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A Product of Their Imagination

Mike Wood's toy company keeps jumping ahead of the field.

By Miguel Helft

Brandon Magnussen doesn’t know a thing about the toy industry’s infatuation with technology, or about the qualities that produce a bestselling toy. But the 5-year-old Head Start student knows what he likes. So, during recess one morning, Brandon stays indoors, captivated by a colorful spiral-bound book. A book that talks.

His chin rests lazily on his left hand. His right hand holds a penlike pointer attached by a cord to an inch-thick plastic pad the book is sitting on. Brandon gently touches the book with the pointer, homing in on the word “drum,” printed under a cartoon character that is pictured playing the instrument. A small speaker in the pad blurts out “drum.” “D-R-U-M,” says Brandon. “Drum.” Brandon spells out other words on the page, each time tapping his pointer on an image or word and listening for the accompanying speaker. “Clarinet.” “Flute.” “Guitar.” Page after page, he works through spelling drills and counting exercises, totally absorbed, until teacher Margaret Taylor nudges him outdoors to play with the other kids in the yard.

The object of Brandon’s fascination is the LeapPad, an educational toy that turns a paper book into an interactive spelling and comprehension lesson and is gaining acceptance as a teaching tool in schools and homes across the country.

“The children like it, and they don’t realize they are learning,” says Taylor, whose Oakland classroom is one of about 10,000 nationwide using the LeapPad. After just a few months of play, she says, her 4- and 5-year-old students are testing at a first-grade reading level.

That’s more or less what Mike Wood hoped would happen when, 10 years ago, he dreamed up a new way for kids to learn. Now, after a decade of trials and focus groups and engineering, Wood, ’74, has one of the hottest toys in America and a booming young company, LeapFrog.

In 1991, Wood was a lawyer at Cooley Godward in San Francisco. He was also a frustrated parent. While working with his 3-year-old son, Matt, to develop prereading skills, Wood searched for an educational toy that might help kids associate letters with sounds. Finding none, he began tinkering with a system—inspired by the speech chips one of his corporate clients had developed to produce talking greeting cards—that would allow a child to squeeze or touch letters to elicit the corresponding sounds. He enlisted the help of Robert Calfee, an emeritus professor at the Stanford School of Education and an expert on cognition, to develop a curriculum for his invention—a set of “talking” cards that spelled out basic words.

After building a prototype—an oversized, colorful keyboard with a window for the word cards—Wood showed it to a buyer at Toys “R” Us who said he’d purchase 40,000 if Wood could mass-produce it. A focus group of moms for whom he demonstrated the product—later named the Phonics Desk—said they’d be willing to pay $50 for it. Wood raised $800,000 from family and friends and bade his law partners goodbye. Business Week later proclaimed the Phonics Desk one of the best-designed products of the 1990s.

LeapFrog has since developed dozens of products and this year expects nearly $300 million in sales. But none has succeeded as wildly as the LeapPad, which helps kids learn everything from phonics to geography. Introduced in 1999, the LeapPad became America’s bestselling toy last December, beating out the then-white-hot Razor scooter during the run-up to the holidays. It also became the first educational toy to top the rankings in an industry dominated by giants like Mattel and Hasbro. Last year, 1.4 million LeapPads were sold, making it the third-bestselling toy for the entire year. And in February, LeapPad won the American toy industry’s equivalent of an Oscar: the Toy of the Year award from the Toy Manufacturers Association.

Here’s how it works: a child places one of the dozens of LeapFrog books on the specialized platform and inserts a cartridge that downloads the book’s contents into the device’s memory. The pad then acts like a touch-sensitive computer screen, except that the child touches paper pages, using a pointer attached to the pad. The LeapPad emits a low-level radio wave and immediately picks up wherever the pointer (essentially an antenna) touches, then “reads” the corresponding text. (The technology, which LeapFrog has patented, is called Near-Touch.)

The idea is simple but effective. “Kids are playing with toys but learning,” says Calfee. LeapFrog’s products are successful because they use sophisticated technology that “doesn’t look like technology,” he adds.

At their Emeryville, Calif., headquarters, Wood and his team follow the same creative process, using the same educational principles, when developing each new toy. Starting with a traditional play activity—say, stacking blocks—they look for ways to enrich the experience through technology.

Wood and his crew recently developed the Imagination Desk, a talking coloring book. “We said, ‘Wouldn’t it be neat if we did a smart coloring book somehow?’” recalls Eric Shuler, LeapFrog’s vice president of product development.

The first idea was to use the Near-Touch technology. But that would have required a 3-year-old to insert a crayon into the pointer before using it. So the in-house engineering team came up with an entirely new technology that could sense the touch of a crayon alone, without pointer. The surface of the pad is made of two thin layers of Mylar, separated by a fraction of a millimeter, that are coated with a material that conducts electricity. When a child presses a crayon on the sheet of paper on the Imagination Desk’s surface, the Mylar layers touch, making an electrical contact that lets the device know what part of an image is being colored.

Then came the kid-testing—and a problem. LeapFrog designers noticed that kids were pressing against the pad not just with the crayon, but with their palms, knuckles, even their elbows. “You couldn’t tell whether they were coloring here or coloring there,” Shuler says. So the engineers figured out a way to differentiate the sharp touch of a crayon from the wider pressure of a palm or fist.

The result, introduced in September, is a touch-sensitive pad that provides coloring pages, one for each letter of the alphabet, with accompanying drawings and curriculum. On one page, for instance, next to a large “O,” are outlines of frolicking otters. As a child colors different parts of the page, the Imagination Desk talks back. “O is for otter. An otter lives in the sea.” And so on. “A plain old coloring book is fantastic,” says Wood. “[But] with our coloring book, kids are learning important things about what they are coloring.”

The Imagination Desk also has a game mode, in which children try to recognize letters, and a musical mode. Like most LeapFrog products, the Imagination Desk connects to the company’s website, where more curriculum can be downloaded and more coloring pages printed on a home PC printer.

Wood’s homegrown company now has deep pockets and big ambitions. In 1997, Knowledge Universe, an education company backed by financier Michael Milken and Oracle chairman Larry Ellison, invested $50 million for a majority stake. With an ipo in its sights, and the potential for even more capital, the company may vie for a place among the toy industry giants. And take another giant leap forward.

Miguel Helft, ’86, MS ’86, is a technology and business writer in San Francisco.

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