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82 6 SECRETS TO STARTUP SUCCESS

to crank out as many as 40,000 units every month in hopes that city
dwellers across the world would embrace the product as a solution
for congested traffic, overcrowded parking lots, and long, exhausting
walks.

But urban commuters never got the memo. After seven years and
more than $250 million in invested capital, the Segway had yet to
catch on with its intended market. Only about 25,000 Segways had
been sold in total by 2008, mostly for police, security, and industrial
use. As BusinessWeek noted in 2006, “the problem that he (Kamen)
wanted to solve, the need for a clean, energy efficient vehicle that
could coexist with pedestrians and replace the car in the world’s cities,
was one that others didn’t see.”2 For most urbanites, the Segway
seemed no more practical than the bicycle, a tried-and-true device
invented two centuries ago and available at a fraction of the cost,
prompting the Washington Post to dub it “The Invention That Runs on
Hype.”3

But don’t count out Segway just yet. During his tenure as CEO
from 2005 to 2010, James D. Norrod pushed the company to expand
its foothold in the police, security, and industrial markets, maintaining
that “market development is about finding one market that works re-
ally well and building your business from there.” The company has
also explored new applications for its Smart Motion technology, in-
cluding robotics, toys, unmanned military vehicles, and the develop-
ment of four-wheeled, multiperson prototypes. For Norrod, these
approaches have been the result of listening to what the market has
to say. “If people want four wheels,” he said, “I should give ’em four
wheels.”4

The Segway story is one dramatic example of a nearly universal
experience among new business founders and investors. What at first
seems like a slam-dunk business idea is usually an approximation, a
first stab at something you hope will resonate with paying customers.
You won’t know for sure until real customers buy and use your prod-
uct. Or not.

Most often, identifying the right market means refining, adapting,
even reinventing your original concept. Apple, Yahoo, and Google
were not their founders’ first ideas. Chris Holden, referring to the suc-

American Management Association • www.amanet.org