Under Armour's Attack on Nike | Sweat Equity | 1

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0:22David Brown:It's summer 2005 in Baltimore, Maryland. Under Armour CEO Kevin Plank is staring out the window of his office. as he waits for someone to pick up the phone. The sky outside is bright blue with a hazy shimmer from the humidity. Plank knows that within seconds of stepping foot outdoors, he'll be dripping in sweat. For years, sweat was his biggest nemesis. As a linebacker for the University of Maryland, the cotton t-shirts he wore under his football pads would get soaked, becoming heavy and clingy, slowing him down on the field. So he set out to fix the problem. Nearly 10 years ago, Plank created a shirt that wicked sweat away from the body, the cornerstone product that became the foundation of a company he named Under Armour.

1:10David Brown:Now, that company is one of the fastest-rising sportswear brands in America. A receptionist finally answers his call, and Plank asks to speak with Edward Stack. A moment later, Stack comes on the line. Kevin, how are you? Those new running shirts are selling like hotcakes. That's great to hear. Hey, do you have a minute to chat? Stack is the CEO of Dick's Sporting Goods, the retail chain founded by his father in 1948. It's one of the largest retailers of Under Armour products. And over the years, the two men have become close. Sure, what's on your mind? Well, you know how we're preparing to take Under Armour public?

1:50David Brown:Uh-huh. Well, I just got off the phone with one of my bankers, and he says that VF Corporation wants to acquire us before the IPO. If I accept, I'll never have to work again. But, uh... Something's sold on you back. I know I should be thrilled, and I'm grateful, don't get me wrong. But I wanted to get your take. I'm sure you and your dad have entertained offers over the years, but you've never sold. Well, look, this company is your baby, and if you sell it to VF Corp, it won't be yours anymore. So you gotta ask yourself, why did you get into this? Was it just for the money? No, no, no, no, no.

2:31David Brown:Not just the money. No, you did it because you believed in what you had. You believed in your product. Because you enjoyed the challenge, right? Yeah, that's true. I just don't want to make a huge mistake and walk away from a pile of money that could change my life. Stack is quiet for a moment. Hey, let me tell you something. As a retailer, I would love to see a company out there that could really rival Nike. Now, from my perspective, the more great products we can offer our customers, the better. And of all the athletic wear companies I have ever seen over the years, you're the one that can take them on.

3:12David Brown:Wow, you really think so? Now, I'm not saying it'll be easy, but the quality of your products and the brand loyalty you've fostered over the years. I gotta tell you, I've never seen anything like it before. Wow. Well, thank you. Thanks a lot. That really means a lot. But when I say you, I mean you. Under Armour needs you at the helm. So think about it, all right? Are you done writing Under Armour's story, or do you want to see how far you can take it? Plank looks out the window again. Ten years ago, he built a shirt to fight sweat. Now, he's about to pick a fight with one of the most powerful brands in sports.

3:58David Brown:He hangs up the phone. He's made up his mind. He's not selling. Instead, he's gearing up to do something almost no one in sports has done before. Beat Nike at its own game.

4:19David Brown:From Audible Originals, I'm David Brown, and this is Business Wars.

4:48David Brown:In 1995, Kevin Plank was still a football player at the University of Maryland when he created a new kind of t-shirt that didn't get soaked with sweat. The next year, after graduating, he used savings from odd jobs to launch a company built around his new t-shirt. He called it Under Armour. The brand pioneered what would become known as performance wear, apparel designed to wick away moisture and regulate body temperature. Under Armour became a hit, its products popular with both professional athletes and weekend warriors. As it grew in popularity, the company set out to do something audacious.

5:27David Brown:Take on Nike. For a decade, it looked like Under Armour might actually pull it off. But building a challenger brand is one thing. Staying on top, that's another. In an attempt to keep up, Under Armour expands aggressively, adding more and more products and chasing technology plays. But the more it veers away from its core, the more the company risks losing the singular focus and brand cachet that made it special. And the question won't be whether Under Armour can catch Nike. It'll be whether it can stay true to itself while trying. This is Episode 1, Sweat Equity.

6:16David Brown:It's a sweltering summer day in 1995 in College Park, Maryland. University of Maryland football player Kevin Plank stands on the sidelines, wringing sweat out of a cotton t-shirt. His helmet and shoulder pads lie on the ground next to him. He's been playing football since he was a kid, but it still blows his mind how much sweat these t-shirts can retain. He once weighed a sweat-soaked shirt after practice and discovered it weighed three pounds. He's pretty sure the heavy, soaked shirts slow him down. There's a reason people don't play football with three-pound medallions around their necks. Plank gives his shirt one final squeeze and tosses it into his bag next to two other sopping wet shirts.

7:01David Brown:He pulls out his last dry one, although he knows it'll be drenched within minutes. He wishes he had a shirt made out of the same material as the synthetic compression shorts he wears. When he changes those at the end of practice, they're still dry, and they weigh the same as they did at the start. Plank stares out at the field. Why doesn't someone make a shirt out of that material? He can't be the only athlete who hates the way cotton t-shirts get soaked with sweat. Athletes put so much thought into their other gear, like their shoes and equipment. Why not their clothing? Plank's mind starts racing.

7:40David Brown:First, he'll need to see if anything like this already exists. If not, he'll get to work. But he'll need to get fabric samples, make prototypes, test them, and pitch them to potential customers. That'll be a lot of work, but it feels doable. A coach barks from across the field. Break time is over. Plank snaps back to reality. He pulls his pads back on and jogs out, but his mind is still on that shirt. In the days that follow, Plank starts sketching designs. He wants to combine the fit of the Hanes cotton t-shirt he typically wears with a synthetic fabric that will wick away sweat. Plank has always had an entrepreneurial drive.

8:25David Brown:Growing up outside Washington, D.C., he mowed lawns and shoveled snow to make money. He's continued to earn cash in college through a variety of side hustles. He's parked cars, sold friendship bracelets and t-shirts at Grateful Dead concerts. and delivered roses for Valentine's Day. His roses business is so successful that he installs a credit card reader in his dorm room and hires other students to help with deliveries. By senior year, he's saved several thousand dollars, enough to take a shot with his new shirt. So Plank heads to the fabric store and picks out a lightweight, stretchy synthetic material similar to the fabric that compression shorts are made of.

9:07David Brown:The sales representative tells him this material is frequently used for women's undergarments. Plank smirks. He probably won't mention that when pitching his new shirt to his football teammates. Next, he takes the fabric to a tailor near campus and asks for seven prototypes based on his designs. Over the next several months, Plank asks various players on his team to test the new shirt and jots down their notes on the length, the weight, and the collar. By the spring of 1996, As Plank's senior year winds down, he feels confident he's created a superior shirt. After graduation, he heads up to New York City's garment district and pays to have 500 shirts made.

9:53David Brown:Then, he moves into a family-owned townhouse in Washington, D.C., and turns the basement into the headquarters for his new company. Plank names it Under Armour, choosing to spell Armour the British way with a U. This allows him to secure the phone number 1-888-4-A-R-M-O-U-R, which he finds visually pleasing. In the basement, Plank and a friend from college spend their days cold-calling every equipment manager on the East Coast, pitching them on the shirt and sending out samples. But the shirt isn't selling, so Plank decides to take the show on the road. He loads up his Ford Explorer with samples and drives around the country, stopping at schools where he knows players or coaches.

10:44David Brown:Through his years of playing elite football, he has a lot of connections in the sport. Some of his friends are still playing at universities, and there are even a few who have gone pro. He hands out samples to anyone who will take them. But still, sales are slow to come. By the end of 1996, Plank has burned through his savings and is on his way to amassing thousands of dollars in credit card debt. His best hope is that an athletic director will place an order to outfit their entire football team in Under Armour shirts. But even with his connections, Plank knows that athletic directors are hesitant to place a large order from what looks like a fly-by-night operation.

11:27David Brown:So, he decides to make his company seem bigger than it is. He hopes this will help athletic directors take the leap.

11:40David Brown:And in late 1996, he gets to test his theory when he walks into the office of the Georgia Tech athletic director, carrying a briefcase. Thank you so much for taking the time to meet with me. Before we get started, let me give you my business card. Plank reaches inside his jacket pocket and pulls out a metal business card holder. On the left side are cards that identify him as the president and founder of Under Armour. On the right are cards that identify him as a sales representative. He pulls out a sales rep card and hands it to the athletic director. The director glances at it, then sets it on his desk.

12:16David Brown:I understand you have a new type of shirt that'll boost performance? Yes, sir. Let me show you. Plank pulls out a shirt from his briefcase and spreads it across the desk. These shirts have been tested by some of the best college football players in this country. We've perfected the fit and the material to ensure that athletes are able to perform at their absolute peak. The athletic director rubs the fabric between his fingers. Hmm. This wicks away sweat? Yes, sir. This is a quick dry fabric that'll keep your players both cool and dry. Well, it's a good idea. As you could probably guess, playing in the South, heat and humidity are big issues for our players.

12:55David Brown:Yes, sir, I know. I used to be one of those players. At Maryland, there were practices where I'd have to change my shirt multiple times. It was a drag, literally. Soaked cotton gets heavy, and it definitely slowed me down. I used to dream about having a shirt like this. The director studies the shirt for another moment. Well, I'd be interested in trying some to see how our players like him. Would it be possible to cut some kind of deal, maybe get a bulk order discount? Plank is so close to making a sale. He doesn't want to mess it up. But he knows the school can afford to pay the full price he's asking.

13:33David Brown:And he needs the money. So he shrugs apologetically. Well, if it were up to me, I would definitely do it. But the big guy back at HQ won't let us cut any deals. A light sheen of sweat shines on his forehead. He hopes the athletic director can't tell that he's bluffing. Plank is the big guy in HQ, and he could cut any deal he wants. But he doesn't want to seem too eager. A founder doing his own sales reeks of small-time desperation. The athletic director feels the fabric again. Well, it does seem like a really good product. Plank leans forward, waiting for the director to finish that thought. All right, we'll take a chance.

14:15David Brown:I need to look at my budget and talk to my coaches, so we'll be in touch with exactly how many, but we're in. Plank bites his lip so he doesn't let out a triumphant whoop. Fantastic. You're not going to regret this. Plank walks back to his Ford Explorer in the parking lot. The windshield is cracked and the inside smells of old French fries, coffee, and sweat. He's logged thousands of miles in this car, but this trip was worth it. He finally made his first team sale. By the end of his first year, Plank has sold$17 ,000 worth of shirts. It's a start, but he's still deep in debt, and he'll need a lot more schools to take the same chance Georgia Tech just did, if Under Armour is going to survive.

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15:59David Brown:Over the course of 1997, Kevin Plank keeps growing under armour. After the breakthrough sale to Georgia Tech, He lands deals with other colleges, including Arizona State. Along the way, Plank employs a variety of tricks to make his small company seem a lot bigger and more successful than it really is. He continues to hand out business cards that identify him simply as a sales representative, not the founder or president. And he frequently stretches the truth about how many teams he's signed. When he has three teams on board, he tells other potential customers he has five. When he has five, he says they're a ten.

16:39David Brown:His hustle pays off. Word begins to spread that Under Armour's shirts are more comfortable and boost an athlete's performance. More and more teams sign on. Plank knows he can't rely on just one product. So he starts developing more. The original sweat-wicking shirt is targeted at athletes playing in heat, so Plank develops a cold-weather version. He uses a different type of synthetic fabric that keeps players warm without weighing them down. He also designs gear that will protect players playing on artificial turf and a line of hats and visors. By the end of 1997, Under Armour has made deals with 12 colleges and 10 NFL teams.

17:24David Brown:In 1998, the company is finally bringing in enough money that Plank is able to move the headquarters out of his grandmother's townhouse in Washington, D.C. and into an office building in Baltimore, Maryland. But if Under Armour is truly going to grow the company, Plank can't just sell to college and pro athletes. He also needs the rec league players, the couch-to-5K runners, and the aerobics class enthusiasts. There's just one problem. Retailers aren't carrying the brand yet. And Plank can't afford a major advertising campaign to drive direct sales. It's a classic chicken and egg dilemma. But then, Under Armour gets extremely lucky.

18:10In 1998, a friend calls Plank with some news.

18:15David Brown:He's been hired as an extra in a movie called Any Given Sunday, starring Jamie Foxx, Al Pacino, and Cameron Diaz. It's directed by Oliver Stone and follows the struggles of a fictional NFL team fighting to make the playoffs. There will be several scenes set in the locker room, which means the cameras will show what football players wear under their uniforms. The friend says that if Plank can convince the costume designers to outfit the actors in Under Armour, this could be his big break. It would be the equivalent of millions of dollars in free advertising. The friend passes along the name of the costume designer, and Plank quickly sends off samples of Under Armour shirts.

18:57And then he waits.

19:04David Brown:Costume designer Mary Zofres arranges outfits on a portable clothes rack in her office. She smooths fabric, adjusts collars, and carefully reviews each item, making sure everything is displayed just right. She's preparing for a meeting with director Oliver Stone. He's known to be obsessive about every detail of his films, so she wants to make sure she's presenting each piece in its best light. The door opens and Stone marches in. His dark brown hair is unkempt and his white button-down shirt is rumpled, as if he slept in it. Stone looks at his watch. Sorry I'm late. It's been a crazy day. Oh, no problem at all.

19:44This stage of pre-pro is always crazy hectic.

19:46David Brown:And I've got another meeting in 15 minutes, so we'll need to make this quick. Yeah, of course. I'll jump right in. Zofre grabs a hanger from the rack. So this is the first option. A t-shirt and compression shorts made by Nike. Stone wrinkles his nose. It looks kind of average. The whole conceit of this movie is that these football players are gladiators. I don't think the cut of this t-shirt says warrior. Understood. Let me show you another option. She pulls a hanger holding Reebok clothes and presents it to Stone. But he's not pleased with those either. These all feel so basic. I want something futuristic, something new.

20:25David Brown:Zofri's nods and moves through a few more options. But Stone isn't happy with any of them either. Finally, she pauses. There is one other option. It's from a relatively new company, so it won't feel as familiar as the other ones. That sounds promising. Show me. Zofries goes to her desk and pulls out a large padded envelope. She removes a cropped t-shirt with a high collar. On the collar is a logo that looks like an arch overlapped with the letter U. She holds the shirt out to stone. This sample showed up a few days ago. It's by a company called Under Armour. Their letter says that several NFL teams have bought their shirts, so if we do use them, it will still have the authenticity I know is important to you.

21:10David Brown:A small smile spreads across Stone's face. I like this. It looks high-tech, befitting of someone who's leaving it all on the field. Great. I'll reach out to Under Armour and let them know. Stone checks his watch. I gotta run, but this was a good meeting. I'm excited about Under Armour. He rushes out, already moving on to the next thing. Plank strikes a deal to provide apparel and accessories for any given Sunday. The production company tries to argue that Under Armour should provide their clothing for free in exchange for exposure from the movie. But Plank plays hardball and insists that Under Armour be paid for its product.

21:48David Brown:In the end, he secures around$40 ,000. It's a huge win for a company with fewer than 20 employees. Still, the production company isn't wrong. the exposure alone could be priceless. And Planck is determined to capitalize on it. There's just one problem. Any Given Sunday is a fictional movie. The team at the center of the story, the Miami Sharks, doesn't exist in real life. Under Armour's brand recognition is so low, Planck worries audiences might assume his company is just as fictional as the Miami team. The obvious solution would be running a national advertising campaign. That could show consumers that Under Armour is a real company with products they can buy.

22:34David Brown:But Under Armour doesn't have the kind of cash needed to invest in this kind of campaign. So, Plank comes up with a workaround. He believes in it, he's just not sure how his employees will react.

22:55David Brown:It's fall 1999 in Baltimore, Maryland. Kevin Plank walks into the conference room in Under Armour's headquarters, carrying a VHS tape. His entire staff is gathered around the table for an all-hands meeting. If Plank has his way, they won't all fit into one room for much longer. But for that to happen, he needs to ask them for a big favor. A TV and a VCR are set up at the front of the room. Plank slides in the VHS tape. Hey, everyone, thanks for coming today. Warner Brothers just sent this over. I think you'll get a kick out of it. He hits play and the video starts. Lightning strikes over a football field.

23:36David Brown:There's an excited murmur in the room as everyone realizes they're watching the trailer for Any Given Sunday. Al Pacino's raspy voice fills the conference room. My wife, my children for these men. I've given up everything I have for these men. The trailer continues and Pacino, who plays the team's coach, gets into a heated argument with Cameron Diaz, the team's owner. The aging quarterback, played by Dennis Quaid, gets injured and is replaced by a young, hot-shot QB played by Jamie Foxx. And then, for a split second, Jamie Foxx appears on screen sporting a shirt with the Under Armour logo. The room erupts.

24:19David Brown:When the trailer ends, Plank looks out at his team. Pretty cool, right? Everyone around the room nods. This is obviously great exposure for us, but exposure doesn't automatically turn into sales. The only way to make sure that happens is to advertise. Now, after careful consideration, I've decided that our best bet is to run a half-page ad in ESPN magazine. It'll go straight to our target demo, young men who are passionate about sports. Plank reveals a mock-up of the ad, which features a broad-shouldered football player in a helmet, with Under Armour emblazoned across his chest. There are impressed murmurs around the table.