2XU’s brand name means ‘multiply your performance’ which could as easily apply to the firm’s success over the last nine years, from startup to US$100 million in sales, including to most of the USA’s pro ballers – RISING asked Jamie hunt what lessons would crossover into other ventures?
Stay Focussed On The Product Once the Honeymoon period of a startup is over, it’s common for brands to pile lots of resource into brand extensions and marketing drives into other categories. But that can be a risky strategy, Jamie Hunt tells RISING. He has always kept the focus on delivering to a single, specific customer. ‘We’ve always asked with every product: “Is this product market-leading and will it help the athlete go faster?”’
It sounds simple but even Hunt says there are times where it’s easy to get distracted. ‘Our product must have some difference to our competitors, we’re clear on that. As you get bigger and bigger as a company, it becomes harder to manage that.’ So, how has 2XU stayed on course and what can we learn from its example?
Stick To Your Guns Every team in the NBA and all but five teams in the NFL buys compression wear from 2XU, as well as most of the major league baseball pitchers, and notable players in the EPL. But as you become a trend you often come under fire – the media has recently picked up on a study questioning the benefits of compression wear itself. ‘Well, what is compression?’ Hunt asks. ‘The problem that we have as a company is that we make fully certified, medical-grade compression for sportswear – but some companies just put the words ‘compression wear’ on products. For years we have been trying to form a regulatory board to regulate the use of the term,’ Hunt says, pointing out that 85% of studies into compression have shown it does have benefits.
Our latest study has shown our compression wear lowers heart rate, increases blood flow and improves endurance
Find Clear Space You don’t grow as fast as 2XU have without having a clear competitive advantage, which started with their patented, circular compression net tech. ‘It’s 100% about being innovative. You have got to find that clear space in business – we try and find area where we can have clear space and a different voice to communicate our advantages rather than just becoming a ‘me too’ brand,’ says Hunt.
While 2XU has been growing there has been an explosion in the instagram-driven ‘athleisure’ market, something Hunt cheerfully says has been nothing to do with them. They have single-mindedly focussed on performance sportswear, instead. ‘We have a great fabric team, we really know which parts of the market are lacking in innovation and we go after those. In compression we clearly have the market leadership, we have now got to a scale where we can do deals to buy yarns at a better price, so we definitely have the leading proposition in the compression industry.’
Keep Pushing The Boundaries Even After Success Many start-ups arrive with a brilliant idea, which they then rely on to grow. This is fine but you shouldn’t expect it to take you all of the way – researching new solutions is vital for innovation and keeping your USP intact. ‘We invest a lot of money into our technology,’ says Hunt.
‘In the last three years we have spent well over $1 million on our research with AIF and also Australia’s leading textile University. We have a full-time person who works in the University doing studies on our fabrics, and at the Institute Of Sport in Canberra we have a full-time exercise physiologist doing studies with the athletes. For our next compression products, coming out next year, we have a whole new evolution again of our fabrics and technology, so we are always pushing the boundaries.’
Don’t Underestimate The Margins You’ll Need When 2XU started out the pricing of the products may have seemed steep to some, but this has meant they could grow in a different way. ‘We’ve definitely didn’t want to be a brand that’s a high-volume, low-margin business. We’d much rather sell fewer great products and make more margin so we’ve always been a profitable company.’ Hunt says he sees a lot of smaller brands doing well but not understanding how high margins need to be in order to grow.
‘People in small businesses don’t understand that you need to make a good margin to go to the next level – that’s the handicap of most businesses out there. To go from that honeymoon period into being a business where they have to hire accountants, get legal advice, get a bigger office, go to trade shows – it eats the money up.’
Show Integrity To Build Customer Trust If you find yourself at the cutting edge of a trend, as 2XU have, then it pays to have some heavyweight, credible partners to hold you to account. ‘By having the government-owned Australian Institute of Sport as a partner, they have definitely held us to a point where everything we claim in benefits they’ve completely ratified. So in some ways customers believe what we say because we’re not making these far off claims,’ says Hunt.
Grow Well One of the biggest challenges when growing from a startup to a medium-sized business is the cultural one. ‘You go from this real lean business where you can oversee everything that gets made into this much bigger business where you can’t be across things every single day. You can lose a bit of the brand integrity here and there and then obviously when you scale up you have to hire and fire – it become more corporate,’ says Hunt.
How hard is it to balance protocols and manoeuvrability? ‘We went through that phase of being a startup becoming more corporate, and now it’s even coming back to having something in between the two. Still being flexible, manoeuvrable, still being quick to market but having protocols in place to report to the board that we are doing things properly. Straddling that middle ground is the hardest thing, but it allows you to have the best of both worlds.’
WHAT NEXT? One of the uses of compression wear is to lessen post-exercise muscle soreness. It works for RISING but the latest research also says beetroot juice can help – read our full report.
Follow the writer @mattfitnessray
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