I gave a brief talk and hosted a panel exploring startup success with founders of three exciting new brands - George Foreman III of EverybodyFights, Michael Schaeffer of NOBULL, and Bruce Smith of Hydrow - at this year's Sports & Fitness Industry Association Leaders' Summit. The Summit was a gathering of ~400 C-level leaders from brands, technology companies, venture / private equity investors, service providers and industry influencers that was covered by industry trade magazine SGB in this event wrap-up.

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(NOTE: this was originally posted on Essential Design’s blog)

"The big brands upstairs want to be downstairs with the startups; and the startups want to take their place upstairs."
- Overheard at a recent tradeshow

Over the past 15 years, 52% of the Fortune 500 has disappeared.

Let that sink in for a minute. Companies that have anchored our economy for decades have simply gone out of business, been acquired or shrunken to an unrecognizable size, to be replaced by technology-fueled disruptors - Google, Slack, Salesforce, Skype, Amazon, Netflix, Uber, Facebook - across every industry.

How did this happen? 

Disruptive Innovation. 

We're now in an Innovation Economy, where the only constant is constant change. As customer choice becomes nearly infinite and the speed of technology adoption increases daily, the rate of disruption in business will only accelerate. No sector is immune from disruption - especially the Sports and Fitness industry, where new brands have grown quickly by becoming incredibly meaningful to neglected, underserved customers in niches ignored by the mainstream. Each of the three companies represented on our panel has found great success in niches - Boxing, Rowing and CrossFit - and transcended them to become leaders of hot new growth categories - Connected Fitness, Boutique Fitness and Training Apparel / Footwear. 

Here are some of the most important factors behind their success:

1. THE RICHES ARE IN THE NICHES

Renowned industry analyst and sage Matt Powell of NPD says that "Small is the new big. The consumer is looking for new, fresh ideas. They're looking for new brands - something their friends don't have."

New brands with a strong, differentiated point of view expressed in their products and experiences have become highly sought after - first in a micro-community, and then by a large, growing consumer base. Lululemon started in yoga, but transcended the category to become the dominant player in athleisure apparel; Outdoor Voices has followed a similar trajectory. Carbon38 began as a retailer of new and unique fitness brands, and ridden the athleisure wave to become a major player. Strava began as an app to track cycling workouts, but now is used by millions to track and share their physical activity socially across more than 30 different sports.

“We started in CrossFit, inspired by Crossfitters who put in the work and don’t need gimmicks to help them get better. We now get orders from athletes in every sport - some of them pros with endorsement deals with other brands.”
- MIchael Schaeffer, NOBULL 

“Our goal isn’t to be known as 'the Peloton of rowing,' but the Nike or Lululemon of rowing.”
- Bruce Smith, HYDROW 

2. REINVENT THE EXPERIENCE - AUTHENTICALLY

Each of these high-growth brands has been able to successfully create a fresh, unique and elevated experience that is not only still authentic to their category but also sets the bar higher for every other brand in it. Their experience also attracts new people to a niche category they may never have thought of being part of.

“Boxing was seen as gritty and dirty. We took the “Fighter’s Workout” regimen that every serious boxer follows and put it into a premium environment that was less intimidating and accessible to more people. Authentic boxing anchors our community, and people just want to be in that atmosphere.”
- George Foreman III, EverybodyFights

“Rowing was one of the world’s most popular spectator sports, but now has an elite, prep school image. It is quantitatively and qualitatively a better workout, so our job is to deliver an authentic rowing experience but use technology to make it accessible to anyone.”
- Bruce Smith

3. PASSION + PURPOSE + CULTURE = A COMMUNITY OF ZEALOTS

Each one of these founders took their passion and vision to build a powerful brand culture around a clear purpose that has attracted a team of true believers in the company's mission. They see their primary roles as builders of community and head coaches of their teams, ensuring that their culture is the “invisible sun” that inspires and drives their growth. 

“Rowers are happiest when we move around in packs...we hire for cultural fit as much as we do for expertise.” - Bruce Smith

“Culture wins every day. Every conflict is your opportunity to define your culture. Respond to conflict in a way that makes you stronger.”
- George Foreman III

4. DIFFERENTIATE THROUGH DESIGN + BRANDING 

Leading companies in every industry have highly functioning product creation engines, able to reliably create differentiated products that express their brand’s unique POV and create consumer desire. Brands with loyal, raving fans - like Apple, Nike, Jeep and Spotify - are masters at this.

“Design plays a critical role in communicating our purpose and delivering the feeling of being on the water. We wanted a product that looked and felt different from everything else in our category, and even trademarked the term “Live Outdoor Reality” to describe it.”
- Bruce Smith

“We began with an ethos of “No Bullshit” that became the filter for everything we do. It is authentic to athletes in every sport that know that hard work and dedication make the difference for them. This mantra is our brand.”
- Michael Schaeffer

5. SPEED IS A SUPERPOWER

Startups have always been able to move more quickly than larger organizations because of their size. But even for small companies, ensuring that agility and speed create successful outcomes depends on their organizational habits and behaviors. Each of these companies has turned speed into a superpower that allows them to take more risks while minimizing their potential downside. 

“We run the company entirely around two-week sprints. Every other Friday afternoon, each department is responsible for sharing its progress towards key milestones. This has helped us turn speed into a competitive advantage.”
- Bruce Smith

6. D2C = DIRECT CONNECTION TO THE CUSTOMER

D2C is shorthand for selling directly to consumers via website or own-brand stores, without needing third-party retailers or distributors. These brands have all taken D2C a step further by building strong, lasting relationships with their customers by connecting with them directly.

“We have a very direct connection to our customers. Every single person in our team is customer service, and is accessible 24/7. Coming from big brands, where customer service was a separate department that sat in a different building, with no connection to our product, marketing or design teams, I now realize how critical this is to build strong and lasting relationships with our customers. I can’t see doing it any other way.”
- Michael Schaeffer

 

What do you think? What are some of the key factors for success behind your favorite high-growth niche brands? Let us know.

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David Knies is Chief Growth Officer at Essential Design.

Essential Design is a leading Innovation Strategy & Design consultancy. We work across the healthcare, consumer, and commercial industries, helping our clients conceive and drive to market comprehensive digital, physical, and service experiences.