Without investment, turning a million dollar idea on paper into reality is nothing more than a dream. Or at least, that’s usually the case. Tough Mudder, the military-style endurance experience, where competitors looking to test their physical and mental limits can tackle 24-hour, 5km muddy obstacle courses that require them to run, jump, crawl, climb and swimming, was the exception. rule.
Its founder Will Dean, a former British counter-terrorism officer, was forced to self-fund the obstacle course after investors couldn’t understand why anyone would pay to undergo such torture.
“We found a little ski hill in the middle of nowhere in Pennsylvania, built a website and then all of a sudden we were selling tickets and I realized I didn’t need to raise money,” he recalls to Fortune. “We sold 5,000 tickets in three weeks, so it turns out they were wrong.”
Tough Mudder has become one of the fastest-growing sports and “team bonding” activities in the United States, bringing in more than $125 million annually in 2017, according to report Financial Times and over 6 million people have completed the obstacle course since its launch in 2009.
But in 2020 the company fell into administration following various disputes and was sold to Spartan.
Two years before everything fell apart for Tough Mudder, Dean made “millions” from his idea, bought a new house and after “three months of real rest” began brainstorming his next venture.
The British entrepreneur’s second moment of enlightenment came during a family day out with his two children on a VR experience on a rainy Sunday afternoon.
“I ended up with motion sickness,” he recalls, adding that it led to him vomiting in a bin at the Swansea shopping centre.
“If virtual reality is successful and people do it, however, in my experience, it’s antisocial, not fun, and makes me feel bad – you can’t help but think I could do it better.
“After I finished Tough Mudder, which was about bringing people together through sheer physical effort, I thought to myself: I wonder if I can create some kind of business that uses technology in a similar way to create shared memories?”
Nine months later, he brought on board David Spindler, another Tough Mudder veteran, as co-founder and CFO and built a simple prototype for what is now Immersive Gamebox in a warehouse in north London.
All of the games, which currently include those based on Ghostbusters, Black Mirror and Paw Patrol, put players in the heart of those fictional worlds with rescue missions and virtual villains displayed on touch-sensitive walls, paired with surround sound and motion detectors. —headphones are not necessary.
But Dean would have to impress investors to get his idea off the ground.
“With Tough Mudder, you could sell the ticket before you built the thing,” says the Harvard Business School alumnus. “With this business, you have to build the thing before you sell the ticket.”
How it literally pitted investors against each other
The entrepreneur spent days seeking funding for business idea number two, a London-based immersive group gaming experience, before offering investors the chance to go head-to-head in a live demo.
He emailed venture capitalists inviting them to test the game for themselves, demonstrating that he knew “a thing or two about running live experiences and selling tickets.”
“I’m not Elon Musk, but because I created Tough Mudder, all the major funds were willing to come and at least see what I was doing,” Dean says. “The idea was to make sure they got a high score and then they would post-rationalize everything.”
The CEO staggered each company’s nomination, used the company name as the team name, and ranked the scores in a public leaderboard.
“It was very intentional,” Dean adds. “Look at all these other people: If you don’t invest, one of these other people will.”
It worked. Investors poured $3.5 million into his venture, and the startup officially opened its doors in October 2019.
Since then, it has raised $65 million to date from backers including Index Ventures and Sweet Capital; she has teamed up with the likes of Netflix for a “Squid Game” experience; and has expanded beyond the UK to over 25 locations ranging from the US and Dubia to Australia and Berlin.
Today, 1.2 million people have tried the live gaming experience and the plan is now to open 1,000 sites by 2028.
“It creates this fear of missing out”
The reason Dean’s investment hack worked isn’t just because getting a high score stroked the egos of venture capitalists playing Immersive Gamebox (though, he admits, that helped).
It’s because they could see whose business they could lose, and that’s something any entrepreneur can emulate.
“You have to create this sort of fear of missing out,” Dean says. “I remember someone saying, ‘Greed starts negotiations, fear ends them.’”
So how can an aspiring entrepreneur instill fear in big investors?
Dean has a few tricks up his sleeve: showing up at a presentation with the wrong investor’s name on the deck.
“Say, ‘Oh, I’m sorry, but the presentation is named after one of your competitors anyway,’” he laughs. “I don’t know how it happened.”
In the past he has even emailed investors the wrong email, before quickly sending a follow-up note saying, “Please ignore that email intended for someone else.”
“Things like that aren’t a bad way to create a little competitive tension,” assures Dean.