The Bill and Melinda Gates Foundation funds a 5-year program supporting the start-up of new small high schools of no more than 400 students and the conversion of larger high schools into smaller, more personalized schools or learning communities. This report focuses on the program's first year and compares new small schools, large high schools converting to smaller units, and model small schools already in operation. Data were gathered via interviews; observations; and surveys of 12 grantee organizations, 5 model small schools, 8 start-up small schools, and 8 converting schools. Findings indicate that teacher-student relationships in small schools were more supportive than in larger schools. Many start-up schools were still struggling with implementing innovative instructional practices by the end of the first year, but most exhibited teacher professional community and distributed leadership. Starting a new small school is difficult. Many issues of human and material capital in start-up schools were still unresolved. Converting large high schools is a 2-year process, although progress toward positive environments occurred even during planning. Few teachers were included in planning, leading to tenuous support by staff. Planning time in start-up schools and preconversion large schools was generally unfunded. Student and educator responses were more positive in small schools than in preconversions on nearly every measure of school climate. Some grantees had limited leverage to influence the school teams implementing their models. Finding viable economic models was challenging for small schools and grantees. Implications for grantees, schools, the foundation, and the field are discussed. (Contains 59 references) (TD)