Nancy Deyo, Purple Moon's chief, top, was proud to have made a difference. Brenda Laurel, company matriarch, director and designer, cited tough competition.

On Friday, Purple Moon's chief executive and sole remaining employee, Nancy Deyo, looked as forlorn as the abandoned dolls as workers arrived to cart away the last copying machine.
The day before, the deal she had been struggling to close when the company ran out of money last month went through -- albeit in a much-altered form. In a move that seemed bittersweet if financially pragmatic, Barbie's corporate parent, Mattel Inc., announced plans to purchase Purple Moon's assets.
"I think Purple Moon made a difference for girls, and I'm proud to have done that," Ms. Deyo said.

In some ways, the story of Purple Moon mirrors that of hundreds of Silicon Valley start-ups that spend millions of dollars each year only to fail before they can change the world and make huge returns for their owners in an initial public offering.

Small and unknown, Purple Moon faced an unforgiving battle for shelf space with Mattel, which had 6 of the top 10 girls' titles last year -- all Barbie themes -- according to PC Data, a market research firm. The four others featured Madeline, French heroine of the much-loved children's books, in titles published by the Learning Company, which Mattel is also acquiring.

That Mattel was eager to scoop up Purple Moon's products -- for an undisclosed sum -- helps refute assertions that the small company's failure confirms that girls just want to play Barbie Magic Hair Styler.

Mattel said it planned new titles based on Rockett, Purple Moon's spunky heroine, who favors spiky orange bangs and such issues as whether to join the popular clique at school. The Los Angeles-based Mattel also was impressed by the popularity of Purple Moon's World Wide Web site, which has 250,000 registered users.
"We agree with the research they've done to show that there is a different way for girls to play with computers," said David Haddad, president of Mattel Media.

But at a time when electronic commerce and Internet portal sites are the darlings of Wall Street, Purple Moon's business failure invites scrutiny of the steps and missteps that led to the dismissal of the company's 40 employees -- at more than 80 percent women, the reverse of Silicon Valley's typical gender ratio -- on Feb. 18.

The brainchild of Brenda Laurel, a game designer whose credits include Atari in the early 1980s, Purple Moon evolved from her work at Interval Research Corp., which was financed by Microsoft's co-founder Paul Allen. Over four years, Ms. Laurel interviewed 1,000 girls in researching how to apply the principles of their play to computer games.

By the time the company was spun off, underwritten by Interval and Allen's Vulcan Ventures, it seemed clear to Ms. Laurel that girls were not turned off by the violence in boys' games so much as they found dying and starting over again tedious. Boys liked overt competition; girls liked covert competition. Boys liked superheroes and fantastical adventures; girls liked challenges they could recognize in their lives.

"Brenda thought it through better than anyone else, and it still failed," said Henry Jenkins, director of comparative media studies at the Massachusetts Institute of Technology. Jenkins, an editor of "From Barbie to Mortal Kombat," an anthology on gender and computer games published by MIT Press, added, "That's very frustrating and very worrisome."

The company used radical game features like emotional navigation and relationship hierarchies to carve out a space for girls in a market that had long been aimed at boys.

The approach attracted plenty of media attention. "A ROM of Their Own," a Time magazine headline proclaimed before Purple Moon introduced its first products.

Spending was not spared. Early on, at a company retreat, the development team role-played the proposed game characters to try to understand their inner lives. In Christmas seasons, Purple Moon bought television advertising.

The exhaustive research in which the company had its roots continued with 25 additional studies. One, an ethnographic study of girls' interest in sports, led to a product line featuring soccer, which Mattel appears least interested in continuing. Some critics argue that Purple Moon's strong focus on research proved no substitute for more nimble business strategies.

It is a criticism that Ms. Laurel acknowledged in her keynote address to the Computer Game Developer's Conference in San Jose, Calif., on Thursday.
"I promised to talk to you about some approaches to research and design that will help us grow both our audiences and our ideas," she said, addressing the pony-tails-and-sneakers crowd in a green print dress, horn-rimmed glasses and sensible shoes. "But since Purple Moon did not make it to the big IPO or a lavish acquisition that made everybody rich, it would be understandable for you to conclude that the methods I'm advocating don't necessarily work."

Paper Moon
Purple Moon was among the top developers of software games for girls last year, but its top title was only 17th overall.

Afterward, Ms. Laurel -- who said she had spent the last few weeks answering e-mail from parents and girls distraught at the news that Purple Moon was no more -- blamed tough competition, bad timing and perhaps unrealistic expectations by her private investors.
"There was a fundamental disagreement over how the company should be valued," said Ms. Laurel, a board member and the company's vice president for design.

Purple Moon had been seeking a buyer since the board decided last fall that a public stock offering was out of reach, she said. Even so, she said she was surprised when the investors, including Institutional Venture Partners of Menlo Park, Calif., and the investment banker Allen & Co. gave up, in part because she believed that the deal being discussed with Mattel could be worked out.
Both Ms. Laurel and Ms. Deyo now say that they should have considered exit strategies sooner. But others close to the company criticized Ms. Laurel's grasp of business.
David Liddle, chairman of both Interval and Purple Moon, said: "Did Interval make a lot of money from this? No, I was disappointed. We had hoped the company would be big and successful on its own."

Whatever its business failings, Ms. Laurel suggests, Purple Moon may have helped broaden girls' attitudes toward technology and the software industry's attitude about girls and technology.
According to PC Data, the market for girls' CD-ROM titles grew 38 percent last year.
Mattel says it will soon offer a line of interactive products that includes Barbie, a series based on American girls in different historical periods, and Rockett.
"I'm proud to have created value," Ms. Laurel said. "It would have been nice to have created enough value to send my kids to college. But I certainly got an education."
 

Source: Amy Harmon, NYT, March 22, 1999