Education & Distance Learning Enthusiasts- Davidsons score with software - Jan and Bob Davidson; Davidson and Associates Inc.'s educational software packages

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Davidsons score with software - Jan and Bob Davidson; Davidson and Associates Inc.'s educational software packages

Los Angeles Business Journal - June 13, 1994

Jan and Bob Davidson (above) rack up big profits with their consumer software firm

When Bob Davidson goes off on a planned cross-country bicycle trip this summer, his wife Jan will stay behind to run the business she founded on a shoestring in 1978.

The Davidsons are anticipating that those 30 days of Bob's peddling trek to Washington, D.C., will be a relatively quiet time at their software company, Torrance-based Davidson & Associates Inc. That would be a rarity.

The company has been on nothing less than a tear lately, emerging as a darling of Wall Street.

Its revenues have increased from less than $10 million in 1990 to $58.6 million last year -- and $13.3 million for the first quarter of this year. Net income in the first three months of this year went from $256,000 for the same 1993 period to $748,000, and for year-end 1993, net income was $6.5 million compared to $3.8 million in 1992.

In the meantime, Davidson stock has gone from an initial offering price of $13 a share in February 1993 to more than $18.

In April, the Davidsons completed what is probably their most ambitious transaction to date, a joint venture with Simon & Schuster, formerly Paramount Publishing, a subsidiary of Viacom Inc. That deal gives Davidson & Associates access to a library of 300,000 Simon & Schuster book titles, which it can transfer to software. The transaction has prompted the Davidsons to plan a major expansion to their company's office space, as well as its work force by an estimated 200 employees over the next few years. Davidson & Associates currently has about 360 employees.

From a sloping white modern building in an office park off Prairie Street in Torrance, the husband-and-wife team has built one of the leading makers of educational software in the country. With the Paramount deal, the Davidson are now ready to expand into other kinds of consumer software -- such as self-help titles and games.

In the software industry, 50-year-old Jan, who carries the title of president, has gotten most of the notice. The former teacher spent 12 years in the classroom before she got frustrated one day with the lack of computer programs to help children learn. As a result, she set out to design a program to teach speed reading, and the company was born.

"She's not a typical software executive. She's not a typical executive, period," says Ken Wasch, president of the Software Publishers Association, the Washington, D.C.-based national trade organization. "Maybe it was because she was a teacher, but she has this kind of reassuring way about her. But don't be fooled, she is a well-respected businesswoman in the industry."

Bob Davidson, 51, who carries the titles of chairman and chief executive officer, is thought of as the meat-and-potatoes guy. Davidson puts together the deals and handles the business side of the operation.

"That's an oversimplification, but that's essentially how it works. I do the business side, and Jan does the product side," says Bob, who works out of a cluttered second-floor office. Jan works out of a polished first-floor office, where everything apparently has its place and where a recent interview with the two was held.

The Davidsons, who have been married for more than 25 years, have a lot in common. With three college degrees each, they are both obviously well educated. But they also have similar backgrounds and outlooks that emphasize hard work, perseverance, responsibility, frugality, goal setting, and following the straight and narrow.

Both the Davidsons began working at an early age. Both were involved in a lot of groups and student activities.

Bob was class president for most of his school years. And Jan was once crowned queen of a junior miss pageant, which she quickly notes was not a beauty contest but rather an all-around event that emphasized community service and school work.

"Those were the days of Dick Clark's American Bandstand," reminisces Bob. "We were both brought up to be responsible people. I think you can say, though, that between the two of us, I probably goofed off a little more than Jan."

One employee notes: "They're both pretty straight. ... I don't want to say they're duds because that has a negative connotation."

Jan was born and raised in a small town in Indiana, while Bob was brought up on a farm in the Hudson River Valley of New York -- about 100 miles north of New York City.

They met at Purdue University in 1962 when, during Jan's second week on campus, Bob was assigned to be her escort at a fraternity function.

"It wasn't planned; it just happened," says Bob, who did most of the talking and was more animated than Jan during the interview.

After graduating with a degree in chemical engineering, Bob went to Washington, D.C., to work in the U.S. Patent Office. A year later, Jan joined him and they married. Bob began attending law school at night; Jan went to graduate school in communications.

In 1970, the two moved to Southern California, and Bob went to work as an attorney in the aerospace business. Jan began teaching school.

In 1978, Jan took $2,000 out of each of the couple's three children's college funds to buy a personal computer for her students. She then had a friend, who has never been associated with the company, design a software program. Thus the idea for Davidson & Associates was born.

In its early years, Jan continued to teach and work just part time on the software business. In 1983 she left teaching and concentrated full time on developing and selling educational software. As the company struggled and then started to grow, Bob continued to work as an attorney, but had since also received an MBA from UCLA.

In 1989 Jan began looking for help to run the business side of the company and handle the finances. "We interviewed people, but it turned out that Bob was the best candidate for the job," recalls Jan. "I guess you can say I recruited him."

For 1989, Davidson & Associates had revenues of about $7.4 million, mostly from sales of its popular "Math Blaster" title. In February 1993, the Davidsons took their company public with an initial offering of 2 million shares with a per share price of $13.

The Davidsons receive a $200,000 annual salary each, and along with their three children own 78 percent of the outstanding shares in the company. At the end of March, there were more than 17 million shares outstanding, which would mean the family owns stock in the company that is worth about $237 million.

People who work for and know the Davidson say they run a pretty tight ship. They are said by employees to watch over their workers closely, and to be very demanding.

"If you can handle that kind of hands-on style of management then you'll thrive," says one worker. "But some people can't handle that, and they wouldn't do well here."

The worker notes the two principals are very proud of their company. "They are kind of like parents who boast about their children. They are very tied to the success of the company."

The Davidsons say they have disagreements, but the key to their successful marriage and business is that they have common values.

They both set common goals, believe in individuals being responsible for their actions and, as Jan says, "We don't spend money unless we have it." The company, notes Bob, has been debt-free throughout its existence, except for a brief period when the couple built the company's 44,000-square-foot headquarters building in Torrance. The Davidsons actually own the building, which is used exclusively by the company, and lease it back to the business.

"One thing that I think is very important to both of us, and something we were both raised with, is to be responsible for yourself," Bob says. "It seems today that everyone has an excuse. I think you have to be personally responsible for your conduct. ... It's very important that everybody knows their job and knows what they are responsible for. That's what we try to do here."

Snapshot

Jan Davidson

Native of: Fort Knox, Ky. Resident of: Palos Verdes Estates Age: 50 Education: B.A. in literature, Purdue University; M.A. in communications, University of Maryland; Ph.D. in American studies, University of Maryland

Bob Davidson

Native of: Hudson, N.Y. Resident of: Palos Verdes Estates Age: 51 Education: B.S., chemical engineering, Purdue University; law degree, George Washington University; MBA, UCLA

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