Every May, as the school year drew to a close, we eagerly anticipated the educational CD-ROMs our teachers would send home. It was their way, I imagine, of staving off summer brain drain. For me, this meant long, hot Texas days spent indoors, captivated by the glow of our family’s old computer screen. One year, I was helping Reader Rabbit save the town play from a mischievous chipmunk; another, I was part of the Cluefinders, navigating the Numerian jungle to outsmart the winged Mathra. Learning was gamified: new costumes were earned through addition problems, ancient gates unlocked by synonym puzzles, and even a bird ride across the U.S. map was granted after geography practice.
Unbeknownst to my young self, the real drama was unfolding behind the scenes, within The Learning Company (TLC). This company was the undisputed giant of educational software throughout the late 1980s and 90s. For millennials, TLC titles were ubiquitous – The Logical Journey of the Zoombinis, Where in the World Is Carmen Sandiego?, and even the iconic Oregon Trail all fell under their umbrella. Yet, by the year 2000, this educational powerhouse was in dire financial straits, becoming central to what many consider one of history’s worst business deals, one that nearly crippled a Fortune 500 corporation.
Warren Buckleitner, editor of Children’s Technology Review, aptly describes it as “a fascinating story.” He highlights how The Learning Company attracted visionaries from both business and education sectors. Educators quickly recognized the transformative power of interactive software in providing children with immediate feedback – a concept Buckleitner likens to “the Holy Grail of learning.”
Interestingly, the genesis of this tech revolution can be traced back to a former nun.
“The programs I designed were done to lead kids towards the answer, rather than punish them for not getting it the first time round.” – Ann McCormick, Founder of The Learning Company
Ann McCormick spent six years as a sister of St. Joseph of the Peace in Washington state. However, it was after leaving the convent and teaching fifth grade in East Buffalo, New York, that her true passion began to emerge.
At P.S. 74, McCormick was taken aback by the number of 13-year-olds struggling with basic reading comprehension. Driven to address these systemic issues, she pursued a doctorate in education at UC Berkeley, specializing in black dialect. Her dissertation remains a relevant work for linguists even today.
After dedicating five years to developing teaching models for underserved schools, McCormick’s attention shifted towards the burgeoning field of personal computing. The arrival of the Apple II in 1977 sparked her interest. In 1979, a grant from the Apple Education Foundation, consisting of $1,000 and an Apple II computer, allowed her to create a program teaching preschoolers directional concepts like “above and below” and “left and right.”
Further funding of $130,000 from the National Science Foundation and National Institute of Education in 1981 enabled McCormick to develop geometry and logic programs for second and third graders. When her initial partner withdrew, she brought in Teri Perl, an educational psychologist with a PhD in mathematics from Stanford, as vice president and math expert.
To complete the founding trio, they needed someone with deep computer expertise. Warren Robinett, a computer engineer, was the perfect fit. Fresh off his success at Atari, where he designed the groundbreaking video game Adventure, Robinett was seeking new opportunities. (Robinett later gained notoriety for embedding a hidden credit in Adventure, an “Easter egg” as a rebellious act against corporate restrictions on programmer attribution, a detail famously referenced in Steven Spielberg’s Ready Player One.)
McCormick, Perl, and Robinett established Alternative Learning Technologies (ALT) – a name chosen for its “grant-getting” appeal, as McCormick joked – in a small office in Portola Valley, California. Robinett began work on a game intended to be a successor to Adventure. “But in this follow-up game,” he explained, “I was going to have different objects you could plug together, kind of like you could plug together pieces in a Lego set, to build machines that you could use to defeat the monsters.”
Inspired by logic gates, fundamental components of computer hardware, Rocky’s Boots evolved into an instructional tool rather than a pure adventure game due to development timelines. However, its educational impact was undeniable. Perl recalls presenting the program in Bulgaria, highlighting its international recognition. Years later, McCormick received letters from MIT students who had learned logic through Rocky’s Boots in second grade, seeking copies to help their college peers grasp the concepts.
Simultaneously, in nearby Mountain View, Leslie Grimm was independently developing her own educational games. Grimm, an elementary teacher’s aide with a Stanford PhD in biology, had witnessed the shortcomings of early educational software from textbook publishers. “It would ask the kids a math question, and if they got it wrong, the screen would fill with a big red X and there would be a loud raspberry sound,” she recounted, expressing her dismay. In response, she taught herself BASIC programming to create better alternatives. “The programs I designed were done to lead kids towards the answer, rather than punish them for not getting it the first time round,” Grimm stated, echoing McCormick’s philosophy.
Apple’s software division initially expressed interest in publishing Grimm’s games but abruptly exited the software business. Upon hearing about McCormick’s venture in Portola Valley, Grimm reached out. The two connected instantly. Grimm joined McCormick and Robinett, contributing to Rocky’s Boots and Juggles’ Rainbow initially without pay. A $300,000 injection of venture capital in late 1981 enabled McCormick to bring Grimm on board full-time. Grimm’s games, alongside Rocky’s Boots and other titles, formed the initial catalog of six products launched by the newly christened “The Learning Company” in 1982.
However, Grimm’s most significant contribution was yet to come. Inspired by an exceptional teacher who successfully taught students with language disabilities, she conceived of a dancing digital rabbit to guide children on their path to literacy. Reader Rabbit emerged in 1984, pioneering character-driven educational software. This franchise spawned over 30 spin-offs and sold at least 14 million copies, becoming a cornerstone of The Learning Company’s success.
With Rocky’s Boots garnering critical acclaim and Reader Rabbit achieving widespread popularity, The Learning Company had established a strong foundation. McCormick noted that while logic gates weren’t on every parent’s wish list, literacy undoubtedly was. Reader Rabbit resonated deeply with the market, proving to be the more commercially successful product.
McCormick described the early years of The Learning Company as a whirlwind. Her initial business partner, Barbara Jasinski, was Steve Jobs’ girlfriend, leading to shared legal and PR resources with Apple. McCormick and Jobs often appeared together for interviews, elevating The Learning Company’s profile. McCormick’s appearances on Donahue, meetings with global government officials, and features in publications like Fortune, Psychology Today, and BusinessWeek underscored The Learning Company’s pioneering role. Buckleitner affirmed their significance, stating, “They were the pioneers. They were the very first” in the educational software industry.
Despite early success, The Learning Company faced financial instability. While their first year yielded $1 million in revenue, early CEO Jack Smyth set product prices too high. (Rocky’s Boots, for instance, was initially priced at $75). The board replaced Smyth with Marcia Klein, who fostered a strong working relationship with McCormick and successfully revamped packaging and pricing strategies.
Tragedy struck when Klein suffered a stroke in her mid-30s. A temporary CEO, with a background in medical equipment, was brought in and promptly dismissed the entire development team. (His name remains unremembered by sources). The founders gradually departed between 1983 and 1985 – Robinett and Grimm pursued other ventures, Perl was fired, and McCormick, the last to leave, was ousted in December 1985.
The Learning Company’s growing pains mirrored a broader industry trend. Visionary founders across the educational software sector were being replaced by business-oriented executives. Jan Davidson, co-founder of Davidson & Associates, known for Math Blaster, stepped down as president due to concerns that new ownership prioritized profits over educational quality. Budgets shifted from research and development – the creation of innovative games – towards marketing initiatives.
Under president and CEO Bill Dinsmore, who led The Learning Company from 1985 to 1995, this strategy was amplified. Sales increased, boosted by the adoption of CD-ROM technology in the late 1980s. In 1992, The Learning Company became a publicly traded company, marking a new phase in its growth.
Simultaneously, the educational software market was becoming increasingly crowded. Companies like Brøderbund, creators of Carmen Sandiego and Myst, and the Minnesota Educational Computing Consortium (MECC), responsible for Oregon Trail, emerged as major players. “A few companies really were able to tap the market and became major players in terms of revenues,” Buckleitner explained. “From there, the field just exploded.” He estimates that hundreds of smaller companies and publishers entered the CD-ROM educational software market.
The industry thrived, but a more aggressive, profit-driven business model was on the horizon, threatening the original ethos of companies like The Learning Company.
In the early 1980s, Kevin O’Leary, now known from Shark Tank, founded SoftKey Software Products Inc., initially focused on office productivity software. By the 1990s, facing stagnation, O’Leary pivoted to the booming educational software sector. His strategy diverged sharply from the founder-led, education-first approach. Instead of investing in game development, O’Leary focused on acquiring existing software companies and leveraging their established titles for mass-market distribution through big-box retailers like Best Buy and Costco. This approach necessitated drastic price reductions. O’Leary, in his autobiography, recounts a meeting with Walmart where a buyer declared SoftKey’s $39.95 average price point unacceptable, stating, “Here, y’all gonna sell your computer stuff for $19.99.”
Walmart and similar retailers also prioritized eye-catching packaging over product quality. Scot Osterweil, creative director of MIT’s Education Arcade and creator of Zoombinis, observed that software sales shifted from specialized stores with knowledgeable staff to big-box stores where shelf appeal was paramount. Licensed cartoon characters and recognizable brands became more critical than engaging gameplay.
O’Leary’s SoftKey made a bid for The Learning Company in 1995, outmaneuvering Brøderbund and acquiring TLC for $650 million. SoftKey’s business practices, however, raised red flags. A 1996 report by a forensic accounting firm highlighted suspicious auditor firings and inflated earnings, causing enough concern for The Learning Company’s board to insist on a cash-only purchase. Despite no longer being involved in the company’s operations, Grimm, Robinett, and Perl profited significantly from the sale, while McCormick had already sold her shares.
SoftKey rebranded itself as The Learning Company, capitalizing on its strong brand recognition. O’Leary continued his acquisition spree, absorbing MECC in 1995 and Brøderbund in 1998. SoftKey acquired over 20 companies, becoming the second-largest consumer software company globally, trailing only Microsoft. Buckleitner characterized O’Leary’s approach: “O’Leary basically saw software companies as commodities. He was the soulless businessperson who just came in and bought a bunch of companies and scaled them back and laid off all the good people.” At its peak in 1998, O’Leary sold The Learning Company to Mattel for an astounding $3.5 billion – 4.5 times The Learning Company’s annual revenue.
The Mattel acquisition proved disastrous. Analysts cautioned Mattel CEO Jill Barad that The Learning Company was a “house of cards.” Revenue growth was fueled by acquisitions, but the substantial acquisition costs were masked. Furthermore, O’Leary’s neglect of research and development was catching up; aging game titles were losing their appeal. Allegations, though unproven in court, surfaced regarding inflated sales figures through questionable inventory practices. Mattel, however, blinded by the perceived potential of the educational software market and concerned about declining Barbie sales, ignored these warnings.
“[TLC] killed the educational software industry. It killed it because there was so much product out there and all of the product was crap.” – Bernard Stolar, brought in by Mattel to salvage The Learning Company.
Eighteen months later, Mattel, losing a million dollars daily, sold The Learning Company for a mere $27 million. Barad was forced to resign. The acquisition is widely considered one of the worst business deals in history. A 2008 Harvard Business School case study described Mattel at that time as “a company which many considered lost.” While Mattel eventually recovered, the educational computer game industry did not.
Bernard Stolar, brought in by Mattel to rescue The Learning Company, bluntly stated in 2016, “[TLC] killed the educational software industry. It killed it because there was so much product out there and all of the product was crap.”
Buckleitner offers a more nuanced perspective, pointing to the rise of the internet in 1994 as a significant contributing factor. The internet introduced freely accessible educational content, diminishing the appeal of paid CD-ROMs. “When the internet came it kind of poisoned the well,” he said. “All of a sudden the CD-ROM, this reliable vehicle for buying and selling content, was fractured. Now you could do downloads or streaming or flash, and everything kind of fell apart.”
The Learning Company became a business liability, its intellectual property changing hands repeatedly. Games continued to be produced into the early 2000s, including my beloved Cluefinders series. Osterweil’s Zoombinis sequel, stalled by the Mattel acquisition, was eventually completed. However, the industry was in decline. Educational software sales for home computers plummeted from $498 million in 2000 to $152 million by 2004.
In 2005, The New York Times declared, “Once a Booming Market, Educational Software for the PC Takes a Nose Dive,” officially marking the industry’s downturn.
Osterweil believes the industry has never fully recovered. The challenges that plagued it persist today in the app-driven mobile market. Educational apps, often priced at just $1, offer profit margins too thin to support quality research and development, a stark contrast to the CD-ROM era, where Buckleitner wryly notes, “[$1] would have been ‘the price of postage’ to mail a game on CD-ROM.”
Today, The Learning Company’s products primarily evoke nostalgia. Oregon Trail was revived as a Facebook-based tourism campaign, and Carmen Sandiego is back in the spotlight with a Netflix animated series and a live-action movie. YouTube is filled with walkthroughs of 90s educational computer games, garnering hundreds of thousands of views, demonstrating enduring interest in these titles.
Reflecting on my own childhood experiences with Cluefinders, I wondered about the educational value of those later Learning Company games. Buckleitner, a veteran game reviewer since 1984, reassured me, “They were good! They had animation, music… for the first time you had actors speaking, kind of like comic books. They teach higher order thinking, so they fit well with school curricula.” The fact that I never questioned their educational merit, he suggests, is perhaps the greatest testament to their effectiveness.
Abigail Cain is a writer living in Brooklyn.
