Company Profile: The Missing Link

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Without wide distribution in the superstores and with mass-merchandisers dominating the retail trade, there was no way Edmark could build its brand. And without a brand identity, there was only a slim chance Edmark would survive the crazy reel of growth sweeping its $650-million industry. "This market would leave us in the dust," says Narodick.

A royal flush of products, properly promoted, would have to ensue before big retailers would cede shelf space. The company had to become as good at selling those products -- to the retailers who resold them -- as it was at making them.

"I always knew the retailer was my customer," says Narodick. But her intellectual acknowledgment didn't dissolve the distance between her and retailers: she still didn't identify "quite as intimately," she says, with the customers who stocked and sold the product as she did with those who took it home and used it. "After all, I'm one of them," says Narodick, a mother of two and a school trustee. "I go to PTA meetings. I use these programs with my kids. I understood what parents want, what kids need. I didn't know what retailers want, what they need.

"I didn't understand the theater of retail," she says. "That I had to learn."

And so Narodick, formerly a straight-A student voted girl most likely to succeed in Clinton (Massachusetts) High School's class of 1962, set out on a remedial course. Dan Vetras, a self-described "dumb offensive lineman" for the very same high school a decade later, would be her tutor. "Dammit," she told him, "we're going to do what it takes to play in this game. Just show me the drill."

"We had to recognize the power of the channel," says Vetras. "And stop thinking all we had to do was sell through it. We had to sell to it."

Maybe some buyers had a place in their hearts for wholesome, high-quality products that helped kids learn. Maybe others had a bigger place for splashy promotions and free drinks. In either case, they didn't have time to listen to every vendor regale them about the quality of its products, Narodick learned. "They wanted to know, Is it going to turn quickly? Will there be more products coming? Would we promote them? Could we generate excitement?" she says. Those were new questions that the old homework hadn't prepared her to ace. So she looked for extra help.

Doug Mackenzie, a fan of Edmark's products and a partner at the prestigious venture firm Kleiner Perkins Caufield & Byers, obliged by leading a round of equity investment that put $5.5 million into Edmark's coffers, paying the market price of $10 a share. Edmark could afford to merchandise in stores and to place ads in the trade press and in consumer magazines.

Narodick braced investors for the three quarters of losses Edmark would report to soup up its selling and add new products. Stanger staffed up in development and hit the fast-forward button. The company doubled its line to eight products in less than 12 months. It was "the most amazing team effort I've ever been a part of," says Stanger. Programmers, engineers, and animation artists worked into the dead of night for months. ("If anyone here thought this was just a job," says product manager Henry Shires, "they'd be in a world of hurt.") By summer the development staff had working demos of Sammy's Science House, the third in Edmark's early-learning line; Thinkin' Things 2, the second in its critical-thinking line for 4- to 8-year-olds; and the first two titles in a line called Imagination Express, a series of interactive story-writing programs for 6- to 12-year-olds.

Next, at Mackenzie's urging, Narodick hired seasoned brand builder Mark McNeely to head the marketing push. "Edmark had all the ingredients for a brand: it was making some of the best children's software on the market," says McNeely, the former chairman of a top Seattle ad agency and an alumnus of giant Ogilvy & Mather. "Customers loved it. And the company had stayed true to its mission despite all the froth and hype in the market. Sally had staked the high ground and stayed there." It was a good location for a brand. If only retailers would agree.

Now Edmark offered retailers a product line that embraced older kids as well as preschoolers. "We don't sell orphans," Narodick would tell them. "We're selling families of products to families of users."

The company had spent more than $3 million to develop those new additions to its families. It had budgeted even more to market them. Would that be enough to get distribution on crowded retail shelves?

Not unless the distribution channel -- the number of retail outlets selling software -- expanded. Narodick bet on it. "As a market moves from early adopters to the mass market, channels of distribution must expand," she explains, pointing to a framed chart on her wall. "We wagered that law would hold true."

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