Company Profile: The Missing Link

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"We knew we had to get reviews," recalls Narodick. With no direct sales force and no money to advertise, "it was the only cost-effective way for us to talk to our customers."

Mailings, phone calls, and electronic messages exhorted 40 influential reviewers to spare 20 minutes. "If we weaseled even a few minutes with a reviewer, we almost always got some ink," says consumer marketing director Jennifer Cast.

Later that fall the first reviews rolled in. Thumbs up, they said. When the Wall Street Journal's personal-technology columnist published a glowing report a few weeks before the holidays, Christmas came early for Edmark. Calls from buyers and customers jammed the switchboard. Narodick's meticulous plan was working: the products and their plaudits were pulling open doors to distribution.

That first year the company gained distribution with Egghead Software and a smattering of other computer-specialty stores and catalogs. Ingram Micro, the industry's largest distributor, agreed to carry Edmark's wares. The company won the first of more than 55 product awards it would clinch in the next two years. It posted sales of $6 million in 1992. "We were off," says Narodick.

When vice-president of consumer sales Dan Vetras joined the company, in October 1993, it already owned a trophy case. In it, the gold statuette that Millie's Math House had won from MacUser magazine stood flanked by Codies from the Software Publishers Association. After less than a year in the business, Edmark was racking up its Oscars. "This is stuff I ought to be able to sell by the truckload," figured Vetras, a veteran of DEC and Lotus.

His mandate was clear: take those products and get them into the retail channel. Reams of registration cards, every one read by Stanger and Narodick, confirmed that customers were eager to buy more. The company was introducing two additional products in 1993 -- the second release in its early-learning line, and the first in a new line that Stanger had dreamed up for four- to eight-year-olds, called Thinkin' Things.

A consumer sales staff consisting of Vetras and two sales reps ought to be enough to sell what many agreed was the best stuff on the market, Narodick figured. One reviewer would dub Thinkin' Things "quite simply the finest children's software ever released." Who wouldn't clear a space on a shelf for that?

Having promised shareholders that Edmark would remain profitable even during its formative years as a consumer-software publisher, Narodick allocated only a nominal budget to promote Edmark's two new products. There was little money for trade advertisements, merchandising gimmicks, or promotions. "We thought that stuff was expensive fluff," says Vetras. "We were above all that."

While Narodick's prudence comforted shareholders, it struck retail buyers, who expected a little show business, as weakness. Four products, only two of them related, didn't make a complete line. And competitors, many with dozens of products and buckets of bucks, had launched aggressive promotions to persuade retailers to stock their lines. Without the marketing dollars or the promotional pizzazz to push products through, "we were fighting bitterly for shelf space," says Vetras. And losing.

"Our competitors were in those retailers' faces every day," says Narodick, "with buy-two-get-one-free giveaways, rebates, money-back offers. We didn't know it until it was too late, and we got elbowed out of the way." Adds Stanger: "Basically, we were too timid." And too tardy.

The buy-in season, when retailers were open to new titles, had passed before Vetras had come on board. Some of the retailers that did pick up the Edmark line couldn't always reorder when the inventory had been sold; they had maxed out their credit lines to stock products from Edmark's competitors. The company was facing stock-outs around the country. Board members and customers were calling to report that Edmark was absent from the shelves of key markets. No product in San Jose's Egghead? What was going on? The company had no way of knowing where or when product was sold out. The wasted opportunities were too many to count.

As the holiday season of 1993 drew near, Edmark claimed distribution in fewer than 2,000 outlets. Not a single superstore carried the entire line. "It was nothing but pain every day for half that quarter," says Vetras.

Disappointing sales -- only half what Narodick had projected -- left employees' spirits deflated. Revenues of $8.7 million that year netted only $125,000 in profit. The stock went nowhere. Bonuses were lean.

"Does this mean the doors are closed on us?" Narodick remembers thinking. "Are we left out of the game for good?"

A superior product -- even one that boasted bright little characters singing and dancing their way through the alphabet -- wasn't enough to make retail buyers fall in love. Edmark's precocious cat, its clever cow, and its irresistible orangutan had won the hearts, Vetras says, of "the tweed-jacketed, Volvo-driving 130-plus-IQ set" who shopped at specialty chains. Unfortunately, those buyers were a limited species.

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