From Software Firm to Late Bloomer Online

Before she turned 30, Laura Groppe co-produced an Academy Award-winning film and won four MTV awards. After that, she started a company that pioneered development of software for girls.

Her next act: the Internet.

Faced with a slump in CD-ROM sales that already claimed a competitor, Groppe is reinventing her software company as a “dot-com” aimed at teenage girls. In the last six months, Groppe has doubled the work force at Girl Games Inc. to 23, adding Web designers and writers. She has hammered out deals with top-tier brands to get real-world exposure for her site, PlanetGirl.com.

And privately held Girl Games, once profitable, now loses money as many dot-coms do, Groppe said. Call it a rite of initiation.

As consumers of all ages spend more time online, companies increasingly are using the Internet to reach them. But few have undergone so dramatic a change as Girl Games.

The strategy doesn’t always work. Egghead Software, for example, closed its bricks-and-mortar stores in 1997-98 to set up shop on the Internet. The company still isn’t profitable.

And Girl Games arrives late to the Internet. The Web is glutted with Gen-Y sites and many have stronger financial support than Girl Games, which is based in Austin, Texas, and Los Angeles. Two of Groppe’s chief rivals are publicly traded companies with slick mail-order catalogs that double as ads for their teen girl sites. Netscape co-founder Jim Clark is part of an investment group that put $22 million into another site, Kibu.

Still, Groppe, an athletic Texan, is enthusiastic about Girl Games’ prospects. “No one to date has demonstrated they can be the leader in content for this demographic,” she said.

Analysts agree. They say no clear winner has emerged among sites that target girls 13 to 19. And given the fickle tastes of teens, they say, sites will undoubtedly fall in and out of fashion before the dust settles.

Ekaterina Walsh, an analyst with Forrester Research, says any shakeout and consolidation of teen sites is two to three years away. But the first test for Girl Games will come soon, as the 6-year-old company tries to raise $8 million in first-round venture funding.

Groppe didn’t set out to become a new-media entrepreneur. A 1985 graduate of Sweet Briar College in Virginia, Groppe took Hollywood by storm. Besides winning MTV awards and co-producing the 1992 Oscar-winning “Session Man,” she produced the 1994 Sundance Film Festival winner for cinematography. Success had a price: burnout. Groppe moved to her hometown of Houston, where she soon zeroed in on the software business.

Of 2,000 CD-ROM titles available at the time, none were designed for adolescent girls. Groppe sensed opportunity, but didn’t know much about teens. So she sat in on high school classes, hung out at shopping malls and dropped in on slumber parties. Her first CD-ROM, released by Simon & Schuster, helped girls keep a diary and alter their wardrobes. Girls use astrology to discover their “mystical” side in her most recent CD-ROM, “Teen Digital Diva II,” licensed from Teen magazine and distributed by Activision.

Girl Games CD-ROMs landed on best-product lists of publications such as Family PC. Even so, its profit was meager because it split revenue among distributors, publishers and licensors. Research projects for corporate giants such as Mattel Inc. and Procter & Gamble kept Girl Games in the black. But Groppe felt a pang when she came up with good suggestions to update Barbie dolls or Pantene shampoo.

“We were giving our best ideas away,” she said. “And giving them away for a song.”

Girl Games, which had revenue of less than $8 million in 1999, continues to do research for clients. But as a dot-com, Girl Games is intent on creating online brands it can profitably develop offline. Groppe already has spun its Indygirl Web feature about extreme sports into a skateboard label.

Analysts say it’s important for dot-coms to develop a real-world presence. Forrester analyst Dan O’Brien said spinoffs reduce an Internet company’s dependence on advertising. And licensed products, such as skateboards, and catalogs, television programs or sheets at Kmart help promote the Web site.

“It is the Martha Stewart approach,” he said, referring to the one-woman mega-brand with magazine, television show, Web site and products.

Not surprisingly, Girl Games’ competitors see the same opportunities. Alloy.com, the alter ego of the Alloy mail-order catalog, has teamed with Penguin Putnam books to publish a teen book line. Alloy.com has nearly eight times more teens visiting its site monthly than PlanetGirl.

Girl Games didn’t enter the Internet business cold. It created PlanetGirl.com in 1996 to promote its CD-ROMs and conduct research for clients. Last October, Girl Games launched an expanded site where girls can message friends, share poetry or get relationship advice. Young style mavens recruited from the streets of Los Angeles critique prom fashions online in an aptly named “Frokumentary.”

Eyeing e-commerce, Girl Games also formed an alliance with DoughNet that allows PlanetGirl visitors to shop online. Jupiter Communications predicts teens will spend $1.2 billion over the Internet by 2002.

Change was inevitable for Girl Games. Another high-profile producer of games for girls, Purple Moon, closed its doors amid a slump a year ago and sold its assets to Mattel. HerInteractive, a girl-focused CD-ROM firm, has added “.com” to its name and is reconfiguring itself as a Web-based game firm. And Santa Monica-based Activision, a leading producer and distributor of games, last week announced a reorganization and layoffs.

At Girl Games, it is all girl, all the time. Its Los Angeles digs, with beanbag chairs, inflatable furniture and autographed posters of hunky surfers, could pass for teen heaven. In a conference room draped with strands of plastic beads, executives with pierced lips and pink hair recently put the finishing touches on Girl Games’ first promotional tour as a dot-com. They are setting up cyberlounges with zebra-print motifs inside eight Macy’s stores this month, where they will plug PlanetGirl and solicit feedback from teens about it.

Marketing director Jillian Winn hands out sparkly, black “Girl Power” T-shirts designed for the event. Laughter breaks out when Winn gives a shirt to programmer David Dattner, the only man on the 12-member Los Angeles team. Few men seek out employment at Girl Games, Groppe noted.

“How many want to talk to advertisers about tampons?” she said.

The Macy’s tour is an example of the partnerships Groppe is forging to promote Girl Games. It also has a deal with Teen in which it gets a page in the monthly Petersen Publishing magazine. And two weeks ago, Sony Pictures Entertainment agreed to invest $3 million in Girl Games as part of a two-year marketing deal.

Sony wouldn’t elaborate on the pact. Groppe said one area under discussion is use of Sony recording artists on the PlanetGirl site, to help push registered users above 65,000. And she is trying to interest Sony in developing an extreme sports television show based on Indygirl.

Such deals are small steps toward creating what Groppe envisions as “the Walt Disney Co. for teens,” an entertainment firm with a presence on the Internet, television and in retail stores. Ambitious? Like, fer sure.

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Girl Sightings

Here is how Girl Games Inc.’s PlanetGirl.com site compared with the leading Web sites geared toward girls. Estimated number of people who visited the sites in February:

Alloy.com: 574,000

ChickClick.com: 357,000

Gurl.com: 330,000

PlanetGirl.com: 75,000

Note: PlanetGirl.com figure provided by Girl Games

Source: Media Metrix