(FORTUNE Magazine) – DONALD KINGSBOROUGH, head of the hottest new toy company around, is hard at play. Colleagues at Worlds of Wonder are demonstrating what they hope will be a best seller next Christmas: Julie, an electronic doll that can recognize its young owner's voice and respond with 100 appropriate sentences. Neat, says Kingsborough, but wouldn't it be great if Julie could read too? The idea is vintage Kingsborough: hands on, imaginative, and possessed of a marketing flair as eye-catching as the white limousine that waits for him at the end of a day. His colleagues laugh nervously. It is 19 days before the year's biggest trade show. Everything about Julie is set, down to her $100 price tag. Teaching Julie to read would make her far too expensive, an engineer finally explains, but maybe the staff could get her to recognize objects. Kingsborough grins. The colleagues scramble. Kingsborough's imagination is leaping ahead almost as fast as the company he founded. Worlds of Wonder is expected to earn $23 million on sales of $320 million for the fiscal year ending March 31. Unimpressed? Then consider that the Fremont, California, company didn't exist two years ago. It went public last June in one of the year's most sought after stock sales. Last Christmas it had an astounding $800 million in back orders for toys, mainly Teddy Ruxpin, the talking bear with moving eyes and mouth, and Lazer Tag, a game that lets kids tag each other with infrared beams. The problem for Worlds of Wonder (Kingsborough hit on the name because he thought it would be fun to see a company called WOW in the staid stock tables) is that the toy business is a quicksand industry. Hit toys are immediately copied by competitors in a Darwinian rush for market share. When demand drops, as it inevitably does, companies can get stuck with too much overhead. Atari discovered that with video games; Coleco is beginning to experience it with Cabbage Patch Kids. Says Kingsborough: ''We'll break out of that pattern.'' A handsome six-footer whose trimness occasionally softens with too much junk food, Kingsborough, 40, is full of contradictions. He is secure enough to hire strong-willed managers who say ''no,'' but is a man who flaunts the trappings of success. (His 22% stake in Worlds of Wonder is worth $100 million.) He has firm friends and equally firm enemies. By his own account he was unambitious until the age of 28, when he started his own company, DK Marketing, which sold the products of more than a dozen manufacturers, including Atari. Then his drive became so strong that he would sometimes work for two days without sleep. Through it all, he kept the easy charm that made him known as Mr. Irresistible in high school. Even a harrowing reminder of his mortality in 1980, when he and his wife were trapped in the MGM Grand Hotel fire that killed 84, failed to curb for long his optimism or his workaholic habits. ''Don is so damned likable,'' says Bob Brownell, a childhood friend who runs his own sales firm. ''People are willing to forgive him anything. He could probably walk in and shoot you, and two days later he'd be back and say, 'Well, it really was an accident.' You'd say 'Yeah,' and be friends after that.'' Brian Wong, an executive at Worlds of Wonder, is struck by Kingsborough's boyish glee. When Wong was considering a job at the company, Kingsborough took him to a crowded restaurant for lunch. Then he pulled out Teddy Ruxpin and began singing along with the bear. ''I felt like slipping under the table,'' says Wong. But as Kingsborough continued to sing, fascinated patrons gathered round the table. Wong could see that Teddy Ruxpin, if not Kingsborough, was a hit. ''I was hooked,'' he says. Not everyone is so easily hooked on Kingsborough. When he worked as Atari's top salesman in 1983, he made some enemies, including those who say he engaged in questionable sales practices. His defenders, five of whom followed him to Worlds of Wonder in senior positions, say such backbiting was typical of Atari during its downfall. UNTIL HE JOINED Atari, Kingsborough had been a traveling salesman working far from the snares of office politics. Now he is at the center of a company growing almost as fast as Atari in its heyday. The real crucible of his career is yet to come. Few toy companies are successful three years in a row; Worlds of Wonder is about to begin its third year. At the American International Toy Fair in February, where toymakers introduce their new products and retailers commit to buy them, Worlds of Wonder unveiled Julie and a playpen full of other talking toys known as Muppet Babies. Julie can be programmed to respond to one child's voice. If a child talks about school, Julie may ask, ''What's your favorite subject?'' She can also recognize specially designed objects, like a toy apple, and comment on them. Muppet Babies, about $79 for a basic kit, have moving mouths and eyes like Teddy Ruxpin. But where Teddy requires a cumbersome cord to converse with other talking toys, Kingsborough's versions of Kermit the Frog, Miss Piggy, and other Jim Henson characters are cordless. Five Muppets will be able to carry on a conversation with each other.

Kingsborough's Midas touch with toys is ironic: He had few as a child. He grew up poor, the seventh and last child of an Oklahoma farmer who migrated to California in 1940. His father, Benjamin, now 82, worked as a bus driver and printer in the San Francisco Bay Area. His mother, Willie Mae, died last year. Kingsborough's siblings, mainly in their 60s, had left home when Don was born. The family lived in public housing in a mostly black neighborhood of Richmond. When Kingsborough was 10, five black teenagers attacked him and cut his face. The frightened family moved to nearby Albany, a working-class, largely white town. Kingsborough remembers Albany as ''an exaggerated womb'' where children played baseball and tag and formed friendships for life. A sunny, popular student, he was more interested in making good friends than good grades. Paul Rago, who developed the idea of Lazer Tag for Worlds of Wonder, grew up with Kingsborough in Albany. ''Don said studying wouldn't help him all that much,'' recalls Rago. ''His idea of success was getting to know the teacher on a % personal level.'' Kingsborough enrolled in the nearby University of California at Berkeley in 1967, mainly to get a student deferment that would keep him out of the Vietnam war. ''The choice was college or death,'' he says. After graduation he sold skin lotion for Westwood Pharmaceuticals. Next came a job selling eight-track stereo players. Bob Goldberg, a marketing executive at Pacific Stereo near Berkeley, remembers being impressed with Kingsborough. The young salesman was adept at identifying why corporate buyers like Goldberg might be wary of eight-track players. Were the margins too thin? Kingsborough would ask. Was distribution poor? ''He was good at putting himself in the customer's shoes,'' recalls Goldberg, now an executive at Worlds of Wonder. In 1976 Kingsborough formed DK Marketing. ''I had done okay,'' Kingsborough says, trying to explain the ambition that then overtook him. ''But I wanted to excel. I wanted to make a lot of money and I wanted to be noteworthy.'' DK Marketing soon landed the northern California account for Atari. When ''Pong,'' one of the first video games, hit it big, Kingsborough's firm prospered. By 1980 Kingsborough was in a frenzy of activity. His aggressive salesmanship had caught the attention of Ray Kassar, Atari's chairman, who asked Kingsborough to help market a new line of computers. In November Kingsborough attended an electronics trade show in Las Vegas. He brought along his wife, Rebecca, and they checked into the MGM Grand Hotel. ''Early in the morning,'' recalls Kingsborough, ''smoke began pouring into the room. We were drowning in smoke.'' Twenty people died on Kingsborough's floor. He and his wife might have died too if they hadn't had an outside balcony. Kingsborough wrote out his will on hotel stationery. After three hours he and Rebecca were rescued by helicopter. Incredibly for someone whose life had just passed before his eyes, the trauma had little effect. Kingsborough continued to work long hours, leaving little time for his family. ''I fell back into a rut,'' he confesses.

In 1983 Kingsborough sold DK Marketing to Atari, then joined Atari as head of sales and distribution. At that point the company was in a free fall, with retailers returning or threatening to return unsold game cartridges. Kingsborough's critics say his salesmen shuffled merchandise among retailers to disguise the slump in sales. At the same time, Atari was dumping inventory to raise cash. According to the critics, these practices complicated Atari's already precarious finances. Even a former Atari executive who remains on good terms with Kingsborough says Don's attitude appeared to be, ''Move fast, make your deal, then move on to the next one. Administrators will clean up after you.'' In response Kingsborough says, ''The market had gone out from under Atari and we were trying to clean up an absolute mess. At the same time Warner Communications was trying to sell the company. A lot of people didn't know what was going on.'' KINGSBOROUGH LEFT Atari in 1984 when computer entrepreneur Jack Tramiel bought it. He had plenty of money by this time, so he took his time casting about for a new job. In early 1985 a California company whose founder helped design the large animated robots at Disneyland came to Kingsborough with an idea for a toy-sized version called Teddy Ruxpin. Immediately enchanted with Teddy, Kingsborough signed a licensing agreement and began a breakneck race to have the bear ready for Christmas. Shortly afterward he incorporated Worlds of Wonder. The company did not begin auspiciously. It had missed the February Toy Fair, where buyers at chains like Toys 'R' Us commit their Christmas budgets. Worlds of Wonder had a $150 prototype on its hands, not the sort of present generous grandparents, let alone moms and dads, rush out to buy. And it had no money or managers. Kingsborough hired a former Atari sales executive, Mark Bradlee. He also signed on Larry Lynch, a former Atari engineer with a network of contacts among electronics manufacturers in the Far East. Lynch nickeled and dimed Teddy into a toy that could sell for $70, still expensive but a price retailers could stomach. After driving down Teddy's price, Kingsborough pushed for financing. He and his executives made 40 presentations in eight weeks, raising $15.5 million. ''DK was the glue,'' says Don Hawley, a Worlds of Wonder executive vice president, referring to Kingsborough in the corporate shorthand. ''He created a bond. Everybody was working days, nights, weekends. Their whole life was committed to this project.'' The management team at Worlds of Wonder is largely the crew that introduced Teddy Ruxpin. A former Atari executive familiar with Kingsborough's company says, ''Don wanted people who would not let undisciplined things go on, as they might have at Atari.'' Kingsborough has assembled an unusual mix of personalities: low-key, analytical executives like Lynch, the head of manufacturing and engineering, and Brian Wong, the head of operations; hard- charging types like Stephen Race, in charge of corporate development; creative, slightly undisciplined men like Paul Rago, the head of new-product development. Riding herd over them is a warm, earthy bear of a man named Angelo Pezzani, once a top Atari lawyer and now chief operating officer at Worlds of Wonder. Says Kingsborough: ''I'm the guy who dreams and leads people down the road and everything else. Angelo is the guy who, when I say, 'Go kill them,' goes and kills them.'' Kingsborough can be tough even when he's relaxing. He likes to play water basketball with pals in his swimming pool. It is a bruising game. One time Mark Bradlee was knocked cold with an elbow in the eye; he touched bottom before Kingsborough and the others stopped playing long enough to fish him out. Kingsborough is also a serious tennis player, and claims one reason he married Rebecca is that he was impressed by the dogged way she improved her game. REBECCA WILL GET to practice on her own court once she and Don finish building their new house: a 20-room mansion with a ballroom, elaborate gardens, and a tennis court. The couple has three children: a 16-year-old son from Rebecca's previous marriage, a 7-year-old daughter, and a 5-year-old son. When he is not traveling, Kingsborough sets aside Sunday as a family day, a departure from his workaholic schedule of a few years ago. Although the Kingsborough kids get to test-market plenty of toys, their father maintains that, ''Having a lot of toys is not what Worlds of Wonder is about. What children gain from our toys is social value. Lazer Tag teaches them to play with each other, and Teddy Ruxpin teaches bravery and friendship.'' Uplifting words, but Kingsborough, no babe in toyland, means them. He is convinced that social toys will create another year of magic at Worlds of Wonder.