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

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, Decker Timestamps: 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 UGG This episode was researched and produced by Casey Herman, with music by Ramtin Arablouei, and edited by Andrea Bruce. Follow How I Built This: Instagram →@howibuiltthis https://www.instagram.com/howibuiltthis/ X →@HowIBuiltThis https://x.com/howibuiltthis Facebook →How I Built This https://www.facebook.com/howibuiltthis Follow Guy Raz: Instagram →@guy.raz https://www.instagram.com/guy.raz/ Youtube →guy_raz https://www.youtube.com/channel/UCNSfrxNEmCruNtjIzxCBHjg X →@guyraz https://x.com/guyraz Substack →guyraz.substack.com http://guyraz.substack.com/ Website →http://guyraz.com/guyraz.com http://guyraz.com See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

• 0:00Speaker 00

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• 4:23Speaker 01

  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.

• 4:41Speaker 00

  And most people would be so excited about that.

• 4:45Speaker 01

  I saw this as a kiss of death.

• 4:53Speaker 02

  Welcome to How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built.

• 5:04Speaker 02

  I'm Guy Raz, and on the show today, how Brian Smith brought Australian sheepskin boots to America that turned Uggs into a multi-billion dollar brand.

• 5:21Speaker 02

  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 Uggs 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.

• 6:02Speaker 02

  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 Uggs to the footwear brand Deckers for a modest price. Deckers would go on to turn Uggs into a global phenomenon, a brand that generated over $2.5 billion in sales last year. But long before celebrities wore them, long before Uggs 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.

• 6:44Speaker 02

  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 10 years in, when he was starting to feel really stuck, he had an epiphany, literally, all thanks to an iconic Pink Floyd song.

• 7:07Speaker 01

  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 of my friends were tracking off to partnerships 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

• 7:52Speaker 01

  in Los Angeles. And I had my surfboard, so I just started going up to Malibu. I surfed that place for nearly a year.

• 8:02Speaker 02

  So it sounds like you were, I mean, were you a good surfer? Or were you just a, like, how would you describe yourself as a surfer?

• 8:08Speaker 01

  I was a good surfer, but every surfer thinks they're a good surfer.

• 8:12Speaker 02

  Right.

• 8:13Speaker 01

  But I was, no, I was pretty good.

• 8:15Speaker 02

  So, all right. And now, this is a different time, LA 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.

• 8:26Speaker 01

  No, $200 a month for this little house.

• 8:29Speaker 02

  Wow.

• 8:30Speaker 01

  But... And all my friends told me it's such a bad area, Brian, don't go there. And I'm this dumb Australian thinks, ah, they'll like me, I'm an Aussie, you know? But it turned out that all the, 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 this 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, listened to music, went to bed and the next morning I woke up in bed and everything went black and I ducked underneath and I, oh my God, the house is on fire.

• 9:12Speaker 01

  Cause the candle didn't have a dish under it and I just let it, it burn through.

• 9:17Speaker 00

  Wait, it was like a real fire, fire in this house?

• 9:20Speaker 01

  Oh, 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 couldn't get it open. And the weirdest thing happened, I, I remember slumping to the floor and I just said, ah, 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.

• 9:48Speaker 00

  Wow.

• 9:49Speaker 01

  And I stood up and I, 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 one of those weird, unexplainable moments.

• 10:11Speaker 00

  For sure.

• 10:13Speaker 00

  All right, so you, you are in LA. I'm assuming you moved to a new place and?

• 10:18Speaker 01

  Yeah, I got a great place in Santa Monica.

• 10:22Speaker 00

  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?

• 10:35Speaker 01

  Well, the trends all came out of Califor-- Levi jeans, waterbeds, you know, all the surf brands and skate brands, all the vibrancy was coming out of California.

• 10:46Speaker 00

  You wanted to be in the place where those things were coming out of?

• 10:49Speaker 01

  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, 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.

• 11:09Speaker 00

  So, wait, just to be clear, the idea was you would come to the US and I'm assuming you had saved money, right?

• 11:15Speaker 01

  A little bit, yes.

• 11:16Speaker 00

  Okay, 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?

• 11:31Speaker 01

  That's exactly right, yeah.

• 11:33Speaker 00

  And it could have been anything. It could have been lollipops. It could have been, I don't know. So you don't have to be a chartered accountant, basically?

• 11:39Speaker 01

  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.

• 12:23Speaker 00

  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 then inside is the sheepskin wool?

• 12:34Speaker 01

  That's right.

• 12:35Speaker 00

  Okay, and this was a thing? That everyone in Australia had, they just had a pair of these boots?

• 12:40Speaker 01

  Whether it was slippers or 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 UG boots and every town would spell UG a different way, U G, U G H, U G H S, U G, you know?

• 13:02Speaker 00

  So this is the, you used to call them UG boots. Where did that come from, like ugly or UG or what?

• 13:08Speaker 01

  Could be all of that. Nobody really knows.

• 13:10Speaker 00

  They've always been called UG boots in Australia.

• 13:13Speaker 01

  Yes, it's a descriptive term, yeah.

• 13:14Speaker 00

  Like you would call like, you know, rubber boots wellies, even though they're not, maybe Wellingtons is 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 Uggs, like didn't, it wasn't a brand name, it's just the name of what they were, it was just description of a-

• 13:29Speaker 01

  It was descriptive of that product, yes.

• 13:32Speaker 00

  So you see this and you think, you know, Eureka, hey, you're in California, you gotta say Eureka, so you're a official model of California. I have found gold and it is in sheepskin boots that are, you know, I'm gonna just mint money doing this thing, cause 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.

• 14:01Speaker 01

  Yes, yes, and Doug and I, we didn't have a lot of money, but we decided we, you know, we gotta get some samples, so we pulled 500 bucks together and caught the guy who ran the advertisement and we talked him into being distributors for the US.

• 14:17Speaker 00

  And I think this guy was, was George Burcher, I think? He was the guy who owned an Australian boot company called Country Leather. He would become your main supplier eventually, right?

• 14:26Speaker 01

  Exactly, yes.

• 14:28Speaker 00

  All right, so you call him and?

• 14:30Speaker 01

  Yeah, and so we ordered six pairs of samples and after they arrived, Doug was going to be the salesman, cause I was an accountant, I was terrified of salesmen. 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.

• 15:14Speaker 01

  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 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 open, he goes, oh my God, Ugg boots. 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.

• 15:56Speaker 00

  Yeah. So, all right. So you're getting all this feedback that seems pretty great.

• 16:00Speaker 01

  Yeah.

• 16:00Speaker 00

  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?

• 16:09Speaker 01

  That's right.

• 16:10Speaker 00

  Different sized feet. And so first of all, you and Doug, I'm assuming, establish a business together?

• 16:19Speaker 01

  That's correct. We're 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 invest, new investments and let me take it to them. And he did. And we were able to raise $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.

• 17:01Speaker 01

  But 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.

• 17:10Speaker 00

  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 orders. So you just ordered what you thought you could sell? Or is that right? You just made up, came up with a...

• 17:26Speaker 01

  Well, it was pretty simple. We had short and tall and we had brown or white.

• 17:31Speaker 00

  Short and tall, like short would go to your ankle and tall would go to...

• 17:34Speaker 01

  Short was ankle, tall was up to the calf, yeah.

• 17:37Speaker 00

  Okay, and then brown or white? And then how many pairs did you order?

• 17:41Speaker 01

  500.

• 17:43Speaker 00

  And just different sizes?

• 17:44Speaker 01

  $15,000, yes.

• 17:46Speaker 00

  And it takes what, six weeks, two months to get these boots?

• 17:49Speaker 01

  It was very quick, actually. It was October and we got the boots in by the end of November, yeah, just beginning of December.

• 17:58Speaker 00

  So you get these boots in and now you're gonna go presumably back to these stores that had expressed interest and you're like, hey, we're back, we got them.

• 18:09Speaker 01

  And 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 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.

• 18:44Speaker 00

  Which was how much money?

• 18:46Speaker 01

  Exactly $1,000, but it was just a fluke, but it was exactly $1,000.

• 18:51Speaker 00

  And I'm not, I'm not fast enough with the math. How much were you selling a pair?

• 18:54Speaker 01

  At retail, it was probably between 50 and 70, depending on the short and the tall.

• 18:59Speaker 00

  Got it, okay. So in 1979, that was not super cheap?

• 19:04Speaker 01

  No, it was super expensive and I was, that was one of the worst facets of the entire UGG project for 20 years, was the lack of margins I had because the pressure...

• 19:16Speaker 01

  Of the retail price kept us way, way down. So it was very hard to make money.

• 19:21Speaker 00

  So you make a thousand bucks in sales your first year. So you 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?

• 19:32Speaker 01

  Four hundred and seventy something pairs, yeah, in the third bedroom.

• 19:36Speaker 00

  In this house that you're renting in Santa Monica?

• 19:38Speaker 01

  Yeah, that was the third bedroom was the warehouse, yes.

• 19:41Speaker 00

  Wow. You couldn't do that today. You couldn't rent a house in Santa Monica and be broke, right? I mean, it'd be impossible.

• 19:48Speaker 01

  Yeah.

• 19:50Speaker 00

  All right. So you, it's nineteen eighty now. We got a bunch of shoes. And what are you gonna do? I mean, and what does Doug do? Like, you guys had started.

• 19:59Speaker 01

  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 four hundred 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, you know, January, February, March, I ended up selling about six thousand dollars worth of product.

• 20:31Speaker 00

  Pretty good?

• 20:31Speaker 01

  And most of it, believe it or not, was out of the back of my van in the parking lot at Malibu.

• 20:38Speaker 00

  Yeah.

• 20:39Speaker 01

  I used to go up for a surf in the morning and afterwards I'd grab a coffee and 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.

• 20:51Speaker 00

  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.

• 21:01Speaker 01

  It's freezing, yeah.

• 21:01Speaker 00

  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.

• 21:13Speaker 01

  Well, these questions you're asking were asked by every single surf shop owner and every consumer. What the hell, why are they so good? And the answer is, 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.

• 21:51Speaker 00

  But you can't turn this to a business just selling them out of the back of your van. You've got to, 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?

• 22:08Speaker 01

  Yep. In fact, there was, the market that's called the action sports market just started that very same year as I started.

• 22:15Speaker 00

  So action sports, surfing and skateboarding and?

• 22:19Speaker 01

  All of the above, yeah.

• 22:20Speaker 00

  Skiing, yeah.

• 22:21Speaker 01

  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 a construction firm. 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.

• 22:52Speaker 00

  So you're working, doing these jobs just to pay the bills?

• 22:55Speaker 01

  Yes.

• 22:56Speaker 00

  You're not giving up on the shoe thing yet? You're still committed to doing this?

• 23:00Speaker 01

  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 I would be, 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?

• 23:25Speaker 00

  Yeah.

• 23:26Speaker 01

  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.

• 23:34Speaker 00

  Fair enough. Okay, so you, so this is now the summer of, or end of the summer of 1980. You gotta sell a bunch of shoes.

• 23:41Speaker 01

  Yes.

• 23:41Speaker 00

  And from what I gather, you started to run small ads in surf magazines. First of all, how did you do that? How, wasn't that expensive to do?

• 23:52Speaker 01

  Relative to how much money I had, it was very expensive, yes. But back at that time, the surf magazines didn't want money upfront. 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.

• 24:13Speaker 00

  I got it. Okay, so you were running these small ads and it was just, were you calling them Ugg boots or Uggs or I'm assuming that's, yeah?

• 24:22Speaker 01

  I, I, 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 is probably four or 5,000 bucks, you know?

• 24:35Speaker 00

  Yeah.

• 24:35Speaker 01

  And I did a search of, of the world, especially the US, to see if there'd been any prior use of the trade name Ugg, and there had not. So that opened up the gate for me to do the registration of the trademark.

• 24:50Speaker 00

  So you, you trademarked that name?

• 24:52Speaker 01

  Yes.

• 24:53Speaker 00

  Ugg, which was not a trademark, I mean, in, in Australia, it was just like?

• 24:57Speaker 01

  It was generic down there, yeah.

• 24:58Speaker 00

  Right, it would be like trademarking the word cheeseburger, right?

• 25:01Speaker 01

  That's right.

• 25:02Speaker 00

  It was just the thing and you were able to trademark that as a brand name in the internet, which is

• 25:09Speaker 01

  That's correct.

• 25:09Speaker 00

  amazing that no one had thought to do that. But I guess this really wasn't a popular product in the US.

• 25:14Speaker 01

  Oh, nobody had heard of it, yeah.

• 25:18Speaker 00

  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.

• 25:31Speaker 01

  Yes.

• 25:31Speaker 00

  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.

• 25:43Speaker 01

  Yeah, still using my own capital, yes.

• 25:45Speaker 00

  And still living on summer, 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, were thinking, what's he doing with his life?

• 26:06Speaker 01

  Yeah.

• 26:07Speaker 00

  Well, 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?

• 26:14Speaker 01

  Yeah, my dad, who'd been a contractor, you know, absolutely did not want me 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, that to me was like going to prison.

• 26:35Speaker 00

  All right, so you, so you're still committed to this, and you're now a full year in.

• 26:42Speaker 01

  Yeah.

• 26:42Speaker 00

  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?

• 27:00Speaker 01

  That's right.

• 27:01Speaker 00

  Okay, and was there more interest at that snow show?

• 27:04Speaker 01

  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.

• 27:27Speaker 00

  Wow. You get a job that summer, 1981, a very unusual job that would not exist today. You had a friend who gave you an in for this job that would pay well. What was it?

• 27:42Speaker 01

  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, 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 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

• 28:27Speaker 01

  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.

• 28:37Speaker 00

  But still, like, on this UG thing, like, who was manning your phones to take orders?

• 28:45Speaker 01

  Well, nobody was calling. I mean, I was like a nonentity for the first three to four years. And every time I'd go into summer mode, I wouldn't think about UG boots 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 and 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 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 would, you know, I would open up, you know, half a dozen pairs in lots of different little surf shops.

• 29:28Speaker 01

  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 UG business started up again.

• 29:39Speaker 00

  So like October, November was when you would run UG?

• 29:42Speaker 01

  Correct.

• 29:43Speaker 00

  I got you. Okay. So it was totally seasonal.

• 29:46Speaker 01

  Yes.

• 29:47Speaker 00

  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.

• 29:57Speaker 01

  Yep.

• 29:58Speaker 00

  This, 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.

• 30:12Speaker 01

  Yes.

• 30:13Speaker 00

  And, okay, now, just 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?

• 30:22Speaker 01

  No, I thought I was doing a brilliant job, you know, and I, 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 that, you know, let's say eighty-one, eighty-two was about thirty thousand, 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 I used good-looking models again. Sales went to, I think it was forty-five thousand that year and it was like just getting nowhere and.

• 31:05Speaker 01

  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?

• 31:15Speaker 00

  Doing what?

• 31:16Speaker 01

  I was a greenskeeper. I was changing the holes on all the greens and I was helping with construction and all that.

• 31:23Speaker 00

  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'd been a chartered accountant, which is a kind of a prestigious gig, right?

• 31:37Speaker 01

  Very much so, yeah.

• 31:38Speaker 00

  And here you are, you know, like doing manual labor. I mean, were you ever like, God, what am I doing?

• 31:46Speaker 01

  I actually loved that golf. That golf course job is probably the best job I've ever had in my life outside of UG, you know?

• 31:53Speaker 00

  Yeah.

• 31:53Speaker 01

  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, they're a size seven or a size 13. So it was a very hard product for 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 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.

• 32:33Speaker 01

  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 Uggs? And they pretty much all just said, oh, there's Uggs, man. They're so fake. Have you seen those ads? Those models, they can't surf.

• 32:58Speaker 01

  And instantly, I realized that not only was my ads not working, I was actually turning people away from Uggs Boots because of the images that I portrayed them in. So it was a huge learning thing.

• 33:13Speaker 00

  So presumably, you started to use real surfers in your ads?

• 33:17Speaker 01

  Yeah, I had a buddy, he 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. 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 Blacks Beach in La Jolla and Tressles up in San Onofre.

• 33:50Speaker 00

  Yeah.

• 33:50Speaker 01

  So when I ran those ads, the sales, which had been around, you know, thirty to fifty thousand per year, the immediate jump was like $200,000.

• 34:02Speaker 00

  Wow.

• 34:02Speaker 01

  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 Blacks Beach with Mike Parsons or to Tressles with Ted Robinson, you know? And that reality really taught me everything I'd learned about sales and marketing.

• 34:25Speaker 00

  The jump from 1982 to 83 was big. I think a couple of things happened that year, which one was you designed a logo for Uggs.

• 34:36Speaker 01

  Yes.

• 34:36Speaker 00

  Right? Like, you designed a logo, it was like a ram's head, I think.

• 34:40Speaker 01

  Yes.

• 34:40Speaker 00

  Right? I don't think it's a logo today, is it?

• 34:43Speaker 01

  They took the ram's head out of it, yeah. It was too difficult to reproduce.

• 34:46Speaker 00

  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.

• 34:55Speaker 01

  Yeah, country leather.

• 34:56Speaker 00

  And then they would be shipped to the US and you could sell them. And then the other thing, I think, happened that year is you...

• 35:07Speaker 00

  You get you get a threatening letter, like a cease and desist letter from another company called UGS, U-G-H-S. It's also, they also sell UG boots. They're, I guess, Australian couple, but based in Oregon.

• 35:23Speaker 01

  Yes.

• 35:24Speaker 00

  Who were doing the same thing you were doing, but they were actually making their boots in Oregon.

• 35:29Speaker 01

  In Oregon, yeah.

• 35:30Speaker 00

  And they sent you a letter saying, hey, you're using the name UGS, we've, you know, we've got a trademark on it, we're gonna sue you.

• 35:37Speaker 01

  Yes, that was, that was a horrible period. And I tried to find other names to use.

• 35:46Speaker 00

  But didn't you already have a trademark on the name UGGS?

• 35:50Speaker 01

  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.

• 36:02Speaker 00

  Right.

• 36:03Speaker 01

  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.

• 36:23Speaker 00

  Right.

• 36:24Speaker 01

  But I didn't want to be in one, because I didn't have any money.

• 36:26Speaker 00

  And this was going to be, well, just because we're gonna come back to this, this is gonna be a 10-year saga, roughly.

• 36:31Speaker 01

  Yeah, yeah.

• 36:32Speaker 00

  It was gonna 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 Boozer, who, I guess you had met when you were in the mainframe.

• 36:58Speaker 01

  Yeah, he was a computer guy, yeah.

• 37:00Speaker 00

  Decommissioning business. He gave you a line of credit, but he wanted half the business, basically.

• 37:06Speaker 01

  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.

• 37:19Speaker 00

  Yeah, yeah.

• 37:20Speaker 01

  But finance is not the same as accounting.

• 37:23Speaker 00

  Right.

• 37:24Speaker 01

  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, you know, 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.

• 37:50Speaker 00

  Yeah.

• 37:51Speaker 01

  And 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.

• 38:07Speaker 00

  Right. It's interesting, cause 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.

• 38:23Speaker 01

  That's, that's correct.

• 38:24Speaker 00

  And you made deals that weren't necessarily in, in your favor, like basically giving half of the business away for a, a line of credit.

• 38:32Speaker 01

  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 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.

• 39:09Speaker 00

  Okay. So you now have a partner, essentially, maybe a silent partner, this guy John, who's giving you a line of credit.

• 39:16Speaker 01

  Yes.

• 39:17Speaker 00

  Meantime, you are, you still have this kind of like potential lawsuit hanging over you. And I guess you, you decide, 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?

• 39:33Speaker 01

  I did. I came up with the name Jackaroo, which is like a cowboy.

• 39:38Speaker 00

  It is an Australian cowboy.

• 39:40Speaker 01

  Australian cowboy Jackaroo. And Gillaroo is the female version. And had these young kids that I knew their parents and they were riding for the UGGSurf team. They had UGGS logos on their surfboards. They're like, all the surf, all the brands had surf teams. And so they wanted to be on the UGGSurf team.

• 40:01Speaker 00

  You sponsored a surf team?

• 40:03Speaker 01

  Yeah, but only with logos and

• 40:05Speaker 00

  Okay, I got you.

• 40:06Speaker 01

  and product and stuff like that. I didn't really have any money.

• 40:08Speaker 00

  Right.

• 40:09Speaker 01

  And I went to them and I said, hey, listen, guys, we, you know, I'm gonna have to give up the UGGS name and we're gonna call them Jackaroos. So you'll be riding for Jackaroos. And they went, no way. We're never, that's a dumb name. We're never, you know, and I realized how passionate they were about the UGGS 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 because that name is really powerful.

• 40:38Speaker 00

  When we come back in just a moment, how Brian's trademark fight is just the beginning of the struggles that put UGGS and his ownership of it at risk. Stay with us. I'm Guy Raz and you're listening to How I Built This.

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• 44:31Speaker 00

  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.

• 44:59Speaker 01

  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 Ugg boots to the line.

• 45:30Speaker 00

  Got it. Okay. 1984, record year, right? But not yet profitable. You had still had a losses. And you have this line of credit.

• 45:41Speaker 01

  Yes.

• 45:42Speaker 00

  Still kind of growing and... But challenging, and from what I understand, that year, you, and I should mention, you were, you had been recently married. You met

• 45:53Speaker 01

  Right.

• 45:54Speaker 00

  Laura, who became your wife.

• 45:55Speaker 01

  Yep.

• 45:56Speaker 00

  And you said to her, hey, I gotta abandon this thing. This is not gonna work. You realize or decide that you see no future in Nugs.

• 46:06Speaker 01

  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.

• 46:31Speaker 00

  Right. And you're getting stressed out and, and you're thinking, I don't need this.

• 46:35Speaker 01

  Yeah, yeah. And he, he just wanted his money out. And I do remember that there was a period when he was putting intense pressure on me. And 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 was a really quiet person, she just looked at me and said, you get up now and walk to bed like a man. And she, she sort of shocked me. And as I stood up, I

• 47:17Speaker 01

  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, I literally wanted to just get out.

• 47:32Speaker 00

  Yeah. I mean, I can understand because you were feeling a bunch of pressure. And I mean, now. You are almost 40, right?

• 47:41Speaker 01

  Yes.

• 47:42Speaker 00

  And probably still struggling, really struggling financially.

• 47:46Speaker 01

  Yeah, Laura was working for an architect and she was paying the bills at the time, yeah.

• 47:52Speaker 00

  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 the business and you want to just throw your hands up and walk away. And, 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.

• 48:22Speaker 01

  Fearing, I think that's his name.

• 48:24Speaker 00

  And he is a, what, who is he? Is he like a wealthy investor?

• 48:29Speaker 01

  His business was Yamaha Motorcycles and he was a distributor for them, but he was also a 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.

• 48:52Speaker 00

  Right.

• 48:52Speaker 01

  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.

• 49:02Speaker 00

  Okay, and your operation at the time was you had a warehouse in San Diego, because you had moved.

• 49:07Speaker 01

  Yep.

• 49:07Speaker 00

  To San Diego a few years earlier. And it was you and how many people do you remember working with you?

• 49:15Speaker 01

  I had a warehouse girl and someone that came in part-time did accounting.

• 49:20Speaker 00

  Okay, and who was doing like logistics, like sending, like shipping the orders?

• 49:25Speaker 01

  Me, me, me, me.

• 49:27Speaker 00

  You were the guy, all right. Okay, so he comes down, this guy Neil, and says, yep, I think I'd be interested in buying you out.

• 49:35Speaker 01

  Yep.

• 49:36Speaker 00

  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, U G H S company, once that lawsuit or that situation gets resolved, then you can, you get your 25% back. That's basically the deal they offered you.

• 50:00Speaker 01

  Yeah, that from his perspective is exactly how he saw it.

• 50:04Speaker 00

  Okay.

• 50:05Speaker 01

  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.

• 50:16Speaker 00

  Him, it was this guy Neil. Paul was this guy you'd worked with, so he'd be a partner.

• 50:21Speaker 01

  Yeah, Paul and another guy, Joe, who was the closeout guy.

• 50:25Speaker 00

  So the three of them were gonna buy the company together?

• 50:29Speaker 01

  In their minds, yes.

• 50:30Speaker 00

  Okay.

• 50:31Speaker 01

  And I was this sort of impediment that came along with it.

• 50:34Speaker 00

  But they needed you because you knew you had the connections, you knew how to run the business.

• 50:38Speaker 01

  Exactly, yeah.

• 50:39Speaker 00

  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, at that time, like, when they said we're gonna buy the company, did they give you a check that you could then cash that was your money?

• 50:52Speaker 01

  No, no, no. We, we set up a new corporation and in my mind, we were all going to own the company 25% each and.

• 51:03Speaker 00

  And what were they bringing to this? Cash?

• 51:05Speaker 01

  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 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 Ugg boots salesman. And so I was going on the road full-time and making, I was not on salary. I was gonna make a commission on sales.

• 51:34Speaker 00

  Okay.

• 51:35Speaker 01

  And they were gonna do all of the operations. So their 75% was overheads and running the company.

• 51:43Speaker 00

  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 gonna operate the side of the business you didn't really wanna do. You wanted to focus on selling.

• 51:57Speaker 01

  Exactly.

• 51:57Speaker 00

  Sounds like you were also looking for some, some kind of certainty or more financial stability. So as a sales rep, you would get commission.

• 52:05Speaker 01

  That's correct.

• 52:06Speaker 00

  But you were giving up the business, basically.

• 52:09Speaker 01

  Well, in my mind, I wasn't. In my mind, they were my new partners.

• 52:13Speaker 00

  Right.

• 52:13Speaker 01

  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 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."

• 52:42Speaker 00

  Hmm.

• 52:43Speaker 01

  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?

• 52:57Speaker 00

  Yeah.

• 52:58Speaker 01

  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 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."

• 53:32Speaker 00

  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 that year that they sort of came in. I mean, you guys did $650,000 in sales, so

• 53:46Speaker 01

  Yeah.

• 53:47Speaker 00

  clearly on the up and up.

• 53:48Speaker 01

  Yeah. The weird thing was, I actually loved being on the road selling. And 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.

• 53:59Speaker 00

  Okay.

• 53:59Speaker 01

  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 mantra was I'm going to try and get a pair of Ugg 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 cheque for $5,000 and said, "That's your commissions."

• 54:21Speaker 00

  Wow.

• 54:22Speaker 01

  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.

• 54:29Speaker 00

  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're really excited to do it. So what changed?

• 54:44Speaker 01

  There was a couple of things. 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. 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?"

• 55:27Speaker 01

  "I'm not really sure, you know. What happens if I get them dirty?" And the guy was useless, right?

• 55:34Speaker 00

  Yeah.

• 55:34Speaker 01

  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?" "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.

• 56:15Speaker 01

  And so that cost me a pair of boots for each new store I opened. But that changed the trajectory of Ugg forever. And it was probably the best marketing plan I ever executed on.

• 56:29Speaker 00

  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, called the Zealander. And I've seen it described as a ski boot, but I don't think it was a ski boot. What was it?

• 56:51Speaker 01

  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. Made us much more credible in the snow industry.

• 57:22Speaker 00

  So it's 1986 and you are selling. You're on the road. And the litigation, or the threat of litigation or the lawsuit, 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. UGS, U G H S, could continue to sell in the US but say "Made in America."

• 57:47Speaker 01

  That's correct.

• 57:48Speaker 00

  And yours, the U G G, would also be allowed to sell in the US but had to emphasize...

• 57:54Speaker 01

  "Made in Australia," yes.

• 57:56Speaker 00

  So this sounds like a great result. And now you get your 25% back now officially in stock.

• 58:03Speaker 01

  Yep. Settling 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, you know, Neil handed me a cheque for $10,000 and the next month, another $10,000.

• 58:33Speaker 00

  This is your commission?

• 58:34Speaker 01

  In commissions.

• 58:35Speaker 00

  Yeah.

• 58:35Speaker 01

  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 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, 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, didn't own the company anymore, but suddenly I'm traveling the America

• 59:19Speaker 01

  and making more money than I could have ever imagined at that time. And that literally went on for the next three years.

• 59:29Speaker 00

  All right, but from what I gather, you did not recover your 25% ownership?

• 59:35Speaker 01

  I was very, very close because in that three-year period I was just talking about, Neil had bought Joe and Paul out.

• 59:43Speaker 00

  Okay.

• 59:43Speaker 01

  So he owned 100% of the company now.

• 59:46Speaker 00

  But you had settled that lawsuit, so surely...

• 59:49Speaker 01

  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.

• 1:00:23Speaker 00

  The next week after...

• 1:00:24Speaker 01

  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.

• 1:00:33Speaker 00

  Wow.

• 1:00:34Speaker 01

  And so now his widow, who'd never stepped foot inside the Ugg business, now owned 100% of Ugg.

• 1:00:43Speaker 00

  Wow.

• 1:00:44Speaker 01

  And, and I was like out in the cold again, you know, so.

• 1:00:48Speaker 00

  Because, wait, because you hadn't signed the deal?

• 1:00:50Speaker 01

  We hadn't signed the contract to bring me back in as an owner.

• 1:00:53Speaker 00

  Wow.

• 1:00:54Speaker 01

  So I called her up and, and, you know, commiserated and everything. And I said, look, I'll be up tomorrow and 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.

• 1:01:15Speaker 00

  So, okay, this is 1988. And so you're, you're running the business, but apparently the accounting was a mess, a total, like.

• 1:01:25Speaker 01

  It, it was.

• 1:01:26Speaker 00

  The books were just a mess. Checks hadn't been cashed, um, POs hadn't, you know, been paid. And then you guys had outstanding bills that you had to pay. What did you discover?

• 1:01:37Speaker 01

  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, 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 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.

• 1:02:20Speaker 01

  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. You know, I wrote a business plan, but I got nowhere with the bankers. Friends and family, we're way beyond that. So, you know, I really was desperate for three or four months on who the hell can I approach?

• 1:02:44Speaker 00

  And, and, I mean, you were still running the business. Orders were coming in.

• 1:02:48Speaker 01

  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 3,000 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?"

• 1:03:27Speaker 00

  Yeah.

• 1:03:28Speaker 01

  And I thought, initially, I thought, oh, the retailers. But when I called my best retailers, they just laughed at me. So, you know, "You're one brand in 100 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.

• 1:03:48Speaker 00

  You were trying to get them to finance.

• 1:03:50Speaker 01

  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 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 work with. 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,

• 1:04:34Speaker 01

  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.

• 1:04:44Speaker 00

  And apparently this guy that you'd been buying. Boots from this guy, George Burcher.

• 1:04:51Speaker 01

  Yes.

• 1:04:52Speaker 00

  He's gone unpaid for a long time and he basically says, I'm not going to ship you anything anymore.

• 1:04:56Speaker 01

  Yes.

• 1:04:57Speaker 00

  And, and so, I mean, that's it. Game over, right? I mean, you can't, there's no business if your suppliers and selling you, sending you boots.

• 1:05:06Speaker 01

  Yep, pretty much, but when I went to the trade show that September, we 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.

• 1:05:22Speaker 00

  Wow.

• 1:05:23Speaker 01

  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 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, uh, 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, we didn't have a handshake.

• 1:06:07Speaker 01

  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, you know, the first 2,000 pairs in. And then the next week, 5,000 pairs the next week. And it was enough to keep the UG company alive. And there was product out in the marketplace with UG labels again. I was so lucky.

• 1:06:42Speaker 00

  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?

• 1:06:56Speaker 01

  So what happened is that, uh, towards the end of the season, I got a call from the life insurance company, Transamerica. Cause I, I'd 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, you know, physical done.

• 1:07:39Speaker 01

  So I was super lucky to have got that offer. And in the meantime, I'd, I'd said to Dela, look, I, 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, I owned the company 100% again. You know, who, who would have ever thought that that would happen again?

• 1:08:12Speaker 02

  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.

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• 1:10:09Speaker 02

  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.

• 1:10:30Speaker 01

  I didn't have the skill to go out and raise the money like traditionally. By this time, there were sort of business plan modules, but I didn't really get into that. I was still, 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.

• 1:11:12Speaker 01

  If I just had a standby letter of credit for $200,000, $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'd get more product. And it was, 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 or three quarters of a million dollars, and that was the hard money.

• 1:11:37Speaker 00

  And so you were constantly, and in this saga, there are so many names of people who were involved as partners at one point or another.

• 1:11:47Speaker 01

  Right.

• 1:11:48Speaker 00

  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, a part owner. And you kept coming back to this, this strategy. The danger is that you might have a partner that you don't like or you don't get along with.

• 1:12:07Speaker 01

  Yeah. And so I had an associate, Alan Greenway, who was another Australian who'd 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 cannon. And he said, Brian, look, I love you, but if I gave you money, I wouldn't hear from you until you needed more.

• 1:12:39Speaker 01

  He was pretty right. And so eventually I finally said, look, Alan, I'm throwing away thousands of thousands of dollars worth of orders every week because I don't have product. Can you please just give me a letter of credit?

• 1:12:52Speaker 00

  You're getting, you're having, you have more demand than you can actually.

• 1:12:55Speaker 01

  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.

• 1:13:15Speaker 01

  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 devil that I knew by bringing him in.

• 1:13:30Speaker 00

  This is a guy named Chuck, I believe.

• 1:13:32Speaker 01

  Chuck Kaiser, yeah.

• 1:13:33Speaker 00

  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.

• 1:13:43Speaker 01

  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.

• 1:14:09Speaker 00

  Right.

• 1:14:09Speaker 01

  So that I could move forward with the bigger financier, yeah.

• 1:14:13Speaker 00

  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 Uggs in Oregon? Because that would have solved maybe some of your problems because then you controlled the production.

• 1:14:34Speaker 01

  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.

• 1:14:44Speaker 00

  This is the company that had sued you.

• 1:14:46Speaker 01

  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 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.

• 1:15:08Speaker 00

  So you actually buy the factory. And so was that, does that become your primary supplier now?

• 1:15:14Speaker 01

  Not a primary supplier, but it did end up making significant dance into the production for us, yeah. But again, we still had to, then we had to finance the factory.

• 1:15:25Speaker 00

  Sure, right. And they could make the same exact boot. It looked exactly the same.

• 1:15:29Speaker 01

  Yeah.

• 1:15:29Speaker 00

  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 are by 1991, 92, are you starting to get into bigger retailers?

• 1:15:48Speaker 01

  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 vibe very, very early. So we started advertising to the youth snowboarding thing.

• 1:16:09Speaker 00

  Yeah.

• 1:16:09Speaker 01

  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 goods owner from, I think it was Chicago. And he rolled his eyes and go, 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, you know, 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.

• 1:16:52Speaker 01

  And so they started calling me to, you know, come and negotiate getting their product into the stores.

• 1:16:59Speaker 00

  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.

• 1:17:05Speaker 01

  Right.

• 1:17:06Speaker 00

  You know, you talk about huge markets. Your total sales that you were $5.8 million. So you were still a very small business. I mean, UG was not a nationally known brand.

• 1:17:16Speaker 01

  Not at that time, no.

• 1:17:17Speaker 00

  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?

• 1:17:27Speaker 01

  I agree with that.

• 1:17:28Speaker 00

  But the thing is, is that you really, you know, to go from a...

• 1:17:34Speaker 00

  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, who 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?

• 1:18:06Speaker 01

  Correct.

• 1:18:06Speaker 00

  And you send them pairs of the shoes for free.

• 1:18:10Speaker 01

  Yes.

• 1:18:11Speaker 00

  How did you find these stylists?

• 1:18:13Speaker 01

  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 Ugg boots, no questions asked. And 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 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 market Uggs as the ultimate casual comfort footwear. So we had the money to hire a PR agency

• 1:18:58Speaker 01

  that 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 Ugg boots. And she took the name of the photographer and the name of the... The magazine and you know, the next morning on the lifestyle section there was a photograph of Pamela Anderson.

• 1:19:42Speaker 00

  In UBS.

• 1:19:43Speaker 01

  And the whole internal next page was this exposé on sheepskin and shearing in fashion. And I don't know where she got her information from overnight, but she did a tremendous job in creating this category.

• 1:19:55Speaker 00

  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.

• 1:20:10Speaker 01

  Yes.

• 1:20:10Speaker 00

  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.

• 1:20:31Speaker 01

  He was.

• 1:20:32Speaker 00

  Far and away the biggest national audience. And he had very successfully sold Snapple. Snapple was an advertiser and a show and really had helped Snapple grow.

• 1:20:43Speaker 01

  Yes.

• 1:20:44Speaker 00

  And, 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.

• 1:20:59Speaker 01

  Yeah, I, I fought that initiative.

• 1:21:03Speaker 00

  You fought it, you didn't want it.

• 1:21:05Speaker 01

  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 outvoted at a board meeting.

• 1:21:22Speaker 00

  By your partners, they wanted to be on, and what was their rationale was, look, he reaches the biggest audience in America.

• 1:21:27Speaker 01

  I, 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.

• 1:21:39Speaker 00

  What do you mean be in the audience?

• 1:21:41Speaker 01

  Well, he wanted to go to New York and be in a taping of one of the Rush Limbaugh shows.

• 1:21:45Speaker 00

  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.

• 1:21:54Speaker 01

  Ridiculously big, yeah. And what happened was that because the board voted for it, I didn't want to fight him. I said, okay, I'm on the team, right? So I'm going to go there. I'm going to introduce the Ugg boots to Rush Limbaugh. And I said, here, try this on. No, I don't need to try it on. And, and I had a bit of a fight with him. I said, well, look, if you don't try them on, we know it's not going to do the advertising. And I was bullshitting because I, I had to make this deal. And eventually he tried them on and he goes, oh, my God, these are so cut like I'd sell these. So fast forward, it's now November, I think. Came on the show, hey, folks, I got a, you know, got some good news to tell you.

• 1:22:37Speaker 01

  Today we have a new sponsor and it's Ugg boots 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 buy, 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, 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.

• 1:23:18Speaker 00

  But, but in 1993, you did nine million in sales. In 1994, which was the Rush Limbaugh ad campaign, you do 11 million. So not, not that much of a boost. So 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 audiences are older too. And I think this was more of a younger product.

• 1:23:43Speaker 01

  Yeah. And I'll give you a good example of that. One of my best surf shops, it was a pretty hardcore surf shop in Hermosa Beach in, in LA. Said this grandmother drove into the shop because they had Uggs on the big banner outside. And 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? So we substituted really good fashionistas who loved the product for these people who'd never even heard of it.

• 1:24:12Speaker 00

  Got it. All right. But it doesn't sound like it did any damage. I mean, it just was a huge-

• 1:24:16Speaker 01

  No, it just moved us sideways. Yeah.

• 1:24:19Speaker 00

  It was just a huge ad spend. So, okay, so 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 and-

• 1:24:37Speaker 01

  I could see it coming so clearly. In fact, the preseason orders that, 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 dollars.

• 1:24:53Speaker 00

  And most people would be so excited about that.

• 1:24:56Speaker 01

  I saw this as a kiss of death.

• 1:24:58Speaker 00

  Because you could not finance those orders.

• 1:25:00Speaker 01

  I knew I would not be able to finance an extra, you know, 6.5, 6.7 million dollars in product. Yeah.

• 1:25:07Speaker 00

  And there were no real competitors either? There were no knockoffs at that point?

• 1:25:11Speaker 01

  Not really, because the Uggs brand was so powerful that anything else was called a fake Uggs. Like, kids would not wear them to school if they didn't have the Uggs brand on them.

• 1:25:22Speaker 00

  And Uggs were not cheap.

• 1:25:23Speaker 01

  No, they were up in the, you know, $100 range by now. Yeah.

• 1:25:28Speaker 00

  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, you know, 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?

• 1:25:47Speaker 01

  Well, I'm going to open up here. I don't really talk about this so much, but-

• 1:25:55Speaker 01

  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 goosebump 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 goods shows in the country at the time.

• 1:26:40Speaker 01

  And way up the other end of the hall, I saw a friend of mine, his name was Doug Otto.

• 1:26:48Speaker 00

  This is in 1995, when you go to the super show in Atlanta.

• 1:26:52Speaker 01

  It was the very beginning. I think the show was in January or February. And I'm gonna backtrack. Do you remember when I was in the parking lot at Malibu selling Ugg boots?

• 1:27:02Speaker 00

  Sure, out of your van, yeah.

• 1:27:03Speaker 01

  Doug was selling sandals out of his car around about the same time. And he parlayed his business into licensing different brands, like surf brands and stuff. And he eventually took on the license for Teva sandals.

• 1:27:19Speaker 00

  Uh huh.

• 1:27:19Speaker 01

  And in the very early 90s, the outdoor market took off and Teva went with that. They went from like 16 million to 60 million.

• 1:27:30Speaker 00

  Wow.

• 1:27:31Speaker 01

  Just through this. And because of that, they did an IPO. And I knew that they were sitting on about 25 to 30 million dollars in cash when I saw Doug in Atlanta, right? And I walked up to him and we high-fived each other 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, 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 start the due diligence on selling the company.

• 1:28:09Speaker 00

  So he was interested in this idea of acquiring you?

• 1:28:13Speaker 01

  Yeah.

• 1:28:13Speaker 00

  And because he had the success with Teva?

• 1:28:16Speaker 01

  Yes. His company died every winter. Our company died every summer.

• 1:28:22Speaker 00

  Because he was selling summer Tevas for the summer.

• 1:28:25Speaker 01

  Yeah.

• 1:28:26Speaker 00

  Right. Tevas were, and, and his company was not called Teva, right? What was it called?

• 1:28:30Speaker 01

  No, it was, it was called Deckers Corporation.

• 1:28:32Speaker 00

  Okay.

• 1:28:33Speaker 01

  So I called up Alan 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 accountant start negotiating on one condition that Chuck Kaiser is never, ever allowed to speak to anybody in this deal.

• 1:28:53Speaker 00

  Okay.

• 1:28:53Speaker 01

  And Alan went along with that.

• 1:28:55Speaker 00

  Yeah.

• 1:28:56Speaker 01

  And it took us, I think from February is when we met in, in Atlanta. It probably took October, November to finish all the due diligence and have the actual transaction punctuated.

• 1:29:09Speaker 00

  So by the end of the summer, the deal closes and Deckers agrees to acquire Ugg's.

• 1:29:15Speaker 01

  Yes.

• 1:29:16Speaker 00

  For a little under $15 million.

• 1:29:18Speaker 01

  Yep.

• 1:29:20Speaker 00

  And I guess you didn't really want to stay on. I mean, you agreed to kind of stay on as a consultant, but you really didn't want to go, because Deckers is based in just north of Santa Barbara.

• 1:29:31Speaker 01

  Yes.

• 1:29:32Speaker 00

  And you didn't want to go there. You wanted to stay in Santa.

• 1:29:34Speaker 01

  They offered me the position of VP of Marketing, but Alan 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 going to get chewed up and spat out.

• 1:29:50Speaker 00

  Yeah.

• 1:29:50Speaker 01

  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, with their marketing and sales.

• 1:30:02Speaker 00

  All right. So Deckers acquires Ugg in 1995.

• 1:30:07Speaker 01

  Ninety-five.

• 1:30:08Speaker 00

  I should mention that we've done another brand on this show that Deckers also acquired, a shoe that many people will know called Hoka.

• 1:30:15Speaker 01

  Yeah, great brand.

• 1:30:16Speaker 00

  Acquired that brand for about $3 million. It's a multi-billion dollar brand. Deckers 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.

• 1:30:34Speaker 01

  Yes.

• 1:30:34Speaker 00

  Because they have three brands, Ugg, Hoka and Teva, and it's a.

• 1:30:40Speaker 00

  Multi-billion dollar company. I mean, they have, they've figured out how to make Hoka and Ugg like not just a practical shoe, but a fashion statement.

• 1:30:50Speaker 01

  Yes.

• 1:30:51Speaker 00

  So they take over Ugg and they supercharge it. I mean, they do deals with Jimmy Choo. They opened Ugg brick and mortar stores in New York and in Tokyo. They, they did a, an endorsement deal with Tom Brady. I mean, for years, he would just wear Uggs everywhere.

• 1:31:07Speaker 01

  Yeah, no, he, he turned out to be a great ploy for getting into the male, you know, the guys who are on TV 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.

• 1:31:25Speaker 00

  Yeah. What did you notice about how they were able to take this thing? It was the same product, the same name.

• 1:31:33Speaker 01

  Yeah.

• 1:31:34Speaker 00

  And now you had done a lot of the foundational work. You'd gotten it on the legs of Pamela Anderson and people were sort of becoming aware of it. But what did they do that turned this into a, an iconic, global phenomenon? How did, how do you think they did that?

• 1:31:51Speaker 01

  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 Richwayne, 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 pairs for her staff and everything.

• 1:32:31Speaker 01

  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 because I didn't have the capital to build the product to take on that demand. That in conjunction with Connie Richwayne, who knew New York fashion, those two things coincided to make Ugg like break through the hundred million dollar barrier and the two hundred million, five hundred million.

• 1:32:56Speaker 00

  Wow.

• 1:32:56Speaker 01

  And that that combination is what really built Deckers into the billion dollar Ugg brand.

• 1:33:04Speaker 00

  I was just in a Macy's in New York City recently and I mean, Ugg, 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.

• 1:33:22Speaker 01

  Yes, especially after it's coming up on another two years, it'll be 50 years, I think, two or three years. And, and I, I am just blown away at the longevity of it. The fact that it's, it's in the two billion range now 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 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,

• 1:34:07Speaker 01

  which is the birth, right? So for me, buying six pairs of samples was the birth of Ugg. 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 believer 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 admin's working, you know, everything's working. And you can run a 10, 15, 20 million dollar 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,

• 1:34:51Speaker 01

  all bets are off. But eventually it becomes mature as a company.

• 1:34:55Speaker 00

  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 30s, you'd established a career as an accountant, 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.

• 1:35:13Speaker 02

  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?

• 1:35:30Speaker 01

  It was 100% attributable to 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 UG boots, I always look around to see if it's got the UG label on the back, you know?

• 1:36:05Speaker 02

  Yeah.

• 1:36:06Speaker 01

  And I get such a kick out of seeing them randomly on the streets. So in that part, I feel extremely lucky in some part of me surviving and building it as something that I knew that it could be.

• 1:36:20Speaker 02

  That's Brian Smith, the founder of UG. Since Brian left the company, he started a few other businesses, including one that installed prefabricated 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 The Birth of a Brand.

• 1:36:45Speaker 02

  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 guyraz.com or on Substack. This episode was researched and produced by Casey Herman with music composed by Ramtin Arablouei. 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, Niva Grant, and Elaine Coats. I'm Guy Raz and you've been listening to How I Built This.