2XU (pronounced ‘Two Times You’) was started after former professional triathlete Jamie Hunt turned his passion for athletics into an obsession with performance fabrics. Together with two business partners, Australian clothing veteran Clyde Davenport (founder and past owner of Davenport Industries) and marketing specialist Aidan Clarke, the trio formed 2XU as a technical sportswear company, based out of Melbourne, Australia.
Starting out as a run and triathlon-specific sportswear brand in 2005, 2XU has grown to become a leading technical sportswear brand – billed as ‘the world’s most advanced technical apparel company’. In the dozen or so years since it was formed, 2XU has undertaken a number of step-changes. These include 2XU’s acquisitions of former distributor operations in the USA and UK, and securing an investment by L Catterton the venture capital and private equity firm.
To find out a bit more about the brand and its plans, we spoke to 2XU co-founder Jamie Hunt…
endurancebusiness.com (EnduranceBiz): Tell us a little bit about Jamie Hunt the person!
Jamie Hunt (JH): I was born and raised in New Zealand. At the age of 13 I did my first ever triathlon and instantly fell in love with it. By the age of 17 I was the New Zealand junior champion and I decided at that stage I wanted to become professional, so I spent the next three years getting ready for that. When I was 19 and 20 I won the junior world duathlon championships and after that I embarked on a career as a full-time triathlete.
I got as high as number 3 in the world in the ITU rankings and then at the age of 29 I decided it was time to hang up my running shoes. I had my third child on the way and I decided it was time to get a real job. I started working with Orca and I was there for four years, and then I started up 2XU.
I’ve got a wife and three daughters and I’m based in In New Zealand, but I commute to Australia every week for work.
EnduranceBiz: How did the three main co-founders [Jamie Hunt, Aidan Clarke and Clyde Davenport] get together? Please talk through how 2XU came about.
JH: Aidan and I met working at Orca and we met Clyde, who was a specialist in licensing products, when the owner of Orca was interested in licensing the Orca brand to Clyde. To cut a long story short, the owner of Orca backed out at the last minute and Clyde approached Aidan and I and said, ‘why don’t we start up our own brand?’.
Aidan and I were ready to leave Orca and thought, ‘why not, let’s give it a shot’. We moved to Australia and set up 2XU; and what’s great about the three of us is that each one of us has our own unique skill set. Our weaknesses are always overshadowed by someone else’s strength. We’ve always respected each other, got along really well and understood each other’s point of view; and to this day, we’ve never really had a big argument over anything and that’s been a testament to all three of us. It’s been a great partnership.
EnduranceBiz: How has 2XU as a business, and as a brand, evolved over the years?
JH: From the very start we had a very clear mandate that every product we created had to ultimately enhance the athlete, so from day one that’s always been really important in everything we create. Over the years you slip and slide around that fact but ultimately to this day, performance always comes first. We’ll never let fashion or other things get in the way, obviously they play a part in making our products look good, but performance will always come first in whatever we create.
Having that mandate has always been a really good guide to whatever we create and a really important factor for our brand.
EnduranceBiz: 2XU has made big strides in the compression category. Do you see this as the core focus of the brand?
JH: Compression is definitely one of our few core focuses. It’s the one area in which we have a really clear space in the market. We’re definitely the market leader for compression, both in sales and in innovation and technology. It’s one thing in which we are relentless in pursuing excellence.
Obviously we have other goals – we want to grow outside compression and have an impact in other categories – but right here, right now, compression definitely takes up most of our energy and our time and we definitely see it as a massively growing part of the market. Hopefully we can continue to increase our sales as a result.
EnduranceBiz: The 2XU business does appear to have gone through a number of step changes. The acquisitions of key distributors [Sports Multiplied in the US, and TCL in the UK] seemed to mark particular turning points. Can you talk through how these deals came about?
JH: In most businesses there comes a point in time where you have to acquire some of your distributors. We play in a very highly margined business and to have an extra margin in the supply chain can often interfere with having a profitable brand and having retail price points that help sell the brand.
As a brand we want to invest in particular markets; and the US and UK are both very important markets to us, but in both cases it was the distributor who came to us and said, ‘we think it’s time you take over’. In both cases we took on their teams and their staff and looked after them as well.
EnduranceBiz: How did the investment by L Catterton [formerly L Capital Asia] change the culture and business momentum for you?
JH: Not a lot. Definitely in the first couple of years they weren’t overly involved in the business. In the last year they’ve got a lot more involved and have definitely been a major instrument in our growth in Asia. They have very strong connections in the Asian market and have helped us grow that market.
It’s our fastest growing market and we see a big future for 2XU in Asia. They’ve added a lot of expertise to many parts of the business including finance and overall governance. We have board members from L Catterton who bring great insight from the business world and it’s been a great partnership. Not once have we felt they’ve inhibited our growth, it’s always been a great working relationship.
EnduranceBiz: How widespread is your distribution globally?
JH: Pretty widespread, and probably more than it should be. We have a lot of distributors in smaller markets; and as we grow as a business, sometimes these markets can be a distraction. All the major countries are covered with the exception of South America. Other than that region, we have great distribution all through Asia, Europe and the northern parts of America.
EnduranceBiz: Your business has a number of retail store operations. Can you talk through this more capital intensive move for the 2XU brand? How has your vision evolved for store retail given the big shift to online for consumers?
JH: We definitely feel like our stores give our consumers a real taste of 2XU. With a lot of specialty stores going out of business and big box having more of a say, and the same with online, we want our consumers to have a 2XU experience; and the best way to do that is through your own stores.
Especially in Asia, retail stores are a really important game. In the US the retail sector is getting hit in a big way; but in Asia there’s a growing middle class and people still go to malls. As far as being capital-intensive, we’re a very cash flow positive business and we’re investing into these stores but it hasn’t really been a strain because all our stores become profitable very quickly. So, if anything, retail stores have been a great marketing tool as well as a great finance tool.
EnduranceBiz: How about other retailer partnerships; who are 2XU’s key third party retail partners and what do you look for when working with retailers?
JH: We have various partners throughout the world. In Australia and New Zealand, we have Rebel, which is our only real big box sporting retailer; and we have a very tight connection with them. In the US we used to have a few big box retailers, some of which have gone out of business and some we’ve left because it hasn’t been the right model for us.
We have connections with major chains in Scandinavia and in the UK as well. In Asia there are no real chains that we’re involved with and ultimately that’s why our own retail stores are very important in the Asian world.
EnduranceBiz: Do you see any specific challenges or opportunities in the online retail space? For example, how do you see the rise of Amazon alongside specialist retailer Wiggle – as key providers of endurance sport apparel?
JH: There’s definitely a space for online retailers. There are many parts of the world where you can’t buy 2XU so having a strong online presence at least gives us access to consumers. The hardest part with online retailers is keeping prices at an acceptable level. With Amazon they’re a great partner but they do price-beat other retailers – so managing that takes energy and time, but if we can keep that under control they’re definitely a great partner to have.
EnduranceBiz: Last year, 2XU confirmed its multi-year sponsorship of USA Triathlon to 2020. How important is this relationship for your US business?
JH: It’s very important and one of many great partnerships we have. Triathlon is still a very important part of our business and we never want to let go of our heritage in that sport, although it’s a very small market overall.
We have a new relationship with Life Time Fitness in the US. We’re also about to announce a number of major new partnerships worldwide and they’re all very important to the business.
EnduranceBiz: How do you balance sponsorship of governing bodies with athletes and individual events? Which works best for you? How do you see the sponsorship model evolving?
JH: I think over the years sponsoring national teams has been a better investment. You can get a lot more coverage out of athletes especially at events like the Olympic Games, Commonwealth Games and world championships but you can’t really form that unique partnership and advisory relationship on making products, which comes through personal relationships with athletes.
We owe it to sports like triathlon to invest in the athletes. As triathlon’s largest sportswear company, we feel we have a responsibility to look after some of the sport’s key athletes because they help us and our growth. I wouldn’t say sponsoring professional athletes gives us a lot of leverage but it’s definitely an important part of our mandate. Sporting organisations can be good marketing partners and also good finance partners.
EnduranceBiz: How important is social media to your business? Where are you currently getting the most traction? Facebook, Twitter, YouTube, Instagram?
JH: Social media is very important to the business, and we still have a lot of work to do in this space. Globally Facebook is our biggest social media community but we also see Twitter, YouTube and Instagram as very important platforms to engage with our consumers and we definitely want to continue to grow these audiences worldwide.
EnduranceBiz: What next for you and 2XU?
JH: We’re currently embarking on some really large product development studies. There have been a lot of studies in the past on fabrication; but we’re taking it one step further to understand how fabrics work with the human body. We’ve got a three-year study going on at the moment and we’re learning a lot of amazing information from this which will be fed into our products, from compression through to triathlon.