Professor Ulrich's Excellent Adventure

It's easy to spot Karl Ulrich among the teenagers and college kids riding their kick scooters along Palo Alto's University Avenue. At 39, he's the oldest member of the group -- by more than just a few years. His sandy hair is thinning, and his shorts aren't baggy enough to match the street uniforms worn by the kids who carve arcs across the concrete. He also happens to be riding the coolest scooter around: It's got big wheels, an elegantly curved steering fork, and a charcoal-gray deck that's the size of a skateboard and that's made from carbon fiber.

Scooting around in the sunshine, Ulrich looks like a middle-aged guy searching for his second childhood. This is an undeniably strange place to find a tenured faculty member from Wharton -- a guy with three degrees from MIT and 15 patents to his name.

So why is Ulrich hanging with a bunch of scooter-heads? His joyride is actually market research for Nova Cruz Products LLC, a company that he launched last year to design, build, and sell an "upmarket" scooter. Ulrich has dedicated himself to turning a kid's toy into serious fun for adults -- and an alternative form of transportation for urban dwellers. At one level, Ulrich's latest project seems like an abrupt detour in a fast-track career -- especially to his parents, both of whom are professors. "My parents think that he's absolutely nuts," confides Karl's brother Nathan, 35, a partner at Nova Cruz, where he oversees research and development.

Ulrich is too much of an engineer to act impulsively, however. Kick scooters have become a hot fashion icon for the young and the digital in Silicon Valley and in the Bay Area, and the fad is now spreading to other major cities as well. Since September, Nova Cruz has been selling its highly engineered, smooth-gliding "Xootr" (pronounced "Zooter") as fast as it can turn the scooters out, despite prices that range from $269 to $489. Judging from the way that the kids in Palo Alto are ogling the company's newest model, Ulrich can expect to find eager buyers for this top-of-the-line Xootr.

Nova Cruz is also a welcome reminder of the early promise and the enduring appeal of the Web. It's amazing, really, how quickly the Internet economy has taken on the trappings of the old economy. Today, virtually every aspiring entrepreneur looks to the same handful of blue-chip VC firms for funding. Founders declare their intention to "get big fast" and to create billion-dollar IPOs.

The story of Karl Ulrich and the Xootr is something else entirely. It's a story about how one smart person convinced a few other smart people to get excited about a new product. It's a story about how these partners bootstrapped the resources that they needed -- no visits to Sand Hill Road, no road shows for IPO investors. It's a story about high-touch craftsmanship -- the scooters are hand-built in a New Hampshire factory -- and about high-tech marketing. And it's a story about the power of the Internet to project a good idea around the world.

Nova Cruz Products is still a small company, but it is growing fast and turning a profit. Ulrich expects revenues from the Xootr to hit $10 million in 2000; he's aiming for $50 million in 2002. The Xootr is now available at high-profile retail outlets such as FAO Schwarz and the Sharper Image. But what's most surprising, given the company's modest size, is its global reach. Nova Cruz has parlayed its presence on the Web to forge distribution links to Asia, to Australia, and to some parts of Europe. "Everyone finds us on the Web," Ulrich says. "I don't even remember how it used to work."

Professor Ulrich is on sabbatical from Wharton this year and is devoting himself full-time to growing his business. If he were back in the classroom teaching a case study based on his company, what lesson would he emphasize to his students? "I'd tell them that Ralph Waldo Emerson was right," he says. "If you build a better mousetrap, the world will beat a path to your door -- as long as you display it at mousetrap.com. If you build something fun, cool, and useful, the Web lets people find it. And once they find it, they will buy it."

Fast Growth Requires Fast Feedback

Karl Ulrich began working on the Xootr because it was the kind of product that he'd always wanted to buy. He describes himself as an "alternative-transportation nut." Growing up in the college town of Durham, New Hampshire, he rode his bicycle everywhere, and he has commuted by bicycle to his teaching jobs at MIT and at Wharton pretty much every day.

Ulrich first broached the idea of a human-powered scooter targeted at adults in an email that he sent to his brother Nathan on January 27, 1999. In six terse paragraphs, Ulrich sketched out the basic requirements: The scooter should be easy to carry into stores or offices, much faster than walking, and very cool looking ("i.e., not a geek thing"). Ulrich figured that if the cost of the parts was kept under $80, the product could be promoted and sold on the Web for less than $300. Within 10 days, Karl had crafted a business plan, and Nathan had created a prototype of the Xootr in his machine shop.