A Cautionary Story for Entrepreneurs: The Rise and Fall of Under Armour

Remember when we said that having a brilliant idea alone wouldn't guarantee the success of your business? Well, here is the proof...

Like any other successful startup, Kevin Plank’s story started from his granny flat where he sold his first t-shirts.

The American billionaire and CEO of Under Armour, always had a passion for trading and sports. During his early years in college, he sold roses on Valentine’s Day, using the profit to invest in Under Armour, which became one of the most successful sportswear brands.

So how did Under Armour start?

It all began during his college football days when he was experiencing excessive sweating and noticed that his teammates were complaining about heavy t-shirts when they got wet.

??By recognizing this problem, he became determined to find a solution.        

Plank began his journey of searching for a material that would wick away moisture and reduce sweat.

After testing many materials, he managed to find the perfect one and he made his former teammates try it, asking them to pass it to other players to spread the word about his T-shirts.

Under Armour’s Timeline:

?? In 1996 he earned a profit of 17,000$ from selling moisture-wicking t-shirts.

?? In 1999 he increased his marketing efforts and managed to achieve his first million dollars after advertising in ESPN The Magazine.

?? In 2003, driven by this jump in profits, Under Armour’s first TV ad was aired, reaching more customers and increasing brand exposure.

?? By 2010, the company was achieving an annual profit of 1 billion dollars.

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So now in 2023, why is Under Armour declining?

Here are 5 mistakes that Plank fell into that lead to the instability of his business.

1- Overconfidence Arising From a Remarkable Start?

Plank’s ego got in the away of his success.

Confident that no one else could create the same technology, he chose not to apply for a patent for his product. This led to mega companies in the industry to develop a similar product and compete with Under Armour.

2- Poor Marketing Strategy and Unplanned Decisions

Plank chose brand exposure over brand image. He partnered with discount retailers that were known for selling products of lower quality.?Thus, he failed to position Under Armour as a high-end brand with premium products.

3- Delayed Growth and Limited Strategic Foresight

In a time when brands were adapting to customers’ preferences and coming up with new products to introduce to the market, Under Armour was falling behind.

In 2017, Adidas and Nike expanded their product lines and came up with an all-purpose t-shirt that is suitable for a variety of activities. They established themselves as leaders in the industry while Under Armour was losing a big market share.

4- Decline in Work Culture

Under Armour made significant changes in their leadership. They changed their CFO not once,not twice, but three times in the course of 1 year.?

In 2017 they laid off 280 employees and in 2018 the number increased to approximately 400 to reduce costs.

This hurt the internal environment and culture of the company by creating a sense of mistrust and uncertainty among the rest of the employees.

5- Loss of Focus

One of the biggest mistakes that damaged his reputation and resulted in a huge backlash was publicly expressing his political opinions.

As a public figure, he should have been more cautious with his public statements, especially that it could harm his business.

Kevin Plank was indeed on the right track.

He managed to identify a need and build a business around it; he invested in marketing at the right time and expanded his business.

That being said, he failed to address many challenges that he faced along the way.

His inability to adapt to new market conditions and identify areas that needed focus limited Under Armour’s chances to expand and reach its full potential.

The last chapters in Plank’s story remain untold, as he stepped down as the CEO of Under Armour. It is unclear what the future holds for him - will he overcome this crisis? The answer is uncertain, but what we can say with confidence is that he is one of the most inspiring entrepreneurs of our time.

Now, tell me what've you learnt from this story?! I would like to hear from you in the comments!