Garmin success starts with co-founder

12/20/2012 7:20 AM

12/20/2012 7:21 AM

In a city where the names of phenomenally successful entrepreneurs are household words — Kauffman, Bloch, Hall, Stowers — there’s another whose name often draws a blank in casual conversations.

And Min Kao is fine with that.

The personable but private engineer who co-founded and leads Garmin Ltd. has agreed to only a couple of interviews in the company’s 23-year history. He prefers the focus to be on Garmin’s products, the array of navigational devices it makes for aircraft, boats, cars, outdoor activities and athletes.

But because the world has recognized Garmin’s pioneering work in bringing GPS technology to the consumer, Kao agreed to an interview with The Star. He had recently returned from London, where he accepted The Economist magazine’s prestigious 2012 Innovation Award for Consumer Products.

Kao, typically, deflected personal praise.

“It’s because of all the people we’ve had,” Kao said, extolling his co-workers. “Ideas can come from anybody.”

Ever since Kao and co-founder Gary Burrell put their heads — and their first names — together to create consumer uses for the global positioning systems first used by the military, they have shied away from personal attention.

Burrell retired to his home south of Kansas City in 2004 and declines all interviews.

Kao, Garmin’s chairman and CEO, agreed to the interview largely to advocate for the nurturing of other engineering and entrepreneurial talent.

Perhaps, he agreed, his company’s success — it’s put more than 100 million navigational products on the market — could be an example for other entrepreneurs.

Now a billionaire

In the interview, the 63-year-old Leawood resident recounted the rise of his company from card table conversations to an employer of 9,000 workers with locations in 40 countries. About 3,000 employees work at Garmin’s operational headquarters in Olathe.

In a milestone on its growth trajectory, Garmin this month joined Standard & Poor’s 500 stock index.

The company expects revenues of about $2.8 billion this year.

Garmin’s success has made Kao a billionaire. According to the Forbes magazine annual list, Kao this year ranked as the world’s 546th wealthiest person, worth $2.3 billion because of the Garmin stock he holds.

No other Kansas City area resident comes close on the list, except Burrell, ranked by Forbes at No. 913 with $1.4 billion.

Yet, Kao “is a genuinely modest man,” said Jon Cassat, a Garmin vice president who has known Kao for 20 years. “He celebrates collective achievement. ... There’s a culture at Garmin of servant leadership.”

Kao, who was born in Taiwan and came to the United States in 1973 to attend graduate school at the University of Tennessee, doesn’t talk about his wealth. He would not, for example, confirm a Wall Street Journal story earlier this year that said he was the person behind a limited liability company’s purchase of a $40 million 41st-floor condominium in New York City’s 15 Central Park West building.

And while his close associates said he’s exceedingly generous with his philanthropy, he’s private about that, too.

“It’s his private life, and what he does with his money is never discussed around here,” Cassat said.

Supporting education

The most public Kao has been with his giving was earlier this year in Knoxville, Tenn., where he and his wife, Fan Kao, contributed $17.5 million to his graduate school alma mater.

Kao earned master’s and doctorate degrees in electrical engineering at Tennessee and continues to be passionate about supporting the engineering program there and elsewhere.

“My top priority is engineering education,” Kao said, describing his family foundation’s funding of engineering scholarships, on behalf of Garmin, at nine schools in seven states, each for $6,000 to $8,000 a year. “The objective is to get more kids involved in engineering.”

Kao received scholarships to attend Tennessee, and he said such support is vital to build enterprises like Garmin that need “STEM talent,” students trained in science, technology, engineering and mathematics.

He also committed $10 million five years ago to the Garmin Electrical and Computer Engineering Initiative at Missouri University of Science and Technology in Rolla. That gift translates to $100,000 a year for 20 undergraduate scholarships of $5,000 each.

Associates said Kao also contributes to the Kansas City Symphony, and other arts organizations as well as various agencies that serve people in need. Kao himself only acknowledged his support of “United Way agencies and miscellaneous.”

Just ‘Min’

At Garmin, Min Kao is Min. Not Kao. Not Mr. Kao. Associates said he sets the tone for a first-name culture that permeates the Olathe buildings.

Kao was agreeably posing in Garmin’s main lobby for The Star’s photographer while employees began leaving the building for the night. One casually dressed young man caught sight of the boss, and the two plunged into comfortable conversation.

The two Garmin communications officers who shepherded the interview marveled that the CEO apparently knew personal details about an employee whom they couldn’t even identify.

Cliff Pemble, Garmin president and chief operating officer, said in a subsequent interview that Kao’s connection with many Garmin employees is real.

“Min is very friendly, very affectionate,” Pemble said. “He makes everybody feel comfortable. In every situation he thinks about all the parties involved.”

Outside of Garmin, Kao has exposed less of his personality. He’s not a notable joiner of civic associations or committees. Rather, he’s a working engineer and company strategist.

“He’s created a great environment to nourish and encourage creativity,” said Jay Dee Krull, one of Kao’s first employees in 1989.

Krull, who now holds the title of Garmin’s director of software excellence, finds in Kao an intriguing combination of humility and brilliance.

“You’d never guess the intellect he possesses,” Krull said, coupling that with Kao’s “sincere caring nature.”

At Garmin, his top associates say, Kao also shows a sense of humor — his own and an appreciation of others’.

“Min likes to have fun with his work,” Pemble said. “He can see the light side of what’s going on.”

More competition

Somehow, associates said, Kao leads a corporate culture that copes seriously, but lightly, with stiff competition in their markets.

Garmin’s annual report lists a formidable lineup of product competitors, including TomTom, Magellan, Nike, Raymarine, Honeywell, Motorola and many others in the five navigational product categories in which Garmin operates.

Unlike Burrell, Kao isn’t a pilot, so he doesn’t have first-hand use of Garmin’s aviation products. “I don’t do boating, either,” Kao said. And colleagues said he doesn’t fish, hunt or play golf, so he doesn’t routinely use Garmin’s navigation products in those fields.

“But the automotive products, I get to test,” Kao smiled, following up with another self-deprecation: “I don’t call myself an early adopter … I don’t even consider myself a very sophisticated iPad user. ... it’s my wife’s.”

Min and Fan Kao were already married when they came to America in 1973. Garmin’s publicity team respectfully refused interview requests with Kao’s family, saying that is “treading beyond Min’s comfort zone.”

Their daughter, Jen Kao, launched her own fashion line in New York after attending New York University and the Parsons School of Design.

Their son, Ken Kao, attended the University of Kansas and DePaul University Law School and is now a film producer in Los Angeles.

Both children spent their teen years in the Kansas City area after the family moved here because of Kao’s earlier work with King Radio Corp. and Allied Signal.

Startup advice

Asked to analyze his entrepreneurial success, given that so many startups fail, Kao said three things were present for Garmin and must be for others:

• “You definitely need a vision … and be convinced the product will provide unique value and stand up over time,” he said.
• “You need a team, partners who are able to translate the ideals into tangible products,” he said, adding that product development requires some rapidity to stay ahead of the market.
• “Third, we’re very proud of our (corporate) culture,” he said. “We’re in it for a long time, not to get rich off an idea.”

Kao said he encourages other entrepreneurs to “think long-term,” to “make a commitment to invest and reinvest for the future.”

Kao said that he ignored some financial advice and elected to provide insurance and other benefits for Garmin employees from the outset.

That helped build a strong culture, as did Garmin’s practice of healthy reinvestment in research and development.

Although there have been some bumps in the road — production of its own smartphone was abandoned due to poor sales — Kao said Garmin is well positioned to handle competition from smartphones that provide a hand-held navigation tool to the consumer market.

“People ask if we worry, but we don’t feel pressured,” Kao said. “A smartphone is OK for the casual user, but the markets we serve require more robust solutions.”

Examples? Waterproof GPS devices for divers. Or ultra-sophisticated “glass panel” navigational instruments for the cockpits of airplanes.

Yair Reiner, a stock analyst at Oppenheimer & Co., who has followed Garmin since 2007, said Garmin has fierce competition for various products, but its product breadth and its culture give it an edge.

“They do a remarkable job in virtually every market they compete in, in having market-leading share and market-leading margins,” Reiner said. “They make products that customers like, are loyal to, and are willing to pay a premium for.”

But more than that, the stock analyst said, he credits Kao with maintaining a corporate culture that is hard to replicate.

“It’s hard to teach an organization how to make right choices and inspire people,” Reiner said.

Kao said he intends to keep the focus on “continual innovation,” and that means continuing to attract talented engineers to Garmin.

And about that company name:

Kao said hundreds of names were considered for the startup, but anything meaningful was already taken or risky. Finally, they resorted to putting together combinations of the co-founders’ names.

After they ran out of options, “Garmin sounded smoother than Mingar,” Kao said.

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