By Marie Griffin / Photography by Mindy Best
Let’s say you launched a business that took off beyond your greatest expectations, bringing in revenues of $70 million after two years. With revenues around $100 million after four years, how do you continue to scale the business? This is the challenge now facing Will Dean, co-founder and CEO of Brooklyn-based Tough Mudder.
Founded in 2009 by English-born Dean and business partner Guy Livingstone, Tough Mudder produces events — not races, Dean emphasizes — in which participants run through mud and tackle physically and mentally challenging obstacles. The company’s eponymous Tough Mudder, representing over 50 of the 62 events produced by the company last year, typically puts 10,000 to 15,000 participants through about two dozen obstacles over a course of 10 to 12 miles.
“Tough Mudder stands for two things: teamwork and really big, spectacular obstacles,” says Dean. A Tough Mudder event is not timed, so participants can complete the “butt-kicking” challenge at their own pace. Instead of focusing on individual performances, Tough Mudder encourages participants to help their teammates — 90 percent of people who participate do it as part of a team — as well as total strangers. Many of the obstacles are designed to be virtually impossible for an individual to tackle alone.
Some of the spectacular obstacles in the Tough Mudder repertoire include monkey bars slicked with a butter-like substance, deep tubs of numbing ice water, steep slides that speed participants through hoops of fire, high and greasy quarterpipes, and the signature Electroshock Therapy, which sends participants through dangling wires live with as much as 10,000 volts of electricity.
Dean, who received an MBA from Harvard, provides a Marketing 101 answer when questioned on Tough Mudder’s strategy for continued growth, which will come from new products and brand extensions. It is, of course, the execution of this strategy that will test the strength of the Tough Mudder organization.
TOUGH MUDDER STEPS OUT OF THE MUD
One of the biggest developments for 2015 is the addition of a fourth brand to the Tough Mudder family, called Urban Mudder. Tough Mudder debuted its first brand extension in December 2011, the World’s Toughest Mudder. This is the company’s only competitive race, and the winners (male, female and team) must complete the most laps of a 5-mile obstacle course over a 24-hour period.
Mudderella is a 5- to 7-mile obstacle mud run targeted at women, although a man can join if invited by a woman. One “prototype” Mudderella was held in 2013; seven Mudderellas took place in 2014, and the company promises to run 15 or more this year.
The first Urban Mudder, slated for July 25, 2015, will be held at New York City’s Randall’s Island. The Urban Mudder course will be half the length of the Tough Mudder about 5 miles and it will be a little less tough. The obstacles that participants have found most intimidating at Tough Mudder are the ones that shocked their systems — with either electricity or ice water — and neither of these challenges will make it into the urban settings.
Also missing from the Urban Mudder will be mud. “Mud is the first casualty in an urban environment,” explains Brett Stewart, co-founder of the Mud Run Guide website and executive producer/host of OCR Warrior, an online video mud run reality series. For Tough Mudder and competitive events, mud not only provides a slippery, shoe-sucking surface and dramatic photos — enthusiastically shared by participants on social media — but also an inexpensive safety cushion that prevents injuries from falls. “Without the mud, you have to use a different thought process to design obstacles that take people off the ground,” he adds. (As of press time, Tough Mudder had not released details of its Urban Mudder obstacles.)
Matt B. Davis, editor-in-chief for Obstacle Racing Media, points out that other obstacle-course racing (OCR) and mud-run organizers have tried events in cities without success. Warrior Dash, another one of the three top companies in the OCR-mud run field, held two Urban Warrior Dash events in 2013 before retiring the concept.
“Tough Mudder has a great brand, but so does Warrior Dash,” notes Davis. (See “Muddy Millions” on page 22 for details on the top OCR-mud run producers.) “The urban version of Warrior Dash failed and Will Dean certainly knows that, so it will be interesting to see how Tough Mudder does it differently.”
As a company, Tough Mudder has shown a willingness to put time into developing new brands. Pointing to Mudderella’s expansion from one to 15 events over three years, Dean says, “There’s always a learning curve with a new event, but we have something of a playbook now for rolling them out.”
MUDDERS TO SHED TEARS IN 2015
The sustainability of the Tough Mudder company, like every successful live-event business, Dean says, relies on constant reinvention of the product. On January 13, Tough Mudder unveiled this year’s new and redesigned obstacles, which the company promised would “redefine the on-course experience.”
The headline-getting obstacle, called Cry Baby, requires Mudders to crawl through a structure infused with a tear-gas-like substance (but not the chemical used in real tear gas). A tester was quoted as telling Sports Illustrated that it stings, not only in the eyes but also in skin cuts and abrasions that other obstacles may have caused. Also new is King of the Swingers, which requires participants to swing off a 12-foot platform into a pool of water.
Two of Tough Mudder’s most noteworthy obstacles, the Artic Enema plunge into a vat of ice water and the Everest slick quarter-pipe wall, have been redesigned. According to a release, “2.0 versions will offer new twists on the classic challenges, pushing participants to work as a team.”
While the obstacles for which Tough Mudder is known — and the name itself — have made the events seem very daunting, Dean says the time has come to downplay the difficulty and play up the fun. “Most people who come to our event are blown away by how much more fun it is than they thought it would be,” he explains. “A lot of people actually think it looks like fun, but they don’t think they can do it. As the company evolves and grows, we’re getting better at saying, ‘If you follow our workout regime, you can.’”
Industry observers note that Tough Mudder is also doing a good job differentiating the experience for veterans versus first timers in its classic event, a strategy designed to encourage repeat participation. The Mudder Legion program, introduced in January 2014, is only for those who have completed their maiden Tough Mudder. Now all participants are given different-color headbands that designate the number of Tough Mudders they have done. The orange headbands, formerly for everyone, now go to first-timers, while double Mudders get green, three-timers blue, and so on; black headbands signify those who have done 10 or more. Legionnaires have access to the tougher obstacles within the Legionnaires’ Loop, as well as the option to skip the dreaded Electroshock Therapy obstacle.
“The Legionnaires’ Loop is really smart,” Stewart says. “By giving VIP access to certain obstacles, it makes the different-color headband mean something.”
With a $20,000 personal investment, Dean and Livingstone started Tough Mudder in 2009 with a website promoting their inaugural 2010 event. “I was hoping for 500 people and we sold out after five weeks with 4,500 tickets. I didn’t see that coming,” Dean admits, but he quickly realized “we were on to something.” At the time, he adds, “I felt I had a binary choice: either be ‘me too’ or become the main brand.”
After producing three events and making about $2 million in 2010, Tough Mudder put on almost five times that number, 14 to be exact, in 2011, while revenues soared to a reported $70 million. Tickets to Tough Mudders are among the priciest for events of its type, with the lowest entry price about $100 and the cost increasing toward $200 as the date of the run approaches. Dean points out that most participants make their payments about six months in advance, “which is a nice place from a working capital perspective.”
With cash flowing in, the company increased its number of events two and a half times to 35 in 2012. “We bit off a lot with that jump, and it was a stressful and long year,” Dean says. Tough Mudder added 18 more events in 2013, for 53, and another nine in 2014, finishing with 62. In 2015, “we’ll have north of 70,” he notes.
While the runners’ entry fees make up the largest single source of revenue for Tough Mudder, several other revenue streams pump up profitability. “Communities give us money to bring the event to their towns,” often also providing services such as shuttle buses and security to Tough Mudder for free, Dean explains.
Sponsorship dollars flow from major companies including Under Armour, Anheuser Busch, Radisson, Met-Rx and Oberto Beef Jerky. A two-year sponsorship agreement with Under Armour was worth between $2 million and $3 million, according to Forbes. At the events, Tough Mudder makes money from food and beverage and merchandise concessions. It licenses its brand for various products and recently signed a licensing agreement with Mexican company Apodaca Entertainment Group to allow it to run Tough Mudder events in Mexico.
On the other side of the coin, though, the costs and logistics of these events are huge.
On site at any one of Tough Mudder’s events will be about 200 staffers, most of whom are not full-time Tough Mudder employees. About one-third of the group will be involved with safety — people channeling crowds through obstacles without trampling one another, lifeguards and divers overseeing obstacles involving water, medics staffing the on-site “field hospital,” a crew waiting with an ambulance, and local police. A construction crew stands by in case an obstacle needs repair, while other workers direct lines of cars through parking lots.
Although Dean declined to comment on Tough Mudder’s expenses or profit margins, Joe De Sena, CEO and co-founder of Spartan Race, estimates that Tough Mudder spends $300,000 to $400,000 on each event. Because Spartan’s races require timing, monitoring of competitors’ compliance with rules, and prizes, its events each cost about $100,000 more, De Sena says.
With tens of thousands of people on site at an average event, Dean must also face the risk that something could go terribly wrong. Of the more than 1.5 million people who have participated in Tough Mudder events since 2010, one man died. In April 2013, 28-year-old Avishek Sengupta drowned, a death that was ruled accidental.
“Avi’s death woke everyone up,” says Davis, referring not only to Tough Mudder but to all the mud run/OCR organizers. Noting that safety was taken seriously prior to April 2013, Davis believes the fact that a man died drove home its importance in a visceral way.
“These are live events with a lot of moving pieces,” Dean says. “We’re very proud of our safety record, but hiring the right people, creating the right training and induction programs, and putting the right managers in place are complicated.” In spite of that complexity, he adds, “there are not many companies in the world that have the ability to produce events of this size on three continents as we do.” CEO
Marie Griffin is a freelance writer based in the New York City area. Contact us at email@example.com.
A new industry report shows how much money obstacle races and mud runs pump out each year
Few businesses take off with the sharp upward trajectory of obstacle-course racing (OCR) and mud runs, a young industry that has been profiled for the first time in Obstacle Race World: The State of the Mud Run Business, written and researched by Melissa Rodriguez and published in 2014. Rodriguez, who holds an MBA, is a personal trainer, fitness market research analyst, and editor of ObstacleRaceWorld.com.
Seemingly popping up out of nowhere, OCRs and mud runs attracted about 200,000 participants worldwide in 2010, who collectively paid $15.9 million in entry fees. The two strongest growth years for OCRs and mud runs followed. In 2011-2012, revenues doubled from $95.2 million to $190.8 million. In 2012-2013, participant revenues alone increased by almost $100 million, or 52 percent, to $290.1 million.
Word of the popularity and lucrativeness of OCRs/mud runs obviously spread, and a host of new players joined the fray in 2012 and 2013. As the meteoric growth rate started to level off — participant revenues rose 25 percent for 2013-2014 — some of those newcomers fell out. Rodriguez and other industry insiders say the industry found its footing again in 2014, with the leading players emerging even stronger. Obstacle Race World projects that the business ended 2014 with participant revenues of $361.8 million, and it will pick up another $72 million this year, for a 20 percent increase, to $434.1 million in 2015.
These revenues reflect the fast and steady ramp-up in participation, with more than 1 million new people leaping into the mud each year from 2010 through 2013. Over 800,000 additional people participated in OCR and mud events year-over-year in both 2013 and 2014, when the total number of participants worldwide reached 4.2 million. By 2016, almost 5.7 million runners will take part in these events as revenue from participant fees hits $481 million, Obstacle Race World predicts.
Although hundreds of companies produce these events, the three biggest organizers bring in 62 percent of the money. For the Obstacle Race World study, Rodriguez estimated market share based on registration fees, participation and social media statistics for the period from 2010 through 2014.
Obstacle Race World pegs Tough Mudder as the market share leader, at 23 percent, for 2010 through 2014. Close on its heels are Warrior Dash, with 20 percent, and Spartan Race, with 19 percent. Those rankings, though, are already starting to shift, Rodriguez says.
“If we were to look at 2014 alone, Tough Mudder and Spartan Race would be the top two,” Rodriguez says. Although Tough Mudder typically charges higher race fees, Spartan held at least twice as many events as Tough Mudder in 2014, so “I would say Spartan Race was first and Tough Mudder second,” she adds.
Warrior Dash, produced by Red Frog Events, was also among the leaders, actually ranking in second place for the 2010-2014 period, although Rodriguez notes that its strongest growth was in the earlier part of that range. Warrior Dash specializes in 5K events that are fairly distinct from Tough Mudder and Spartan. Tough Mudder’s core challenge is an obstacle-course run of 10 to 12 miles. Spartan has a wider range of formats — all are timed races — that range from 3 to 26.2 miles, but its sweet spot is with distances comparable to Tough Mudder’s.
While Spartan may bring in the most top-line revenue in the OCR-mud run space in 2015 — because of its race schedule and the exposure it is receiving through its partnership with TV network NBC — Tough Mudder will bring more money to the bottom line.
Joe De Sena, Spartan’s CEO, says that “after five years, Spartan is still not profitable.” De Sena, who is determined to develop a sport that will one day be included in the Olympics, says he is taking a long-term view.
BUILDING A BRAND
From inception, Tough Mudder co-founder and CEO Will Dean knew what he wanted his race series to stand for. Through continuous reinforcement, a team that’s willing to live the mantra and a growing, and devout, following of “Mudders,” the company has established itself as a market leader.
The Mudder Pledge:
- I understand that Tough Mudder is not a race but a challenge.
- I put teamwork and camaraderie before my course time.
- I do not whine — kids whine.
- I help my fellow mudders complete the course.
- I overcome all fears.
Tough Mudder Core Values:
Tough Mudder’s culture is based on the TMHQ PACT, our company’s credo and our commitment to work (and live) by the principles of Pride, Accountability, Continuous Improvement and Teamwork. These elements guide our actions as employees and tell us what is expected of each other in return. They also guide how we interact with our customers and business partners.
TOUGH MUDDER AWARDS & RECOGNITION
Fast 50 2013 | 2014
Best Places to Work 2013
Wounded Warrior Project
Talkhouse Award 2013
40 Under 40: Ones to Watch 2013
HR Excellence —
Best Overseas HR Strategy
Best Overseas HR Strategy 2013
Ernst & Young
Entrepreneur of the Year — NY Region Winner 2013
Entrepreneur of the Year — Emerging Winner 2013
Best Places to Work Award 2013
The Stevie Awards 2012
Maverick of the Year — Silver Winner
Event Experience of the Year Award 2013