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Zooming From Zero to $70 Million in 2 Years

It all started with a wacky idea and a $20 Facebook ad. Two years later, this Brooklyn-based company has created, and conquered, plenty of obstacles. Here's how.
Mass Communication Specialist 3rd Class Sebastian McCormack, crawls through the mud on his way through the third obstacle of a Tough Mudder competition in Snow Valley, California.
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When the typical career that comes after Harvard Business School wasn't exciting enough for him, Will Dean took a job helping the British government chase terrorists. When even that lost its luster, he decided to create his own challenge—something that mixed the endurance needed for marathons with the kinds of intensive training those terrorist-chasing special forces were subjected to. The final product was an event called Tough Mudder, now a world-wide series of 10-to-12 mile obstacle courses that feature challenges such as crawling through barbed wire, climbing over butter-greased monkey bars, and running through fire.

What started as a flash of inspiration and a single $20 Facebook ad grew into a $70 million company in just two years—and that's without any venture capital to seed the venture. It has grown from eight employees to 60 and hopes to double that number by year's end. The success came through challenging norms about the business world and putting faith in brand identity so it spreads virally both on- and offline. Dean and Guy Livingstone, president and chief operating officer of the Brooklyn-based company, talked at an Escape the City discussion in Manhattan on Tuesday about the four ways they conquered their own obstacles, while building a fast-growing business. 

1. Create a disruptive product.

Tough Mudder's founders started their business with a simple premise: Even for the most athletic people out there, marathons can be boring sometimes. Livingstone and Dean looked at the statistics that showed an estimated 500,000 people complete marathons and 1.4 million compete in half marathons every year, and saw room for a shakeup.

"Marathons are terribly run," Livingstone says. "For us that was just a huge, huge opportunity."

What they saw was a chance to make a competition that's more interesting to all-around athletes, not just people who spend a year training their knees for a 26-mile marathon. They emphasize that the event is a challenge with focus on teamwork, not a race.

"The reason why we've been so successful is that we're offering a product to people who are athletically minded but don't want that competitive aspect," Livingstone says.

When starting the company two years ago, Dean had soured on the corporate business world and was left with loads of debt from business school. He was searching to create a lean startup and sunk $300 into a basic website, $20 on the Facebook ad and then starting generating buzz for the event.

"Every professor at Harvard Business School told me this was a terrible idea," he said. "They told me I should take that job at Bain." 

2. Develop an offline viral product.

Dean remembers that he spent $8,000 advertising the first Tough Mudder in January 2010, because, well, that was all the money he had in his bank account. Now the advertising isn't much of an issue: 77 percent of its Web traffic comes from word of mouth. The founders said they took advantage of a phenomenon known as the "humble brag," wherein participants show off their experiences at the competition.

"Something that we saw is that experience is the new luxury good," Dean said. "Memories, particularly shared memories, are this experience that, unlike an iPhone, appreciates in value over time."

One of the keys to success was pre-registrations: since participants pay the $100 to $200 entrance fee ahead of time, Tough Mudder started making money before it even built a single barbed-wire obstacle.

The cooperative nature of the event has birthed a fiercely loyal fan base that helps spread the brand: After all, once you conquer something called the Chernobyl Jacuzzi (later renamed the Arctic Enema), you’re likely to want to show your friends the pictures. The company hopes one day it can be enough of a household brand that a dude can tell a girl about it in a bar and she'll know what he's talking about.

"We're not trying to be the Marriott Hotel. We're not trying to be everything to everyone," Livingstone said. "I think you either get it or you don't with our brand, and we're very, very proud of that."

3. Partner with national brands.

Dean said at the first event in Allentown, Pennsylvania, in 2010, when competitors walked across the finish line covered in mud and bruises, he didn't want to give them an "isotonic banana" or something else healthy and boring.

"I said let's have a beer when you finish this event," he said.

But he also didn't want to give out a Bud Light, which led to an early partnership with Dos Equis, whose "Most Interesting Man in the World" campaign appeared to be a fit with the event's off-kilter image.

What started as a free-beer promo in the beginning of the event grew into more than $100,000 worth of sponsorships, including branded obstacles such as the Degree wall climb and partnerships with other like-minded companies such as Clif Bar and Under Armour.

"We wouldn't be where we are as a brand without the partners we have," Dean said.

Tough Mudder says it is only aligning itself with top brands—while still trying to keep an indie image.

"We're trying to be the anti-corporate corporate," Livingstone said. "Are we selling out by getting corporate brands? On balance, I don't think we are."

4. Create a sustainable corporate culture.

For all the fire-walking, mud-diving, and cliff-hanging that goes into a Tough Mudder event, Livingstone says he considers the company's sustainable company culture to be "the most interesting part of what we do."

Part of that is an import from across the pond: as Brits, Dean, and Livingstone thought the typical 10 vacation days afforded to American workers was too low, so they offer a mandatory four weeks of vacation time to employees.

"You have to invest in people, invest in culture, and invest in the future, so people who come aboard aren't disaffected," Livingstone said.

The company offers various community building perks, including partnering with Harvard Business School, a book club covering business titles, a paid gym membership, an iPad, and participation in a company-wide expedition to somewhere exotic.

"It brings the entire company together across departments," Livingstone said. "We also want to really invest in human capital for everyone that works there."

The company also launched Tough Mudder Ventures to invest in the ideas of staff members.

So far it's working, as the company gets 20,000 resumes annually, including 7,000 this year alone so far, and has attracted people who used to work for Barclay's, Bain & Company, the Olympics and the NFL.

For a bunch of people with fancy business pedigrees and $70 million worth of value, all they really want to do is not be taken too seriously.

"People really enjoy coming to work," Dean said. "Having an organization full of people that enjoy their lives is probably one of the most rewarding things that I've done with my life."

IMAGE: Official U.S. Navy Imagery
Last updated: Mar 29, 2012

TIM DONNELLY | Columnist | Inc.com Contributor

Tim Donnelly is a freelance writer and managing editor of Brokelyn.com. His work has appeared in Billboard, The Atlantic, Thought Catalog, and The New York Post.

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.



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