INNOVATORS

How one entrepreneur got out of a $1.3-million debt hole.

The accolades were pouring in at the end of 5k Foam Fest’s first year in Canada. Despite a series of hurdles, including the bankruptcy of the U.S. entity that owned the brand name for the obstacle course races, the resulting poor press and the subsequent cash crunch, Jesse Fulton, the founder and president of 365 Sports Inc., knew he had a good product on his hands. “The feedback was so positive, the staff thought it had legs, I thought it had legs, everybody had fun and we actually raised some money for charity while we were at it,” he says. Just one problem: Along with the accolades, the bills were pouring in as well — $1.3 million of them. “Every single person and their dog told me to cut my losses and move on. But I was like, No way man, I’m going to figure this one out.”

Fulton’s problems really began when Round House Racing, the Utah-based company that sold him the Canadian rights for the 5k Foam Fest name, as well as a lot of the infrastructure needed to hold the races, went under in 2014. Already operating under a tight deadline, the bankruptcy came as a surprise, but perhaps it shouldn’t have.

A few weeks before the event, Collingwood, Ont.-based 365 Sports didn’t have the inflatable waterslide, fans, foam machines and other equipment worth about $250,000 that it had purchased through Round House. “We had to take working capital and buy a ton of our assets twice and had to express a lot of those obstacles into Canada,” Fulton says. “Shipping a 4,500-pound slide air freight is not cheap.”

Despite the bad PR — Round House’s bankruptcy made Fox News and Fulton got thousands of calls and emails from angry Americans who had registered for events in the U.S. that were being cancelled without refunds — he says he couldn’t change the race’s name as he had already spent $50,000 on branding. Flags, tents, banners and even the medals bore the 5k Foam Fest name.

Fulton, at least, was used to encountering obstacles. Before starting 365 Sports, he was a pro snowboarder for 13 years, coached the Canadian Olympic team at the 2010 games and founded Shreducation, a training program that produced 28 national team athletes and more than a dozen Olympians.

The original idea for 365 Sports was to operate a multi-action-sport facility, but later morphed into hosting action sports events, which led to opportunities to do some consulting, branding, concept development and experiential marketing. In turn, Fulton came across an opportunity to jump into the fun run market by licensing the 5k Foam Fest name. “Fun runs and obstacle course racing is the fastest- growing participatory sport in the world,” he says. “It’s now bigger than triathlons and marathons combined; 15 to 20 million people a year do it.”

Fulton’s first race in London was a desultory affair, but the second one in Toronto came within minutes of not being held at all when the venue’s landlord pointed out he hadn’t received his $20,000 fee yet and if he didn’t get it later that day, the event was off. Fulton had some funds he could draw upon, but getting them would take a couple of days. “Our intern pipes up and goes, Hey, I just got approved for a $20,000 line of credit. Let’s go to the bank and grab it,” Fulton recalls. “We got it to the guy with six minutes to go.”

The company didn’t make any money on the obstacle races during 2014 and ended up $1.3 million in debt, but Fulton managed to assure suppliers and creditors that he could turn things around. For 2015, 365 Sports bumped the number of events up to 12, got some sponsorships to balance out the overhead and managed to get to a breakeven position and pay off some of the debt. This year, the company, which has 15 full-time staff, 35 full- time summer students and hires an additional 1,500 part-timers for the events, plans to host 14 races.

Fulton says the company still owes money, but it’s now a manageable amount and he’s investing in new event properties, such as acquiring the activation rights and part-ownership of the Obstacle Course Racing Championship, which hosts 7,000 athletes from 30 countries to make it the biggest such event in the world. He’s also buying more infrastructure, including a 1,000-foot slide that will tour six Ontario locations this summer, setting up a marathon in Australia and designing a new office/warehouse space. “I love the adrenaline of the events and the creativity we can put into it,” Fulton says. “As long as the phone keeps ringing with new opportunities, I’m a happy camper.”