Company Profile: The Missing Link

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Five and a half years ago, when Narodick took the CEO's spot at Edmark, the publicly traded company was an obscure, not-quite-$3-million-a-year purveyor of reading products (mostly workbooks) for the special-needs segment of the school market. Narodick's friends and colleagues watched in horror as she leapt from her 31st-floor executive suite in Seattle's largest bank, finally landing in the corner office of Edmark's then-dingy headquarters, also in Seattle.

Although Edmark had earned the respect of educators in its tiny niche, it had earned little else. Profits had been modest and irregular. The company had spent 14 years in a fitful sleep before it broke $1 million in sales. "The business was going to go nowhere as long as it stayed in its small, noble niche," says early investor and former board member Don Barton.

Narodick, a late-blooming entrepreneur (she will turn 50 this year), was recruited by an exasperated board to come in and finally take the company (it will turn 25 this year) somewhere. But where, exactly? Her obsessive habit of "doing her homework" yielded an answer.

The rising birthrate, the gradual increase in home-PC ownership, and the dearth of educational software on the consumer market all suggested to Narodick that an explosive category was about to be born. When she saw a handful of early-education products sell more than 100,000 units each, she knew this was a market that would serve one of her elegant financial models well. "You could see the consumer market for this stuff on the horizon barreling toward us," explains Narodick. "It was a ramp opportunity."

Her scholarly strategy, cautious enough to garner shareholder support, recommended entering educational software gradually. "We'd take it in bite-size increments," Narodick recalls deciding. "Raise a little capital, hit a few milestones, go back for more." Her plan, ambitious enough to demand superb products, would be nothing if not reasonable.

Narodick's vow to market only the finest software under the Edmark name was a powerful lure for an award-winning educational-software auteur named Donna Stanger.

Stanger, a frugal developer with impeccable credentials as an educator, had both the instincts and the track record, Narodick recognized, to develop Oscar-winning products for Edmark. "I didn't want to do B movies," says Stanger, her soft-spoken manner belying a flinty ambition. Narodick also realized that her gambit to launch an Edmark brand in the educational-software business would be a stillborn fantasy if she failed to find a product visionary.

"It's all about great product," says Narodick. "A brand starts there. It's sustained there. And it can be lost there." Without high-quality products, there would be no fawning reviews, no groundswell of demand, no welcome from the distribution channels, she reckoned.

"We were willing to pay what it would take to get a top-notch developer here," says Narodick. "But four? At once?" That was the bargain struck in November of 1991, when Stanger refused to travel from Rochester, Minn., without her entourage of hotshot programmers. Stanger's "package deal" included three of the "kids" with whom she had been hacking for more than a decade. She called herself their "den mother." Some were alums of her fifth-grade class. All were under 25. None had developed a consumer product before.

In one fell swoop and with no immediate sales boost to offset it, Narodick would have to increase payroll 20% to hire the brood. While she did have $1.6 million in freshly raised equity capital, a cash-flow crisis that only a little more than a year before had forced her to cut salaries and staff was still fresh in everyone's mind. The risk that no products would result was real. But so was her commitment to making products that were so good they'd practically sell themselves. Narodick stopped blinking long enough to see the benefits of importing a team that was already humming: these people knew how to work together, they'd ramp up fast, they'd cut the time to market. She told her board she'd found a "turnkey solution," and before 1991 was out, the Minnesota Four, as insiders came to call them, went west.

The team had its work cut out. Its first products had to be winners. Only a third of the software released in a year ever gets reviewed. Even less of it finds a perch on a retail shelf.

By the summer of 1992, in about six manic months, the team had produced working demos of the two products that would ship that fall. Millie's Math House, a numbers program for preschoolers, targeted a nook in the market where little competition existed. KidDesk, an interface that prevents kids from damaging their parents' files, aimed not simply to exploit the market but to grow it. When parents stopped worrying that Junior might trash the system folder, then they'd be game to buy more kids' software.

With the product still shrouded "in smoke and mirrors" -- "If you were careful and you talked fast enough, you could get through a demo" before it crashed, recalls Narodick -- Edmark took its show on the road. Narodick and her cohorts buckled their PCs into empty airline seats (they were too nervous to check them) and flew to wherever they'd finagled five minutes with a reviewer or buyer.

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