How Garmin fended off Apple and Google

Garmin CEO Cliff Pemble is a relatively unassuming leader. The former software engineer enters a room with a quiet presence and humble demeanor. But make no mistake, he leads a tech company worth more than $14 billion.

Like Pemble, Garmin is the antithesis of the flashy Silicon Valley tech darlings. The Kansas City company, which specializes in GPS-enabled products, quickly became a well-known brand after it debuted personal navigational devices for automobiles in 1998.

“That gave us rocket fuel,” Pemble says. “It was a highly consumer, rapid growth market.”

He recently told Fortune how Garmin survived the challenge from tech behemoths like Apple and Google, which introduced the iPhone and Google Maps, respectively, as well as how the now-30-year-old Garmin still managed to spur new growth. Thanks in part to the popularity of its fitness watches, Garmin has restored and surpassed the annual revenue it generated when it dominated the personal automotive GPS device category more than 10 years ago. Last year, it saw $3.8 billion in annual sales, beating its record year in 2008.

And Pemble was there for all of the company’s ups and downs. At 24, he joined Garmin in 1989, its founding year, as the company’s sixth employee. Pemble says at the time, he was itching for a bigger opportunity and was considering a job out of state. That’s when he got a late-night call from Gary Burrell, who cofounded Garmin along with Min Kao.

“He said, ‘I hear you’re leaving. Please don’t go. Please come join Garmin,’” Pemble recalls. “And by the next day, I was in his car essentially doing a mobile interview.”

Thirty years later, Pemble, using the hard-earned lessons of the past, maps out the company’s future.

Here’s what Pemble told us about his journey at Garmin.

Fortune: What attracted you to Garmin?

Pemble: I had never been part of a startup before. When somebody shows you an empty building, and they say, “We’re probably going to set up some manufacturing here,” I was just overwhelmed. The vision was compelling. We had to invent everything from scratch, so that urge I had to do more things was instantly gratified within the first 10 minutes of coming in the door.

People don’t typically think of Kansas City as a startup town. What’s the culture like for a startup in the area?

I know we’re not the size of some of these big names—the Googles, the Facebooks—but we’re a very successful consumer electronics company. Coming out of Kansas, nobody would’ve thought that would’ve been possible, but it turns out that’s kind of an ideal environment for us. The kind of lifestyles that our products are suited for are all things Midwestern people are interested in. We have a lot of passionate [employees] at Garmin, and that help set the direction of the company, because they actually want to buy the products that we make.

When would you say was the moment Garmin was viewed as a success?

We didn’t get a ton of attention until we went public in 2000. We started talking about taking GPS from the niche-focused markets of outdoor and boats to more mass markets. We created the category of portable automotive devices. When people saw that and the skyrocketing growth we had, I think they realized Garmin was for real.

When the iPhone, equipped with Google Maps, debuted in 2007, your business took a major hit. How did you survive that?

We were a company that had a lot of diversity early on. So if one segment or one market was down, others were maybe more stable. We started to realize the diversity aspect was a strength, so we continued to try to branch out into new areas. We tried some things. Some worked, some didn’t. The most effective thing to try is to double down on growth and opportunity. Saving money and cutting expenses never really works.

Was the comeback you’re experiencing today expected?

We probably couldn’t have guessed we could grow everything else to come back to the level that we were at. That’s a really tall task when you’re talking a couple of billion dollars. What we probably underestimated was the importance of the wearables. We were dabbling with it way back when, but nobody could foresee that it would become the category that it is today.

Was there ever a moment that the company thought this might be the end?

Even when we were on the decline in the [automotive] market, Garmin has always been solidly profitable. It was never a question of, “Gee, we’re getting weak as a company, and we need financing,” or anything like that. Garmin has always been debt-free. We have cash in the bank for rainy days. So there was no sense of panic.

What kept the company from panicking?

I think confidence is one attribute we had. Min [Kao, Garmin’s CEO when decline in automotive revenue began in 2008] is a very quietly confident person, and his sense of confidence in our business was very strong. He’s the kind of person that said: “Let’s not obsess about this. Let’s do what we know works. Let’s invest in ourselves, let’s invest in the markets, let’s create new things, and see where it leads us.” It was confidence and patience.

You mentioned that Garmin has a lot of outdoor and fitness enthusiasts. Are you one of them?

Early in our fitness-watch development I realized, “Wow, this is an interesting category. I’d like to learn why our team is saying we should be doing this versus that.” So I started running with our products. Ever since I was a kid, I was a watch person anyway. One of my favorite gifts that my mom gave me was a wristwatch. One thing led to another, and now I can’t stop [running].

Given everything you’ve learned, how do you prepare Garmin for future disruption?

If I’ve learned anything over the course of the years at Garmin, it’s that surprises can happen at any moment. You never know what you’re going to wake up to. I think, though, it’s really about how you react to those things and how prepared you are to think your way through it. If you get distracted by the chaos and activity that goes into crisis situations, then you don’t always do your best thinking. We only focus on the [things] we can control. We structure our business in a way it’s best suited for the next crisis.

Garmin’s CEO on fending off Apple and Google

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