UGG: Brian Smith. How an epiphany, surfers, and $500 launched an iconic sheepskin footwear company.

Transcript from https://podmenti.com/t/b752f3cdb80d6447

I could see it coming so clearly. In fact the pre-season orders
Looked like the company was going to
be destined for you know uh uh eighteen million, maybe even twenty million dollars.
But
I knew I would not be able to finance an extra five, six, seven million dollars in product.
And most people would be so excited about that.
I saw this as a kiss of death.
Welcome to How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements.
They don't.
Guy Raz and on the show today how Brian Smith brought Australian sheepskin boots to America.
that turned UGS into a multi-billion dollar brand.
In 1979, a 32-year-old Australian named Brian Smith decided to import boots from Australia and sell them in the US. At the time, Brian was living in Southern California, and the boots he was importing were made from wool and sheepskin. In Australia, everyone called them Uggs.
because they were ugly, not because it was a brand name. Lots of small factories made their own versions of these same Ug boots. But when Brian tried to sell them in the US, he could barely move inventory.
It would take more than a decade before he'd find any traction with consumers.
He made mistake after mistake. He ran out of cash, he lost control of the company, then got it back, then nearly lost it again.
And finally, in 1995, Brian managed to sell Ug to the footwear brand Decker's for a modest price. Deckers would go on to turn Uggs into a global phenomenon, a brand that generated over two and a half billion dollars in sales last year.
But long before celebrities wore them, long before Ug became one of the most recognizable footwear brands in the world.
It was just Brian Smith.
A van full of boots and a conviction that comfort could become culture.
Brian was born in Canberra, Australia, right after World War II.
Growing up, his family spent lots of time at the beach.
Brian says he learned how to surf so young he doesn't even remember it.
He never thought about starting a business, so instead he went into accounting for job security.
But ten years in, when he was starting to feel really stuck.
He had an epiphany, literally.
All thanks to an iconic Pink Floyd song.
One afternoon I was driving along the highway.
This music came on the radio and
There was a song there that was called Time and the words were
And then one day you find ten years have got behind you, no one told you when to run.
You missed the starting gun.
And I
J
Talking to me.
And as soon as I heard those words my body just got
Covered in goosebumps and uh
I thought, Oh my God, all of my friends were tracking off to partnerships and
in the accounting world and other friends who'd started business out of high school and I
I felt like I'd been running on the spot for ten years, so it was
Literally it was so powerful it was only a matter of weeks before I arrived in in uh
Los Angeles and uh
I had my surfboard, so I just started going up to Malibu.
I surf that place for nearly a year. So it sounds like you were I mean, w w were you a good surfer, or were you just a like how would you describe yourself as a surfer? I I was a good surfer, but every surfer thinks they're a good surfer. Right. But I was no, I was pretty good. So all right.
Now this is a different time. LA in in nineteen seventy eight, much different than a cheaper. So you probably had some savings and it but I I I don't think it was that expensive to rent a place in nineteen seventy eight. No two hundred dollars a month for this little house.
Wow.
All my friends told me it's a such a bad area, Brian, don't go there and
And I'm this dumb Australian thinks oh they're like me, I'm an Aussie, you know?

But it turned out that all the all of
houses in that area had bars on the windows and you know the first night I was there I
Bora.
Pizza and a bottle of wine and a this big tall candle about, you know, fifteen inches tall, and I stuck it on a shelf.
In the living room and lit it and then you know
Drank some wine, listened to music, went to bed and
The next morning I woke up in bed and th everything went black and I
Ducked underneath, oh my God, the house is on fire.
'Cause the candle didn't have a dish under it and I just let it b it burn through.
Um wait it was like a f real fire fire in the house was like rumbling with noise, yeah, on on fire
And I got up to the front door and I was fumbling with the lock and I I couldn't get it open.
And
The weirdest thing happened. I I I remember slumping to the floor and I just said oh
I'm gonna die.
And
This voice this is gonna be hard to believe, but this voice
That just said very
Calmly.
You haven't done enough with your life yet, Brian.
Wow.
And I stood up and I
I worked my way all around the house, punching all the windows out with my fists and screaming out and uh eventually a workman who'd been couple of houses down came up with a crowbar and got the bars off my bedroom.
To get out and then
You know, it was just one of those weird, unexplainable moments.
For sure.
Um
Alright, so you
You are in LA.
I'm assuming you moved to a new place and Santa Monica.
Um, I d I don't quite understand what that what you
I mean,'cause you quit your job. So you had to find a career and a profession. You couldn't just surf'cause you had to pay your bills.
Did you think that that
was maybe where you would find the thing you would do.
Um well the trends
All came out of Califor Levi jeans, waterbeds, you know, all the surf brands and skate brands.

in the place where those those things were coming out of.
I
look at the Wall Street Journal and I'd look at billboards on the way to everywhere and I'd look at
You know, shop windows and see what was the f yeah, and I was really literally on a search for something to take back to Australia. I had no desire to stay and live in America.
So wait, just to be clear, the idea was you would come to the US
And I'm assuming you had m saved money.
Right.
And you were gonna live off that money and uh and surf, but also
Just
It was kind of like a reconnaissance trip. You were just looking for maybe a product or something that was cool there that you could then bring to Australia and sell.
That's exactly right. Yeah.
And it could've been anything, could have been lollipops, it could have been I don't know.
So you don't have to be a chartered accountant, basically. Exactly. Yeah.
Well I was sitting around my house in Santa Monica with my buddy Doug and uh
I was reading Surfer magazine.
There was a photograph of
This guy and a girl in a in front of a fireplace with the all you could see was their legs with these white boots on their legs.
And
I the instant I saw it, I thought, Oh my God.
You know, one in two Australians.
W has some sort of sheepskin footwear.
And there's none in America.
Hm.
So I just thought this is like the ultimate no brainer.
And uh I looked at Doug and said, Man
We gotta go into business, we've gotta be instant millionaires. Just like that.
Okay, let's just kinda break this down for a minute.
These are I don't know, mid calf.
Boots that uh the outer
is a sheepskin leather and in inside is the sheepskin wool.
Okay. And this was a thing
And every little town
There is someone with a sewing machine
And they're making
Ugboots and every town would spell Ug a different way. U G U G H U G H S, U G you know.
You call them Ug Boots. Wh where did that come from? Like ugly or Ug or what be all of that. Uh nobody really knows. They've always been call boots in Australia.
Descriptive term. Like you would call like, you know, rubber boots Wellies, even though they're not I maybe Wellington's is a brand or maybe it's named after like the Duke of Wellington. I don't know.
But in the UK they c wellies. So uh these were just called Uggs. Like didn't it wasn't a brand name, it's just the name of what they were. It's just descriptive. Descriptive of that product, yeah. So you see this and you think
You know, Eureka. Hey, you're in California. You gotta say Eureka. It's the official mind of California. Um, I have found gold and it is in sheepskin.
uh boots that are, you know I'm gonna just mint money doing this thing'cause uh you know, everyone in Australia has this and
Okay, so
'Cause initially your idea was
Let me bring a little bit of southern California to Australia.
Now you're thinking, wait, let me bring Australia
to Southern California.
Yes, yes. And Doug and I we we didn't have a lot of money but we uh decided we you know we gotta get some samples, so we pulled five hundred bucks together and
Called the guy who ran the advertisement.
And we talked him into being distributors for the US. And I think this guy was it was George Bercher. I think he he was the guy who owned an Australian boot company called Country Leather. He would become your main
Supplier eventually, right?
Exactly. Yes.
Alright, so you call him and
And so
We ordered
Six pairs samples. And uh after they arrived Doug was going to be the salesman'cause I I was an accountant. I was terrified of sales.
And uh
He went on the road and visited every single shoe store in Southern California. He came back with about a hundred and fifty business cards of all these retailers.
And not a single order.
Said Brian, they tell us we're crazy trying to sell sheepskin in California.
And that sounds logical, but Australia's climate is identical to California.
So that wasn't the real answers and so
You know, as an entrepreneur you have to pivot when you you hit a wall like that. And I thought well
the um well maybe the surf market's the way to go. We we looked up you know the yellow pages there are probably sixty to eighty
Surf shops. And so Doug and I
Change gears.
And now he insisted I went on the road and I I can remember walking in a
con surfboards which was in Santa Monica right near where I lived and
I was so embarrassed to open up this bag of samples. I pulled them open and he goes, Oh my God, oak boots He says, They're great. Oh my friends have got'em. What are you doing with those? And I said
Well, you know, we're thinking of importing them into America. Oh my God, you're gonna make a fortune. And so this happened in all the surf shops that I went into, and the same with Doug.
And we thought we were gonna be instant millionaires, no doubt about it. Yeah.
So all right, so you're getting all this feedback that seems pretty great. Yeah. And before we get into like actually launching this business,
You need money to purchase orders and you also need to purchase different sizes, right? Because people have different size feet and
So
First of all.
You and Doug, I'm assuming, establish a business together.
That's correct. We're gonna be partners and uh
The interesting thing about that road trip we both did, neither of us realized that we hadn't asked for an order.
Right. Now we knew we needed inventory and
By a pure fluke, my roommate
in Santa Monica overheard us talking and
Said, Oh, there's some guys at my office.
Looking for other invest new investments. And let me
take it to them and he did him and we w we're able to raise twenty thousand dollars from them
Uh
as capital and
We didn't even have a business plan. It was just the enthusiasm of of
You know, me talking about how big it was in Australia and everything, but
But so we raised this twenty thousand dollars and w we knew we would never, ever, ever need any more money than that for yeah, for the rest of the business. Right. I see I got you. Okay, we'll we'll we'll get we'll get there. Okay, so you you uh raised twenty thousand dollars.
But it sounds like you didn't have any orders, so you just ordered what you thought you could sell, or is that right? You just made up uh came up with a short and tall.
And we had brown or white. So short and tall, like short would go to your ankle and tall or short was ankle. Okay. T tall was up to the calf, yeah. Okay, and then brown or white, and then how many pairs did you order?
Five hundred. And just different sizes. Fifteen thousand dollars, yes. And it takes what?
six weeks, two months to get these boots.
We got the boots in by the end of November.
Yeah, just beginning to December. So you get these boots in
And now you're gonna go back
Presumably back to these stores that had expressed interest and you're like, Hey, we're back, we got'em.
And uh
I remember going back to Con Surfboards and the owner goes, oh well done, Brian. You are gonna be so successful, but we couldn't sell them out of our store. We just sell surfboards and trunks and flip-flops, but you're gonna do great in the shoe stores. Good luck, you know?
And I walked out without an order, right? And this happened
To in about sixty surf shops all the way down the coast from Malibu down to San Diego.
And uh the total sales for the first year was twenty eight pairs.
Which was how much money.
Exactly a thousand dollars, but it's just a fluke, but it was exactly a thousand dollars. And I I'm not I'm not fast enough with the math. How much were you selling a pair?
At retail it was probably between fifty and seventy, depending on the short and the tall.
Got it. Okay.
So in nineteen seventy nine, that was not super cheap.
No, it's super expensive and
I was th that was one of the worst facets of the entire
Project for twenty years.
was the uh lack of margins I had because the pressure
Of the retail price kept us way, way down. So it was very hard to make money. So you make a thousand bucks.
in sales your first year, so you uh it's not looking very good. And
You are now you've got pairs, what, just piled up in boxes for you? Hundred and seventy something pairs, yeah, in the third bedroom.
In this uh house that you're renting in Santa Monica?
Yeah, that was the third bedroom was the w the warehouse, yeah. Wow.
You couldn't do that today. You couldn't rent a house in Santa Monica.
Uh and be broke. Right. I mean just w it'd be impossible. Yeah.
Um all right, so you
It's nineteen eighty now.
We got a bunch of shoes.
And w what are you gonna do? I mean and what does Doug do? Like you guys had started Yeah, Doug decided to go into the video business which was just starting at that time.
We knew we couldn't make a living out of no sales, so
You know, I I wanted to give up but I couldn't'cause I got four hundred pairs in the bedroom and uh all my investors' money is tied up. So
I started doing swap meets and street fairs.
And basically anywhere I could get a crowd
And over the next, you know, January, February, March I ended up selling about
Six thousand dollars worth of product. Pretty good.
And uh most of it, believe it or not, was out of the back of my van
In the parking lot at Malibu. Yeah. I used to go up for a surf in the morning and afterwards I'd grab a coffee in the newspaper and I I had my van full of product and I would just sit there with the doors open.
I made, you know, steady money.
A g just a a point of clarification here.
I know that especially in California, because the water's really cold.
Most surfers wear wetsuits'cause it's hard to swim in that water. Unless you're in a wetsuit.
Were surfers in Australia wearing these wool boots because
They want to
warm up their feet or their
after they surf? Like it just seems Well, these questions you're asking were asked by every single surf shop owner
And every consumer. Wha what the hell what h why are they so good?
And the answer is that and all Australians know this
Is that sheepskin breathe.
So you can put them on with freezing feet.
And they will insulate and if you got wet feet like after surfing
It wicks the moisture out towards the surface and so within ten, fifteen minutes your feet are dry and warm.
Mm. So there was a very, very practical side to wearing them after surfing.
And so that's what I I wanted to tap into.
But you can't
turn this to a business just selling them out of the back of your van. You've gotta you gotta figure out how to get into retailers, right? And and so were there I'm assuming all you know, there were trade shows back in in the early eighties of for
Shoes and and and apparel.
Yep, in fact there was a uh the market that's called the action sports market
Just started that very same year as as I started. So action sports, surfing and skateboarding and uh so I did

Nobody understood what I had.
So the bottom line is uh you know, in f in March I just uh
Shut it down and uh my first job in the summer was scraping boats at Marina Del Rey.
Then I switched over to
Uh construction firm a buddy of mine owned a contracting company in Bel Air and I I was working in Beverly Hills and Bel Air on
Construction projects.
And uh th that filled up the summer.
So you're working, uh doing these jobs just to pay the bills. Yes.
You're not giving up on the shoe thing yet. You're still committed to doing this. I had the most interesting motivator.
Which was that at least one in two Australians owned some sort of sheepskin footwear.
So
It's not the product's fault, it must be me.
And I had that mantra for like ten, fifteen years. Every time I
It's not working, it's not working, I would come back to that that thought that well, how come everyone in Australia owns a pair? Yeah.
And so
That with that attitude
I was able to stay in the game a lot longer than somebody who'd never seen them in Australia.
Fair enough. Okay. So you so this is now the summer of or end of the summer of nineteen eighty. You gotta sell a bunch of shoes. Yes. And from what I gather
You started to
run small ads in surf magazines. First of all, how did you do that? How did w wasn't that expensive to do?
Um

Relative to how much money I had, it was very expensive, yes.
But back at that time the surf magazines didn't want money up front. So I was able to get thirty to sixty days to pay the advertising bill. So I was totally gambling.
that if I ran these ads I would get enough sales to be able to pay for the ads. I got it. Okay. So you were running these small ads and it was just s w were you calling them Ug Boots or Uggs or I'm I
I did the probably the smartest thing I ever did in that business was um
I did a search, a trademark search that it cost me six hundred dollars at the time, which today's probably four or five thousand bucks, you know? Yeah. And
I did a search of the of the world, especially the US, to see if there'd been any prior use of the trade name Ug
And they had not. So that opened up the gate for me to r do the registration of the trademark.
So you you trademarked that name Ug, which was not a trademark I mean in in Australia it was just like it was generic down there, yeah. Right. It would be like trademarking the word cheeseburger, right? It was just the thing. And you were able to trademark that as a brand name.
In the United which is amazing that no one had thought to do that. But I guess this really wasn't a popular product in the US. Oh, nobody had heard of it, yeah.
Alright, so you um from what I've read, because you you've written about this in in in a book
Um you actually
Sold.
About thirty thousand dollars worth of these shoes for the year nineteen eighty.
Pretty good. Yes. But you end up with a loss because
the cost of the boots and the expenses of going to trade shows and taking out ads, so you actually
You're still
Running in the red.
And still living on
Some are
summer jobs to basically to stay to stay, you know. And you were not
A kid, I mean you're now well into your thirties, right? And
I imagine that
Maybe part of you or maybe your parents
Oh we're thinking.
What's he doing with his life? Yeah. What he's in California, he's surfing, he's trying to sell these boots. I mean
Did you get any any of that feedback from your family at all?
Yeah, my my dad
Who'd been a contractor, you know, absolutely did not want to be
running my own business. And I think it's probably because he had such a hard time of it.
That's why I got into accounting. He wanted a safe, secure job, you know
work your way up to chief accountant, you know, th I uh I couldn't think of
That to me was like going to prison.
Alright, so you uh you're so you're still committed to this.
And you're now
A full year in.
Yeah. And still kinda pounding the pavement, going to these
trade shows trying to get more and more
Interest.
I think you even
in in nineteen eighty one you even attend a snow or ski
Kind of um
trade show in Las Vegas, right. Okay, and and was there more interest at that snow show?
The ski market was even harder than the surf market.
Um because their attitude was well we have mud and we have slush and we need rubber, yeah, we gotta have Sorells.
And they couldn't see
sheepskin being strong enough or waterproof enough to work in their their area. So
Yeah, the ski markets were very, very difficult to get into.
Uh
You get a job that summer.
Uh nineteen eighty one
A very unusual job that
I would not exist today.
You
had a friend who gave you a an in.
For this job that would pay well. What was it?
It was at the time when all the big mainframe computers were being replaced by desktop computers.
And what nobody knew is that these
big refrigerator size mainframes
Every connection where one wire touched another wire or a motherboard touched you know plugged into another board.
It was gold connections.
And so he
arranged to buy up all of these old mainframes which most accountants were paying to get rid of them.
Right. Not knowing they were full of gold.
And so I was given a

Snips and hammer and
I found out when I got home that that I'd made three thousand dollars, which was a fortune to go on the road for a month, you know?
But I realised I'd shift over three hundred thousand dollars worth of gold back to San Diego. Wow not really knowing that I was doing it.
But still like
On this Ug thing.
Like
Uh who is manning your phones to take orders?
Nobody was calling. I mean it I I was like a non entity for the first three to four years. And
Every time I'd go into summer mode I wouldn't think about Uggberts for four or five months.
And then it would be yeah, July, August, September I'd start thinking, Oh shit, I better
figure out who I'm gonna sell to, how do I get more sales, you know. Because
I learned early on that trying to walk into a surf shop with sheepskin boots on a hot day
was like pointless. So I I learned to wait for a really shitty day when you know the storm would hit, you know, then I'd go on the road and and sales were you know, I I would open up, you know, half a dozen pairs in lots of different little surf shops. So
Like in the off season I was fully
Making money to stay alive.
And then I would have to back track and get the Ugbo business started up again. So like October November was when you would run Ug.
I gotcha. Okay, so
It was totally seasonal. Yes. So you would basically
Focus on this in October, and November, and try to get
You know, people to order these so you could get them in time for Christmas, presumably.
This is I mean, the unpredictability of this is insane because
You've gotta figure out how much you should spend on ads.
with the hope that it would convert and then hopefully order the right amount of shoes so you wouldn't be left with a bunch of inventory. Yes. And okay, now just uh the ads for a moment. What what are they
Look like
Was it just text or were there photographs of people wearing them or No, I I thought I was doing a brilliant job.
Um
Telling you I uh about one of the biggest mistakes I ever made, right? Which was hiring these two models, really good looking.
We posed them on the beach and I'd run those things and and the sales at that you know, let's say eighty one, eighty two was about thirty thousand, the the sales went to thirty five thousand like it was like my ads were doing nothing.
And then
Again summer job and then come back to it and and w I use

Sales went to I think it was forty five thousand that year.
And it was
Like just getting nowhere and
It was probably the fourth season of me being in business.
I really wanted to give up. I was working on a golf course in the summertime, right? Doing what?
I was a greenskeeper. I was changing the holes on all the greens and I was
Helping with construction and all that.
By the way, I understand the the necessity of doing all that, right? You needed to earn a living and
Now I mean you're you're in your you know, late thirties and you had been a certified you've been a chartered accountant, which is a kind of a prestigious gig, right? You can and here you are, you know
like doing m manual labor. I mean, d d did it were you ever like, God, what am I doing?
I actually love that golf this that golf course job is probably the best job I've ever had in my life outside of Ug, you know? Yeah.
Um but
Over the summer I I realised, you know
My product's so expensive it needs a huge inventory'cause you never know if someone's gonna walk in the door they're size seven or a size thirteen. So it was a very hard
product for a retailers to stock because of the cost.
Americans still didn't understand sheepskin. They thought it was hot and sweaty and prickly and so so I've got that against me.
And
I
By a pure fluke was having a beer with one of my good retailers in s in Ocean Beach in San Diego.
And at his store.
And
I was talking about how hard it was for me to get traction in the advertising and
He
called out to the back and and he called at half a dozen of these little kids, you know, the twelve to thirteen year old grommies who store their surfboards in the shop and he says, Hey you guys, what do you think of Ugs?
And
They pretty much all just said, Oh, those Uggs, man, they're so fake.
Have you seen those ads?
Those models they can't surf.
And
Instantly
I realised
that n not only was my ads not working, I was actually
Turning people away from Ugbers because of the images that I portrayed them in. So it was a huge learning thing. So uh presumably you started to use real surfers in your ads.
Yeah, I I had a buddy, uh, he was a former world surf champion, Pete Town and who
Worked for uh surfing magazine and he
was running a scholastic surf team at the time and I called him up and said, Hey, do you have any young kids who are about to turn pro
And he gave me Mike Parsons and Ted Robinson as two people to check out and
So I hired them for I paid them in boots, you know. And uh
I just took my own little cannon short shot and we went surfing at Black's Beach.
In La Jolla and Trassel's up in San Onofre. Yeah. So when I ran those ads, the sales which had been around
You know, thirty to fifty thousand. Um
Per year w the the immediate jump was like two hundred thousand dollars. Wow. And it was because I finally connected the image
that kids would wanna be in the photographs like they would be dying to walking to Black Spee with Mike Parsons or to Trestles with Ted Robinson, you know. And that reality
really taught me everything I learned about
Sales and marketing.
the jump from 1982 to 83 was big.
I think a couple things happened.
Um that year.
Um which one was you you designed a logo for Ugs. Yes. Right. Like
You design a a logo was like a ram's head, I think.
Yeah. Right. I don't think it's a logo today, is it?
They took out of it. Yeah, it was too difficult to reproduce. Yeah. But that was the logo. Okay, so you had a logo, but
You were basically able to just order, you know, from
A manufacturer in Australia.
shipped to the US and you could sell them.
And then the other thing
I think happened that year is
You uh
You get
you get a threatening letter, like a cease and desist letter from another
company called Uggs. U G
H. S. It's also
They also sell Ug boots.
they're I guess Australian couple, but based in Oregon who were doing the same thing you were doing, but they were actually
making their boots in Oregon. They send you a letter saying
Hey.
You're using the name Uggs, we've you know, w we've got a trademark on it.
We're gonna see you.
Yes, that was that was a horrible period. Um
And I I tried to uh
Find other names to use. Um
But didn't you already have a trademark on the name U G S. Um in Australia, the trademark law is if you if you're the first guy in with your ten dollars and you fill the form out
You own the trademark. Right.
The rest of the world, you have to establish first use.
And continuous years.
And I was able to do that with this woman. She she came in after me
And I had advertisements, I had lots of public information that showed I was in business before she even came to America.
So I knew I would always win a a lawsuit, but
I didn't want to be in one'cause I didn't have any money.
And this was going to be well just'cause we're gonna come back to this, this is gonna be a ten year saga.
Right.
It was gonna last a long time. Um
But I'm sure in the meantime it was
It's a competitor, right? I mean since somebody is do trying to do the same thing that you're doing

I know happened that year is that
You met somebody who gave you a line of credit.
And I'm assuming because you were you were doing
Well that year, right? And a guy named John
Booster, who
I guess you had met when you were in the mainframe
Yeah, he was a computer guy, yeah.
But he wanted half the business, basically.
That's correct, yeah.
And you know, when I look back on my
Experience of Ug
The greatest weakness I had was my lack of financial knowledge.
Right. I was an accountant, sure. Yeah.
Yeah.
The same as accounting.
Accounting is what happened last year, here's the balance sheet.
Finance is forecasting, what am I gonna need?
Over the next one, two, three, five years.
Yeah, in in in a in a company that's that's was growing pretty fast.
So I was always in a position
Of the sales exceeding my ability to finance the production.
And the more sales you get, the bigger your problems get in in supply.
Yeah.
I never really understood that.
I my accounting thinking was
We just sold a million dollars worth of product, we're broke.
What's the answer?
Oh, sell two million next year and think we'd have more money, but you don't, you're twice as broke.
Right. It's interesting'cause you did have this deep experience as an accountant
But as we will see the
you know, for a variety of reasons, you felt like you had to make decisions that would
over time chip away at your control of the business. And you made deals that weren't necessarily uh in in your favor, like
basically giving half of the business away for
A a line of credit.
Yes.
I was always
trying to get financing from someone who had cash. It wasn't like a
A well thought out.
you know, business plan or anything.
And always in September, October, where I had these humongous orders to fill
And no product. So so I was in the worst negotiating position
Of all time. And this happened two or three times during
those early years where the old investors didn't have the money to buy the new product.
So I had to do a deal to get them out and bring in bigger investors and and that that was a really horrible cycle.
Okay, so you now have a partner, essentially, maybe a silent partner, this guy John

Yes.
Meantime.
You are um you still have this kind of like
potential lawsuit.
hanging over you. And I guess you you dec you start to think, well
Who wants to deal with this? Maybe I'll just change the name. And you thought about
Changing the name of Uggs. I did. I I came out with the name
Jackaroo, which is like a cowboy. Um it is an Australian cowboy.
Australian cowboy jacket. And J Jillaroo is the uh
The female version.
And uh
had these young kids that you know, I knew their parents and they were writing for the Ug Surf Team. They they w they had Ug logos on their surfboards. They're like all the surf all the brands had surf teams.
And so they wanted to be on the UG Surf team. You sponsored a surf team? Yeah, but only with logos and and product and stuff like that. I didn't really have any money. Right. And I went to them and I said, Hey listen guys, we we you know, I'm I'm gonna have to give up the Ug name
And uh we're gonna call him Jackaroos, so you'll be writing for Jacaruz and they're w No way, we're never that's a dumb name, we're never
You know, and I realised how passionate they were about the Ug brand.
And
Just made me forget
All about changing the name and I said, Damn it, I'm just gonna go to court and fight this,'cause tha that name is really powerful.
Let me come back in just a moment. How Brian's trademark fight is just the beginning of the struggles that put Ug
And his ownership of it.
At risk.
Stay with us, I'm Guy Raz and you're listening to how I built this.
Hey, welcome back to how I built this. I'm Guy Raz.
So it's nineteen eighty-four, and Brian's business is growing, but he's tied to a seasonal sales cycle without reliable financing.
He knows he has to grow beyond surf shops.
But he can't get traction with
Any national retains.
And he's feeling stuck, until a trade show friend named Paul Bussman.
Starts opening doors for Brian to another sport.
Skiing.
He was one of the founders of the ski industry association.
humongous trade show in Las Vegas, and he came on as a sales rep for me.
in the ski industry. He I wasn't looking for a sales rep, but he came and convinced me that
The ski market was a totally different market to the surf market.
And he was right. And so he had a group that was already selling gloves and socks and everything to all the ski areas and all the ski shops.
So he added Ug Boots to the line.
Got it. Okay.
Nineteen eighty four.
Record year.
Right, but not not yet profitable. You had still out of losses.
and you have this line of credit still kind of growing and
But challenging, and from what I understand that year
You uh and I should mention you were you had been recently married. You met uh Laura, who became your wife. Yep.
And um
You said to her, Hey.
I got it.
abandon this thing. This is not gonna work. You realize or decide that you see no future in Ugs.
Yeah.
That
Partner investor that gave me the line of credit.
He was
Used to
Finding an idea and doubling his money overnight.
That's why he had the computer business that nobody else ever saw, you know, stripping out the gold.
And
He wanted to double his money, but you know, he had no concept of
Advertising, cost of samples, cost of the communicating with the sales for it. Yeah, yeah, and he he just wanted his money out.
And I do remember the the
There was a period when he was look putting intense pressure on me and I I remember
I was at home one night
With my wife, Laura and
We were watching T V, uh, I was lying on my back on the floor and the show finished, I clicked the T V off.
And I rolled over on my stomach.
And got up on my hands and knees and I started crawling towards the bedroom.
You know?
And Laura, who was a really quiet person, she just looked at me and
So you get up now and walk to bed like a man.
Hm. And she sh she sort of shocked me.
And as I stood up I just I was like coming out of a fog. It was like Oh my God, there's so much
more to life than this crappy little sheepskin company. And that night I started you know how
How can I get out of this? You know, I I literally wanted to just get out.
Yeah, I mean I could understand'cause you were feeling a a bunch of pressure, and uh I mean now
You are almost forty.
Right. And
Probably still

Working for an architect and she was paying the bills at the time, yeah.
So all right, so there's a lot of pressure.
and this guy wants his money back or he may want to get out of business and
you wanna just throw your hands up and walk away. Um
And but
like will happen again and again in this story.
Some intervention, call it divine, whatever you want.
Uh you call up this guy Paul Bussman and say, Hey I wanna get out of this thing.
He says, Well, uh I know somebody
who could potentially help you.
Uh, his name is Neil Fearing. Fearing I think that's his name.
And he is a what who is he? Is he like a wealthy
Investor
His business was Yamaha motorcycles and he was
A distributor for them.
But he was also
A uh
Opportunist and and if he saw good deals
in the marketplace, especially in the ski industry, he would buy a whole bunch of clothes outs and figure out a way to make money out of it. So
So that was who Paul Bassman introduced me to.
Right.
And Neil came down and looked at our operation and
And said shit, I you know, I could do this, but you know then we have to sit down and try and figure out
How we were gonna do it.
Okay, and your operation at the time was you had a warehouse in San Diego'cause you had moved
Yeah.
And it was you and
Uh how many people do you remember working with you?
Uh w I had a a warehouse girl and uh someone that came in part time did accounting.
Okay, and who was doing like
Logistics like sending like shipping the orders. Me. You were. You were the guy. Okay. Okay, so he comes down, this guy Neil, and says, Yep.
Uh I think I'd be interested in buying you out.
Yep. Uh but
From what I understand, he says you're gonna lose we're gonna buy you out, you're not gonna have any ownership, but
You can regain twenty five percent of your ownership.
Once this little issue with that uh other company, the Uggs UG H S company, once that that
lawsuit or that situation gets resolved.
then you can you get your twenty five percent back. That's basically the deal they offered you.
Yeah, that from his perspective is exactly how he saw it.
Okay.
But me being a naive
You know.
Business man.
I was looking at
Oh, he's so lucky I'm bringing in three new partners to my business.
Him, it was this guy, Neil. Paul was this guy you'd worked with, so he'd be a partner.
Yeah, Paul and another guy, Joe, who was the close out guy.
So uh
The three of them were gonna buy the company together?
In their minds, yes.
And I was this sort of impediment that came along with it. But they needed you because you knew you had the connections, you knew how to run the business. Okay. So you would stay on
And I'm not trying to second guess you or anything, I'm just trying to get in your head when you were
you know, that time like
When they said we're gonna buy the company, do they give you a check that you could then cash that was your money?
No, no, no.
We set up a new corporation.
And
In my mind we were all going to own the company twenty five percent each.
And uh And what were they bringing to this cash?
They were bringing in cash, the ability to buy more product. They were
We also moved the entire operation up to their warehouse in Anaheim.
And uh
I was not going to be involved in the day to day operations anymore. I was going to be the salesman.
And by now.
I loved sales. I I was just an incredible IB salesman.
And so I was going on the road full time and making I was on not on salary, I was gonna make a commission on sales.
Okay.
They were gonna do all of the operations. So their their seventy five percent was
Overheads and and running the company.
Okay, so you saw this as it's almost like if you were to
raise capital from a an an outside investor except
not only did you raise capital, they were also gonna operate
the the side of the business you didn't really want to do. You want to focus on selling. Exactly. Sounds like you were also looking for some some kind of
certainty or more financial stability. So if as a sales rep,
You would get commission.
That's correct.
But you're giving up the business, basically.
Well in my mind I wasn't. In my mind they were my new partners and nothing had changed. They're the ones that thought they just bought the business from me and it came to a head we spent
a a whole week organizing everything up in the Anaheim warehouse and getting the accounting working and everything. And I finally went on the road my first day as a full time sales rep.
Right.
And I drove down Beach Boulevard to Huntington Surf and Sport and I walked in and uh the manager's name was Dave and I and
Before I could say anything he said hey Brian, I heard you sold the company.
And I w What
He said, Yeah, I called an order in this morning and
They said you don't own the company anymore.
And like I couldn't wait to get out of the store and I went to the shell gas station next door.
to the phone booth'cause this is before cell phones, right? Yeah and I called up Neil and
I said, Neil, what the hell are you telling people? And he said, What do you mean?
I said, You're telling him I don't own the company He says, Well you don't.
Yes I do, you're my three new partners.
And he goes, No, you don't get your stock issued until you finish the trademark.
And I just hung the phone up.
And I drove from Honeyden Beach straight back to San Diego.
And I pulled out my contract.
And I read it and I re read it and I just went, Oh shit.
I don't own the company anymore.
Well.
Okay.
So
You're frustrated, but you know that you could get twenty five percent of your ownership back.
Sounds like they actually did pretty well that that year that they sort of came in. I mean you guys did six hundred fifty thousand dollars in sales, so clearly on the up and up.
Yeah, the weird thing was I I actually loved being on the road selling and you know, after we got a we we made a deal that from then on they would not tell anybody that I'd sold the company. Okay.
Right. So that that we got that out of the out of the way. I'd already
committed that I don't own the company, I don't run this anymore.
Yeah, but I um my mantor is I'm gonna try and get a pair of ug boots on every single person in America.
And I went back on the road to all my southern California guys and I got back to the office and Neil handed me a check.
For five thousand dollars. I said that's your commissions. Wow.
And
Would you believe that I think that was the fifth or sixth year. That was the first money I'd ever taken out of the company.
And and here here's a question I have for you.
I remember you said that early on you would cringe. It was so hard for you to go into these shops and try and sell them. You were embarrassed. You were
You were nervous.
Now it sounds like you were really excited to do it, so what changed?
There was a couple of things. Um
By being out there with the customers it was so much easier for me to
you know, get a rapport going and
introduce the product by having them try the boots on. Now that turned out to be the biggest
factor in uh closing our first orders was having the buyer try them on.
But while I was in the stores I I uh
This girl walked into the shop one day, uh I think I was in in Newport Beach somewhere.
and she was touching the Uggberts and she obviously loved the look of them, the feel of them and and she was asking the the staff guy there
You know, what are these like? Well, I'm not really sure, you know, well are they are they hot?
Um, not really sure, you know, d what happens if I get'em dirty. Yeah. And he the guy was useless, right? Yeah. And I saw that interaction
And
I came up with what I call the six pair stocking plan. And if a store would open up with six pairs I'd give a free pair to the store manager.
And now I was in a different surf shop, you know, a month or two later and
A guy walked in and he says Yeah, one of these
boots like and the and the the sales guy says oh they're fantastic I'm wearing'em now. He says aren't your feet hot? No, they breathe, you know, so well what happens if you get'em where to do oh you can wash you know I mean it was just like night and day.
And so the guy bought a pair of oak boots because there was somebody to validate how good they were.
And so that cost me a pair of boots for each new store I opened, but that changed the trajectory of Ug forever. That w and it was probably the best marketing plan.
I never executed on.
Okay, so you are now full time selling and and making a commission and
Driving all around Southern California.
Um I think at a at a certain point you even tried to
Build like a boot.
for the ski market, specifically for the ski market called the Z Lander, and I've seen it described as a ski boot, but I don't think it was a ski boot. Wha what was it? No, it wasn't a technical ski boot, no, it was a after ski boot. Yeah.
A boot that you could wear in the snow because
The original
Classic line had an E VA sol, it was a flat piece of e ethyl vinyl, acetate, whatever. And uh
It was super slippery on snow and ice.
So we created a rubber capsule.
Because it was rubber, it was much more sticky on snow and ice.
Um but yeah, that was a big, big change. Made us much more credible in the snow industry.
So it's nineteen eighty six and you are
Selling uh you're on the road.
And
the litigation or the the threat of litigation or the lawsuit it it essentially gets settled, I guess, and neither side really comes out
the winner or loser, I guess your trademark wasn't invalidated, hers was not invalidated.
Um
Ugs U G H S could continue to sell in the US, but say made in America. That's correct. And yours, the U G
would
also be allowed to sell in the US, but had to emphasize
Made in Australia, yeah.
So this sounds like a great
And now
You get to twenty five percent.
Back now officially in stock.
Yep. Settling that lawsuit was a
Big step and and probably the the best advice my lawyer ever gave me
Was okay, Brian, now you can sell
Just
Beat her in the marketplace.
But
I didn't really push

Because a weird thing had happened
You know, the second month I was out on the road after we made this change, you know, Neil handed me a cheque for ten thousand dollars and the next month another ten thousand dollars. This is your commission. In commissions. And I'm realizing, oh my God
I don't have to
do any ordering, I don't have to do any accounting, I don't have to do any warehousing and shipping. I don't have to I just am doing the marketing and s be I'm on the road selling and I and it wasn't even selling anymore. It was hanging out with all my buddies who who owned the surf shops and the ski shops and
Yeah, we'd go fishing in Idaho, we'd go golfing in Nevada, we you know it was just a great, great lifestyle and I
This was a classic case of nearly always your most disappointing disappointments.
will become your greatest blessings, which is one of my favorite sayings.
And here I was like destitute with didn't own the company anymore, but suddenly
I'm travelling the the America and and making more money than I could have ever imagined at that time.
And that literally went on for the next three years.
Alright, but from what I gather, you did not recover your twenty five percent ownership.
I was very, very close because
In that three year period I was just talking about, Neil had bought Joe and Paul out. Okay. So he owned a hundred percent of the company now.
But you had settled that lawsuit, so certainly so he finally called me up and said, Hey Brian, look, you you've settled the trademark.
Come in next week.

And that day he hired
We had a a a a life insurance salesman come in from Trans America and
We wrote out life insurance policies on each other, so we were full steam ahead.
But that next weekend
Neil was at a motocross race. He was a big
Yeah, motorcycle rider.
And he was not in good health and he had a massive heart attack during a race the next week after next between the time he called me to get my stock.
And
That was the very next Sunday. He had a heart attack in this race and never recovered. Wow. And so
Now his widow
who'd never stepped foot inside the ark business
Now owned one hundred percent of AG.
Wow. And and I was like
out in the cold again, you know? So because wait,'cause you hadn't signed the the deal. We hadn't signed the contract to bring me back in as an owner.
Wow.
I called her up and and you know, commiserated and everything and I said, Look, I'll be up tomorrow
And uh I'll I'll
Commit to working a year for for the business to see if we can salvage it.
And that became you know, coming off the three best years of my life, this became the hardest year of my life for sure.
So okay, this is nineteen eighty eight.
Um and so you're you're running the business, but apparently the accounting was a mess.
The books were just a mess.
POs hadn't, you know, been paid and then you guys had outstanding bills that you had to pay.
What did you discover?
It was
What you said amiss. And uh
I had to try and
Reconcile everything and and
It ended up about eighty seven thousand dollars in the hole when I finally finished the accounting.
had no leads on financing for the following year.
My supplier at Country Leather had just had three fabulous years working with Neil and he got his money on time all the time.
And when I called him up and told him the news about Neil
He started to clam up and he was I k knew he was thinking
Back to when I was running the company before Neil.
And he yeah, I always paid him but he never knew when or you know, the money was coming.
And so he started to get very cautious
And I said, George, don't worry, I'm gonna do a business plan, I'm gonna go out and refinance the company and I'll have plenty of money to start production.
Right.
But it didn't work out that way. It you know, I wrote a business plan, but
I got nowhere with the bankers.
Friends and family were way beyond that.
So n you know, I really was desperate for three or four months on a who the hell
Can I approach
And and
I mean you were still running the business. Orders were coming in.
In fact, uh it was the best of worlds and the worst of worlds, you know, the best was that I'd created a black and charcoal, two new colours for the line which all the sales reps had
And that was right before Neil died. So they were out in the field and Black and Chaco were just kicking butt with all of their orders.
And we were
you know, getting two or three thousand pairs of of orders a week and I was bundling them and sending them down to the manufacturer going, Hey George, get ready, it's gonna be a killer season, you know, I'm working on the financing
And
It got to be April, May
You know, and I started thinking
Who would benefit from me being in business?
Yeah.
And
I thought initially I thought oh the retailers but when I when I called my best retailers they just laughed at me, so you know
You're one brand in a hundred brands we have in this store, Brian, forget it, you know? And then I hit upon well, how about the tanneries? You know, th their business is selling sheepskin and I'm a huge
User.
of sheepskin. You were trying to get them to finance. So I sent a business plan down to several of them and and one guy, Gordon Jackson,
who owned a big tannery in in Melbourne.
He uh called me up and said, Brian, this looks fantastic, you know, come on down.
And uh
He was a
Really weird guy. He had the mantra.
you know, I reserve the right to change my mind and he he was a very difficult guy to to work with. At first it was
Come on in, g wha how many sizes do you have? How many colours do you have? How many skins are we gonna need?
And the next day was, Oh my God, this is you know
This is pretty risky, Brian. I'm not sure we can go forward with this. And and the next day was, Oh, I found a guy in Los Angeles to look in on you and and then the next day was, Oh look, it's a family business and you know my family don't wanna go into there and
Yeah, the bottom line is I spent like a week with him
But we never got a commitment to finance.
Or build product.
And apparently
This guy that you'd been buying.
Boots from the
This guy George Bircher.
Yes. He's g gone unpaid for a long time and he basically says, I'm not gonna ship you anything anymore. Yes.
And and so
I mean that's it. Game over, right? I mean you you can't
There's no business if you're suppliers and selling you
sending you boots.
Yeah.
Pretty much.
When
I went to a the trade show that September.
We hired no new product to put on the
Yeah, displays. I put all last year's product there.
I didn't want anybody to know that I was out of business. Wow. And uh you know, I didn't tell any of my staff, I didn't tell any of the retailers that we were selling to that
I wouldn't have product to ship. So when I got back to San Diego after the trade show, we you know, it was a round about midnight I called
Gordon in Australia at the Tannery.
And I said, Gordon, I'm just gonna have to shut the business down.
And he was very sad and we hung up
And uh
Went to bed and and then about a half an hour later the phone rang.
And it was Brian
It's Gordon here. Screw George.
I'll get you all the boots you need, you know?
Well,
Just like that.
His commitment
meant that we we didn't have a handshake, we didn't have a contract, nothing. He he said, Send me down the patterns, which I did
And he duplicated the patterns and sent them out to four or five
Manufacturers.
And he cranked up his tannery to full production and started supplying skins to everybody.
And it took us about
Three weeks but then we started getting the you know the first two thousand pairs in and then the next week five thousand pairs the next week in
was enough to keep m the UG company alive and there was product out in the marketplace
With Ug labels they're going. It was so lucky.
Um
So
How did you regain your
ownership. I mean if if his Neil's widow owns the company
Did you say go to her and say, Hey?
Let's figure this out. Maybe you don't want this business, maybe I can buy it out. Like what what did you do?
So what happened is that uh towards the end of the season
I got a call from the life insurance company, Trans America.
'cause I I made a claim when Neil died.
Back in February, March.
And I not heard much except they rejected they rejected I had a lawyer who kept pressing them
And they finally called us and said, Look
We gotta get this off the books by December thirty first.
Can you come to Los Angeles?
And uh we spent a day negotiating with them and we ended up getting two hundred thousand dollars.
As a settlement to walk away.
Even though Neil didn't even have his his you know
Physical done. So I I I was
Super lucky to have got that offer and
In the meantime, I'd I'd said to Dell, look, I
I think I can pay you this ma amount. I don't have the cash right now, but
If I can keep this season together I'll pay you. And so I signed a promisory note with her
And this two hundred thousand dollars was enough to pay her note out.
And then by you know I I owned the company one hundred percent again.
You know, who who would have ever thought that that would happen again?
When we come back in just a moment, how Brian tackles a new problem.
His boots are finally flying off the shelves.
but Brian doesn't have enough money to meet the demand.
Stay with us, I'm Guy Raz, and you're listening to how I built this.
Hey, welcome back to How I Built This. I'm Guy Raz.
So it's nineteen eighty nine, Brian is now the sole owner of Ug, and by the end of that year, for the first time ever,
Ug turns a profit.
$140,000, which is great news.
But Brian's inability to secure stable financing is still a big problem.
I didn't have the skill to go out and raise the money like traditionally, you know, by this time there were there were sort of business plan modules, but I didn't really get into that.
I was still
You know, who's who's a rich person that I know?
Right.
There was no real structure to it.
And so I was always

Desperate to get
Financing.
Here's the irony.
The business didn't need that much cash.
to run for the season. It just needed
The guarantee that the manufacturers would get paid. So that meant a letter of credit.
So that when they ship their product they were automatically paid.
If I just had a standby letter of credit for two, three hundred thousand dollars
Each of those years

when we ship product we had cash immediately pretty much immediately, we were able to pay our bills and we get more product and it was it only took a couple of hundred thousand to g to get that cycle running, but because I pushed it so late every year I needed a half a million and three quarters of a million dollars and that was the hard money.
And so you are constantly and and
In this saga
There are so many names of people who were involved as partners at one point or another.
Right. It sounds like your strategy was the same. It was I've just got to find somebody with money
who's willing to in infuse the business with cash and then you know they'll be an owner.
A pa part owner.
this strategy the the danger is that you might have a partner that you don't
Like or you don't get along with.
Yeah.
And so I had an associate, um
Alan Greenway, who was another Australian who had done very well in the hotel industry.
And I'd been in business with him in in a different deal.
And so we trusted each other.
And he
Would be a great
Invest uh
However, he thought I was a bit of a wild canon and he
Say, Brian, look I love you but
If I gave you money I wouldn't hear from you until you needed more.
And
Pretty right.
And so eventually I finally said, Look
Ellen I'm throwing away.
thousands of thousands of dollars worth of orders every week'cause I don't have product
Can you please just give me a letter of credit?
You're getting you're having you have more demand than two you can actually.
And so finally he said, Look, Brian, uh I have an associate
He's uh a CPA.
If he can come into the business and look over your shoulder, I'll invest.
So
As much as I
really disliked this person when I finally met him.
My option was to keep the company alive.
And bring him in.
Or refuse him and the the company probably would have folded. So I opted for the you know the devil that I knew by bringing him in. This is a guy named Chuck, I believe. Chuck Kaiser, yeah.
So you were constantly bringing in new partners.
Which
I mean man, that that's gonna create a lot of tension and a lot of challenges.
Um
The new money
Did never ever want the old money in the company, so that's why each

version of the business, a new a new entity was formed.
And
I
Had to make a deal with the previous investors.
So I I would do promisory notes.
To pay them back their capital with a little return. Right. So that I could move forward with the bigger financial yeah.
Okay, so
One question is, and maybe this would just be unrealistic,
Did you ever entertain the idea of just building your own manufacturing?
facility in the United States, like the people making y ugz uh
In Oregon.
Because that would have solved maybe some of your problems'cause then you controlled the
Production.
Yes.
In fact, it was around about that time that we
Uh the owner of the U G H company came to us and said, Look, we're desperate. We're not making any money.
who sued me, she'd been taken out of the business by investors. So it was the investors now I was talking to, and they
They just wanted desperately to get out of it. So
We ended up doing a deal where we purchased the U GHS company
And we
maintained that factory for a couple of years.
So you actually buy the factory and so was that does that become your primary
Uh supplier now?
N not a primary supply, but it it did uh end up making significant
dance into the into the production for us, yeah.
But again, we still had to then we had to finance the factory. Sure, right. And they can make the same exact boot. It looked exactly the same.
But yeah, you have to finance a factory. So that's also cash that you gotta
put out there.
In meantime.
Most of your sales are still in
What, boutiques, sh uh shops, small businesses, or are by nineteen ninety one, ninety two are you starting to get into bigger retailers?
That's the year where we started to get
Traction in the stores, yeah.
We were huge in the surf market.
Then there is the ski side, well snowboarding was just starting and I
picked up on th that vibe very, very early. So we started
Advertising to the youth
snowboarding thing. And that worked in the snowboarding industry.
It took a long time for me to get back east'cause I didn't know what the kids did
for sport in the winter and I w I was talking to a sporting good owner from I think it was Chicago
And he he rolled his eyes and go, Duh, they play hockey.
You know, and being Australian I
I had no idea of the hockey market.
And when I looked it up I went, Oh my God, this is twice as big as surfing You know? And so we started ma you know, making our ads
for the youth hockey players which were all over from Chicago all the way back to Boston. And
That turned out to be a huge market and the big department stores now are seeing
This happened.
And so they started calling me to, you know, come and
Uh negotiator s you know, getting their product into the stores.
All right, so this is nineteen ninety two, and and I wanna put this in perspective and not to sort of discount or diminish what you've done, but you know, you talk about huge markets, your s total sales at you are five point eight million dollars. So you are still a very small business. I mean
Ug was not a nationally known brand as it would be.
uh you know, the United States uh small business administration considers anything under forty million dollars a small business, right, in the United States. So but the thing is is that you really
You know, to go from a
a winter boot or a surf boot to a fashion accessory.
That's a bigger leap, and I guess.
It's around this time where the guy who originally you originally joined you, Doug Jensen, back in nineteen seventy eight.
Yeah.
He suggests that you actually
Get these boots.
on the legs of celebrities, which is hard. You can't just say, here's celebrity, you know wear this. But he suggests that um instead of going to the celebrities, you go to the people who style them, like the makeup artists and the and the people who dress them, right? Correct. And you send them pairs of the shoes for free.
Yes.
How did you find these stylists?
Um I I found a mailing list of stylists in Hollywood and sent uh a letter to them.
And about four hundred people uh responded
And so I sent them all a pair of ugly
No questions asked and uh
It was a couple of months before I started seeing them on celebrities, but the biggest thing that came out of that
Was that
I started looking at people magazine and us magazine bit by bit.
The Ugboots started showing up over and over again in all of the celebrity magazines
So I I came up with the
The description casual comfort.
And I said, I want to market AGs as the ultimate casual comfort footwear.
So we had the money to hire a PR agency.
that I was hoping would would take this to the market and make it a much more mainstream product.
Mm-hmm.
I'd made an appointment with the USA today
Fashion editor.
And
By the time we arrived at her office she double booked and and we only had like five minutes to make a pitch.
I pulled out a m little folder that I had full of celebrities.
One of those photographs was Pamela Anderson on the set of Baywatch and she was in a red swimsuit
With tall white Ugg boots.
And she took the name of the photographer and the name of the uh
The magazine and uh
Yeah, the next morning on the lifestyle section there was
A photograph Pamela Anderson
Yeah, no.
And the whole internal next page was a this expose on sheepskin and shielding in fashion and
I don't know where she got her information from overnight, but she did a tremendous job.
In creating this category.
Okay.
Um there's another parallel ad campaign.
That may have been even more successful, at least temporarily.
You guys in NT Ny four.
That year you did eleven million in sales. In large part
Because of a three month ad by
that I I believe cost half a million dollars, which is a huge amount of your your budget.
Now Rush Limbaugh, uh some young people may not remember was
He was like
Joe Rogan plus you know, like the biggest
conservative talk show host. He was far and away the biggest national audience. Um
And he had very successfully sold Snaple. Snapple was an advertiser on a show.
And really had helped Snapple grow. Yes. And um
And this is a little controversial because some people
might have said oh it's on Rush Limbaugh I don't want to buy this product because I don't agree with his politics
So it's a little bit of a risk, right? But he reaches a huge audience. Yeah. I
I fought that initiative
I you fought it, you didn't want it. He was just not a fashion icon. He was a hard right winger
And uh very polarizing.
Yeah, we'd spent years building up this image.
of casual comfort and f fashion and everything.
And so I really fought it, but I was out voted at a board meeting.
By your partners. They wanted to be on and what was their rationale was look, you were just the biggest audience America.
Alan was a a Rush Limbaugh groupie.
He wanted to be in the audience in the front row with Rush Limbaugh.
What do you mean be in the audience? Well he wanted to go to New York and be in a taping of one of the Rush Limbaugh shows. So he was excited about it. That was his motivation. Half a million dollars. I mean that is a huge amount of your budget. That's five percent just on Rush Limbaugh for three months.
Um
Because the board voted for it, I didn't want to fight'em, I said, Okay, I'm on the team right. So I'm gonna go there, I'm gonna introduce the U boots to Rush Limbaugh and I said, Here, try this on. No, I don't need to try it on
And and I I had a bit of a fight with him. I said, Well look, if you don't try on we're not gonna do the advertising and I was bullshitting'cause I I I had to make this deal.
And he eventually he tried them on and he goes Oh my god
These are so cut like it cellies.
So
Fast forward which now
uh November I think came on the show, Hey folks, I got a you know, got some good news to tell ya. Today we have a new sponsor.
And it's Ugberts from California and
That second
Our switchboard shut down.
Because
Every broker in the country, every stockbroker

Are you guys public? Can we buy stock, can we sp you know because they'd seen what had happened to Snapple.
And Snapple had gone into the millions to the hundreds of millions and they were wanting to jump on board so
Effectively our sh our switchboard shut down for the entire season.
And we had to create new phone numbers and we sent them out the phone numbers to our best retailers and said, You're gonna have to fax the orders in.
But but
In nineteen ninety three you did nine million in sales. In nineteen ninety four, which was the Rush Limbaugh ad campaign you do eleven million. So not
Not that much of a boost. So it it it's interesting because
I would have thought when I read about this that it would have really supercharged your business like it did for Snapple.
even though his audience was conservative, but you know these audience is older too. And I think this was more of a younger product. Yeah, and I'll give you a good example of that. Uh one of my best surf shops, it was pretty hardcore surf shop in Himosa Beach in in LA
said this grandmother drove into the shop'cause they they had Uggs on the big banner outside.
Then she ordered eight pair for all her grandchildren.
And she said she'd never heard of the brand before, but Rush Limbaugh said she had to do it.
Right. Yeah. So so we substituted really good fashionists who love the product for these people who'd never even heard of it.
Got it. All right. But it doesn't sound like it did any damage. I mean it just was it just moved us sideways, yeah. It was just a huge ad span. So okay, so you do that.
But you end up the year with eleven million in sales, and so
You know.
You get into nineteen ninety five, um
And y even with all this buzz
You are worry that you guys are doomed.
to repeat the same mistakes. Too much spending and I could see it coming so clearly. In fact the pre season orders
That C you know, for the January, February, March period.
looked like the company was going to
be destined for, you know, uh uh eighteen million, maybe even twenty million dollars. And most people would be so excited about that.
I saw this as a kiss of death.
Because you could not finance those orders. I knew I would not be able to finance an extra f you know, six five, six, seven million dollars in product. Yeah.
And there were no real competitors either? There were no knockoffs at that point?
That anything else was called a fake Ugids would not wear them to school if they didn't have the Ug brand on them. And Uggs were not cheap.
No, they were they were very they were up in the
Yeah, hundred dollar range by now, yeah. Wow.
Okay.
So you're still concerned about this
I'm just surprised because by nineteen ninety five you would have thought, Okay,
They've proven this out.
It's growing.
Did you see an end game? Did you see an end point? Did you th you know, did you think okay, we're gonna go public, we're gonna get acquired, like did you even was that on your mind?
Well, I'm gonna open up here. I don't really talk about this.
Uh so much, but
I had a different pressure on me.
This year.
Chuck Kaiser had sort of
Turn out to be a bit of a sociopath and was a very narcissistic person and
He started to create such chaos within the company.
that I spent most of my time fighting him versus going out and marketing and selling the product.
And
I didn't really want to have to deal with Chuck anymore.
And so
This weird serendipitous thing happened. It was a goosebumps moment again, right?
I was in the
Baggage claim area at Atlanta Airport. I was going to the Super Show, which is one of the biggest sporting goods shows in the country at the time.
And
Way up the other end of the hole.
I saw a friend of mine, his name was Doug Otto.
This is in nineteen
Ninety five.

And I'm gonna backtrack, do you remember?
When I was in the parking lot at Malibu selling Ugg boots well out of your
Doug was selling sandals out of his car.
Around about the same time.
And he
Purleyed his business into licensing different brands like surf brands and stuff, and he eventually took on the license for Tiva Sandals. Uh-huh.
And
In the very early nineties the outdoor market took off and Tiva went with that to you know they went from
Like sixteen million to sixty million. Wow. W just through this and and because of that they did an IPO and you know, I knew that they were sitting on about twenty five to thirty million dollars in cash.
When I saw Doug a in Atlanta, right?
And I walked up to him and
We high fived each other and
'Cause we've we'd seen each other going in and out of surf shops for like ten years, right?
We joked about
Selling out to each other in the past.
And I said, Doug, if ever we're gonna do it, now's the time.
That afternoon we had the accountants back in California talking to each other and
suggesting meetings to to start the due diligence on selling the company.
So he was interested.
in this idea of of m of acquiring you. Yeah. And uh'cause he had this success with Tiba. Yes.
His company died every winter?
Our company died every summer.
'Cause he was selling summer Tevas.
For the summer. Yeah.
Right Tiva's were and and his company was not called Tiva, right? What was it called? No, it was it was called Decker's Corporation. Okay. So I called up Alan and I said, Alan, we have this opportunity to sell the company.
To a really good guy. He's honourable. He's not gonna screw us around.
I'd like to start negotiation or have the the accountants start negotiating on one condition.
That Chuck Kaiser is never ever allowed to speak to anybody in this deal.
Okay.
And Alan went along with that.
Yeah and it took us I think from
February is when we met in in Atlanta. Uh it probably took October, November.
to d finish all the due diligence and have the actual transaction consummated.
So by the end of the summer the deal closes and Decker agrees to acquire Uggs. Yes.
For a little under fifteen million dollars. Yeah.
Um and
I guess you didn't really want to stay on. I mean you ca agree to kinda stay on as a consultant, but you really didn't go wanna go'cause Decker's is based in just north of Santa Barbara. Yeah. I think you didn't want to go there.
Alan
Um
took me aside and said Brian, you you don't have a political bone in your body.
So if you join this public company you're gonna get chewed up and spat out. Yeah. And so he was the one that made me see that
Yeah, I'd be better off as a consultant.
And so I worked for two seasons with them.
Uh just helping with with their marketing and sales.
Alright, so Decker's acquires uh Ug in
Nineteen.
Ninety five. Ninety five.
I should mention that we've done another brand on this show that Decker's also acquired, a shoe that many people will know called Hoka. Yeah, great brand. Acquired that brand uh for about three million dollars. It's a multi-billion dollar brand. Decker's is a I don't know enough about Doug or
the company, but what I do know about
Deckers is that this is a a business that knows
how to take a small brand and turn it into a massive brand because they have three brands.
Ugh.
Hoka and Tiva. And it's a
multi billion dollar company. I mean they have
They've figured out how to make
Hoka and Uganda.
Like not just a
Practical
Shoe but a fashion statement.
So they take over Ug and they supercharge. I mean they do deals with Jimmy Choo, they open
Ug Brick and Mortar stores in New York and in
Tokyo they
They did a uh an endorsement deal with Tom Brady. I mean for years he would just wear Uggs everywhere.
Yeah, no, he he turned out to be a great ploy for
Getting into the mail.
You know the guys who are on T V every weekend watching football.
And that move with Tom Brady I thought was a brilliant stroke to
Bring people back to the to just the fact that males do wear these products.
Yeah.
What did you notice about
How they were able to take this thing was the same product, the same name.
Yeah. And now you had done a lot of the
foundational work. You had gotten it on the legs of Pamela Anderson and people s were sort of becoming aware of it.
But what did they do?
That turn this into a an iconic
Global
Phenomenon. How did how do you think they did that?
After they did the acquisition they immediately hired a guy
Who had come out of a company called LA Gear.
And and he tried to turn the brand into a street
Cool product.
He lasted less than a year, and then they brought in a a young lady called Connie Rishwane.
who had spent time in a lot of the the New York high fashion footwear industry.
And she's the one that started advertising in
You know, the the really, really high end women's fashion mags.
That
Teamed up with the fact that we'd sent boots to Oprah.
And she ordered pair for her staff and everything.
And
If we had announced that Oprah was was wearing our shoes or boots
It would have killed the company when I owned the company'cause I didn't have the capital to build the product.

That in conjunction with Connie Rishwane, who knew New York fashion, those two things coincided to make U like
break through the hundred million dollar barrier and the two hundred million, five hundred million and that that combination

Dick is into the uh billion dollar
Uh brand.
I was just in a uh a Macy's in New York City recently and I mean Ugs it's i you know, it's still a huge brand.
But
Uh you know, Uggs still has a section there and you know, they've got shops and
Uh it's still going.
It's still a powerful brand, which is
quite remarkable.
Yes, especially after it's it's coming up on another two years, it'll be fifty years, I think. Two or three years.
And and I I am just blown away at at the longevity of it.
The fact that it's uh
It's in the two billion range now.
Uh for a couple of years.
And
You know, a lot of people ask me if I resent the fact that I don't own it anymore and
It it couldn't be more opposite. In fact, after all of this, I I wrote a book called The Birth of a Brand.
And
The theme of that book was you can't give birth to adults, right?
Every entrepreneur has this aha moment which is the conception
And then
the they take some action which is the birth, right? So for me
Buying six pairs of samples was the birth of Ug.
But then every business just goes into this horrible infancy and it just lies there and
But if you can keep feeding it and keep it alive, it'll hit the toddling stage, which is
Really cool'cause magazines are running articles about your product and your all your true reliever friends are telling their friends and that's a pretty cool phase.
And that goes from toddling into youth, which to me is the best phase of every business'cause
Production's working, accounting and admin's working, you know, everything's working. And you can run a ten, fifteen, twenty million dollar company in that youth phase.
And if it's a great product or a great service, it'll hit the the teenage phase and then
You know, all bets are off, but eventually it it becomes mature as a company.
Yeah. And when you think about
You know, the journey you took and and
You know, taking this risk and
You were in your mid thirties, you had established career as an accountant, you left it and
It was a tough.
ten years that you went through after that trying to build this brand and really making no money and struggling.
But i in the end it worked out and you were able to sell it and you were happy with the result and and now you've got
your legacy is tied to this.
Massive brand.
How much of of

Do you attribute to the work you put in? And do you or do you put any
Any stock in in luck.
Oh it was
A hundred percent attributable to perseverance. That's all I can say. I
And again I had that vision behind me of of the Australian acceptance of the product, so
I I just was happy with the mantra that it it can't be the product, it's gotta be me. What can I do?

Attitude when I came to everyone

And so when I walk through an airport in the winter
And somebody we walks past wearing Ug boots, I I always look around to see if it's got the Ug label on the back, you know. And I get such a kick out of seeing them.
Uh randomly on the streets.
So in that part I feel extremely lucky.
And some part of me surviving and building it as something that I knew that it could be.
It's Brian Smith.
The founder.
A Ugh.
Since Brian left the company, he started a few other businesses, including one that installed pre-fabricated walls. He even patented the process.
But the 2008 recession hit the business hard and he wound it down.
He's also written a book about the Ug Saga.
It's called
Birth of a brand.
Hey, thanks so much for listening to the show this week. Please make sure to click the follow button on your podcast app so you never miss a new episode of the show.
And if you're interested in insights, ideas, and lessons from some of the world's greatest entrepreneurs, please sign up for my newsletter at guyros.com or on Substack.
This episode was researched and produced by Casey Herman with music composed by Ramina Rablui. It was edited by Andrea Bruce.
Our engineers are Patrick Murray and Maggie Luthar. Our production staff also includes Alex Chung, JC Howard, Chris Masini, Carla Esteves, Sam Paulson, John Isabella, Carrie Thomson, Niva Grant, and Elaine Coates.
I'm Guy Raz and you've been listening to how I built this.