Small Business Design From the ground
Small Business Design retrospective – Meeting Kevin Plank, CEO of Under Armour I had the privilege and honor of meeting Kevin Plank, CEO, founder and president of Under Armour at a recent talk at The Darden School of Business. In a word, he’s the real deal. His speech was memorable to say the least and I wanted to share some of the background of his company and talk about some of the points specifically related to small business design and small business architecture. Kevin gave us the retrospective look at his business. From his humble beginnings in the basement of a Georgetown apartment to a current enterprise valued at a market cap of $1.5 billion dollars, Kevin is fearless, tenacious and embodies the true entrepreneur grit.
Kevin started as many businesses do, with a problem. The problem Kevin solved was that athletes didn’t have underwear that performed at the same level as the rest of their equipment. Cleats, jerseys and helmets had evolved but the trusty cotton tee-shirt’s days were number back in the late 90’s when Under Armour was founded. Cotton sucks up sweat and perspiration and doesn’t let go. Cotton can multiply its weight many times over when it absorbs liquid which makes for a very unpleasant and distracting experience.
With space-age fabric that doesn’t like wetness and a form fit for function, Under Armour had created a as-yet untouched niche in the market. Identifying a market niche is fundamental step in the design process of building a small, or in this case, big business. I want to try to capture some of the insight that Kevin shared with us the other day and relate his philosophy to this forum. Kevin stumbled into a problem as many successful start-ups often do. There’s a more scientific way of going about this, but luck can’t be discounted in the case of Under Armour.
One of the most striking pieces of nuggets that Kevin shared with us was this mantra that he seems to have deeply internalized: “I was too smart to be naive enough to not know what wouldn’t work”. This speaks to the fearlessness that is necessary for a successful start-up and Kevin absolutely embodies this notion. If you’re small, for God’s sake don’t look like one! Kevin had some sage advice for start-ups that everybody should consider carefully. Kevin talked about the early days when he carried two business cards. When he was selling product and trying to get purchase orders, his card read: “Kevin Plank – Sales Manager”.
When he was trying to negotiate a better price or terms for raw material his card read “President and CEO”. This is an important point. When you’re trying to make a deal there is NOTHING that screams “SMALL START-UP” louder than having “CEO” on your business card. There is a time an a place to espouse yourself as the owner and head honcho, but in front of the customer is not the time! If you strut into the customer’s office as the “CEO”, you’re the guy… buck stops with you. There’s two problems with this. First, as I’ve already mentioned, you’re screaming that your company is run out of your garage.
Second, what are you going to do when the guy wants a better price on his first order of widgets? If you’re the CEO, you have to negotiate. If you’re simply the District Sales Manager – “Hey, there’s nothing I can do! The old man up at corporate is a son-of-a-bitch and won’t let me budge on prices!” Who’s in your Network? Who’s the Decision Maker? Kevin talked extensively about his personal network and getting to the decision makers in the organization. In his case, the early adopters of the Under Armour were the equipment procurement managers on sports teams.
The really brilliant thing about Kevin’s strategy is that in the early days, he was the big fish in a really small pond. Who cared about underwear? If your product initially doesn’t have a competitor this is GOOD! One of the easiest things to accomplish with a business is to sell into a market that is woefully under served with a product offering that is clearly superior. This is exactly what Under Armour did and it was successful. Very successful. The really interesting thing, to me anyway, is that Under Armour has been able to parlay a superior solution to a systemic and fundamental problem to a wider reaching brand that is recognized world-wide in a variety of adjacent markets as a MARKET LEADER!
The networking piece that led to this pervasive success was Kevin’s leveraging of personal relationships that went viral. Initially Kevin realized through product trialing, that his product didn’t just solve a “football” problem, but rather it solved a general athletic problem. By giving out samples of his product to his football friends, word spread into adjacent markets beyond his initial target. This viral spread was the result of his football friends sharing product with baseball friends, lacrosse friends, soccer friends, etc..
This was the embryonic beginnings of a brand that upholds the promise of superior performance and innovation. The Future of Under Armour The really interesting thing about Kevin’s speech was regarding how he felt about the future. It was almost shocking to me. Kevin told us that he felt that Under Armour hadn’t yet developed it’s defining product! This is incredible if you think about it! How you possible think that with years of 20%+ compounded annual growth, annual sales in excess of $750 million dollars and a market cap of $1.5 billion dollars you hadn’t found your defining product yet? Personally, I think this is the innovative dimension of Under Armour’s culture. Kevin has the Under Armour story right. He’s managed to move the company from a point of having an innovative product to having a solid brand promise. This creates the space in the market to continue to introduce products that redefine the category. For example, Kevin talked to us about a very paced, deliberate and systematic entry into the mega-lucrative running shoe market.
He shared the advertising campaign with us and it’s innovative and progressive to say the least. Key takeaways relating to Small Business Design Stumbling into a niche market sometimes happens, but don’t leave this to chance. Do the market research!Think about your personal network and channels that you have access to and leverage them!You have to have a bit of grit and tenacity but you don’t have to be a daredevil!Don’t underestimate your company story and have heart! Underwear? Think about it, so what? Have a story and remember the brand promise.
