Why Spartan Race Teaches Us That Success In Business Is All About Perseverance

Contributor: Jason Belzer for Forbes

1/8/2015

This can’t be happening… again.

These words rang like a bell inside the mind of Joe De Sena in early 2011, as he began to come to terms with what seemed like the inevitable – the failure of yet another one of his ambitious business ideas. Spartan Race, the mass market adventure racing series De Sena had created just a year earlier had turned into a logistical and business nightmare. With races all across the world, each requiring their own set of venue negotiations, marketing, and haggling with local governments for permits, De Sena had simply underestimated the human and financial resources necessary to survive long enough to see the company turn a profit. With more than $300,000 a month in expenses now being financed by his credit cards and employees resigning left and right because there was no money left to pay them, the future of a once promising venture seemed unnervingly bleak.

Yet De Sena was no stranger to adversity. The Queens, New York native made it big when he bootstrapped one of the city’s most successful pool cleaning and construction companies in college,  and eventually found his way to Wall Street and the world of private equity. To escape from the stresses of banking, he found adventure racing – week long slogs through rivers, over mountains and across deserts. The brutal conditions pushed De Sena to both his physical and psychological limits, and proved to him again and again that he was capable of so much more than he could ever have believed.

What started as a hobby soon became an obsession. In 2000, during the height of the dot com bubble, the domain Peak.com became available, spurring De Sena to drop seven figures to purchase it in the hopes of creating an online community for all things adventure racing. Intended to be a hub for people interested in traveling the world, scaling Mount Everest, traversing the Sahara, and undertaking any number of other physical challenges, De Sena was certain that Peak.com would attract those that shared his passion for the extreme.

He was wrong.

Some 8 years and 2 million dollars later, De Sena finally accepted the fact that extreme adventure racing wasn’t a scalable business.  There just weren’t enough people interested in pushing themselves 350 miles or more through the world’s toughest terrain, much less enough to form a profitable online community. It turns out that sometimes passion doesn’t make good business.

Around the same time, in late 2009, De Sena came up with another idea – creating a military style obstacle racing series that was marketable to the everyday consumer instead only die-hard adventurers. In fact, he had discussed this idea with many friends, including his long-time assistant, Jaloyn Fockler, but he had become so obsessed with making Peak.com a success that he simply couldn’t face the brutal facts, nor see the forest for the trees. Moreover, he was financially over leveraged, his credibility among investors was all but shot and the country was knee deep in one of the worst recessions in a century. There was simply no way he could start another business.

“I really struggled during those few months,” remembers De Sena. I knew I was on to something, that an adventure race for the masses was really at the essence of why I had started Peak.com so many years before. But I also knew that after my failures, I would never find a sane investor to put up their money to finance another racing project run by me. So after much deliberation, I did what any serial entrepreneur would do – I ended up going for it and funded everything through personal credit cards and loans. It was an insane and stupid idea; everyone around me thought I was committing financial suicide. But I also knew that I couldn’t live with the failure of Peak, I had to give it another go.”

De Sena began reaching out to former friends, colleagues and relatives to recruit them into joining his new venture. While he received quite a bit of rejection, many were swept up by his excitement and vision for what would eventually become Spartan Race. Yet the majority of them knew that there was little guarantee of success, and many joined with the promise that they would be paid little to be part of De Sena’s vision.

According to Selica Sevigny, one of the company’s first employees, “When Joe mentioned he was brewing a new race concept and starting a new company, I knew then and there I wanted to be part of the pioneering team, the founding few. We left our jobs, sold everything we owned, and believed 110% in the project—or what I referred to as ‘the mission.’ Everyone thought we lost our minds, especially when I told them we would get paid little for the work. It would essentially be a work-for-stay-and-food deal. The only way we could earn a living was once the events were profitable, which took some time. We made the decision to work crazy hours every day for many years to make Spartan a success.”

Organizing events, finding locations, negotiating venues, and finding volunteers was a much bigger job than De Sena and his small staff initially anticipated. The excitement of building a new business blinded them from the truth of what it was really going to take to succeed. When the reality set in that a new business, in a new industry, with this much work might take years to turn a profit, the tension became palpable.

“I can’t tell you how many people I begged to run Spartan during those turbulent times,” recalls De Sena. “Andy Weinberg, who, was supposed to have moved to Vermont years prior to help me with Peak races in Vermont, my brother in law, who started and then stopped….Sean McGuire, who helped put on the first 7 events and then quit….Sean’s business partner, who dropped after the first event…. Selica, who ran with international and got us on the ground with very little resources. I thought I had hit rock bottom a year and a half earlier with Peak, but now I was dragging my friends and family down with me.”

Spartan Race was on life support. The business had quickly required three hundred thousand dollars a month in “fuel” or marketing spending in order to reach people and get them to races. This simply wasn’t sustainable even for someone who spent twenty years building a construction company and on Wall Street.

Out of money and with his staff down to a skeleton crew, De Sena made a desperate call to some former colleagues on Wall Street seeking financial help. Miraculously, he was able to raise enough money to keep the doors open and float the company for a few more months. It would require taking all of his remaining senior employees down to a meager monthly compensation, including the CEO and COO, but De Sena was able to convince the majority of them to stay on, if only for a little bit longer.

To say that building Spartan was a labor of love, is putting it mildly. It had been an all-out war for De Sena and his staff. Brutal hours, often with little pay, and the constant threat of bankruptcy hung over their heads like a guillotine.  And even after the struggle of 2011, Spartan Race writhed financially until investor group Raptor Group Holdings stepped in and put the company on firm footing. Even then, it took another year before Spartan was on solid ground. Staff turnover, the revamping of the marketing department and even finding office space, all took huge amounts of time and effort.

Spartan Race now projects to have 240+ events in 50 different countries in 2015, which will draw over 1 million global participants. With more than 10 million people participating in obstacle racing yearly, Spartan has only captured a tip of a very big iceberg when it comes to market share.  The future is incredibly bright for company once dismissed by almost everyone in the industry.

“After 34 years of running businesses and competing in ultra-endurance events as well as building a family, I’ve come to realize that it’s almost impossible to have success without adversity,” proclaims De Sena. “Building a business from scratch is one of the hardest things to do on this planet, keeping a business successful through all the ups and downs is equally as challenging. I have to admit I was unsure [Spartan Race] was going to work, but it’s hard to have rewards in life without risk.”

Just as all those people who have undergone the grueling adventure that is Spartan Race have learned, nothing comes easy. In business, as in life, those who are willing to get up and take another step, even when everything seems against them, are the ones who in end succeed.

One needs to look no further than Spartan Race for proof.

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