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For most entrepreneurs, business success is about overcoming obstacles. For Will Dean and Guy Livingstone, co-founders of the Brooklyn-based extreme endurance series Tough Mudder, it’s about building obstacles — and enticing the masses to trudge through them.
In 2009, while a student at Harvard Business School, Dean, a former counter-terrorism officer for the British government, thought up the idea for the grueling, military-style obstacle course.
His vision: a mud-soaked 10-12 mile course full of hair-raising challenges (think ice swims, crawling through dark and narrow trenches, a sprint through dangling live wires and tons of mud) that would test participating teams’ all-around fitness and mental grit in a way that existing athletic events — like marathons— didn’t.
Dean sketched out a proposal and was selected as a finalist in Harvard’s annual business plan competition, but, he says, “Most of my professors told me I was stupid” to actually pursue it.
They were wrong.
His idea grew into the Tough Mudder event series. Projected revenue for 2012 is a cool $70 million from 35 events in the U.S., UK, Australian and Canada.
To get started, Dean recruited Livingstone, a longtime friend and fellow adventure junkie, to get down and dirty with him.
“I’d been looking for a way to get me out of my comfort zone,” recalls Livingstone, 31, then a corporate lawyer in London.
With a $20,000 start-up fund and Dean’s kitchen table in his Brooklyn apartment serving as their office, the two spent early 2010 setting up a website and scouting a venue for their first event. They settled on a ski resort in Pennsylvania.
“We had a pretty clear idea of the people who would do it,” Livingstone says. “We imagined people like Will and me, gym-goers, cops, firemen, military people, and ‘weekend warriors.’ ”
The question was how to market to them. Facebook’s then-infant (and still cheap) ad program turned out to be the answer.
Within five weeks of launching the ads, 4,500 people had paid $95-$155 to register for the first ever Tough Mudder, filling the event to capacity — and lining the company’s coffers.
“It happened so quickly, we were just blown away,” says Dean. “The first day that we did 200 sales, I remember thinking it was a bug in the system. I’d made more money in the past ten minutes than I had in the past five years.”
But the learning curve involved in staging such a big production was “huge,” concedes Livingstone.
Along with recruiting a slew of interns, “we had to very quickly learn the tens of thousands of small things that need to go into the event — ordering all of the equipment, ensuring it was safe,” he explains. “We spent a lot of time assuring our partners we knew what we were doing, though of course we didn’t really.”
Hundreds of teams of enthusiastic “Mudders” came to Pennsylvania to army-crawl, sprint, climb and otherwise struggle their way through the British Special Forces-inspired course, which Dean and Livingstone designed and the venue staff constructed.
It was after that first event, Livingstone says, that the pair realized “the market was ours for the taking.”
And take it they did. Before the year was out, the co-founders and their growing team hosted two more challenges — each bigger than the last — netting a total of $2 million in 2010. In 2011, Tough Mudder staged 14 events across the country. Their 35 events this year include next weekend’s World’s Toughest Mudder competition in Englishtown, New Jersey — a sort of year-end finals where participants will see how many times they can complete the obstacles in a 24-hour period (it typically takes 3 1/2 hours to complete the course a single time).
In 2013, they aim to hold over 50 events.
The founders attribute much of their rapid success to tapping into the growing craze for ‘functional fitness’ like CrossFit and P90X — and to the appeal of an athletic challenge that’s not a race but a personal accomplishment.
Facebook, too, has been integral.
“Because of all the imagery events create, it’s an amazing word-of-mouth viral channel,” says Dean, noting his company’s now two-million-plus Facebook fans.
But the economics of the industry — in which participants pay months in advance, thus negating the need for any external financing — is likely the key reason Tough Mudder has grown at lightning speed.
“We’ve been able to use our deferred revenue to finance our own growth,” says Livingstone. “We don’t have to answer to the guys in suits.”
Having just one standard (and fine-tuned) product has also allowed for swift expansion.
“We’ve kept it very simple and very uniform,” says Livingstone.
The growing visibility of the brand and its “cool factor” has also helped Tough Mudder lure in top talent and expand quickly. The company currently has 110 employees working at its DUMBO headquarters, up from eight last year. According to Dean, they receive roughly 15,000 resumes every month. “If you can attract really high-quality people and you can give them real responsibility, then you can grow the business really quickly,” he says.
Tough Mudder’s enormous fan-base has also opened up doors to lucrative corporate sponsorship with the likes of UnderArmour and Dos Equis, and a meaningful partnership with the Wounded Warriors Project, for which the company has helped raise almost $4 million to date.
But the entrepreneurial Cinderella success hasn’t come hitch-free. In 2010, Tough Guy, a UK-based mud-run event started in the late 80s, sued Dean for stealing the business idea. The two companies settled out of court last summer, with court documents showing Tough Mudder paying out $725,000 to Tough Guy.
A Tough Mudder spokesperson says “any allegations made against Tough Mudder have been vigorously defended in court.”
And, even when business is running smoothly, the rapid growth is a challenge. “When you’re doubling in revenues every 3-6 months, you have to continually reinvent yourself,” says Dean.
The near future has the duo focused on international expansion. In 2013, Tough Mudder plans to hold its first events in Germany and Scotland. “We aspire to be a truly global brand,” he says.
But, despite all the rapid growth — and rapidly growing revenue — he insists the greatest reward remains the chance to witness people enjoying the fruits of their labor.
“Hearing people tell you that Tough Mudder is one of the best days of their lives,” Dean says, “is one of the most awesome feelings I think you could possible have.”