The Road to Riches
Garmin's GPS systems get drivers, pilots-and investors-where they want to go
What Garmin has done is nothing short of invent an entirely new consumer electronics segment. The company was founded in 1989 by Gary Burrell and Min Kao, two engineers who quit their jobs at Allied Signal when the aerospace engineering giant decided not to invest in hand-held GPS technology. Combining their first names, Gary and Min, to form "Garmin," they rolled out the first civilian portable navigation unit, the GPS100, in 1991. By triangulating the signals from a network of 24 satellites orbiting Earth, the device could pinpoint its location within a matter of feet. The idea was immediately popular: Some U.S. military forces took Garmin hand-helds with them into combat in the Gulf War. (Troops in Iraq and Afghanistan today continue to do the same.) "Some people act as if these two guys had an idea and just got lucky," says John Bucher, a research analyst at BMO Capital Markets. "But this was a world-class organization from the beginning-competent at building products with very complex radio systems inside them."
No frills. After a decade of growth, Garmin went public in December 2000-not exactly a boom time for tech-but its stock has still shot up an average of nearly 40 percent a year since, making Kao and Burrell two of the richest men in the country. Kao's $2.2 billion net worth places him 140th on the Forbes 400. Burrell's $1.5 billion isn't far behind. Between the two of them, Kao and Burrell are worth more than Donald Trump. Kao is now Garmin's CEO; Burrell is retired.
While its early success made it a leader of the GPS pack, Garmin, with nearly 3,500 employees, still has the no-frills feel of a much smaller company. One entire floor of its recently constructed eight-story office building is unfurnished, filled instead with Ping-Pong tables. On business trips, Garmin execs fly Southwest. Rauckman recently sold 4,000 of his Garmin shares not through a broker but on E*Trade. Kao, the company's top earner, pays himself a salary of $250,000; he gave himself a $203 bonus last year. "They don't waste money," says J. B. Groh, a senior research analyst at D.A. Davidson & Co.
Instead, Garmin pours all its considerable resources back into its products. Last year, the company rolled out over 70 new devices, and in several of its markets Garmin's gadgets are rewriting the rules of the industry. Take aviation, where Garmin engineers have created the first glass-paneled instrument system for small planes-meaning pilots of the 60,000-odd general aviation aircraft in the United States will no longer have to rely on old-school dials and gauges. With Garmin's new gear, they can retrofit their planes with high-definition, interactive flat screens. It's the kind of technology usually reserved for airliners, all for only about $30,000, a relative pittance in aviation circles. Where technology meets demand, there is money to be made: According to some estimates, the retrofit market might be as large as $1.8 billion. "It allows old aircraft to use 21st-century technology," says Jonathan Braatz, a partner at Kansas City Capital Associates. "And there's a gazillion planes out there."
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