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By Kent Larsen
Mormon Businessman Started Adult Scooter Craze
PALO ALTO, CALIFORNIA -- It started on January 27, 1999 when Mormon
business and engineering professor Karl Ulrich sent an email to his
brother, Nathan, describing what he wanted to buy -- a human-powered
scooter for adults. In just six paragraphs Ulrich described what the
scooter should be like -- easy to carry, faster than walking and very
cool looking. Those simple paragraphs has led to a craze for scooters
for adults and a change of career, at least temporarily, for Ulrich.
Within 10 days Karl Ulrich had written a business plan for the
product while Nathan, who is also an engineer, had created a
prototype. Just six months later the scooters were shipping and
Karl's parents, both professors, were saying he was crazy. But not
any more. The business they founded, Nova Cruz Products LLC, hit $10
million in sales of its Xootr last year, and Karl hopes to sell $50
million in 2002.
Looking at Karl's background, it may not seem unusual that such a
product would come from him. Always fascinated with "alternative
transportation," Ulrich has always ridden a bike to work, and has
even built himself a recumbent bike. But he isn't only interested in
human-powered transportation or physical fitness or environmentalism.
Instead Karl is a business professor at the highly-regarded Wharton
School of Business at the University of Pennsylvania. He holds a
doctorate in mechanical engineering from MIT and had received 14
patents for developing products and processes in several fields.
Ulrich is also the author of a widely-used graduate-level textbook,
"Product Design and Development."
After the brothers developed the prototype, Karl persuaded
award-winning design firm Lunar Design, Inc. to become a partner in
the venture, further preparing the scooter for market. He then turned
his attention to marketing, designing the company's website in a
friendly, open and accessible way, making candid comparisons about
the company's products and their strengths and weaknesses. He made
sure that visitors to the website
http://www.xootr.com/ could email the people in his company,
including Karl himself, with any questions (he now gets 50 or more
emails a day from customers who say what they like and dislike about
the scooters).
But this didn't sell his scooters, at least not at first. Ulrich
decided to first approach the college market, and in October 1999
paid a student agency to slip flyers under dorm room doors with a
scooter giveaway to 10 students that registered at the company's
website. The night the flyers were distributed, Ulrich watched the
registrations flying in. Ulrich could even see where the flyers were
being distributed that moment, since Stanford, where the test was
held, assigned Internet addresses by building. Within a couple of
days, 8% of Stanford's student body registered.
But in spite of two months of work on Stanford's campus, Nova Cruz
didn't sell a single scooter. Shocked, Ulrich concluded that his
scooter just wasn't cool enough. Back at the drawing board, he
decided that adding a battery and electric motor to the Xootr would
help. He presented the e-Xootr to his partners, who loved the idea.
But before the company could start selling the battery-powered
e-Xootr, sales through the company's website started to take off. A
low-cost scooter manufactured in China called the "Razor" was selling
strongly in Asia, and soon became hard to find. This led consumers
there to use the web to look for scooters, and Nova Cruz's sales
exploded. The company soon also got orders from unhappy Razor owners
who wanted a higher-quality scooter. The company's web page soon was
at the top of Yahoo's index for scooter sites, and stayed there for
more than six weeks.
The popularity then led to distributors asking for scooters for
countries around the world -- Australia, Hong Kong, Japan, the
Netherlands and Switzerland. One customer asked for a full-sized
shipping container full of Xootrs, more than all the scooters Nova
Cruz had manufactured before that time. Now the company has deals to
distribute the scooters through such high-end catalogs as the Sharper
Image and high-end stores like FAO Schwarz.
Now that Ulrich's company has become successful, he is mindful that
it needs to be improved. Still an engineer at heart, he watches the
cost of each element of the products carefully. Each Xootr is hand
built, and the company can turn out about 100,000 each year, but
sales are already stressing the company's ability to build them in
house, and Ulrich is looking at contracting out some of the work. And
Ulrich is also mindful that, like any craze, the interest in scooters
may wane soon. He now describes Nova Cruz as a manufacturer of
high-performance personal transportation products, and is looking for
other products to sell.
And he also has a new plan for his customers, allowing them to have
their Xootrs custom-made. He sees them placing an order on a screen
that allows customers to select the shape of the scooter's deck,
design their own logo, select custom colors, and change other aspects
of the design. And, he might even have it set up so that they can
watch their scooter in construction at the company's plant.
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