All aboard the Embit podcast with Seamus Madan. Welcome everyone to the Embit podcast. I'm your host, Seamus Madan. And today, we have a very special guest, Brian Smith, the founder of UGG. Brian was born in Australia where he first developed his love of surfing. With just $500, he founded UGG imports to bring sheepskin footwear to America. After 17 years, as sales reached $15,000,000, He sold a business to Deckers Outdoor Corporation.
Doug Brand has since exceeded over $1,000,000,000 in international sales, and Brian is also the author of the book the birth of a brand, detailing his experience founding UGG. In addition, he also speaks to entrepreneurs all around the globe, inspiring them on their journey building their companies. So first off, Brian, thank you for taking the time to join the show. It's a pleasure to have you on today. I know you had a great introductions. Thank you so much. I appreciate it.
So let's first start off. Would you mind walking the audience through at the very beginning? How a surfer magazine inspired you to first start off your journey and later build the company up. Yeah. I in the late seventies, I would I just graduated as an accountant in Australia as working full time and studying at night. And after 10 years, I finally graduated, and I quit the same day because it really wasn't my future.
And after a few weeks of sitting around, I just learned yoga and meditating back then, and is meditating one day thinking, okay, what the hell am I gonna do it? I just got this this rash of goosebumps that that said, hey, all the trends are coming out of America, out of California. So I pretty much right then decided, okay, I'm gonna go to California and find the next big thing like, leave by jeans or waterbeds or surf brands, and I'm gonna bring them back to Australia and make my fortune.
So Within couple of weeks, I arrived in Los Angeles and rented a little house in Santa Monica and bought a surfboard with me and I rented a a van and drove straight to Malibu because I'd been reading serve magazines all my life, and and Malibu was always one of those those dream places to serve. So I went up there and for a couple of months was looking around for the next big thing and and never really found it.
And eventually after about 5 months, it was November, and the the water was getting cold, and the wind was changing to winter. And I finished surfing, and I was pulling on my sheep skin And I thought, oh my god. And I looked at my buddy Doug and said, hey, man. We gotta go into business. There there's no sheepskin boots in America. And 1 in 2 Australians owned some.
So we went back to my house, and and I found the surf magazine when I'd seen the Madan, And I called up the guy country leather, and it's kinda long story short. We we ended up sending him 500 bucks and buying six pairs of samples. So that that's really the story of the birth of AUG. And you mentioned surfing. I guess where did your love of surfing first originate from? And then how did that translate over into the UGG brand? Well, first of all, I don't ever recall learning to surf.
It's like learning to walk. We we in Australia, everyone's at the beach, and I remember stealing the big guys surfboards when I was like, eight years old dragging him down the beach. And and so you just picked it up like like osmosis. But how that translated into the business was We we thought we were gonna sell to all the shoe stores. And my buddy Doug, who was on the road as a salesman, I was terrified of sales.
He came back after a few weeks and and no orders in about a 150 business cards of every shoe retailer and said they They think we're crazy trying to sell on sheepskin in in California. It's too hot and but I knew that wasn't the reason because Australia's climate's exactly like California. And I knew from Australia that the surf brands all took off and became real powerful businesses with Hang Tan and Gotcha and Quicksilver and Bilibong and all.
All those brands, they all started off in Australia, and And I thought all my friends at Malibu think UGGbirds are the best things, and I realized that so many of them have been to Australia surfing and brought I've boots back for their buddies. So we just switch gears like a good entrepreneur. When you hit a wall and you gotta figure out a way around or under or over, And so he said, okay. Let's go try the surf shops. And, Doug took one area of Los Angeles.
I took the beach cities and I I remember walking into the first retailer. Really scared because I was terrified of getting rejected. And I opened up my little bag of samples, and he just goes, oh, man, I'd boots. Where you doing with those? I said, well, we're thinking of importing them. And he goes, oh my god. You're gonna make a fortune. They're the best. Everybody wear my friends got him.
And so that happened all the way down the coast from Malibu down to Mexico, and and Doug was getting the same reaction in the valley. So We were on fire. We thought we were gonna be instant millionaires and but we didn't have any we didn't think to ask for any orders. Because we didn't have any inventory. Right. And that and that backfired on us big time because we ended up raising about $20, which in today's money's about $70,000.
And, you know, we thought we'd never need any more money than that, and we bought 500 pairs from Australia and And when they finally arrived, we went back on the road. And on this time, I had a huge duffel bag full of boots and an order Madan went back to the same store that told me it was gonna be a fortune. And he goes, oh, well done, Brian, but we couldn't sell them in our store because we just sell surfboards and trucks and flip flops and and I didn't get a sale.
And the next store said the same thing in the next one. And so When Doug and I after a couple of weeks regrouped, we realized that our sales for the year was 29 pairs. It just happened to be exactly a $1000, but that was horribly disappointing because Americans just didn't understand sheepskin. Right?
And, but over the years, I I I did build a business real big, and I I've since had other businesses, And I've noticed a theme which which is the theme of my book, which is the birth of a brand, and this is like a road map for entrepreneurs. It's started the day I thought of the idea all the way through to when I sold the company.
And if you look the stock exchange page on the Wall Street Journal, every single one of those companies that's listed probably started with a $1000 in sales, right, or the equivalent of 28 pairs. Right? And so It made me realize that the theme of my book is you can't give birth to adults. Right? Every every entrepreneur conceives of the idea and they've take the first action. So for Ag, the first action was buying 6 pairs of samples. That was the birth of the brand. Right?
And they they do the first action, and then the the project just lies there, and it lies there, and it lies there. It's inferior. Most entrepreneurs give up because they think they got it wrong. But, really, every business is gonna do this.
It'll just lie there, and you gotta keep feeding it and changing the diapers, you know, every now and again, you get a giggle, but eventually it goes into the youth phase, which is a titling phase where all your friends are talking about it, and magazines are writing articles about you, and you start to get traction.
And then after a while, that leads into the youth where you've got really consistent orders and productions working and sales and marketing's working and administration Madan billing and accountings working. And that's the best phase of every business. You you could run a business from 2 to 3000000 all the way to 25,000,000 in in that youth phase.
But if it's a really good product or a really great service that you have, you're gonna hit the teenage years, and you probably know you wanna be out at every party on a Saturday night. Right? And the same thing happens in business. You wanna be in every major trade show and every mass distributor and every retailer. And you can quickly just go under by by trying to expand too fast. It's a very, very dangerous phase. His teenage.
But eventually, you learn and you put the controls in and it becomes a mature company. So so even out of that disaster, I was able to draw analogy of birth to adults, and it it's it's been infallible. Everybody who hears it just goes, oh my god. I get it. You know?
Yeah. And speaking of trade shows, when you initially began your distribution in the US, at a New York City trade show, you took shop at only half of a display but there was no real interest as you mentioned a little bit earlier from those people. For the 1st year, in fact, like you mentioned, only sold those 29 pairs. But what was going through your mind during that time? And what was keeping you from not saying, hey.
Let's shut down the business and instead be like, Here's the next types of steps we have to do to accomplish our mission. Yeah. Okay. Well, right after that first delivery of Christmas, which was our 1st year south, I I used to go up to Malibu, and I had my my had a Dodge van, and and I had it full of product. And I I I ended up selling about $6000 worth of product out of the back of the van in January, February, March. And then the trade show came.
And, yeah, I was it it was funny you know, a big surf action sports market with sheepskin boots. I felt pretty weird, but I knew that that the The thing that made me never give up ultimately was that, well, damn, every one into Australians owns a pair of these things, and they think they're the best in the world. So It wasn't the product that was wrong. It must be me. Right?
So I had a couple of years we were advertising with these models on the beach and perfect clothes and hair and perfect sunset, and the boots were, like, the main feature of the ad. And The second year went to about 6,07,000 dollars, then next year was 10,000. And and then the next year was 20. And I and I just decided I I'm just gonna give this up, but I I was working in the summer to, like, I had to get summer jobs for 4 years, and that the last one was working on a golf course.
And and and right in October, the big storm came through that sort of the beginning of winter, And I got home, and the answering machine was just for about 25 messages from all my surf shop retailers. Just going, Brian, Brian, we need Ugh boots, man. Everyone's been in the store today, and they're all asking for Ugh boots because that big storm hit. And And I realized, shit, I I can't really go out of business with all this demand.
So I've ordered more boots from Australia, but before I advertised, I had a beer with one of my good sir shop retailers in in San Diego, and I was explaining this this problem that I wasn't getting any traction in in the ads. And he just said, oh, shut up. Right? And he calls out the back to these little twelve thirty year old kids who leave their surfboards in the store and and said, why do you guys think of UGG? And every one of them just went, oh, Madan. UGGs. They're so fake.
Have you seen those ads? Those models, they can't surf and, like, instantly I realized I'm sending a wrong message to my target market. And I when I looked at the ads again, it it threw their eyes, I was embarrassed at how bad they were. And so I called up a buddy who was running a national scholastic surf association up in Orange County, and I said, hey. Pete, do you have any young kids who are gonna turn pro real soon? Because I got no money, but I could pay him in UGGbirds.
And he gave me 2 kids, Mike Parsons, and Ted Robinson, and And instead of posing photos, we just went surfing. We went to black speech down in San Diego and trassels up near Orange County, and These are these walks are a mile long, just to get to the water, and it's always fantastic surf when you're there.
And I could just imagine every little kid, I selected a couple of photos of his walking along both paths, both roads, And I thought every little kid in in America who surfs is gonna be dying to walk along that path with Mike Parsons at Ted Robinson, And so we ran those ads October, November, December, and the sales went to $220,000. It was, like, night and day. And That's when I discovered the art of advertising and marketing, and that is you you never sell your product.
Per se with a photograph of it. You you you have to create a scene that the reader would just die to be in. Right? It's gonna be so alluring that they can feel themselves in the ad. And these ads, the the the boots in the final ads, the boots were, like, not even an 8th of an inch tall in the in a full page photo. Right? And it just highlighted.
You couldn't even see the boots, but the image of walking along the beach to to with Mike and Ted with the UGG logo was the beginning of the what what I call it the branding. Right? Your your brand is not your trademark registration. Your brand is not your logo, and your brand is not the product. Right? The brand is what do consumers think of you? So if you look at the 1st 1st 3 or 4 years, I was damaging my brand so badly. Because I was doing these ads that no one would believe. Right?
But just like that, I was able to switch it around And then if you didn't have a pair of UGG Boots at Laguna High or Newport Beach High or San Diego High, you were just not one of the cool people. And so every kid that Christmas, they said, mom, oh, the cool kids at school have got ugly boots. I need a pair for Christmas, and that is really what brought that $220,000 worth of sales into play.
Yeah. That's that story component really coming into play that we even see with a lot of major brands nowadays. Where especially with what you mentioned, how the consumer wanted to be in that ad is invoking that sense of emotion. It it can come in many different forms. For with Apple recently decided to invoke a more, negative emotion with their new iPhones. They're like, hey.
If you don't buy this, you might you might get injured in a car crash, and nobody will come save you, but but it's all that invoking of emotion to the consumer. Does that make sense? And what's interesting? We're living in a world now with with com computers and and instantaneous sales and and The big thing now is influencers, but me me hiring Mike and Ted 40 years ago was was influencer marketing. Right?
So it's a it's really weird how the medium from advertising has changed, but the principles are still identical. Yeah. Exactly. Like, even back then, you had Mike and Tim who were the perfect people to represent the brand. And even now with influencers, that's why they try to find companies will try to match their brand and their mission to a specific types of influencers. Like, a beauty brand isn't gonna go advertise on a financial YouTube channel. So it's all best.
The principles remain exactly the same. Yeah. You're right. Yeah. And where did the name of, originally come from? Nobody knows that there's a couple of old guys in Australia claim they invented it, but It's been around as a descriptive term from the 40.
So every every little town in Australia had a factory that that processed sheepskins in seat covers and bed underlays and dusters and and ugg boots, and they they would spell every town was UG or U GH or UGG, U GHHS, and nobody registered the trademark down there since the thirties and forties. Luckily, the the the law in in the rest Australia is first guy in with your ten bucks and fill out the form. You own the trademark. Right?
But the rest of the world, you have to establish 1st use and continual use, and I was able to prove that right from the beginning. So I registered the UGG. I just selected that as a strong version of the name. And I registered that and then built the brand around that registration. Keeping in mind that was not the brand, right, the the word, and the logo and everything was just the the logo the brand came with the image that I built around that. Gotcha.
And what would you say is a specific instance when you are founder and the leader of that company where you had to make a difficult decision. And how did you approach that? Well, it's There's all sorts of difficult decisions. Yeah. Back then, we didn't have peer groups like EO, you know, entrepreneur organization or YPO or Vistage or those those self those helping entrepreneurial groups now. So I was very much the lone ranger. I I didn't have anyone to talk to or ask.
So when a decision had to be Madan, I I just pretty much made it. And luckily, I I was still in the beginning 5 years, 6 years, I was still very small. And, you know, sales had probably just got to a million bucks by 6 years. And that's a horrible stage for any business. 1a1a half 1,000,000 in sales because you're too small to be big and you're too big to be small. Right? Because you can't afford good help. You can't afford a new accountant. You can't.
So I had to make a lot of decisions, and I mean, some of the tough ones were when when I was cash broke, I would have to put money on my credit cards, right, to pay the salaries And I was able to do that a couple of times because I knew there was income coming within the next month, and I could take that risk. So that was risky, but But just showing up every day with a wife and child at home was a risk. Can I survive another day? Can I make money to pay the rent? For another day.
So all of those decisions were made on the fly. As it got bigger, we started to get sales staff and accounting staff and all that. Decision making was more consensual. We would have meetings, figure what are the thing was. And and usually, we'd get a an agreement by everybody on the way to go. And even if it wasn't right, we still went that Madan. And figured out when it went wrong again. We gotta have another meeting. So it was pretty pretty mutual between the staff. Definitely.
And you mentioned you had a family at home for the people in the audience who might have or who might be building companies and have a, maybe, a kid or a wife at home, what would be your advice to them in terms of creating a balance or just running a startup while also having a second life? Yeah. The my advice is don't give up your day job, right, especially if you have a wife and kid.
Because you you do need to have that rent paid, and there's a huge peace of mind knowing that you've got the rent covered while you're working on your other project. If you are single, like, out of college, go for it. You know, you got nothing to lose. Right? You you can always pick up and start again even if you go broke. But the bottom line is I would stick with my day job and and an income until it started getting in the way of the business that I and the money I could make elsewhere.
In the business. Does that make sense? Yeah. Gotcha. That totally makes sense. It's kinda like a lot of influencers who technically are are building their own businesses a little bit. Won't really go full time into it until they at least match their current the money they're currently making at their job. But, yeah, what would be probably some of the, you know, takeaways and most important lessons from building UGG that you describe in your book as we wrap it up here.
Okay. The, there's a lot of philosophy and a lot of spirituality in my book because I I've certainly come to believe since selling, and I've started other businesses as well and and sold them off. But the the thing is just start and get started and hang in there and keep going. And it may look like nothing's ever happening, But one of the pieces of philosophy in the book is that the quickest way for a tadpole to become a frog is live every day happily as a tadpole. Right?
And I'll give you some examples. So it took me 5 or 6 years to get going in ag. Back at the same time I was starting out, there was a company in Oregon importing these nylon running Shamus. And they were trying to get into all the athletic departments and running magazines and everything. And after a few years, they they changed their name to Nike, and the spot of jogging took off. Right? And everybody starts looking, okay. Well, who's the best running shoe?
And they go and they start researching and they find, oh, this This Nike company's been around for a while. Blue Ribbon's been, you know, I think I'll get them. Right? And so even though Nike was or 6 years just blundering. And and I know this because I read Phil Knight's book called, Shudog. He was the founder of Nike. And would you believe the 1st 5 year sales of UGG was greater than the 1st 5 year sales of Nike? Wow. That's crazy. Yeah. So as bad as we were doing, they were doing worse.
But this this shift took off worldwide in jogging, and they got sucked into the millions and a 100 of 1,000,000 And there was another company in Santa Monica that had been nearly 10 years out of England trying to get this little dance shoe Popular, and they were running, you know, advertising and dance magazines all over the country and and trying to get into the high school cheerleading and the college cheerleading groups.
And then the sport of aerobics took off, and everyone starts reading the magazine. Well, who's been around? Who's been, oh, rebook? They've been rebook. Rebook. So Rebar got into the millions and the hundreds of millions and the billions. And and so that's how these trends work. Nobody knows the 5 or 10 years a grind and lack of sales and almost bankruptcy before something happens and it catches. So that's something to remember as an entrepreneur.
And that's why the Ted Paul thing, you you're a Ted Paul, Ted Paul, Ted Paul, Ted Paul, and if something will happen in Bam, you're a frog. Right? The other piece of philosophy that's my favorite is that your most disappointing disappointments will always become your greatest blessings. And now I speak all over the world, right, to big entrepreneur groups and small entrepreneur groups.
And, I always ask the audience please raise your hand if in the last 12 months something happened in your business or your personal life that at the time was a huge disaster And now you look back and think, thank god that happened. And would you believe 80% of every audience I get raised hands? So it's that that just knowing that your most disappointing disappointments will become your greatest blessings. Is how you handle it mentally. You can go, poor me. It's so unfair. Life's not fair.
I why did it happen to me? You can take that attitude, and it'll take 6 months to fix it. Or what I do, I just go that's good. Now what's good about it? And just by taking that switching the the attitude to to now I'm what's good about this, it really happens in in in a few days or even a week. You can find something that is way way better than what was happening before the disaster. Definitely. And in terms of those successes, like even in the media.
They'll portray pretty much any big company story from the founding point to the endpoint as being like an overnight success just because it's in a simple article. Take you 2, 3 minutes to read. It seems like, oh, that probably didn't take too long. And from a numerical standpoint, like saying, oh, after 8 years, they copy It's like, oh, only 8 years, but from reality, it's a lot longer and a lot more painful than a lot people might think. But, yeah, definitely.
But, yeah, That wraps it up for today's episode. I greatly appreciate you, Brian, for taking the time to join the show. We'll have a link posted in the episode description for his book down below. Thank you so much. I appreciate it.