When you start your business, it’s like an infant, you’d realize that it will not grow on its own. You have to be there when it becomes a toddler as it looks for potential clients. And then it grows to its teenage years where everything is a risk because there is this want to be everything and anything for everyone. Brian Smith explains the birth of a brand through his experiences in surfing and owning billion-dollar brand, Uggs. But the best advice he gives to entrepreneurs is to go deep and connect with spirit and know what it is that you really love doing.
Start From Scratch, The Birth Of A Brand with Brian Smith
My guest built a billion dollar company with just $500 to start. Throughout his journey from rogue surfer to mega company owner, he learned a few lessons along the way. He’s here to share those with us. Starting from scratch, he built one of the most iconic brands ever launched. He founded UGG boots brand in the face of incredible adversity but never gave up, always staying focused and has so much to teach us all. Welcome Brian Smith, founder of UGG, to the show.
Mitch, good to talk with you.
I love your genuine story and where you come from, how you’re always so willing to share what you’ve learned. One of the things we do with all of our guests is we like to start from the beginning. Tell us what it was that got you motivated to build a boot company out of sheepskin.
We got to go back a long time because next year will be the 40th anniversary of me starting UGG. I was an accountant and had studied for ten years and finally graduated. I quit the same day because I hated accounting. I was trying to figure out what to do. It struck me that all the trends are coming out of California to Australia, the waterbeds and Levi’s Jeans. I thought, “I’m going to go to California. I’m going to look for the next big thing and bring it back to Australia and set up my own company.” I quickly arrived in Los Angeles and rented a house in Santa Monica because one of my dreams was to surf Malibu Beach. I had my surfboard and spent a month in Malibu making tons of friends but didn’t find the next big thing. Another month in Malibu. It is in the third month, got to be October, November, the water was getting pretty cold. I remember sitting on the beach pulling on my sheepskin boots and I got covered in goosebumps. I thought, “There are no sheepskin boots in America.” One in two Australians are in some sheepskin footwear. It was just so logical to import them instead. I called a manufacturer in Australia and ordered six pairs of samples. I was convinced I was going to make millions and millions instantly. The samples arrived and a buddy of mine was going to be the salesman and I was going to be the accountant. He went out on the road and came back with zero orders and the comment that, “Brian, all the shoe retailers think I’m crazy trying to sell sheepskin in California.” I thought I understood what they are saying but Australia’s climate is identical to California. I knew that wasn’t the real reason.
As every entrepreneur has to do when they hit a wall you have to pivot. I thought, “How come all my friends up at Malibu think this is the best idea in the world?” It struck me that they all surfed and they’d been to Australia. On their surf trips, they brought four or five pairs back for their buddies. Doug and I switched gears and went to the surf shops. Our initial contact was so good because they also thought, “They are fantastic. We got some. I know what they are. You’re going to make a fortune.” This went store after store after store for both of us. Realizing we weren’t going to be instant millionaires, we decided, “We need some capital to buy some product.” The weird thing is we hadn’t asked for a single order because we didn’t have any inventory, which was a big mistake. I raised $20,000, which in today’s standards is about $75,000and sent fifteen of it down to Australia and ordered 500 pairs of boots. When they arrived, we stocked them in my house in Santa Monica and loaded up our cars and went out on the road again. This time, I was going out to sell. I arrived at the first surf shop and opened up my bag and they go, “Brian, well done. Bet you’re going to make a fortune but we couldn’t sell them in our store. We just sell surfboards and trunks. They’re way too expensive. You should go to the shoe stores.” This happened over and over and over again in every surf shop I went from Malibu all the way down to San Diego. Doug was getting the same reaction in the Valley. We regrouped. We tallied up our orders for the first season because it was December. We had one or two weeks to ship. Our total sales for the first year of UGG was 28 pairs. That would be exactly, $1,000.
When you came to America and you had the realization that no one sold sheepskin boots, did you have the idea that you would find out who would potentially sell them if you could bring them in or was that part of the experimentation process?
That was part of Doug going on the road to all the shoe stores. He got shut out by 150 stores in a row.
That’s like the story of the author of Harry Potter, how she submitted that manuscript 100 times and it was rejected every time until somebody bought it. When you finally tallied up sales and you had $1,000 of sales, what light bulbs went on at that moment? What shifts happened in your mind in terms of either where to sell the product or what product was going to be right for California? Tell us about that moment.
It was horribly disappointing as you can imagine. Later on, I came to see a theme, which became the theme of the book that I wrote, which is called The Birth of a Brand. It’s doing really well on Amazon. It’s like a guidepost for entrepreneurs. The theme of the book is that you can’t give birth to adults. Every business, every sandwich shop, every new movement starts with someone conceiving it and then taking the first action. My first action was buying six pairs of samples. That was the birth of UGG. But then, every business just lies there and it lies there and it lies there. There’s no amount of overfeeding or urging it. This infant can’t get up and be a college graduate. It has to be an infant. Eventually, it starts toddling, which is a cool stage because the first true adopters are taking your product and putting it out there and you’re getting articles written about you. That becomes the youth, which is a fabulous stage for every business where you’ve got consistent orders, consistent production, consistent shipping and invoicing and all that stuff. It’s equivalent to when your kid gets old enough to go to the bathroom by himself and eat food at the table, stuff like that. You can run a$20, $30 million business in that youth stage. If it’s a really good business or product or service, it’ll hit the teenage years. They’re very dangerous because just like when you wanted to be at every party in town as a teenager, you get the temptation to want to be in every shoe retailer, in every big box department store and bid every trade show in the country. It can suck up cash if you’re not capitalized properly. We never were. It becomes a very, very hard path to get through but ultimately you’ll survive it and the accountants put all the controls in. The biggest learning experience for me was, “Do I give up at sales of 28 pairs or do I carry on?” The answer was pretty simple. I still had all of my investors’ money tied up in the 480 pairs that we didn’t sell.
For the next couple of years, I just dribbled them out, go to swap meets and street fairs. The biggest sales outlet I had was the back of my van up at Malibu Beach. It was like a little retail store. Even if the surf wasn’t good, I’d still show up there because the sales were so good. After two or three years of running ads of these models on the beach wearing the boots with perfect clothing and perfect makeup and hair and the sunsets were great. For three years, we got nowhere. I remember being in one of my surf shop customers. I was telling him this problem and he goes, “Shut up, Brian.” He called out to all these little kids that leave their surfboards in the shop and he said, “What do you think of UGG?” Half a dozen thirteen-year-old kids say, “Those UGGs, they’re so fake. Have you seen their ads, those models? They can’t surf.” It was my first realization that my ads were so contrived and so fake. There was no reality to them. That triggered me to call a buddy of mine who is running Scholastic Surfing Association. They have young kids who are going to turn pro soon. He gave me the name of two young guys who were leaving school and about to turn pro. I just went surfing with them and I photographed them going to Black’s Beach in La Jolla and Trestles up in San Clemente. I just took these shots of them walking to the beach and walking back. When I ran those ads in the SURFER Magazine and action sports magazine, that next season the sales went to $220,000 from $15,000.It made me realize, “The secret to advertising is to make the customer want to be in the ad.” That was the beginning of my love affair with marketing.
After three or four years in business up until that point where you asked the surfer kids what they thought of your ads, what kept you in business? I don’t know if I would have had the patience or the financial ability to stay in business for three years with nothing going on but selling a couple of pair of boots out of the back of my car. What was your mindset? What was going on with you that you thought that it was still worthwhile to pursue this?
The mindset was, “Everybody in Australia loves these things. America is not that different from Australia.” That was the big motivator. It wasn’t like I relied on the business for income because I didn’t make anything for the first four or five years but each summer I would get a different job. The first year was washing boats at Marina del Rey. The next summer was construction laborer in Bel Air in Beverly Hills. The third year was a greenskeeper on a golf course. It was while I was on the golf course I decided, “I’m going to shut this business down. It’s too hard. It’s not working.” If you recall back to the infancy, that’s what entrepreneurs usually arrive at. One day, the first storm hit the coast of California in September, October. I got home drenched and there must have been 30 messages on my answering machine from surf shop retailers screaming out for product. That was when I realized, “I’ll be the guy to give it up like I was going to or I’ve got to find some financing to pay for my salary over the next summer.” I did that and that was the year that we hit the $280,000 in sales. From then, it became a lot easier because the marketing that I started doing was pushing consumers into the retail stores.
What happened here is that you just would not give up. You were convinced that there was a market. If you’ve ever been in business, you know where Brian was at, at the moment that he’s describing where you feel desperate, where you feel like you’re not going to go forward. This is a spiritual question but you almost wonder if there was a little bit of intervention here. Maybe spirit realized that it was time to give you a little bit of a boost to keep you in the game. It seems like that’s what happened at that moment in time.
I’m a very big believer in spiritual help that we do get. The tenacity was where I was digging very deep, questioning my intentions and wanting to know but as they say, once you start out on a path, the universe conspires to work with you. This was definitely the big turning point for me. One of the quotes I have in my book is, “Nearly always, your most disappointing disappointments will become your greatest blessing.” That came true in UGG business.
If I reflect on my life, one of my biggest disappointments was having quit my job, having my partner quit his job, going deep into development for a software product. Six months later, when we were finally done and ready to launch, the entire reason for having that product disappeared overnight, instantly, because of an IRS ruling.
That’s a huge disappointment but I’ll bet you the blessing came later for you, did it?
Yes. The blessing was that once we realized that our entire product had no value anymore to our intended audience, we started searching for how we could repurpose what we built for a different group of people. Had this not happened, had we continued on the path we are on, we might have had a little $100,000 or $200,000 business. Because that business disappeared overnight and we pivoted into taking our time tracking technology and applying it to keeping track of time and billing for lawyers and accountants, that became a $10 million business. That’s that moment of the most severe disappointment became our blessing later, just as you said. You’re at a point now where the marketing’s starting to work, where you start to finally see life breathing into your business, where you understand now what you didn’t understand two years earlier, and you finally have that kind of market and it’s open to you for the first time. What do you do next?
It’s a matter of slow building. That first sales year of 28 pairs with three or four pairs to friends, there were four surf shop retailers that made up the other sixteen pairs. The name of your show is getting Your First Thousand Clients. We had to start building on those four by servicing them and making sure that we could give them every opportunity possible. I started giving each manager in each store a free pair of UGG boots to wear because the understanding of sheepskin in California was so poor that if they saw around the shelf, nobody would be interested in buying. If the surf shop owner was wearing them and someone said, “What are these boots like?” the surf shop owner would go, “They’re the greatest. I’m wearing them now.” That word of mouth started things going. Bit by bit, it was from four retailers. We started telling other retailers the success that they were having. Suddenly, we got twenty retailers and then 100 retailers. Once I hit that advertising image with the young surfers, then every young kid at school was saying to their moms at Christmas, “Mom, all the cool kids at school have got UGG boots. I want a pair for Christmas.” That started the ball rolling. The retailers were starting to call me because customers were coming in saying, “Do you have UGG boots?” Most of them are going, “What the hell are UGG boots?” They did their research and realized that this is something they could jump onto and make some money.
You took a pretty big leap here. You went from selling out of the back of your car now to 100 plus retailers. Where are your systems? Where is your management team? Where are the computers that keep track of orders and schedule deliveries? Where is all of that?
This was many years before computers. I can remember my ordering to Australia was on green bar paper with different colors for each style and size. The systems were almost non-existent for the first six years. Everything was done by hand. In the beginning, we were sending telexes back and forth, which nobody even knows what they are anymore. They preceded faxes. Faxes came along and that was a huge jump for us. The systems didn’t get put in place until probably the fifth or sixth year when I hired a salesman first and then I hired an accountant to keep track of all the activity. The accountant started putting in the systems. He was the one that started researching the very first desktop computers. We were one of the first people to buy a desktop computer and start putting all of our orders and accounting onto a proper system.
It’s hard to imagine building a business, a billion dollar company, literally without even an accountant or a bookkeeper. It seems so difficult to understand. Back then, it probably was the only thing you could do.
It was, there was no alternative. They didn’t have pre-loaded business plans or cashflow forecast. I can remember sitting down with a guy who had one of the very first Apple Macs with the little green screen. Seeing him create a spreadsheet, I was just in awe. This was going to radically change my business eventually.
We can all remember a time when something happened that automatically shifted the direction of our companies. For me, it was looking at the PC for the first time. When I first saw a PC, I knew in my heart that I had to be in this business. That was why I entered it. Here you are again. You’re finally organized. You have your accountant. Are you paying yourself a salary? Are you’re making money?
No, I didn’t make any money out of it for the first six years. I started with no capital$500 is what we used to buy the samples. That was all we had. We had to buy out our first investor for $20,000. We got bigger investors and had to buy them out and got bigger investors. We ended up with three guys from Anaheim coming in to take it to the next phase. We did a deal where we were all 25% each of the company but there were two provisos. One, I was going to be out of the office and on the road as a full-time salesman on commission. The other thing was that I didn’t actually get my stock certificate until I finish this little trademark lawsuit that I was in over the name, which I knew I would win. I didn’t care about it. I remember the first day after we moved all the inventory up to Anaheim, I went on the road down to Huntington Surf &Sport. I walked in and the owner, Jim, says, “I heard you sold the company.” I go, “What?” He said, “I called an order in and they said you don’t own the company anymore.” I said, “You’re kidding me.” I went next to a gas station to call up the office because this was before cell phones. I said, “What the hell are you telling people?” He says, “The truth. You don’t own the company.” I said, “Yes, I do. You’re my three new partners.” He said, “No. You don’t get your stock.” I just went into this horrible depression. I went back to San Diego and pulled out the contract and I read it and I reread it and said, “I don’t own the company.” I went into a huge depression. After a few days, I was moping about and I couldn’t make a serious decision about anything.
I decided to get back into my meditation, which I had been doing a lot of it at the time, and I got these goosebumps again because I was trying to think, “What can I do? Will I be an insurance agent? No. Real estate? No. Business broker? Maybe. Accountant? Never.” These goosebumps hit me and I thought, “I really love selling now.” I thought, “What the hell could I sell?”That’s when I got the goosebumps. It was UGG boots. I love UGG boots. I ate humble pie and went back up to Anaheim and I said, “I may never own the company but I’m going to make sure I can get a pair of UGG boots on everybody in America.” I went on the road and started selling. It was October, November that was the beginning of the good season for us. I got back to the office after the first month. Neil, one of the new owners, handed me an envelope and I opened it up. It was as a check for $5,000. He says, “That’s your commissions.” That was the first money I ever pulled out of the business. The next month, a check for $10,000 and the next month, another check for $10,000. It led me to realize that I’m not doing any ordering, any receiving. I’m not doing any warehouse work. I’m not doing any shipping and accounting and billing. I’m just out here having a ball with my buddies on the road. All the surf shop owners were now my good friends. I’m having a really good time and I’m making tons of money. There’s another saying from my book which is, “The quickest way for a tadpole to become a frog is live every day happily as a tadpole.” What that meant was as long as I stuck out there doing what I did best, which was selling and working with customers, the rest took care of itself. For the next three or four years, I started making a ton of money, $100,000 plus, which was a lot of money back then, just from being on the road.
From that exact moment in time when you realized you didn’t have the stock anymore and that you were no longer an owner, most people would have done all kinds of things. If nothing else most people would have quit. Most people would have walked away but you ate humble pie. There’s an important lesson here. At that moment in time, you truly discovered what it was that you loved to do. If we all take that viewpoint that we’re here to find the thing that we love to do and do it as much as we can. As long as it’s legal and as long as it’s ethical, there’s nothing wrong with that. It was a great lesson.
You described the secret of success, which is figure out what you can do better than anybody else and then do it. Even if you don’t even know what the future holds, once you start working at being the best, it’s automatic that you’ll be successful.
How would you advise people to find out what it is that they are the best at if they don’t know?
It means going deep. I’m very spiritual. I refer to meditation. I find that if I get quiet and ask the universe to help me out with what it is I want to do, it usually isn’t too long before you start to figure out things that you enjoy. If there’s a potential for making money, even if you don’t see the big money at first, if there’s a potential that this could make money, it’s worth giving it a try. Quite often you’ll go down some dead ends but ultimately you’ll figure out something. There’s that other great saying that once you start out on a path, the universe conspires to work with you. When’s the last time you saw an ad for a refrigerator? You probably can’t remember. If you needed a refrigerator next Saturday, you would start seeing ads on TV, you’d start seeing things online. You would drive down the street and you’d see windows full of refrigerators. The universe is perfect. Everything you could possibly want already exists. If you’re sitting in front of the TV with no direction, you’ll never see any of the information that’s available out there to help you. The minute you start on a path, all of the information suddenly becomes clear to you. That was the same with me and UGGs. I had no idea what I was doing when I started but I had a vision. Bit by bit, mistake after mistake, I kept zoning in on what was the right way to do things and how to grow a little bit more. In other words, I became a great tadpole and lived every day in the moment. The future of UGG, I knew it would be big but I had no idea it would be a billion dollars. If I had quit and given up, the world would not know about UGG right now.
One of the things that you described is called the Reticular Activating System. What that means is the way you describe it. If all of a sudden you were to need a refrigerator and you are focused on refrigerators, that’s all you see. It works the same exact way with cars. There’s a different way to look at that. You talked about that and I love what you said. You said that once you desire it, the universe then conspires to get it for you. This is the caveat that I will add to what you said. As long as you’re willing and open to receiving it.
Quite often it comes in ways that you don’t expect.
How did you go from not owning a single share and making great money as a salesperson, what happened after that?
For the next three or four years, I was in heaven because I was out playing golf with all my customers in the summer and surfing with them. I traveled a lot because we had about 30 sales reps around the country. I put up nearly two million frequent flyer miles over the five or six year period, going out on the road working with my sales reps all across the country. I treated every customer as the most special person in the world because I’ve switched gears. I hated selling which is why my buddy, Doug, was going to be the salesman at the beginning. My reference of sales was auditing used car yards when I was an accountant and I detested the methodology that these guys were using. I always thought sales was trying to rip people off. I was in a surf shop one day and I realized, “These guys bought $60,000 worth of boots from me last season.” I knew they mark them up 100% so, “They just made $60,000 for me last year. I knew the rent on their little surf shop was probably less than $30,000. That’s $30,000. They probably paid their salaries for all their part-time staffers on that. Every other cent that they sell in the shop goes into the owner’s pocket.” I stopped thinking of sales as ‘getting’ and realizing I’m ‘giving’. I’m giving an opportunity to every one of my retailers to make money. That made me a benefactor, which changed the momentum of the business from then on. I was out there preaching this to the sales reps on the road.
Long story short, for three years I was having a ball making $100,000 plus every year. When the main guy, Neil, had bought the other two guys out so he owned 100% of the company, he called me and said, “Come in next week and we’ll issue you 25% of the stock.” We bought company cars and took out life insurance policies on each other. I was in heaven because I was getting back into the company. My wife called me over the weekend on my new cell phone, it was a carphone, and she was crying. I go, “Laura, what’s up?” She goes, “Neil just died.” He was in a motocross race and had a huge heart attack during the race and never recovered. I had to go up and work with his widow. I called her up and said, “I’ll be up tomorrow and see where we’re at.” That was in February and from February to June, July I became a forensic accountant and realized the company wasn’t in very good shape after all. I just decided I had to work to figure out what we could do with it because I was still commissioned on at that time and sales were still going on. It was a tremendous season. We’d introduced black and charcoal colors, which were just kicking butt out in the sales groups. My problem was that the supplier didn’t have much faith in me because he hadn’t received very good payments. I always paid him in full but he never knew when his money was coming when I owned the company. He just made through three or four really good years with Neil and Paul and those guys. Every time I’d call up the supplier and say, “George, we have fantastic season. Have you started production?” “How are you going to pay me?” This went on over and over, week after week through April, May, June. In July, I realized, “I don’t think he’s going to supply.” I had to scramble. I found another supplier down in Melbourne, Australia that owned a tannery. I flew down to meet with him. He was super interested but after four or five days he just didn’t want to take on the risk of sending hundreds of thousands of dollars’ worth of product to me not knowing who I was. The trade show season was hitting in September. That means shipping started in October, November, December.
Here’s another point when I should’ve given up because I had no way of getting product. I had a trade show to do and I didn’t want to tell all the market that I was out of business. We showed up anyway and I put the booth up using all of last year’s product and I heard that there was another company out there selling sheepskin boots. They were telling everybody they were going to put UGG out of business. I thought, “I’m going to find out where they are.” I found them in the trade show and I walked over to their booth and stopped a couple of breath short and went, “Oh, shit.” There was all my black and charcoal and all my product from that initial supplier. They had the label THUGGS. The company was Thunderwear so they called them THUGGS. That was when I realized, “I’m really out of business now.” I didn’t tell anybody because I still didn’t want to give up. I told my wife, “When we get back out, we’ll start calling all of our retailers and tell them to go buy the THUGGS because it’s all our product anyway.” The last call I made was to the tannery down in Melbourne. I said, “Thanks for trying to help me out but this is what’s happened. My original supplier has done an end run around me and we’re out of business. Laura and I, we’re going to call up everybody and shut it down.”
We went to bed and the phone rang about 2 AM and he said, “Brian, it’s Gordon. Screw those suppliers. I’ll get you all the boots you need.” Just like that, with no contract and no handshake, just one Aussie helping out another. I sent the patterns down and he duplicated them and sent him out to four or five manufacturers. Pretty soon we had 2,000 and then 4,000 and then 5,000 pairs every Friday coming in. Our retailers would drive down, all the Southern California ones, and pick up the boots out of the warehouse because I didn’t want to wait for UPS. We shipped October, November, December and we threw away at least $1 million worth of orders because we couldn’t get the product. I didn’t care. We were still alive and we were still in business and we still had the UGG brand out there in retail.
The weirdest thing happened between Christmas and New Year. Number one, the life insurance we took out and paid out and it was just enough money for me to buy his widow out a 100%, I had the business 100%again. The other thing, which was just as impactful was that the customs broker screwed up and shipped 2,000 pairs of THUGGS boots to me and 1,000 pair of my boots up to him. He was up in San Clemente which is about 45 minutes. I called him up and arranged to swap them out. When I was driving back home to San Diego, I started thinking, “How come we couldn’t keep boots in the warehouse for 24 hours and the THUGGS warehouse, which was way bigger than our warehouse, was floor to ceiling full of sheepskin boots?” It made me realize that the loyalty of my customers was so great. Retail would have been $2 million worth of sales but they were willing to forego those sales rather than go buy it from somebody who they knew had gone around me and knocked me off. That loyalty is so critical for anybody. It doesn’t matter what business you’re in, especially nowadays where everything’s on a website. It’s ‘Buy Now.’ It’s clicks and is so fast and it’s so impersonal. You must, even today, reach out to your customers and keep a connection with them because there will always be somebody cheaper, there will always be somebody with little twist on what you’ve done. If you have a personal connection, they’re always going to stick with you. This worked out. The next year, I have no idea where those THUGGS disappeared to but they were gone and we were back controlling the market again.
The point you bring up about loyalty, back then, it made a lot of sense. I could understand it. These days, it almost feels like that doesn’t exist anymore. It exists in small businesses where you’re dealing with the owner but the brand loyalty that you’re talking about, I don’t see much other than companies like Apple but that’s more product loyalty in a sense.
I consult with one girl who’s got a leather shoulder bag, which is going to be the next fanny pack. She’s shipping about 250,000 to 260,000 last month purely on Facebook. No bag goes out without one week later, her customer service people calling the buyer up and saying, “Did you get your bag? What do you think of it? Are you happy?” She has got a rabid fan base of tens of thousands of women who are online all the time chatting about the product and sending photos in from trips they’re doing with the bags. It is possible to reach out even though it’s a completely Facebook-driven site and it’s 100% online sales. She’s got a following so powerful that she’s had to segment them into VIP fans, product focus group fans and general fans. It is possible. Any company that’s selling on the internet that doesn’t reach out that way is going to be subject to somebody, no loyalty coming back for second purchases or third purchases. It’ll be a one-time deal.
The thing I was thinking about is the furniture business, which is much different. I remember when I was involved in the furniture business about fifteen, sixteen years ago. The interesting thing about it was that most of the manufacturers were in the United States back then. The stores were loyal to them in the United States. What started to happen is that the Asian manufacturers started knocking off American furniture styles and they were building it at the same quality level. Amazingly, the stores shifted loyalty very quickly when they realized they could save 40% on their inventory. That means to me that while it’s possible a woman who makes a product like you’re talking about certainly can build that loyalty, manufactured items that can be knocked off easily might not have the same kind of luck.
I see your point. I’ve bought furniture online and I’ve been called by the vendors shortly afterwards. I think, “That was so good. I didn’t expect that.” They made sure that everything was courteous and that the product made in my specifications and I thought, “I’ll buy from them again.”
There is a way and it’s worth taking the time to keep in touch with customers if you can, even paying extra to put staff in place to keep in touch with customers because you’re right.
There is a cost to it but the loyalty to reorders is the easiest money to make.
At this point, you’re back in the ownership position. How did you end up at the point where the company got sold?
At that stage, we were only about $7 or $8 million, which is good but it doesn’t seem like much because it’s a billion dollars now. One of the big things is I realized that we were big in the surf market. We’d switched over to snowboarding and ski in the Midwest where they don’t ski or read SURFER Magazine. They all play ice hockey so that was a great market. I had only scrambled images of UGG and I wanted to get a cohesive marketing image. I was on a plane one day coming back from somewhere and the girl next to me was reading US Magazine and People Magazine, I kept seeing all these photos of these Hollywood stars walking around wearing their products and the names of the products were being mentioned. I thought, “That’s incredible free advertising. How do I get into Hollywood?” I had a buddy who told me, “Look at all the stylists.” I said, “What are stylists?” He goes, “The hair and makeup artist, wardrobe people.” I found a mailing list of all the stylists in Hollywood and I sent a letter out saying to about 5,000 people, “If you want a free pair of UGG boots, give me a call.” About 50 of them did. I sent 50 pairs of UGG boots out. Remember, you can’t give birth to adults. It took a while to start but after six months, I start seeing a sitcom on TV and the stars wearing UGGs. I start seeing photos of people walking around Hollywood wearing UGGs. The description was, “so and so wearing UGG boots.” That was the beginning of the fashion look that UGG took on.
It was a very well-planned PR campaign but my target was to get on the front page of the lifestyle section of USA Today. We ended up doing that because of a photograph of Pamela Anderson from Baywatch wearing a pair of UGG boots on the beach with a red swimsuit. As soon as that ran, retailers from all over the country started calling us going, “How can we get into this?”Consumers were calling us up saying, “Where’s a retailer near me?” That was the beginning of the big run of fashion. One other lucky thing that happened because of my customer service that we had, a girl in London kept calling us up every Christmas and she want twenty pairs of boots to be sent to twenty different people in England. That meant twenty customs. It was a pain in the butt but we did it because it was Trudie Styler, who is the wife of Sting. We wanted to be in those circles. This one year, she called me up. This was the year I was about to sell UGG. She said, “Brian, I need a huge favor. I just have been to a seminar that’s changed my world and I want to give a perfect gift. Can you send a pair of boots? Do you have a pencil?” I said, “Yeah.” She goes, “Oprah, care of Oprah Winfrey in Chicago.”This was when Oprah was at her peak of television popularity. We sent the boots and she immediately came back and ordered boots for all of her staff. Remember, you can’t give birth to adults. Over the next couple of years, we ended up being on the best picks for Christmas two years in a row and Oprah’s Favorite Things. This was twenty minutes of nothing but UGG boots on Oprah when she was an absolute prime. We could not have paid for that much advertising. That was what took the business. That was the year I sold the company because it had got too big for me to finance. I knew we were coming into it $20 million a season and I didn’t have the capital to take it there. When I sold the company, I handed Oprah over to the new owners.
You made an interesting decision there. You decided to sell the company at a moment in time, maybe at your peak. They talk about sports people getting out at their peak. Did you feel as if, in retrospect, that was the right time to get out?
It was the perfect time for me. I’ll be quite honest, I didn’t have the skill set to take it up into the billions. I’m a good entrepreneur. I love the freewheeling, decision-making, seat-of-the-pants steerage that comes with being an entrepreneur. The company was morphing into committee meetings and no decision could be made without a meeting. You get ten people in a room to pick the colors for next year and yet, in my mind it’s going to be raspberry and forest green and caramel. You get into a committee meeting and it always comes out gray because that’s the least offensive. That part of running a big business was not appealing to me at all. That was one part. I wasn’t skilled enough to take it into the mainstream shoe industry. The other thing was that because I never had any capital to start, we’ve just come off a season of about $12 or $13 million. I knew from the pre-orders that we were looking at $18 to $20 million season coming and I had no way to finance it. It was just obvious that I had to find a much bigger player to sell it off to.
How did you find a buyer?
The universe stepped in. My biggest retail outlet in the first years with my van at Malibu, a couple of parking spaces up there was another guy called Doug Otto who was selling these neoprene sandals, a triple-decker, high-heeled flip flops. His company was called Deckers. We would see each other on the road year after year. We used to joke, “You should buy me.” “You can’t afford it.” Over the years, he eventually took on the license for a sandal called Teva. When the outdoor market took off, his sales went through the roof and he took his company public. Teva got up to about $60 million in sales. When he took it public, I knew that he had $20 or $30 million left in the bank. I was going to a trade show in Atlanta called the Super Show and way up at the other end of the baggage claim was Doug. I got goosebumps again and I thought, “I knew he was sitting on all this cash and I knew his company died every winter and our company died every summer.” These goosebumps just went, “It’s perfect.” I walked up and we high fived and I said, “Doug, if ever we’re going to do it, now is the time.” We had the accountants talking to each other that afternoon.
What’s interesting is you mentioned the goosebumps several times throughout our chat. It seems to me that’s where you get that signal from inside that maybe something important is about to happen.
I’ll tell you what it is. This is going a little bit out there but God isn’t way out there at the end of the universe somewhere. There’s a spark of God or spirit in every single one of us and it has some inkling of the direction it wants to take in our life. I’ve come to believe that every time we get goosebumps, it’s that inner voice sending a message to us. It can’t come through or eardrums. It can’t speak to us but it sends it to us the only way it can, which is through this electrochemical body that we have and it comes out in the form of goosebumps. Every time I get goosebumps, I think, “There’s a spirit telling me I’m on the right track again.”
That leads us right into our closing questions. Who, in all of space and time, would you like to have one hour to enjoy a walk in the park, a quick lunch or an intense conversation with?
Off the top of my head, it would be one of my idols who is Richard Branson. I’m not even interested in Virgin Airlines or Virgin. I would love to know more about his childhood and what made him become such a freethinker and be such a great entrepreneurial risk taker because I’m pretty sure it would be the same upbringing I had. I would love confirmation of that.
You might get a chance to meet him, if you’re interested. You and I are both part of the same group the Mavericks and I know every year they have a Necker Island event. I know Necker Island is closed for repairs but it’s going to be somewhere else in the Caribbean. It might be a good time for you to actually have your wish come true about that.
I know about that group and I’ve seen great videos from that mastermind in Necker Island so I would love to be involved in that next time.
Here’s the grand finale question. It’s the change the world question. What is it that you are doing or would like to do that truly has the potential to literally change the world?
Doing more of what I’m doing. When I sold the company, I got involved in a lot of others but got hit pretty hard in the recession in 2009 that went into 2013. That was the time I set aside to write my book. The book was literally a roadmap for entrepreneurs because so many people started out on a path not having a clue just like I did when I started. I wanted to put out a story of all of the successes and mostly the failures that I had because being an entrepreneur is more about failing and finding a way to pivot. That’s the only way you succeed. I wanted to have a dialogue with people. When I wrote the book, it was so successful that people said, “You should speak on the stage.” I’d never wanted to be a public speaker but I’ve come to love it because so many people come up to me afterwards and go, “I was about to give up my business. I must be in the infancy. But now you’ve given me heart to carry on.” That melts my heart. From an early age, since I was about fifteen, I always had this feeling that I wanted to leave the planet better off than I found it. By helping entrepreneurs start and persevere is my calling. The more I can get on stage and speak to entrepreneurial groups or sales groups or multi-level marketing groups, any time I can get in front of a big audience where they’re all in business for themselves, I just relish the chance to do that.
It sounds like it’s your calling. You didn’t like sales in the beginning and then it became your passion. It sounds like maybe this is the way you will deliver your message to the universe through stages and through speaking. If there’s somebody who’s resonated with your story and would love to learn more about you or possibly even hire you for a speaking engagement, how would they get in touch?
On my website, the UGGFounder.com or they can email me straight away at Brian@UGGFounder.com. I highly recommend it if people are struggling in their business or wanting to start, that they buy my book, which is on Amazon. It’s called The Birth of a Brand. It’s doing extremely well. I just love all the letters I get and emails and messages on LinkedIn, “What a great book. It was such an easy read. I read it in two sittings.” That’s the thing I love more than anything. I’m sure anybody who reads it will have the same reaction.
I’m sure I will too. It’s in my book stack. It’s two books away so I can’t wait to read it. Brian, it has been such a pleasure chatting with you. I feel like we’re kindred spirits in so many ways. I really cannot wait until the next time we get a chance to hang out together again.
Thanks for your time.
Resources Mentioned in This Episode:
- The Birth of a Brand
- Scholastic Surfing Association
- Oprah’s Favorite Things
- Necker Island event
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