Hot Start-Ups

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WHAT'S TO LOVE: There's something appealing about a bunch of Harvard Business School graduates (Dodge went there too) starting a company that makes products a child could understand and use. The compactness of the X-It ladder allows the stores that carry it to maximize their shelf space. It's also a product that, by most accounts, is so well designed that it fills a unique niche. "The market's very fragmented, and with most ladders out there you'd be better off just buying a rope," says Paul Enright, president of Jomy Safety Products, in Boulder, Colo., a maker of fire escapes and collapsible ladders.

Another true believer is Bill Brouse, who helped get X-It products into retail stores through his independent sales network. In addition to being in Super Kmart, the ladder is sold through such powerhouses as the Home Depot and Amway. As for the fire extinguisher, called Flame Stop, it was in BJ's Wholesale Club and Sam's Club just four weeks after the company's launch.

FLIES IN THE OINTMENT: The links in X-It's supply chain aren't quite as dependable as the rungs of its ladders. X-It outsources manufacturing to a company in China; the cost savings allow it to price its products competitively. But "it's a weakness when you don't control the crucial parts of your value chain," Ive concedes. And as the products' popularity grows, so will the opportunities for supply-chain snafus, says Patricia Negron, vice-president of equity research at Adams, Harkness & Hill, in Boston.

THE "CAN LIVE WITHOUT 'EM" FACTOR: "I think about venture capital constantly," says CFO Dodge. "There could be real benefits, but our business grows slowly, and it isn't sexy. But we may not need venture money at the end of the day. We already have real customers who buy a real product." --I. M.

9. Upsetting the stats quo

COMPANY: Trakus Inc., Somerville, Mass.
YEAR FOUNDED: 1997
CONCEPT: Make devices that, when embedded in athletes' helmets, transmit data providing a wealth of new statistics about the game
PRINCIPAL: Eric Spitz, 29, founder and CEO
PROJECTIONS: Growing from no revenues at the present to $10 million in revenues in 2000
FUNDING: $4 million, raised in two rounds of financing from angels and from Venture Investment Management Co. LLC

BIRTH LEGEND: In 1997, Spitz, fresh out of MIT's Sloan School of Management, joined with two engineering grads to build a system that would track the movements of supermarket customers. By outfitting carts with transmitters, the trio hoped to show supermarket managers where shoppers spent the most time. They raised $50,000, rented an office--and six weeks later decided that their product would be too expensive for the low-margin grocery business. "We had one of those come-to-Jesus weekends and locked ourselves in the office to decide what to do with the 95% of the money we had left," Spitz says. "We came up with the sports idea." Regrouping, they talked to some potential customers, including Fox Sports, Nike, and the University of Nebraska football team. Although none signed up on the spot, the response was enthusiastic enough to propel Spitz and two new engineers (the other original cofounders had left) back to the drawing board. The result of their labors was the Electronic Local Area Positioning System (ELAPS), which collects performance data in real time during a game.

WHAT'S TO LOVE: Professional athletics are rapidly adopting a digital gloss, and Trakus is square in the center of that trend. Transmitters in an athlete's helmet broadcast radio signals to antennae surrounding the playing field; the raw data are then crunched by Trakus's computers to yield statistics or digital images. For the first time, coaches and broadcasters will be able to collect precise information on an athlete's speed, acceleration, and impact with other players or objects, and create digital replays of key moments.

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