"I have no doubt there’ll be books written about Kevin. He's every bit as legendary an entrepreneur as Steve Jobs or Elon Musk or Richard Branson."
The above quote is from an Under Armour executive talking about why those inside Under Armour (NYSE:UAA) have so much faith in founder Kevin Plank. Under Armour eclipsed the $3 billion annual sales mark for the first time last year and overtook Adidas asthe No. 2 athletic apparel brand in the U.S. behind Nike. Thecompany has posted 23 quarters in a row of more than 20% year-over-year sales growth. Here's how founder and CEO Kevin Plank made Under Armour so successful.
The man under the Armour
At the helm of this high-growth company is Kevin Plank, an innovative and passionate entrepreneur, and also a fighter who has worked for years to get UA to where it is today. Under Armour will turn 20 next year, and that's 20 years of Plank fighting his way toward the top, starting when he was just 23 years old.
Plank grew up in Kensington, Md., raised by a real-estate developer father and a mother who became the local mayor during Plank's childhood. Plank was also the youngest of five boys, which could have stoked the underdog spirit that has been the basis of Under Armour's own story.
Now Plank lives with his wife and two children outside of Baltimore (though they also own and spend time at a historic horse ranch in Maryland called Sagamore Farm, where Plank is starting his own brand of Maryland-style whiskey). When Under Armour went public in 2005, and shares doubled on the first day of trading, Plank was on his way to his current reported wealth of around $4 billion.
Act big, even when you're small
Under Armour was born out of Plank's frustration with cotton T-shirts that would soak up sweat and become heavy and restricting during his time as the captain of the the University of Maryland football team. His first breakthrough product was a treated polyester shirt that had moisture-wicking features to get the sweat off of the athlete's body without absorbing it and getting heavy, like cotton does.
In 1996, Plank used $15,000 of his own cash, money he earned starting a flower delivery service in college, to start production of these new shirts. After a few naming attempts hit dead-ends because he couldn't get them licensed, Plank heard one of his brothers mistakenly call what he was then calling "Body Armor" "Under Armor," and stuck with that name. And why the English spelling with the "u" in Armour? Turns out that was decided only because it made for the easy toll-free number (888) 4-ARMOUR.
Even when Under Armour was still small, Plank made sure the brand value was big. Soon after launching, Plank had the opportunities to get UA gear in the football movie Any Given Sunday as well as on Miami Dolphins players, including Dan Marino, before a nationally televised game. On both occasions, he was asked to give the products away, a promotional opportunity almost anyone else would have done anything to take part in -- especially in Plank's position of only having just moved the business out of his grandmother's basement a year before.
Instead, he knew that his product was valuable and that to give it away would devalue the brand. On both occasions, the groups came back to him and agreed to pay for the gear, which is why he says that by making a great product and selling it at a fair price, you don't need to give it away.
"Don't forget to sell shirts and shoes."
Fast-forward to 2015, and Plank is now running a company with annual sales over $3 billion, a market cap over $21 billion, and with over 10,000 employees as of the end of 2014. Under Armour continues to try new avenues of growth, such as its Connected Fitness segment, but Plank likes to remind himself and his team not to forget that the core mission of the company is to sell shirts and shoes. In fact, he even has that quote in red on his office wall.
Of course, with such rapid growth and continual tinkering for new ideas comes the risk of missteps along the way. Under Armour speed suits were blamed for the poor showing from the U.S. speed-skating team at the 2014 Winter Olympics in Sochi. The claims were never fully validated, but it didn't matter, UA pulled the suits and continued to push forward. That's the fighting spirit and hustle that Plank has embedded into the culture and messaging of Under Armour that has made the company so successful.
Bradley Seth McNew owns shares of NKE and UA. The Motley Fool recommends both of those stocks. The Motley Fool owns shares of Under Armour. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.