The Pied Piper Of Kids' Software

Think a four-year-old couldn't possibly grasp Boolean logic? She might, if she sits down at the computer and plays Fripples To Go. Playing a shopkeeper selling wacky creatures, she'll have to fill such orders as "sunglasses and spots but not curly hair." Mr she might learn pattern recognition by mimicking percussion rhythms played by a wild-haired orangutan wearing purple shoes and an earring. If this doesn't sound like educational computer software, think again.

Behind these whimsical characters stands a surprising CEO. She's Sally G. Narodick, a 50-year-old banker-turned-entrepreneur, and she's everything the playful Fripples aren't: serious, well-groomed, intellectual, businesslike. As mother of two, she's passionate about children and education--and knows what kids like. She won't let a product leave Redmond (Wash.)-based Edmark Corp. unless it's fun as well as educational.

THE ITCH. It's been a winning combination. When Narodick became CEO in 1989, Edmark was a sleepy maker of special education materials, with sales of $2.5 million. She hired creative talent and pushed the company into kids' multimedia software for the home market. Edmark's 10 products (table), appealing to kids, parents, and educators alike, have won more than 65 awards. Edmark nearly doubled its sales, to $22.7 million, in the fiscal year ended June 30 and earned $2 million after losing money a year ago. The stock is sizzling: At nearly 50, it's trading at five times last October's 93/4 (chart). And on July 18, the company announced plans for a 3-for-2 stock split and a secondary offering of 650,000 shares.

Narodick, who holds masters degrees in business and education, spent 15 years at Seattle's Seafirst Corp., rising to senior vice-president. In her mid-40s, she got "the entrepreneurial itch" and left to form a consulting practice and help start a bank. "It was, at the time, a pretty gutsball decision," Narodick says. "I gave up a fancy title and a fancy office--a lot of things women really value in terms of achievement."

Her kids paved the way to Edmark. When daughter Lisa, now 20, was 7, the Narodicks (Kit, her husband, is an aviation lawyer) got an IBM PC. Lisa and two friends grew so fascinated by Logo, a children's programming language, that they dubbed themselves "the Logo Lassies." "I became very interested in what a magical tool this was for children," says Narodick.

A few years later, the father of one of Lisa's classmates, an Edmark director, hired Narodick to help develop a strategic plan. Her research showed a surge in demand from the kids of baby boomers, so Narodick suggested a move into multimedia software for consumers. The board then brought her on as CEO, and she hasn't swayed from the plan since. Now, Narodick's son, Philip, age 9, plays a role at Edmark: He and his friends have been testing the company's software for the last four years. He appears in Edmark ads, as does the chief financial officer's son. "They are convinced they're responsible for the stock price," says Narodick.

Narodick is neither a technological whiz nor a creative genius. To carry out her vision, she hired Donna Stanger as vice-president for product development. After 20 years as a teacher, Stanger spent eight years developing computer-based curriculum materials for a company called Sunburst. She and Narodick met at a conference in Florida and quickly realized they shared a vision of what kids' software ought to be.

BIGGER IDEAS. Stanger brought her team of programmers with her from Minnesota: three young men who had worked with her since they were in high school. In 1992, after six months of day-and-night programming, they had Edmark's first two consumer products: Millie's Math House and KidDesk, a menu program that lets kids find their programs without damaging their parents' data. Other award-winning programs, Bailey's Book House and Sammy's Science House, followed. All use colorful graphics, original cartoon characters, and friendly voices to encourage preschoolers to explore ideas rather than learn by rote.

But Stanger had bigger ideas: She dreamed of a program that would be fun but would also develop "critical thinking skills," such as recognition of music and rhythm, visual memory, spatial awareness, and logic. In 1994, her team produced Thinkin' Things, starring drummer Oranga Banga, xylophonist Tooney Loon, and, yes, the Boolean Fripples. "They've stuck their neck out to do some different kinds of things," says an admiring Diane Kendall, editor of the newsletter Children's Software. Thinkin' Things has become Edmark's biggest hit, selling more than 100,000 copies a year.

Education gurus praise Edmark. "They make some of the finest children's software," says Daniel Shade, a University of Delaware professor and software judge for the National Association for the Education of Young Children. "They seem to understand children's development very well."

KIDS' STUFF. Like most entrepreneurs, Narodick has had setbacks. Her worst error was underestimating the growth of the kids' software market. In 1993, Edmark introduced too few products and spent too little on marketing. Sales for Christmas, 1993 were half what Narodick had predicted.

In 1994, she redoubled marketing efforts, stepped up development, and courted retailers. Edmark hired mothers with young children as part-time workers to spend time in stores explaining its products to clerks and customers. The outlets carrying Edmark products doubled to 5,000 last year, and Narodick says she's on track to double that again in 1995. Sales last Christmas exceeded expectations, and it has been uphill ever since. "Their products have really gotten a strong allegiance," says Lawrence N. Mondry, executive vice-president for merchandising at CompUSA, the nation's biggest PC retailer.

With just under 3% of the $600 million educational software market, 180-employee Edmark is a small player. But it's a fragmented market: Leader Broderbund Software Inc. has about 10%. The fast-growing kids' software business hasn't begun to consolidate, but analysts believe Edmark's recent stock high of 55 was driven by speculation that it might be an acquisition target. "Anyone looking at this company would say, `Gosh, what a good takeover candidate,"' says Robert D. Kugel, an analyst with Seidler Cos. Narodick says she's open to that option, but thinks it unlikely until market growth slows somewhat. Kugel predicts fiscal 1996 profits of $3.8 million on sales of $40 million.

When Narodick does move on from Edmark, she knows what she wants to do: teach. That's hardly your typical aspiration for a CEO. But then, Sally Narodick is hardly your typical CEO.


THINKIN' THINGS COLLECTION 1 (ages 4 to 8) and COLLECTION 2 (ages 6 to 12): Develop such "thinking skills" as music recognition, visual memory, and spatial awareness.

SAMMY'S SCIENCE HOUSE; MILLIE'S MATH HOUSE; BAILEY'S BOOK HOUSE (ages 2 to 6): Preparation for science, math, and reading.

IMAGINATION EXPRESS (ages 6 to 12): Kids select scenery, animate characters, narrate pages, and add sound effects. Three "Destinations": Neighborhood, Castle, or Rainforest.

KIDDESK (ages 3 to 10): Two versions let kids launch their own programs. Accessories include calendar, calculator, and address book.



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