So they always kind of did things behind their partnerís back. Nothing unusual in China I suppose. But all the big schools are limited companies that are defined as training companies, not schools per se, so legally they look more attractive to investors - thus New Orientalís big stock market splash. Brian called me into his office in 2008 to ask me if I wanted to get them some new lawyers and try to fix up the mess. Legally they were a little shaky, but no worse than most businesses in this country, and with a little bit of work it all could have been made to look quite attractive since Kai Enís brand was pretty solid still. His plan was to attract investment in order to expand, particularly for Kai En corporate to be able to cover companies like INTEL that have offices all over the country. PROMINENT

So long story short the company was bleeding money for at least a year and never got any additional investment at all. I heard about 3 weeks ago that Steve and Ken had left - Ken to Taiwan and Steve to England. I had known that Steve and his wife were wanting to get out of China but this seemed very sudden. I was told that Brian, Ken and Steve were personally liable for the companyís debts. Kai En was not a limited company. Thatís what really fucked the whole situation up, and itís why students were left stranded with no school a day after signing up and teachers found the doors closed on pay day. Yup, thatís right - it ended classy. HAVE A GREAT SHAPE

It sounds like the owners saw the writing on the wall and had time to sell their homes and get their families out before Kai En officially went bankrupt. Debts were due and there are stories of gangsters looking for money. Iíd heard that the Chinese mob or some kind of loan sharks might be involved, but who knows. Frankly, I could see the Bank of China using the personal touch of hired goons. But then banks here donít loan to small businesses, so I really donít know who had been helping Kai En out with cash flow over the last few months. HAVE A TRAVEL

Brian stayed till just about the end it seemed, and he called a meeting to say that 2, maybe 3 schools would soon close. An investor was in the mix to save the school, and suddenly everyone was paid their salaries for October, apparently even Chinese staff, who had been treated far more horribly than the foreign staff over the last few months. Labor bureaus had been called and helped to put pressure on Kai En to pay up or open their books, and there was even some sort of sit-in a couple months back. I had gotten out July 31st, but had to fight tooth and nail to get paid, even screaming over the phone to the head of finance and going there and practically threatening her. I managed to get everything except about 2,000 that they had tried to weasel out of. When I called HR the other day, the poor girl stuck there to deal with much of this (HR head Michelle smartly got out at least a half a year ago after being with the company almost from the beginning), she said that Brianís phone had been off for a few days and that since the next day (the 15th of December) was payday, most staff were starting to think it was the end. A lot of them didnít show up the next day, and the teachers and students who came found classes had been canceled. Someone called reporters and it was on the 6 oíclock news (which comes on at 7 here). MODERN

So last Thursday or Friday, or perhaps even sooner, Brian quietly shut off his phone, got his wife and baby girl and got the fuck out. Probably his smartest move in a long time. Hope he sold his house. I can imagine one bitter man, there. Ken and Steve certainly have investments in Praxis (offshore, of course), and I figure Brian does too, but they still canít ever come back here. Itís a story out of Chinaís Wild West, which was actually China just 10 years ago. A China that those guys, especially Ken and Brian knew well, but probably thought theyíd never be a part of. Kai Enís closing is just like those gyms that take memberships one day and are closed the next, with the owner safely in Hong Kong. But I seriously doubt Brian had a suitcase full of cash. There was no cash to take. There were stories about the CEO and the head of finance fleecing the company but it couldnít be proved. That poor wreck of a finance girl left the company about 2 months ago, but I figure because of stress, not stealing. I think it never would have ended so ugly if it had been a limited company. The owners would have stuck around and notified staff and students in advance that things were going under. ďCOLLEAGUERSĒ

Well, thatís it. A pathetic ending for a company that was ahead of its time and was a pretty cool place to meet people back in the day. There were some great characters. When I went back to work there in 2008 it had obviously changed, as had Shanghai, and though I met some great new Ďcolleguersí, the warning signs were everywhere. Seems like a hell of a long time ago that I stepped into class at Kai En for the first timeÖ with no TEFL and no experience, circa 2003. Thanks for that, Kai En. It was many peopleís first job in China, and I met a lot of wonderful locals through the school. Strange to think of it not being around to poke fun of. SUITABLE

Former Shanghaiist contributor and ChinesePod host Aric Queen has also weighed in on the matter. He vouches for Ken's character while slamming Steve Williams and Brian McCloskey:
Ken mentored me. he also looked out for me. he gave me money sometimes when I didnít have any. and to this day, he never let me pay for a drink. [and let me tell ya, when you're spending hours-upon-hours in a small homemade studio, there's a lot of drinking.] he took care of me. and he took care of others. he was the creative pulse behind what was once a promising product. he would sit and listen to my ideas and push me to try them. he came to everything I put on. he came for Scottís 4-hour funk session. he even funked on-stage for us once. heís a goodfella. and he is someone I consider a friend. I say all of this as recently, as things do in Shanghai - a company he started with another made the press for closing up overnight, with everyone involved fleeing the country. money is owed both to students and teachers. rumors of Ďthugsí visiting the schools are flying around and no oneís really sure what to believe. I donít know what happened, but have spoken to a few who do. their story is out there if youíre really interested. but Iím writing this to say that Ken ainít the type of person who would be behind this. the others, Steve and Brian? you betcha - I know from experience. but not Ken. is he caught up in it all? sure. but again, he ainít that type. I donít know whatís going to happen, nor do I really care. but with all the shit flying around, hereís one guy who owes his career in Shanghai - one that led to many more opportunities - to Ken Carroll. which means I knew him pretty well. and he ainít the type of guy who does this.

Last but not least, in Ken Carroll's latest tweet posted on Dec 1, we find him quoting a question by the American economist Thomas Sowell, "Fairness and social justice? So what is your fair share of what someone else has worked for?" File that under "famous last words"!