Marc Ackerman, Senior Vice President, Legal and Business Affairs and General Counsel at Tough Mudder, on thinking business at a fast-growing company, international expansion and risk management.
Tell us a bit about Tough Mudder.
Tough Mudder launched in 2009 and was founded on the philosophy that experiences are the new luxury good. In our founder’s vision, the Tough Mudder experience was based on the teamwork-over-individual-accomplishment ethos he learned during his military training. Tough Mudder events don’t have winners or losers; the events are about getting out there, pushing yourself through mental and physical challenges, bonding with friends, teammates and even strangers sharing the course with you, and then sharing a sense of accomplishment (and a beer) with the community you’ve built during the event.
When I joined in 2012, we had approximately 60 employees, and our business was putting on 10-12 mile races with approximately 20 obstacles (e.g., jumping into a shipping container full of ice, crawling through barbed wire, and navigating electrified wires) at venues across the country. Since then, we’ve grown from offering this one type of event towards something closer to a lifestyle brand. Tough Mudder’s customers increasingly consider the company to be part of who they are. Looking forward, we’re focused on transitioning from being something people do to something that people identify with.
As part of this expansion, we now run a wider range of events and have a presence in the United States, Canada, Germany, the United Kingdom, Australia and Mexico, with China and Dubai coming soon. We’re exploring other kinds of experiences as well, including television, video and training.
Beyond your title, what are your day-to-day responsibilities at Tough Mudder?
My role was initially focused on legal work. I was hired as general counsel to help build a full service in-house legal function. Day-to-day, I worked on building the department, transactional matters and legal risk management.
Over time, my role has become much broader and, increasingly, focused on overall company matters beyond legal. A few years ago, I took over our “People Department,” which includes recruiting, training, human resources, compliance, corporate culture, and engagement. I also joined what is effectively the company’s senior steering committee, which includes our CEO, President, CMO, COO, and CFO. The Steering Committee makes key strategic decisions about what’s on the horizon, what we want to focus on and how we’re going to allocate resources in order to help us get where we want to go.
Tell me about your legal department.
Besides me, we have two lawyers and an intern – I call it a “two towers” approach. One lawyer covers transactions, primarily helping the business people get their deals done. The other lawyer covers ongoing risk management matters, including litigation, intellectual property enforcement and insurance. It works very well, and explaining it like this, it sounds very mapped-out and strategic.
The reality was bumpier. Given the volume of work related to employment, intellectual property and disputes, we could have a legal department that is double our current size – and initially I went in that direction. Ultimately, it became clear that having specialists focused on one area of legal work wasn’t necessary. I pulled back to my “two towers” approach and the other lawyers transitioned to roles on the business side of the company.
How have you handled the legal side of Tough Mudder’s international expansion?
We’ve developed a “playbook” for entering markets outside the United States. The playbook focuses on a few main questions we need to understand about any new market – e.g. an understanding of labor law, advertising law and privacy law – that we’re willing to hire local counsel to solve and explain, if necessary. As part of this initial inquiry, we also look at how our operations need to adapt to take cultural differences into account – e.g., serving beer at the end of an event, having men and women participate together. The playbook has been a pretty efficient way to handle international expansion.
How do you manage the tension between your business and legal roles?
I play different roles throughout the course of any given day, so managing this tension is challenging. Primarily, I manage this tension by seeking clarity – both for myself and with others – about what role I’m playing at any given moment. When I’m asked a question, I pause and think to myself: What perspective is called for here? Is my colleague asking for my legal advice or my business judgment? Sometimes it’s quite clear because the businessperson actually indicates whether I should be wearing my business hat (“don’t give me a lawyer answer!”) or my legal hat (obviously taking into account business realities).
What was the biggest challenge when you transitioned from private practice to Tough Mudder?
Learning to balance my business and legal roles was one of the most difficult parts of the transition. As outside counsel, I always pitched myself as taking business considerations into account in my advice to clients – and, conceptually, I always did. But you don’t understand the full breadth of considerations until you’re in-house and tasked with making the decision…and you have approximately one quarter of the information you wanted to base your decision on, but you have to make a call anyway. It took me some time to get my sea legs.
Two things helped: First, our CEO (a brilliant, thoughtful guy) made it clear that he needed me to make decisions and just take my best shot. He advised me that nobody was going to fault me if I say “here is option A, here are the risks and benefits, and given that we’re a fast-growing, entrepreneurial company, here’s what I recommend” and then we take the risk and things ultimately turn out badly. What is a problem, he explained, was me just listing out options and not taking a position; without a recommendation, the wheels stop rolling.
We also developed a framework for measuring risk that takes into account both potential risk and the probability associated with that risk. For example, it’s theoretically possible that a Tough Mudder event could get hit by a nuclear weapon launched from Iran, but that risk has an extremely low probability associated with it, so it’s probably not worth taking any steps to try to mitigate that risk. We also take into account what it would cost to mitigate potential risks. Our analysis of potential costs is broad and robust; a cost can be anything from out-of-pocket dollars spent trying to mitigate the risk to what we’re giving up in potential revenue or growth by not pursuing the opportunity. Making a practice of understanding both sides of the risk equation has given me a framework for resolving the tension between business and legal perspectives when I’m making a difficult decision.
What advice do you have for in-house lawyers looking to become more business-focused in their current roles?
Transitioning from private practice to my role at Tough Mudder taught me something I probably should have known already: It’s crucially important to spend more time listening than talking. Practice empathy. Understand what your client is going through.
Practically speaking, this means getting off email, Slack, or whatever communication tools your company uses and actually walking across the floor to have a conversation with your internal client. It also means experiencing / using your company’s product.
Both approaches will inform the legal advice you deliver and enhance business-side responsiveness and trust.