Professor Ulrich's Excellent Adventure

The rest of the launch proceeded just as fast. Ulrich persuaded Lunar Design Inc., an award-winning design firm, to become a partner in his venture. By July, six months after that initial email, Ulrich was ready to take orders for the Xootr.

One reason why Ulrich was able to move so fast was because he cared so much. He really believed in the concept behind the Xootr. But he also believed that moving from concept to winning product required a direct, two-way connection to customers -- the kind of relationship that flourishes through email, as well as through a Web site that invites customers into the organization. Ulrich, who taught himself HTML, built much of the Xootr site on his own, trying hard to avoid the "smoke and mirrors" that he saw elsewhere on the Web. He wanted his site to be simple and authentic: It includes pictures of the Xootr and its makers during the manufacturing process, as well as product comparisons that are candid about the Xootr's strengths and weaknesses. "People look for visual cues about what your company is like," says Ulrich. "The site makes us more approachable."

Ulrich now gets about 50 emails a day from customers telling him what they like and don't like about the Xootr. Most of them start by addressing him as "Karl." The day that he received a poem extolling the virtues of the Xootr, Ulrich knew that the feedback loop was alive and well.

Even more useful are the technical critiques sent in by scooter enthusiasts. Some people had been trying to do skateboard-style stunts on the Xootr: They'd ride it into curbs at full speed and end up breaking the steering pin. After receiving an email about the problem, Ulrich replaced every one of the affected units. And complaints about the hand brake being too hard to squeeze led to a design change that Ulrich intends to introduce this summer.

Surprise! Your Plan Doesn't Work

There's nothing more powerful than a two-way connection with customers to guide a product's evolution over time. But even the most robust customer connections can't guarantee success: Markets move too fast, competitors respond too fast, and consumer tastes change too fast. When launching a business on the Web, you should expect to be surprised -- and then respond intelligently to unforeseen problems or opportunities.

Last October, for example, a few months after he launched the Xootr Web site, Ulrich decided that it was time to test the Xootr's appeal with a key market segment: college students. He figured that the scooter would click immediately, particularly with the half million students at the country's 20 largest warm-weather campuses. It didn't take long for Ulrich and his team to settle on Stanford University as the first test market.

Ulrich paid a student agency to slip flyers under every dorm-room door on campus, offering to give away a free Xootr to 10 lucky students. All that the students had to do to qualify was to register on the Xootr Web site. Late on the night of the contest, seated at a computer in the basement of his home, in Narberth, Pennsylvania, Ulrich watched the site as the number of registrations began to climb. Because of a quirk in the Stanford network-addressing system, Ulrich could literally see the pattern as students from one dorm after another hit on the Xootr site to register. He was watching from afar the progress of flyers being shoved under doors.

Over the next couple of days, 8% of Stanford's student body registered on the Xootr site -- a response rate that would have even the most successful direct marketers doing somersaults. For a couple of months, Nova Cruz brought a small fleet of Xootrs to campus every Friday and Saturday, so that students could try them out. So how many scooters did the company sell to Stanford students? Negative one. "We actually sold one -- but then the buyer returned it," says Ulrich.

The trial blindsided Ulrich and his team. Among college students, their primary market, the Xootr just wasn't cool enough. So Ulrich moved on to plan B. On January 10, 2000, he met with his four partners and told them that he wanted to refocus the company on a battery-powered scooter, dubbed the "e-Xootr." Adding a battery, he believed, would turn the Xootr into a true commuter vehicle. The prototype that he brought along to the meeting was a hit. Tom Miner, a senior vice president at Lehman Brothers and an investor in Nova Cruz, pulled Ulrich aside and said, "Forget about the kick scooter. This is it."

But just as Ulrich was preparing to wind down production of the human-powered Xootr in favor of the e-Xootr, he got another surprise -- this time an opportunity -- in the form of a scooter manufactured in China called the "Razor." The low-cost Razor was selling particularly well in Japan, and it was fueling a scooter boom throughout Asia. Faced with a shortage of Razors in Japan, consumers and retailers began checking the Web for other places to buy scooters. Now Ulrich's Web site started to pay off -- thanks, in part, to its authentic design, but thanks also to a clever trick that Ulrich had engineered to increase his company's visibility on the Web.