Turning a profit on the "toughest event on the planet"April 17, 2012: 11:07 AM ET
Tough Mudder isn't your typical road race. Barbed wire, dangling electrical cords, and frozen mud baths figure prominently. Its organizers hope new boot camps will continue to grow the business.
By Daniel Roberts, reporter
FORTUNE -- In 2011, Joel Gat ran every Tough Mudder event in the country. Granted, the company only held its eponymous competition 14 times. But this is not some 5 kilometer road trial. Each Tough Mudder is 10 to 12 grueling miles made memorable by more than two dozen obstacles. Par for the course: crawling under barbed wire, running through charged electrical cords, and navigating monkey bars situated above muddy, freezing water. The cost to enjoy this kind of pain? $125.
Tough Mudder, the adventure sports company behind such events, is headquartered in the decidedly softcore DUMBO, Brooklyn. But from its posh perch, the company is overseeing a rapid expansion that will more than double the number of events it coordinates. Some 500,000 individuals will participate this year, up from 140,000 in 2011. Tough Mudders will be held in Australia, Canada and the UK as well. (Gat may find it harder to attend all 35 events this year.) And, in a bid to find more recruits, the company is launching boot camp training classes through 24 Hour Fitness gyms this month.
Guy Livingstone, 31, co-founded the company in 2010 with Will Dean, 31, after Dean came up with the idea while attending Harvard Business School. "We want to drive more people to our events, obviously, but we also think of Tough Mudder as a lifestyle," says Livingstone of the expansion and the 24 Hour Fitness partnership. "People have viewed fitness as boring, and monotonous, and drudgery. We want to transform that."
Tough Mudder, in its marketing materials, is careful not to call itself a "race." Participants -- who sign a death waiver as well as recite a pledge that they will help others during the event -- are encouraged to go with a group and to drink a beer at the finish line. (Dos Equis is a sponsor.) The event is not timed, though the top 5% of finishers qualify for World's Toughest Mudder, which is a timed, 24-hour long competition held at the end of each year.
A description of the trials usually elicits one of two reactions. "When people hear about the event," says Eric Svenson, who completed a Tough Mudder last May, "they either say, 'That sounds kind of fun,' or they say, 'why would anyone want to do that?' If you fall into the first camp even slightly, you should do it." The company believes many people might fall into the first one but remain too nervous to sign up. Hence the boot camps.
As scary as the events may sound to some, Tough Mudder stresses that it is team-oriented. Like the recent phenomenon of CrossFit -- intense group weight-lifting classes -- its demographic is clear: attractive, in-shape young people who work out and party hard. The new training classes are meant to make the event less intimidating. (The tenor of the actual events is another matter. Signs that direct participants how to skip an obstacle read: "Wimps go this way, Tough Mudders go that way" and "Harry Potters go this way, Tough Mudders that way.")
Tough Mudder and 24 Hour Fitness began testing classes with a quiet pilot program last year in the San Francisco bay area. Now it has launched them in New York City and New Jersey, and will soon offer them at locations across the country. They are free for 24 Hour Fitness members; non-members can sign up for $15 per hour-long class. For now, 24 Hour Fitness has signed on to do the classes for 2012, with the possibility of extending that deal if the partnership proves successful.
While the classes will likely raise Tough Mudder's profile (24 Hour Fitness has 4 million members), it is less clear how this partnership benefits the gym, which has over 400 clubs in the U.S. Tony Wells, CMO of 24 Hour Fitness, says only that the company has made other such partnerships -- like with the U.S. Olympics -- and is impressed with Tough Mudder. "They've built an unbelievable brand in a very short period of time. So we're excited to help them succeed in their business and get our members excited about the event."
The classes may get people excited -- Erin Hass, who did a Tough Mudder last summer, says she would have taken them -- but it's doubtful they can provide much of a simulation, since they are held inside the club. And Julian Jamison, 39, a runner and economist at the Federal Reserve in Boston, says the people who do events like this regularly would not bother with the classes.
After all, Tough Mudder has competition in the toughness department. The Barkley Marathon, a 100-mile race, is one example. It has a completion rate of less than 1% compared to Tough Mudder's 78%. The Barkley consists of five loops, each about 26 miles, much of the unmarked trail running through briars or along mountain edges. "The people who last out there for a while are hallucinating and sleep-deprived," says Jamison, who was happy to complete just one of the five Barkley laps. "So when I compare it to that, Tough Mudder just isn't so difficult." Gat concurs: "My one lap at Barkley was much, much harder than my five laps at World's Toughest Mudder. When I finished, my feet were macerated and bleeding. I was destroyed."
If Tough Mudder, whose official slogan is "Probably the Toughest Event on the Planet," is not the toughest event, then where does it see itself headed? Livingstone says it is not just another mud-run, though it often gets grouped with those. "If there's a household brand that we benchmark ourselves against, it's Ironman, but we don't compete directly with them in terms of participation," he says. "Our goal is to become a household brand so that a guy can be at a bar and mention to a girl that he's running a Tough Mudder, and she can know what that is and be impressed."
With buzz and viral marketing, Tough Mudder is poised to keep growing. The company had $22 million in revenue 2011 and projects it will pull in $75 million in 2012. It would not disclose its profitability, thought CMO Alex Patterson says it has made money since it first launched. The startup has also made partnerships with major brands. In addition to Dos Equis and 24 Hour Fitness, it's drawn in Degree Men, Bic, Camelbak, Paramount and Under Armour. Those brand sponsors, it claims, will help fuel it to become a mainstream mega-competition.