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Volume 22 No. 28
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The $5 billion startup

How Under Armour founder Kevin Plank maintains the culture of a challenger brand

Under Armour founder and CEO Kevin Plank has a riposte for all those marketing authorities with Harvard and Wharton degrees or pedigrees from companies like Procter & Gamble and Coke.

“Branding can’t be taught,” declared Plank, who in a little more than 20 years has built both a $5 billion company and a trademark that can compete with Nike and ESPN as sports’ most indelible.

Kevin Plank is shown 20 years ago when he launched Under Armour in the basement of his grandmother’s house.
Photo by: Under Armour
Inside his capacious office above the North Shore of the Baltimore Harbor, Plank is arguing heredity over environment, citing a credo from David Mamet’s play, “Glengarry Glen Ross”: “Salesman are born, not made.”

“Brand is something you either have in your DNA or you don’t,” Plank said. “You can be taught some of the exterior [branding] stuff, but the idea that everything matters to a brand is the most important — and nobody teaches that. Nothing should be an accident; every single thing matters, and that is the nuts and bolts of everything here.”

Call it the “Cult of Kevin.” At Under Armour’s headquarters in Baltimore, the former Maryland football walk-on turned billionaire now serves as tactician, preacher, financial strategist, product designer, coach and visionary. Like any leader, Plank engenders passion and shares it with his followers. With revenue approaching $5 billion, there are plenty of believers.

“You only have to watch Superman once to realize he’s special, he has a big logo on his chest, and he flies around the world and saves people,” said company co-founder and current CMO Kip Fulks, tongue not entirely in cheek.

“From the beginning, we always wanted to make the brand feel bigger than some guys working out of [Plank’s] grandma’s basement. That forced us to think brand first and that has lasted.”

Around the time of the 20th anniversary, Steve Battista, senior vice president of global creative, is also thinking about continuity, since he was one of Under Armour’s first 20 employees. “When a founder/CEO is packing boxes and doing every detail himself to make sure it’s done right, you tend to do that yourself,” Battista said. “There’s still

a lunch-pail mentality here. [UA endorsers] Misty Copeland and Steph Curry have changed the mindset a lot, but still the first thing that comes to mind is an authentic gritty brand, which is kinda cool. The hard thing now is to make sure that culture continues to translate.”

Consequently, while Plank is happy to talk about footwear sales, which grew 57 percent in 2015, or the company’s investment in “connected fitness” technology, which he has promised Wall Street will be a $200 million business by 2018, brand and culture are still two of the favorite topics for the man who notably pioneered the performance athletic apparel category, but also built the foundation for a company that has posted 24 consecutive quarters of 20 percent-plus growth.

“I’m looking at 12,000 employees and 850 [job] openings this year,” Plank said, “so maintaining the culture is paramount. Strategy is critical, of course, but culture eats strategy for breakfast. We have great resources now, but anyone that believes they have unlimited resources is wrong. You’ve got to still want to be the underdog. You could say we’re a pretty big startup at this point, but we still have only a fraction of the resources of our competition [Nike].”

Defining culture

Even as he was designing and executing plans for his first performance T-shirt, Plank was building a brand that could cast Nike as the stuff your parents wore.

“Other competitors went less in your face, but the first thing [Under Armour] did was challenge Nike unabashedly with ‘Protect This House’ and ‘Click Clack,’’’ said Schutt Sports President and CEO Robert Erb, who butted heads

The company’s campus now spreads along the harbor in Baltimore.
Photo by: Under Armour
with Nike while he was CEO at Adidas America in the 1990s and Fila in the early 2000s. “After the original [performance] super hero T-shirts, they didn’t have great technology or IP, just really good messaging. They found the right voice quickly and used a licensing model to build distribution faster than any Nike competitor had.”

Authenticity is the biggest essential in sports marketing. With the right voice and a strong brand, no one ever challenged Under Armour’s validity. The high school footballers that Plank grew up among adopted the brand right away, because it was a Plank whiteboard maxim: Talk like athletes talk.

“The key on the marketing side has been to make sure we’re not talking to ourselves,” said Battista, who helped write Under Armour’s first television brand campaign in 2003 (see story, Page 21.).“If we stay on the young side with kids and the athletes, others will follow. The biggest challenge now is to make sure we focus there.”

Getting buy-in across 12,000 people may be Plank’s most imposing effort since having to initially convince a generation that cotton was the enemy.

“Kevin was the target consumer when he started the company,” said North America

President Matt Mirchin, who joined Under Armour in 2005. “Now we rely a little more on research, but he still does a lot of things by instinct, and generally he does things differently than what a marketing textbook would tell you. That’s one of the reasons why he’s been so successful.”

Still from one person to another at Under Armour headquarters, you hear the doctrine that Under Armour is still Avis to that much bigger Hertz out in Beaverton, Ore. “We’re still a challenger brand,” said Ryan Kuehl, vice president of global sports marketing and a former University of Virginia football player who joined UA in 2009 after playing 12 years in the NFL. “Our competition is much bigger and that’s the goal, so how could we not have a challenger mentality?”

Added Sports & Fitness Industry Association President and CEO Tom Cove: “As Under Armour has grown from small to big, its ability to infuse the whole company with its values has really been one of its strengths. People there know what the company stands for. The other thing is that some leaders struggle with vision when their company is in trouble. It’s underestimated how important it is to maintain vision when success comes at you, and Kevin has done that well.”

Numbers game

Mushrooming sales aside, there are still some numbers Under Armour wants to erase, or at least change. The apparel/footwear mix now is 90/10 and 80/20 is within sight. Beyond basketball, where Curry has turned it around, Under Armour still has a lot to prove in footwear.

“They got this great cachet with a generation that didn’t really want to continue with Nike,” said Erb. “Yet you look at those same consumers’ feet and the swoosh remains on them.”

Stephen Curry has fueled footwear sales, but Under Armour still has plenty of ground to make up.
Photo by: Getty Images
Nonetheless, Mirchin stresses, “we really do believe our footwear business will be bigger than our apparel business in the near future.”

Offshore sales are another area where Nike has a huge advantage, with about 55 percent of its sales coming from outside America. Plank said foreign sales have grown by more than 60 percent over the past year and should account for 14 percent of Under Armour’s total by year’s end.

The goal? “We want to be a global brand; by definition that means more than half of our revenues should come from overseas,” said Plank, without stating a target date.

Nike’s revenue is around six times bigger than Under Armour. Sales of Nike’s Converse footwear brand alone are $1 billion more than Under Armour’s shoe sales. Still, the comparisons are inevitable. The distance between Nike and Adidas was once as yawning as the distance between Under Armour and Nike is now.

Peter Ruppe, Under Armour senior vice president of footwear, has worked for both brands. He grew up with a father who was a football coach, so he knows all about the team approach.

“Nike’s not a team sport culture; Nike is a runner’s culture,” Ruppe said. “Both companies are hypercompetitive, but we’ve been the challenger brand and still are. Their horizon is more of the monopolist: how can they use their scope and power to control the market. To me, it still feels like a startup. How are we gonna get better … by maintaining that mindset.

“In a lot of cultures in corporate America, you are driven to perform well because the hierarchy is telling you to do

so and there’s a little bit of fear in there. I work my ass off here, because I know everyone around me believes in the same possibilities.”

Still, Under Armour may be more analogous to another brand that started on athletic fields, uniquely solved a problem with an innovation, and grew through seeding in the grassroots and athletic trainer community: Gatorade. Of course, there’s one big difference.

“We had Michael Jordan to help with Gatorade’s growth,” said Jeff Urban, former Gatorade senior vice president of sports marketing and more recently co-founder of youth sports programmer Whistle Sports. “It remains to be seen whether [Under Armour endorsers] Jordan Spieth and Steph Curry do as much for Under Armour, but anything that helps them break through all the marketing noise out there helps.”

Kerry Chandler, Under Armour’s chief human resources officer, has worked both for former NBA Commissioner David Stern and Plank. She has told both of them that working for the former man was a prerequisite for working for the other. Fortunately, they both laughed. As for comparisons of the two leaders? “They can both see possibilities years ahead that most people don’t see at all,” said Chandler, “and after that, they see ways to get things done in ways most people wouldn’t either.”

Digital domain

Mike Lee launched MyFitnessPal 10 years ago as a Silicon Valley startup and didn’t have much interest when Under Armour called in late 2014, seeking to acquire the health-tracking app.

Plank convinced Lee to visit Baltimore.

“We fell in love with the culture ­— everything from the train that runs through the middle of the campus to the cafeteria being named ‘Humble and Hungry,’” Lee said. Still, “I knew Under Armour was a fast-paced company, but I still thought we’d have to get used to more bureaucracy, but man, we are going faster than we were as a stand-alone startup.”

The nascent wearables market and the eventual transformation of fitness into connected fitness per se has Under Armour investing more than $710 million in apps like MapMyFitness, MyFitnessPal and Endomondo. Under Armour’s HealthBox suite of a wrist fitness tracker, heart rate monitor and scale feed data to those apps.

“So far, connected fitness has been all about sensors, data and gathering, but consumers want to know what that data will do for them,” said Kevin Haley, president of product and innovation.

Plank is confident the connected fitness business will mean every sports record will be broken soon. If Under

Pedestrians walk past an Under Armour store in Shanghai. Foreign sales should account for 14 percent of revenue by the end of the year.
Photo by: Getty Images
Armour can make headway in the health care business, it’s an entirely different position, and a different multiple.

“Big sports brands pay athletes, buy teams, and they make and sell stuff,” he said. “We can do that too, but if our product could make you feel better, that’s a much more powerful proposition.

“So the challenge I give our team at every product session is not ‘how are you going to do when they [Nike] come up with their new upper, it’s ‘what are you going to do when Apple or Amazon or Google start making shirts and shoes?’ And I absolutely believe they will.”

Technology and billions in sales aside, some of the originals will say that things haven’t changed much.

“When we were on Wicomico Street [2000-02] I remember Kevin saying that when we get big — meaning like $20 million — we’ll be able to blow off afternoons and go play golf,” Battista said. “That never really happened. In fact, the pace picked up.”

Fulks is another one who insists it still feels the same as when every investor could fit into grandma’s basement.

“Twenty years ago, I was coming in every day thinking ‘I have too much shit to do,’” Fulks said. “I feel like that today. We’re still trying to boil the ocean here.”