How I Built This with Guy Raz - UGG: Brian Smith. How an epiphany, surfers, and $500 launched an iconic sheepskin footwear company.

Episode Date: June 1, 2026

In 1978, Brian Smith quit his accounting job in Australia and headed to California with a surfboard, some savings, and ambition. He figured California was where he’d find an idea or a product to bring back home to Australia to build a business. A year in, he was still looking.But then he saw an advertisement in a surfing magazine for Australian sheepskin boots. Uggs were so widespread in Australia at the time, the name was a generic term - like flip flops - not a brand. Brian was immediately stoked: these boots were virtually unknown in America. If he could get ugg boots for sale in the U.S., they would be a huge success! Almost nobody else agreed.For years, Brian lived on the edge of collapse. He sold boots from the back of his van and worked construction and golf course maintenance jobs to survive. Retailers laughed him out of stores. He lost control of his company twice. At one point, he literally crawled across the floor from stress, ready to walk away forever.And yet…he kept going.What followed was one of the most unlikely brand-building stories in modern retail history — involving surf culture, trademark wars, miraculous timing, brutal financing mistakes, and a product the fashion world initially dismissed.Today, UGG generates more than $2.5 billion a year in sales.You’ll hear how Brian:Turned rejection into problems to solveDiscovered marketing insights that changed UGG foreverSurvived years of cash-flow disastersLost control of the company and regained it a couple of times.Used surf culture to build an emotional connection with customersNearly quit… over and over again…And how he eventually sold UGG to footwear giant, DeckerTimestamps:09:51 Brian's eureka moment that led to the birth of UGG12:41 The first sales trip results in ZERO sales21:10 The mantra that kept Brian going while doing odd summer jobs to survive28:32 Brian gets a critical lesson in marketing…from some 12-year-old kids51:59 Brian’s most effective strategy for retail: the “Six-Pair Stocking Plan”56:42 On track to regain his ownership - Brian hits a huge snag01:01:57 A midnight phone call from Australia saves the business01:11:28 Brian gets the last laugh in the trademark dispute - and acquires a boot factory01:14:54 Pamela Anderson wears UGGs on the set of Baywatch01:23:39 A chance meeting in the Atlanta airport leads to a deal to sell UGGThis episode was researched and produced by Casey Herman, with music by Ramtin Arablouei, and edited by Andrea Bruce.Follow How I Built This:Instagram → @howibuiltthisX → @HowIBuiltThisFacebook → How I Built ThisFollow Guy Raz:Instagram → @guy.razYoutube → guy_razX → @guyrazSubstack → guyraz.substack.comWebsite → guyraz.comSee Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

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change. But honestly, the best part was the connection to the place. The host left us with a list of local spots, a tiny bakery, a coastal trail, and within a couple of days, we were talking to locals, finding places we never would have discovered otherwise. There's something I always look for when I book a home on Airbnb, not just a place to stay, but something that feels connected to where I am. And it got me thinking, while we were away, our own home was just sitting there empty. But if you host your home on Airbnb. It could be making you some extra cash, maybe for a renovation or even your next trip. Your home might be worth more than you think. Find out how much at Airbnb.ca slash host. I could see it coming so clearly. In fact, the preseason orders looked like the company was going

to be destined for, you know, $18 million, maybe even $20 million. But I knew I would not be able to finance an extra $5, $6, $7 million 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 built. I'm 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 U.S. 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 Ugs because they were ugly, not because it was a brand name. Lots of small factories made their own versions of these same Ugg boots. But when Brian tried to sell them in the U.S., 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 Ugg to the footwear brand Deckers for a modest price. Decker's would go on to turn Ugs into a global phenomenon. a brand that generated over $2.5 billion in sales last year. But long before celebrities wore them, long before Ugg 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 serve 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 10 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 10 years have got behind you, no one told you when to run, you missed the starting gun. And I just thought, oh, shit, he's talking to me.

And as soon as I heard those words, my body just got covered in goosebumps. And I thought, oh, my God, all 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 felt like I'd been running on the spot for 10 years. So it was literally it was so powerful.

It was only a matter of weeks before I arrived in Los Angeles. And I had my surfboard, so I just started going up to Malibu. I surfed that place for nearly a year. So it sounds like you were, I mean, were you a good surfer? Like, how would you describe yourself as a surfer? 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. L.A. in 1978, much different than today cheaper. So you probably had some savings. And I don't think it was that expensive to rent a place in 1978. No, $200 a month for this little house. Wow. But all my friends told me it's such a bad area, Brian, don't go there. And I'm this dumb Australian thinks, oh, they'll like me.

I'm an Aussie, you know. But it turned out that all the houses in that area had bars on the windows. And, you know, the first night I was there, I bought a pizza and a bottle of wine and a big tall candle about, you know, 15 inches tall. And I stuck it on a shelf in the living room and lit it. And then, you know, drank some wine, listen to music and went to bed. And the next morning I woke up in bed and everything went black. And I ducked underneath.

Oh my God, the house is on fire because the candle didn't have a dish under it and I just let it burn through. Wait, it was like a real fire fire in this house. Oh, the house was like rumbling with noise, yeah, on fire. And I got up to the front door and I was fumbling with the lock and I couldn't get it open. And the weirdest thing happened. I remember slumping to the floor and I just said, oh, I'm going to die. and this voice, this is going to 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 worked my way all around the house, punching all the windows out with my fist and screaming out. And eventually a workman who'd been a 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, Just one of those weird, unexplainable moments.

For sure. All right. So you are in L.A. I'm assuming you moved to a new place. Yeah, I've got a great place in Santa Monica. Okay. I don't quite understand what that would. I mean, because you quit your job.

So you had to find a career in a profession. You couldn't just surf because you had to pay your bills. Did you think that that was maybe where you would find the thing you would do? Well, the trends all came out of California. Levi jeans, waterbeds, you know, all the surf brands and skate brands. All the vibrancy was coming out of California. You wanted to be in the place where those things were coming out of. Yes. And I was, you know, every day I'd 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 a, 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 U.S. And I'm assuming you had saved money, right, from your time. A little bit, yes. And you were going to live off that money 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 have been anything. It could have been Lolley, pops. 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 I was reading Surfer magazine. There was a photograph of this guy and a girl in front of a fireplace with the, all you could see was their legs with these white boots on their legs. and the instant I saw it, I thought, oh my God, you know, one in two Australians has some sort of sheepskin footwear and there's none in America. So I just thought, this is like the ultimate no-brainer. And I looked at Doug and said, man, we've got to go into business. We've got to be instant millionaires, just like that. Okay, let's just kind of break this down for a minute.

So these are, I don't know, mid-calf boots that, The outer is a sheepskin leather, and inside is the sheepskin wool. That's right. Okay. And this was a thing that everyone in Australia had. They just had a pair of these boots. Whether it was slippers or the little booties or scuffs or whatever. You can imagine Australia being a sheepskin country, and every little town,

there is someone with a sewing machine, and they're making ugg boots. And every town would spell ugg a different way. UG, UG, H, UGHS, UG, you know. So this is the, you used to call them UG Boots. Where did that come from? Like, ugly or Ugg or what? Could be all of that. Nobody really knows.

They've always been called Ugg Boots in Australia. It's a descriptive term, yeah. You would call, like, you know, rubber boots, wellies, even though they're not, maybe Wellington's as a brand, or maybe it's named after like the Duke of Wellington, I don't know. But in the UK, they call them Wellies. So these were just called Ugs. Like, it wasn't a brand name. It was just the name of what they were.

It was descriptive of that product, yeah. So you see this and you think, you know, Eureka, hey, you're in California. You're a official amount of California. I have found gold and it is in sheepskin boots that are, you know, I'm going to just mint money doing this thing because, you know, everyone in Australia has this. And okay, so, because 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 didn't have a lot of money, but we decided we got to get some samples.

So we pulled 500 bucks together and called the guy who ran the advertisement. And we talked to him into being distributors for the U.S. And I think this guy was George Bercher. I think he was the guy who owned an Australian boot company called Country Leather. He would become your main supplier. eventually, right? Exactly, yes. All right, so you call him and?

Yeah, and so we ordered six pairs of samples. And after they arrived, Doug was going to be the salesman, because I was an accountant, I was terrified of sales, right? And he went on the road and visited every single shoe store in Southern California. He came back with about 150 business cards

of all these retailers, and not a single order. and 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 hit a wall like that. And I thought, well, maybe the surf market's the way to go. We looked up, you know, the yellow pages.

There are probably 60 to 80 surf shops. And so Doug and I changed gears. and now he insisted I went on the road and I can remember walking into 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 up and he goes, oh my God, Agboots! He says, they're great, all my friends have got them.

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 going to 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 going to 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? That's right. Because people have different sized feet. And so, first of all, you and Doug, I'm assuming, establish a business together. That's correct. going to be partners. And 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 new investments. And let me take it to them. And he did them. And we were able to raised $20,000 from them as capital, and we didn't even have a business plan. It was just the enthusiasm of, you know, me talking about how big it was in Australia and everything. So we raised this $20,000 and we knew we would never, ever, ever need any more money than that for the rest of the business. Right. I see. I got you. Okay, well, we'll get there. Okay, so you raised $20,000, But it sounds like you didn't have any order.

So you just ordered what you thought you could sell? Or is that right? You just made up, came up with a... Well, it was pretty simple. We had short and tall, and we had brown or white. Short and tall, like short would go to your ankle and tall would... Short was ankle. Okay.

Tall was up to the calf, yeah. Okay. And then brown or white, and then how many pairs did you order? 500. And just different sizes. $15,000, yes. And it takes, what, six weeks, two months to get these boots? It was very quick, actually.

It was October, and we got the boots in by the end of November, just beginning of December. So you get these boots in, and now you're going to go presumably back to these stores that had expressed interest, and you're like, hey, we're back, we got them. And I remember going back to ConSurfboards, and the owner goes, oh, well done. Brian, you are going to 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 going to do great in the shoe stores. Good luck, you know, and walked out without an order, right? And this happened to, in about 60 surf shops all the way down the coast from Malibu down to San Diego. And the total sales for the first year was 28 pairs.

Which was how much money? Exactly $1,000, but it was just a fluke, but it was exactly $1,000. And I'm not fast enough with the math. How much were you selling a pair? At retail, it was probably between 50 and 70, depending on the short and the tall. Got it. Okay. So in 1979, that was not super cheap.

No, it's super expensive. And that was one of the worst facets of the entire UG project for 20 years was the 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 it's not looking very good. And you are now, you've got hundreds of pairs of these things. What, just piled up in boxes?

470-something pairs, yeah, in the third bedroom. In this house that you're renting in Santa Monica? Yeah, the third bedroom was the warehouse, yes. Wow. You couldn't do that today. You couldn't rent a house in Santa Monica and be broke. Right. I mean, it would be impossible. All right. So you, it's 1980 now. We got a bunch of shoes.

And what are you going to 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 wanted to give up, but I couldn't because I got 400 pairs in the bedroom and 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 January, February, March, I ended up selling about $6,000 worth of product. Pretty good. And 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 had my van full of product and I would just sit there with the doors open. I made, you know, steady money. Just a point of clarification here. I know that, especially in California, because the water is really cold, most surfers wear wetsuits because it's hard to swim in that water. It's freezing, yeah. Unless you're in a wetsuit.

Were surfers in Australia wearing these wool boots because they wanted to warm up their feet after they surf? Like, it just seems. Well, they see. questions you're asking were asked by every single surf shop owner and every consumer, what the hell are they so good? And the answer is that, and all Australians know this, is that sheepskin breathes, so you can put them on with freezing feet and they will insulate. And if you've got wet feet like after surfing, it wicks the moisture out towards the surface.

And so within 10, 15 minutes, your feet are dry and warm. So there was a very, very practical side to wearing them after surfing. And so that's what 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 got to figure out how to get into retailers, right? And so were there, I'm assuming, you know, there were trade shows back in the early 80s for shoes and apparel? Yep.

In fact, the market that's called the Action Sports Market just started that. very same year as I started. So action sports, surfing and skateboarding and... All of the above, yeah. Skiing, yeah. And so I did go participate, but nobody understood what I had. So the bottom line is, you know, in March I just shut it down. And my first job in the summer was scraping boats at Marina del Rey.

Then I switched over to construction. and a buddy of mine owned a contracting company in Bel Air, and I was working in Beverly Hills and Bel Air on construction projects, and that filled up the summer. So you're working, 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 10, 15 years. Every time it's not working, it's not working, I would come back to that thought that, well, how come everyone in Australia owns a pair? Yeah.

And so 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 this is now the summer of, end of the summer of 1980, you got to 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? Wasn't that expensive to do? 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 30 to 60 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, were you calling them Ugg boots or Ugs? I'm assuming that, yeah. I did, probably the smartest thing I ever did in that business was I did a search, a trademark search that it cost me $600 at the time, which today's probably $4,000 or $5,000, you know? Yeah. And I did a search of the world, especially the U.S., to see if there'd been any prior use of the trade name U.S., and they had not.

So that opened up the gate for me to do the registration of the trademark. So you trademarked that name, which was not a trademark. I mean, in Australia, it was just like... It was generic down there, yeah. Right. It would be like trademarking the word cheeseburger, right? That's 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 U.S. Oh, nobody had heard of it, yeah. All right, so you, from what I've read, because you've written about this in a book, you actually sold about $30,000 worth of these shoes for the year 1980. Pretty good, but you end up with a loss because the... 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. Yeah, still using my own capital, yes.

And still living on summer jobs to basically to stay, to stay, you know. And you were not a kid. I mean, you're now well into your 30s, right? And I imagine that maybe part of you or maybe your parents or, or, thinking, what's he doing with his life? Yeah. He's in California. He's surfing.

He's trying to sell these boots. Did you get any of that feedback from your family at all? Yeah. 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, I couldn't think of it.

That to me was like going to prison. All right. So you're still committed to this and you're now a full year in. Yeah. And still kind of pounding the pavement, going to these trade shows, trying to get more and more interest. And I think you even, in 1981, you even attend a snow or ski kind of trade show in Las Vegas, right? Okay.

And was there more interest at that snow show? The ski market was even harder than the surf market because their attitude was, well, we have mud and we have slush and we need rubber, you know, we've got to have sorrels. And they couldn't see sheepskin being strong enough or waterproof enough to work in their area. So, yeah, the ski markets were very, very difficult to get into. Wow.

You get a job that summer. a very unusual job that would not exist today. You had a friend who gave you an end 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-sized mainframes, every connection where one wire touched another wire or a motherboard touched, plugged into another book. 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 bunch of cash and a pair of snips and hammer. And I found out when I got home that I'd made $3,000, which was a fortune to go on the road for a month, you know. But I realized I'd shipped over $300,000 worth of gold back to San Diego, not really knowing that I was doing it. But still, like, on this UG thing, like, who was manning your phones to take orders? Well, nobody was calling. I mean, 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 UGBITs for four or five months. and then it would be, you know, July, August, September. I'd start thinking, oh, shit, I better figure out who I'm going to 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 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 sales were, you know, I would open up, you know, half a dozen pairs in lots of different little surf. shop. So like in the off-season, I was fully into making money to stay alive. And then I would have

to backtrack and get the Ugg boot business started up again. So like October, November was when you would run UG. Correct. I got you. 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. you could get them in time for Christmas, presumably. Yeah. I mean, the unpredictability, this is insane, because you've got to 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 that you wouldn't be left with a bunch of inventory. Yes. And, okay, now, just at the ads for a moment, what do they look like? Were they, like, was it just text or were there photographs of people wearing them? No, I thought I was doing a brilliant job. You know, and I'm telling you 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 the sales, you know, let's say 81, 82 was about 30,000. The sales went to 35,000. It was like my ads were doing nothing. And then, again, summer job and then come back to it. And I used good-looking models again. Sales went to, I think it was $45,000 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 necessity of doing all that, right? You needed to earn a living. And now, I mean, you're in your, you know, late 30s and you had been a certified, you've been a chartered accountant, which is a kind of a prestigious gig, right? Very much so, yeah. And here you are, you know, like doing manual labor. I mean, were you ever like, God, what am I doing? I actually loved that golf. That golf course job is probably the best job I've ever had in my life outside of that. you know yeah um but over the summer i realized you know my product's so expensive it needs a huge inventory because you never know if someone's going to walk in the door their size seven or a size 13 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 I've got that against me. And I, by a pure fluke, was having a beer with one of my good retailers 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 he called a half a dozen of these little kids, you know, the 12 to 13 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, there's Ugs, man, they're so fake. Have you seen those ads? Those models, they can't surf.

And instantly, I realized that not only was my ads not working, I was actually turning people away from UggBuds because of the images that I portrayed them in. So it was a huge learning thing. So presumably you started to use real surfers in your eyes. Yeah, I had a buddy who was a former world surf champion, Pete Townend, who worked for 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 I just took my own little Cannon Sure Shot, and we went surfing at Black's Beach in La Jolla and trestles up in San Anofrey. So when I ran those ads, the sales which had been around, you know, 30 to 50,000 per year, the immediate jump was like $200,000. Wow. And it was because I finally connected the image that kids would want to be in the photographs, like they would be dying to walking to Black's Beach with Mike Parsons or,

to trestles with Ted Robinson, you know. And that reality really taught me everything I'd learned about sales and marketing. The jump from 1982 to 83 was big. I think a couple things happened that year, which one was you designed a logo for Ugs. Yes. Like you designed a logo as like a Ramshead, I think. Yes. Right.

I don't think it's a logo today, is it? They took the Rams head 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. Yeah, country leather. And then they would be shipped to the U.S. and you could sell them. And then the other thing, I think, happened that year, is you get a threatening letter, like a season-de-siss letter from another company called UG.

U-G-G-H-S. It's also, they also sell UG-Boots. They're, I guess, Australian couple, but based in Oregon. Yes. They were doing the same thing you were doing, but they were actually making their boots in Oregon. In Oregon, yeah. And they sent you a letter saying,

hey, you're using the name Ugs. We've got a trademark on it. We're going to see you. Yes, that was a horrible period. and I tried to find other names to use. But didn't you already have a trademark on the name UGGS? Yes, I'd registered a trademark, but they claimed that, like in Australia, the trademark law is if you're the first guy in with your $10 and you fill the form out,

you own the trademark. Right. The rest of the world, you have to establish first use and continuous use. and I was able to do that with this woman. 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 lawsuit, but I didn't want to be in one because I didn't have any money. And this was going to be, well, just because we're going to come back to this, this was going to be a 10-year saga, roughly. Yeah, yeah.

It was going to last a long time. But I'm sure in the meantime, it was, it's a competitor, right? I mean, since somebody is trying to do the same thing that you're doing, one other thing that 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 Booser, who I guess you had met when you were in the mainframe decommissioning business. He gave you a line of credit, but he wanted half the business, basically. That's correct. Yeah.

And, you know, when I look back on my experience of Ag, the greatest weakness I had was my lack of financial knowledge, right? I was an accountant, sure. Yeah, yeah. But finance is not the same as accounting. Right. Accounting is what happened last year. Here's the balance sheet. Finance is forecasting.

What am I going to need over the next one, two, three, five years, you know, in a company that 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 supply. And I never really understood that. My accounting thinking was, we just sold a million dollars worth of product, we're broke. What's the answer? Oh, we'll 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 because you did have this deep experience as an accountant, but as we will see, 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. That's correct.

And you made deals that weren't necessarily in your favor, like basically giving half of the business away for a line of credit. Yes. I was always trying to get financing from someone who has. had cash. It wasn't like a well-thought-out business plan or anything. And always in September, October, where I had these humongous orders to fill and no product. 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 that was a really horrible cycle. Okay, so you now have a partner, essentially, maybe a silent partner, this guy, John,

who's giving you a line of credit. Yes. Meantime, you are, you still have this kind of, like, potential lawsuit hanging over you, and I guess 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 came up with the name Jackaroo, which is like a cowboy. It is an Australian cowboy.

Australian cowboy jacket. I see. Okay. Jilleru is the female version. And had these young kids that, you know, I knew their parents, and they were riding for the Ugg surf team. They had Ugg logos on their surfboards. They're like all the brands had surf teams.

And so they wanted to be on the Ugg surf team. You sponsored a surf team? Yeah. only with logos and product and stuff like that. I didn't really have any money. And I went to them and I said, hey, listen, guys, I'm going to have to give up the ug name and we're going to call them Jackaroos, so you'll be writing for Jackaroos. And I went, no way, we're never, that's a dumb name. We never, you know, and I realized how passionate they were about the Ugg brand and just made me forget all about changing the name.

And I said, damn it, I'm just going to go to court and fight this because that name is really powerful. When we come back in just a moment, how Brian's trademark fight is just the beginning of the struggles that put Ugg 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 1984 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 retail chains. And he's feeling stuck until a trade show friend named Paul Busman starts opening doors for Brian to another sport skiing. He was one of the founders of the Ski Industry Association, you know, what became this. humongous trade show in Las Vegas, and he came on as a sales rep for me in the ski industry. 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

Uggboots to the line. Got it. Okay. 1984, record year, right, but not yet profitable. You had still out of losses, and you have this line of credit. Yes. Still kind of growing, but challenging. And from what I understand that year, you, and I should mention, you had been recently married. You met Laura, who became your wife.

And you said to her, hey, I got to abandon this thing. This is not going to work. you realize or decide that you see no future in Nuggs. 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 you. Right, and you're getting stressed out. and you're thinking, I don't need this. Yeah, yeah. And he just wanted his money out. And I do remember that there was a period when he was putting intense pressure on me. I remember I was at home one night with my wife, Flora, and we were watching TV.

I was lying on my back on the floor and the show finished. I clicked the TV 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 is a really quiet person, she just looked at me and said, you get up now and walk to bed like a man. And 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 can I get out of this? You know, I literally wanted to just get out.

Yeah, I mean, I can understand because you're feeling a bunch of pressure. And, I mean, now you are almost 40, right? Yes. And probably still struggling, really struggling financially. Yeah, Laura was 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 want to just throw your hands up and walk away. But like will happen again and again in this story,

some intervention, call it divine, whatever you want. You call up this guy Paul Busman and say, hey, I want to get out of this thing. He says, well, I know somebody who could potentially help you. His name is Neil Fearing. That's correct. And he is a, who is he? like a wealthy investor?

His business was Yamaha motorcycles, and he was a distributor for them, but he was also an opportunist. And if he saw good deals in the marketplace, especially in the ski industry, he would buy a whole bunch of closeouts and figure out a way to make money out of it. So that was who Paul Busman introduced me to.

Right. And Neil came down and looked at our operation and said, shit, I could do this, but then we had to sit down and try and figure out how we were going to do it. Okay, and your operation at the time was you had a warehouse in San Diego, because you had moved to San Diego a few years earlier. And it was you and how many people do you remember working with you? I had a warehouse girl and someone that came in part-time did accounting. Okay, and who was doing like logistics, like sending, like shipping the orders? Me, me, me, me, me.

You were the guy. Okay, so he comes down, this guy, Neil, and says, yep, I think I'd be interested in buying you out. Yep. But from what I understand, he says, you're going to lose, we're going to buy you out, you're not going to have any ownership. But you can regain 25% of your ownership. Once this little issue with that other company, the UGS, UGS, UGS, HHS company, once that lawsuit or that situation gets, gets resolved, then you can, you get your 25% 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, businessman, 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 the three of them were going to buy the company together? In their minds, yes. Okay. And I was this sort of impediment that came along with it. But they needed you because you knew you had the connections, you know how to run the business. Exactly, yeah. 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 going to 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 25% each. And what were they bringing to this? Cash? They were bringing in cash, the ability to buy more product. We also moved the entire operation up to their warehouse in Anaheim. And 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 was just an incredible ugboot salesman. And so I was going on the road full time and making – I was not on salary. I was going to make a commission on sales. Okay. And they were going to do all of the operations. So their 75% was overheads and running the company.

Okay. So you saw this as – it's almost like if you were to raise capital from an outside investor except not only did you raise capital, they were also going to operate the side of the business you didn't really want to do. You wanted to focus on selling. It sounds like you were also looking for some kind of certainty or more financial stability.

So as a sales rep, you would get commission. That's correct. But you were 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 her head.

we spent 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 the manager's name was Dave and before I could say anything he said hey Brian I heard you sold the company and I went 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 because 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? And I said, you're telling them I don't own the company. And he says, well, you don't. And I said, 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 just hung the phone up. And I, and And I drove from Huntington Beach straight back to San Diego, and I pulled out my contract, and I read it, and I reread it, and I just went, oh, shit. I don't own the company anymore. Wow. Okay. So you're frustrated, but you know that you could get 25% of your ownership back.

Sounds like they actually did pretty well that year that they sort of came in. I mean, you guys did $650,000 in sales, so clearly on the up and up. Yeah, the weird thing was I actually loved being on the road selling. You know, after we got a, we made a deal that from then on, they would not tell anybody that I'd sold the company. Okay. Right. So that got that out of the way. I'd already committed that I don't own the company.

I don't run this anymore. But my mentor was, I'm going to try and get a pair of ugboots 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 $5,000 and 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 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 nervous. Now it sounds like you were really excited to do it. So what changed? There was a couple of things.

By being out there with the country, 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 closing our first orders was having the buyer try them on. But while I was in the stores, I, this girl walked into the shop one day. I think I was in Newport Beach somewhere, and she was touching the ugg boots, and she obviously loved the look of them and the feel of them. And she was asking the staff guy there, you know, what are these like? Well, I'm not really sure.

You know, are they hot? I'm not really sure. You know, what happens if I get them dirty? And the guy was useless, right? Yeah. And I saw that interaction and I came up with what I called 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, you know, what are these boots like? And the sales guy says, oh, they're fantastic. I'm wearing them now. He says, aren't your feet hot? No, they breathe, you know. So, well, what happens if you get them wet or do? Oh, you can wash, you know. I mean, it was just like night and day.

And so the guy bought a pair of ugg 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 ag forever. And it was probably the best marketing plan I ever executed on. Okay. So you are now full-time selling and making commission and driving all around Southern California. I think at a certain point you even tried to build like a boot for the ski market, specifically for the ski market. specifically for the ski market called the Zeelander, and I've seen it described as a ski boot,

but I don't think it was a ski boot. What was it? No, it wasn't a technical ski boot. No, it was an after ski boot, yeah, a boot that you could wear in the snow because the original classic line had an EVA sole. It was a flat piece of ethyl vinyl acetate, whatever, and it was super slippery on snow and ice.

So we created a rubber cup sole. because it was rubber, it was much more sticky on snow and ice. But yeah, that was a big, big change. It made us much more credible in the snow industry. So it's 1986 and you are selling. You're on the road. And the litigation or the threat of litigation or the loss, 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. UGHS, U.S. could continue to sell in the U.S. but say made in America. That's correct. And yours, the U.G, would also be allowed to sell in the U.S. but had to emphasize. Made in Australia, yes. So this sounds like a great result.

And now you get to 25% back now officially in stock. Yep. Selling that lawsuit was a big step. And probably 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 to get my stock right away because a weird thing had happened. You know, the second month I was out on the road after we made this change, Neil handed me a check for $10,000.

And the next month, another $10,000. 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. to do any warehousing and shipping. I just am doing the marketing and I'm on the road selling. And it wasn't even selling anymore. It was hanging out with all my buddies who owned the surf shops and the ski shops. And, you know, we'd go fishing in Idaho. We'd go golfing in Nevada.

It was just a great, great lifestyle. And 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 traveling the America and making more money than I could have ever imagined at that time. And that literally went on for the next three years. All right, but from what I gather, you did not recover your 25% ownership. I was very, very close because in that three-year period, I was just talking about, Neil had bought Joe and Paul out.

So he owned 100% of the company now. But you had settled that lawsuit. So surely... So he finally called me up and said, Hey, Brian, look, you've settled the trademark. Come in next week. I've got the attorneys ready to issue your stock. And that day he hired...

We had a life insurance salesman come in from Transamerica 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 motorcycle rider. And he was not in good health. And he had a massive heart attack during a race. The next week after?

The 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 argument. business now owned 100% of ag. Wow. And I was like out in the cold again, you know?

Because wait, because you hadn't signed the deal? We hadn't signed the contract to bring me back in as an owner. Wow. So I called her up and, you know, commiserated and everything. And I said, look, I'll be up tomorrow and I'll commit to working a year 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 1988.

And so you're running the business, but apparently the accounting was a mess, a total, like the books were just a mess. Checks hadn't been cashed. 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, a mess. And I had to try and reconcile everything. And it ended up about $87,000 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 I knew he was thinking back to when I was running the company before Neil and he you know 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 going to do a business plan I'm going to 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, 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 are coming in. Yep. In fact, 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 colors 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 charcoal were just kicking butt with all of their orders. And we were, you know, getting two or three thousand pairs of orders a week.

And I was bundling them and sending them down to the manufacturer going, hey, George, get ready. It's going to 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 called, you.

them are 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, their business is selling sheepskin, and I'm a huge user of sheepskin. You were trying to get them to finance. Yeah. So I sent a business plan down to several of them. And one guy, Gordon Jackson, who owned a big tannery in Melbourne, he called me up and said, Brian, this looks fantastic, you know, come on down. And, and, you know, and, you know, and, And he was a really weird guy. He had the mantra, you know, I reserve the right to change my mind.

And he was a very difficult guy to work with it. At first it was, come on in, how many sizes do you have, how many colors do you have, how many skins are we going to 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 the next day was, oh, I found a guy in Los Angeles to look in on you. And then the next day was, oh, look, it's a family business. And, you know, my family don't want to go into there.

You know, 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 had been buying boots from, this guy, George Bercher, he's gone unpaid for a long time. And he basically says, I'm not going to ship you anything anymore. Yes. And so, I mean, that's it. over, right? I mean, you can't, there's no business if you're suppliers and selling you, sending

you boots. Yep. Pretty much. But when I went to the trade show that September, I had no new product to put on the, you know, displays. I put all last year's product there. I didn't want anybody to know that I was out of business. Wow. And, 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, around about midnight, I called Gordon in Australia at the tannery. And I said, Gordon, I'm just going to have to shut the business down.

And he was very sad, and we hung up and went to bed. 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. And just like that, his commitment meant that we didn't have a handshake, we didn't have a contract, nothing. 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 first 2,000 pairs in. and then the next week, 5,000 pairs the next week. It was enough to keep the Ugg company alive, and there was product out in the marketplace with Ugg labels. It was so lucky. So how did you regain your ownership? I mean, 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 did you do? So what happened is that towards the end, end of the season, I got a call from the life insurance company, Transamerica, because I made a claim when Neil died back in February, March, and I'd 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've got to get

this off the books by December 31st. Can you come to Los Angeles? And we spent a day negotiating with them and we ended up getting $200,000 as a settlement to walk away, even though Neil didn't even have his physical done. So I was super lucky to have got that offer. And in the meantime, I'd said to to Della, look, I think I can pay you this 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 promissory note with her. And this $200,000, was enough to pay her note out. And then by, you know, I owned the company 100% again. You know, 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 1989. Brian is now the sole owner of Ugg, and by the end of that year, for the first time ever, Ugg 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 sort of business plan modules, but I didn't really get into that. I was still, you know, who's a rich person that I know?

There was no real structure to it. And so I was always pushed down the road until I was 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 shipped their product, they were automatically paid. If I just had a standby letter of credit for $300,000 each of those years,

because when we shipped product, we had cash pretty much immediately, we were able to pay our bills and we get more product. And it only took a couple of hundred thousand to get that cycle running. But because I pushed it so late every year, I needed a half a million on three quarters of a million dollars. And that was the hard money. And so you are constantly, 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 infuse the business with cash and then, you know, they'll be an owner. I bought part owner. And you kept coming back to this strategy. 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, Alan Greenway, who was another Australian, who had done very well in the hotel industry. And I'd been in business with him in a different deal,

and so we trusted each other. And he would be a great investor. However, he thought I was a bit of a wild canon. And he said, Brian, look, I love you, but if I gave you money, I wouldn't hear from you until you needed more. and he was pretty right. And so eventually I finally said, look, Alan, I'm throwing away thousands of thousands of dollars of worth of orders every week because 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 you can actually. Yes, so much more demand. Yeah. And so finally he said, look, Brian, I have an associate. He's 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 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's going to create a lot of tension and a lot of challenges.

But keep in mind that the new money did never, ever want the old money in the company. So that's why each iteration was a new version of the business, a new entity was formed. And I had to make a deal with the previous investors to pay them back. So I would do promissory notes to pay them back their capital with a little return so that I could move forward with the bigger financier, 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 Ugs in Oregon? Because that would have solved maybe some of your problems because then you controlled the, production. Yes. In fact, it was around about that time that we, the owner of the UGH company, came to us and said, look, we're desperate. We're not making any money. This is the company that

sued you. That had sued me, yeah. And the woman 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 UGHS company. and we maintained that factory for a couple of years. So you actually buy the factory, and so does that become your primary supplier now? Not a primary supply, but it ended up making significant dance

into the production for us, yeah. But again, we still had to, then we had to finance the factory. Sure, right. And they could make the same exact boot. It looked exactly the same. Yeah. But yeah, you had to finance the factory,

so that's also cash that you got to, put out there. And meantime, most of your sales are still in, what, boutiques, shops, small businesses, or by 1991, 92, 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 was the ski side. Well, snowboarding was just starting. And I picked up on that 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 because I didn't know what the kids did for sport in the winter. And I was talking to a sporting good owner from, I think it was Chicago. And he rolled his eyes and go, oh, they play hockey, you know. And being Australian, 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 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 happen. And so they started calling me to, you know, come and negotiate, you know, getting their product into the stores. All right. So this is 1992. And I want to 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 total sales at your $5.8 million. So you were still a very small business. I mean, Ugg was not a nationally known brand as it would become, right? And I think, you know, the United States' small business administration considers anything under $40 million a small business, right, in the United States. I agree with that. But the thing is, is that you really. you know, to go from 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 1978, he's been out of the picture, he suggests that you actually get these boots on the legs of celebrities, which is hard.

You can't just say, here's a celebrity, you know, wear this. But he suggests that instead of going to the celebrities, you go to the people who style them, like the makeup artists 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? I found a mailing list of stylists in Hollywood and sent a letter to them.

And about 400 people responded. And so I sent them all a pair of Uggboots. No questions asked. And it was a couple of months before I started saying. 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 Ugg boots started showing up over and over again in all of the celebrity magazines. So I came up with the description, casual comfort.

And I said, I want to marketugs as the ultimate casual comfort footwear. So we had the money to hire a PR agency that I, I was hoping would take this to the market and make it a much more mainstream product. And I'd made an appointment with the USA Today fashion editor. And by the time we arrived at her office, she'd double booked and we only had like five minutes to make a pitch. I pulled out a 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 ug boots. And she took the name of the photographer and the name of the magazine. And, you know, the next morning on the lifestyle section, there was a photograph of Pamela Anderson.

And the whole internal next page was this expoze on sheepskin and sheiling in fashion. I don't know where she got her information from overnight, but she did a tremendous job in creating this category. Okay. There's another parallel ad campaign that may have been even more successful, at least temporarily.

You guys in 1994, that year you did 11 million in sales, in large part because of a three-month ad buy that I believe cost half a million dollars, which is a huge amount of your budget, on Rush Limbaugh. Now Rush Limbaugh, some young people may not remember, was he was like Joe Rogan, plus, you know, like the biggest conservative talk show host, he was, yes. Far and away the biggest national audience. And he had very successfully sold Snapple. Snapple is an advertiser in a show and really had helped Snapple grow. Yes.

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 fought that initiative. You fought it. You didn't want it.

He was just not a fashion icon. He was a hard right-winger and very polarizing. You know, we'd spent years building up this image of casual comfort and 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 the, and what was their rationale was, look, he reached the biggest audience. America. I think it was much more selfish than that. Alan was 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 5% just on Rush Limbaugh for three months. Ridiculously big. Yeah. And what happens? happened was that because the board voted for it, I didn't want to fight them. I said, okay, I'm on the team, right? So I'm going to go there. I'm going to introduce the Uggboots to Rush Limbaugh. And I said, here, try this on. No, I don't need to try it on. And I had a bit of a fight with him. I said, well, look, if you don't try him on, we're not going to do the advertising.

And I was bullshitting because I had to make this deal. And eventually he tried them on. And he Oh my God, these are so comfortable I could sell these. So fast forward, which now November, I think, came on the show. Hey, folks, I got some good news to tell you. Today we have a new sponsor, and it's UGBootz from California. And that second, our switchboard shut down. Because every broker in the country, every stockbroker was calling us saying, are you guys public? Can we buy stock? Can we spot?

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 switchboard shut down for the entire season. We had to create new phone numbers. And we sent them out the phone numbers to our best retailers and said, you're going to have to fax the orders in. But in 1993, you did 9 million in sales.

in 1994, which was the Rush Limbaugh ad campaign, you do 11 million. So not that much of a boost. So 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. Yeah. And I think this was more of a younger product.

Yeah, and I'll give you a good example of that. One of my best surf shops, it's pretty hardcore surf shop in Hermosa Beach in L.A. said this grandmother drove into the shop because they had ugs on the big banner outside. Then she ordered eight pairs 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 we substituted really good fashionistas who loved 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 a huge...

No, it just moved us sideways, yeah. It was just a huge ad span. So, okay, so you... You do that, but you end up the year with $11 million in sales, and so, you know, you get into 1995. And even with all this buzz, you are worried that you guys are doomed to repeat the same mistakes, too much spending. I could see it coming so clearly. In fact, the preseason orders that see, you know, for the January, February, March period looked like the company was going to be destined for, you know, 18 million, maybe even $20 million.

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, you know, $6, $6,000, $6,000 in product, yeah. And there were no real competitors either. There were no knockoffs at that point? Not really because the UG brand was so powerful that anything else was called a fake UG. Like kids would not wear them to school if they didn't have the UG brand on them.

And Ugs were not cheap. No, they were up in the $100 range by now, yeah. Wow. Okay. So you're still concerned about this. I'm just surprised because by 1995 you would have thought, okay, they've proven this out. It's growing. Do you see an end game?

Do you see an end point? Did you think, okay, we're going to go public, we're going to get acquired? Like, did you even – was that on your mind? Well, I'm going to open up here. I don't really talk about this so much, but I had a different pressure on me this year. Chuck Kaiser had sort of turned 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 goose bump moment again, right? I was in the baggage claim area at Atlanta Airport. I was going to the Super Show, which was one of the biggest sporting good shows in the country at the time. And way up the other end of the hall, I saw a friend of mine, His name was Doug Otto. This is in 1995 when you go over to the Super Show in Atlanta.

It was the very beginning. It was, I think the show was in January or February. And I'm going to backtrack. Do you remember when I was in the parking lot at Malibu selling Uggboots? Sure, out of your van. Doug was selling sandals out of his car around about the same time. Okay. And he parlayed his business into licensing different brands like surf brands and stuff.

And he eventually took on the life. license for Tiva sandals. Uh-huh. And in the very early 90s, the outdoor market took off, and Tiva went with that. You know, they went from like $16 million to $60 million. Wow. Just through this. And because of that, they did an IPO.

And, you know, I knew that they were sitting on about $25 to $30 million in cash. When I saw Doug in Atlanta, right? And I walked up to him and we high-five. other and because we'd seen each other going in and out of surf shops for like 10 years right we joked about selling out to each other in the past and i said dog if ever we're going to do it now is the time that afternoon we had the accountants back in california talking to each other and suggesting meetings to to to start the due diligence on selling the company so he was interested in this idea of acquiring you yeah and uh because he had this success with tiva yes His company died every winter. Our company died every summer.

Because he was selling summer Tivas for the summer. Yeah, yeah. Tivas were, and his company was not called Tiva, right? What was it called? No, it was called Decker's Corporation. Okay. So I called up Allen, and I said, Alan, we have this opportunity to sell the company to a really good guy.

He's honorable. He's not going to screw us around. I'd like to start negotiation or have 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 Atlanta.

It probably took October, November to finish all the due diligence and have the actual transaction consummated. So by the end of the summer, the deal closes. And Decker's agrees to acquire Ugs. Yes. for a little under $15 million. Yep. And I guess you didn't really want to stay on.

I mean, you agree to kind of stay on as a consultant, but you really didn't want to go – because Decker's is based just north of Santa Barbara, I think. And you didn't want to go there. You want to stay in San. They offered me the position of VP of marketing. But Alan took me aside and said, Brian, you don't have a political bone in your body.

So if you join this public company, you're going to get chewed up and sped 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 just helping with their marketing and sales. All right. So Decker's acquires Ugg in 1995. 95. 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 for about $3 million. 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 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 figured out how to make, Hoka and Ugg, like not just a practical shoe, but a fashion statement. Yes. So they take over Ugg and they supercharge it. I mean, they do deals with Jimmy Choo. They open Ugg brick and mortar stores in New York and in Tokyo. They did an endorsement deal with Tom Brady. I mean, for years, he would just wear Ugs everywhere.

Yeah, no, he turned out to be a great ploy for getting into the mail, you know, the guys who are on TV every weekend watching football. And that move with Tom Brady, I thought it was a brilliant stroke to bring people back to just the fact that males do wear these products. Yeah. What did you notice about how they were able to take this thing? It 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 were sort of becoming aware of it. But what did they do? that turn this into an iconic global phenomenon? 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 L.A. Gear. And he tried to turn the brand into a street cool product. He lasted less than a year. And then they brought in a young lady called Connie Rich Wayne, who had spent time in a lot of the New York high-fax. fashion footwear industry. And she's the one that started advertising in, you know, 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 pairs for her staff and everything. And if we had announced that Oprah was wearing our shoes or boots, it would have killed the company when I owned the company because I didn't have the capital or build the product to take on that demand. That in conjunction with Connie Rich Wayne, who knew New York fashion, those two things coincided to make Ugg, like, break through the $100 million barrier and the $200 million, $500 million. Wow.

And that combination is what really built Deccas into the billion-dollar ag brand. I was just in a Macy's in New York City recently. And, I mean, it's, you know, it's still a huge brand. No one's at Macy's these days. but, you know, Ugg still has a section there, and, you know, they've got shops, and it's still going. It's still a powerful brand, which is quite remarkable. Yes, especially after, it's coming up on another two years. It'll be 50 years, I think.

God, two or three years. And I am just blown away at the longevity of it. The fact that it's in the two billion range now for a couple of years, and, you know, a lot of people are me if I resent the fact that I don't own it anymore and it couldn't be more opposite. In fact, after all of this, 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 they take some action, which is the birth, right?

So for me, buying six pairs of samples was the birth of ag. But then every business just goes into this horrible infancy and it just lies there. But if you can keep feeding it and keep it alive, it'll hit the toddling stage, which is really cool because magazines are running articles about your product and 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 because production's working, accounting and admins working, you know, everything's working.

And you can run a $10, $15, $20 million company in that youth phase. And if it's a great product or a great service, it'll hit the teenage phase. And then, you know, all bets are off. But eventually it becomes mature as a company. Yeah. And when you think about, you know, the journey you took and, you know, taking this risk. And you were in your mid-30s. You'd established career as an accountant.

and you left it and it was a tough 10 years that you went through after that trying to build this brand and really making no money and struggling. But in the end it worked out and you were able to sell it and you were happy with the result and now you've got your legacy is tied to this massive brand. How much of this do you attribute to the work you put in and do you put any stock in luck? It was 100% attributable to first. perseverance. That's all I can say. And again, I had that vision behind me of the Australian acceptance of the product. So I just was happy with the mantra that it can't be the product.

It's got to be me. What can I do to fix this? And just having that attitude when I came to every sort of obstacle. And so when I walk through an airport in the winter and somebody walks past wearing ugg bits i always look around to see if it's got the ugg 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 in some part of me surviving and building it is something that i knew that it could be that's brian smith the founder of ugg 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 Ugg saga. It's called The 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 gairoze.com or on Substack. This episode was researched and produced by Casey Herman with music composed by Rumpina Rube. It was edited by Andrea Bruce. Our engineers were Patrick Murray and Maggie Luthar. Our production staff also includes Alex Chung, J.C. Howard, Chris Messini, Carla Estevez, Sam Paulson, John Isabella, Carrie Thompson, Neva Grant, and Elaine Coates. I'm Guy Raz, and you've been listening to How I Built This.