Brian Smith, Founder of UGG
Step-by-Step Instructions On Building a Worldwide Iconic Brand with Brian Smith of UGG
In the late 1970s, Brian Smith was a young Australian surfer looking for the next big thing. Little did he know that while flipping through a magazine, he would stumble upon an idea that would grow into one of the world’s most iconic brands. With more than $1 billion in sales worldwide, you can find the UGG brand in millions of households.
What does it take to build such an iconic brand?
Smith openly admits that, at the time, he had no idea. He struggled to get people interested in his product, and even when they were interested, he found it difficult to turn them into customers. In fact, after his first season of sales, Smith had sold only 28 pairs of boots. The outlook was not good for his fledgling brand.
While many entrepreneurs would become disheartened and give up, Smith realized that no company becomes successful overnight.
“You can’t give birth to adults,” Smith says.
Smith believed that every successful business in the world has to go through a period of infancy, where almost nothing happens, and only then can you start getting the traction and momentum you need to explode your business.
For UGG, that infancy stage would go on for another four years until that lightbulb moment came and Smith figure out what he had to do. What happened next turned sales from only $15,000 to $200,000 almost overnight.
In the years that followed, Smith would find his sheepskin boots on the feet of young surfers, snowboarders, and eventually A-list celebrities.
- The stages of building a global brand and how to move through each one as quickly as possible
- When to hold em’ and when to fold em’, Smith details how to recognize when the moment is right to sell your business
- How to use grassroots events to build your early customer base
- Why the most important element of your brand is not what you think
Full Transcript of the Podcast with Brian Smith
Nathan: Hello, and welcome to another episode of “The Foundr Podcast.” My name is Nathan Chan and I’m coming to you live from hometown, homegrown, Melbourne, Australia. Loud and proud. And I’m the CEO and publisher of “Foundr Magazine.” For those of you that are joining us for the first time, we interview some of the greatest entrepreneurs of our generation. Really, really smart founders that are either number one or two in the industry and disrupting their industry. And I pretty much pick their brains and find out how they’ve done it and just get them to share experiences and lessons learned.
Now, today’s guest, you’re in for an absolute treat. His name is Brian Smith. And he’s the founder of a company called UGG Boots. I’m sure you guys may have heard of them. I’m actually wearing mine right now. I’ve been wearing UGG Boots pretty much my whole life.
So, I go for him, with Brian, you know, what it takes to build a household name, brand, disrupting industry and makes a big cool. How do you make a product so cool that everybody knows what they are? You know, companies all around the world rip off, you know, these products. So what does that take? How do you build a great brand? And it wasn’t that easy, you know. Actually, you know what, better yet, I’m not gonna go into it. I’m gonna let you guys listen and find out more about the story. But a lot of gold, a lot of lesson shared.
The first question I ask everyone that comes on is, “How did you get your job?”
Brian: My job at UGG?
Nathan: Yeah, your job there. Like, how did you end up doing what you’re doing today?
Brian: I got it because I had another job which was in Perth, Australia. And I was a chartered accountant and it took 10 years to graduate. And the day I graduated, I quit because I really didn’t like being an accountant. And I decided, you know, after a few weeks and, you know, I was wondering what I’m gonna do, did a bit of meditation, it suddenly struck me that all the best trades are coming out of California.
So within a couple of weeks, I bought tickets and I arrived in Los Angeles with my surfboard and a suitcase and rented a little house in Santa Monica. And I came here to look for the next big thing to bring back to Australia.
And, yeah, I was here. Maybe the first month, you know, I did tons of surfing up at Malibu but no big thing. In the second month, still no big thing. And it was in the third month that I was reading a surf magazine and, you know, this guy from Albany, Western Australia, had run this ad for sheepskin boots. But, you know, the photograph was in front of the fireplace and everything. It just didn’t really fit.
But, anyway, I just got goosebumps when I saw that ad because I thought, “Oh, my god, there are no sheepskin boots in America.” And so, I called the guy up. And, you know, to cut the long story short, it got to be…to distribute and buy some samples. And that’s how I got my job.
Nathan: Yeah. Okay. Interesting. So, first of all, did you sell the company at some point?
Brian: Yeah. I got it up to about 15 mil, looking about 20 million season coming up and it just outstripped my ability to finance it. So, I had a really good buddy who had just taken his company public on a sandal product called Teva. And it was just the right thing at the right time. You know, it got so big that it was getting a little bit unwieldy for me. And I love the startup phase. I’m not a really big fan of being in a corporation, so the timing was perfect.
Nathan: Yeah, I got you. So, what are you doing right now?
Brian: Mostly speaking, keynote speaking. I wrote a book called “The Birth of a Brand”, and it’s done really well. And that sort of led me to people saying, “God, you should come and speak to my group, my group, my group,” you know. And bit by bit, over the last three years, I’ve grown into loving speaking from the stage and I’ve got a really, you know, great series of keynotes that I can tailor to different audiences.
And it’s all about…its stories from the building of the UGG brand but I weave into a lot of spirituality and philosophy and also the bare bones, you know, the boots on the ground tips that…you know, about building business that you’ll never learn in a business school or, you know, university.
Nathan: Yeah, I gotcha. So, let’s loop back, Brian. So, you said that you saw an ad for sheepskin boots in a surf magazine. Now, you said you became a distributor. What did you mean by that? So you didn’t idolize the concept or…?
Brian: Well, he wanted to sell boots in America and I wanted to, you know, sell them. So what I did was I registered the UGG trade market in California because nobody else had been around who had done it, nobody had heard the name really. Maybe a few people in the surf industry. And so I registered it and I started selling it thinking I was gonna be like an instant millionaire. Because you know how many Australians wear sheepskin footwear, right? And I started going up and down the coast to the shoe stores and they were just shutting me out completely. They’re like, you know, “Brian, who cares?” You know, “Sheepskin in California? You’re crazy.”
But I knew that the climate here in California is identical to Perth and Sydney and, you know, Melbourne and Adelaide. And so it wasn’t the weather, it was just this fact that Americans didn’t get sheepskin like Australians do. We know it breathes so you can’t sweat in it. You can get it wet, it’s okay. It’s really rugged, you can’t rip it. But Americans were thinking, “Oh, hot and prickly and delicate. You can’t get it wet. We have mud and slush in America.” And so there was this amazing disconnect.
But, you know, one of the things I pointed out in my book is that every entrepreneur has to have a certain level of ignorance going into their business because if you knew all the obstacles that were ahead, you’d never do it. And this just turned out to be one of those obstacles. It was a big obstacle, too, you know, there’s lack of awareness. And it took me years to figure out how to easily sell the product.
But, you know, that first year when I got shut out by the shoe stores, I was thinking about, you know, “How come all my buddies up at Malibu think they’re great?” And it struck me that they all surf and a lot of them had been down to Australia on their surf odyssey and they brought a bunch of sheepskin boots back for their buddies. So, in the surf community, it was pretty well-known.
So I did a tour of the surf shops with my samples and I said, “Yeah, you know, I’m gonna be importing these.” And they’ve been going, “Oh, man, you’re gonna be so successful. Those things are fantastic”, you know. And every surf shop I went to has been saying the same thing. “Oh, those are sheepskin boots. Yeah, my buddy has brought some back”, or they’d say, “Yeah, I own a pair. They’re fantastic. You’re gonna do great,” you know.
So on the strength of that, without thinking that I should have asked for an order because I didn’t. I didn’t have any inventory. What was the point, you know? So, I raised some money and bought 500 pairs into my little sort of bedroom which was the international headquarters of UGG now. And I went back on the road to all these surf shops and I had a full inventory and I ordered pads and everything.
And, you know, I walked into the first one. He got, “Oh, Brian, well done. But, you know, we couldn’t sell them out of our store. We just sell surfboards and trunks and bikinis and, you know, sandals. But don’t worry, you should go to the shoe stores. You’ll do great.” And that was my first inkling of, “Uh-uh”, you know. And then the next one, “Oh, well done, Brian. But we couldn’t sell them in our store. We just sell surfboards and trunks.” And this went on and on and on. Every single surf shop that I thought was gonna buy from me had an excuse why not to.
And so that was, like, late November. And by the time the end of the year went round, my title sales for year one was 28 pairs. It just happened to be exactly $1,000, you know. And that was, like, so disappointing. But it became the theme of my book. Because, you know, if you look at “The Wall Street Journal” or, you know, “Sydney Morning Herald,” for instance, there’s a stock exchange page. I looked at all the companies listed there, not one of those started without having to go through that first thousand dollars, right?
Nathan: A hundred percent.
Brian: Yeah. So the theme of my book became, “You can’t give birth to adults.” And every business or every sitcom on TV or every religion or every sandwich shop, they also started with someone conceiving the idea, and then they give birth by taking the first action. You know, the birth of UGG was buying the six pairs of samples.
And then, every business or movement just goes into this horrible infancy and it just lies there. And it lies there, and it lies there. And that’s when most entrepreneurs give up because they think they’re failing, they think it’s not happening. But, you know, there’s no amount of shake in the cradle, overfeeding it or urging it. The infant cannot get up and go to college. It has to go through the infancy.
But eventually it’ll start toddling and then that’s a really cool stage for your business because the first customers are sort of telling people about you and, you know, people are writing articles about you and it’s starting to catch some traction.
And that’ll eventually lead into the youth, which is the best phase of every business where you got consistent sales, consistent production, the accounting and billing is working, the customer service is great, you know, the warehouse is fantastic. You can run a business up to 20 million bucks in that youth phase. But if it’s a really, really good product or a really hot service, you know, sort of like UGG was, it’ll hit the teenage years. And then it’s like all bets are off.
Remember when you wanted to be in every party around town when you were a teenager? Well, that same temptation comes in a business where you want to be in every trade show in the country and you wanna be in every big retailer in the country and it’s super, super dangerous because it can outstrip your financing so fast. And I almost lost control of, like, two or three times in that teenage phase. But, you know, eventually, it gets to a point where all the accountants start putting in controls and it becomes mature. So that’s the life cycle of every business.
And the reason it resonates so much from the stage when I’d speak about it is that, you know, I had people come up to me after my talks and they’ll go, “Oh, my god, Brian, I was thinking of giving up my business this week, but now I realized I’m in the infancy or the toddling stage and you’ve given me new hope and new heart.” And so, you know, the speaking and my book, which goes from birth to handing the, you know, the young child off to her husband, you know, when I sold it to Deckers, it’s chronologically the story of building UGG and all of the ups and downs that I had with that.
Nathan: Yeah, gotcha. So, when it comes to UGG, you came up with the brand, though. Like, you saw that someone was selling sheepskin boots and you repackaged it under the UGG brand, right?
Brian: Repackaged is…it’s not correct because it didn’t exist in America.
Brian: And I knew in Australia that, you know, this guy, Shane Stedman in Sydney had registered UGH down there. And so, because there was no evidence of any product in America, the law here is, you know, if you are the first in and you can prove continual use, then you own the trademark. So that’s how come I got to register UGG and keep it.
Brian: And then, I had to build a brand around the product. Because the first boots that came in were pretty shoddy, you know. And it was just the way they made them back down there. So what I had to do was create a brand. And that’s a whole story in itself.
Nathan: Yeah, gotcha. So UGG is very well-known in Australia.
Nathan: But were you able to bring the brand to Australia? How did that part work?
Brian: Well, in Australia, I think they delisted it from the trademark register. I’m not 100% sure on that, but everyone can use the name Ugg in whatever way they wanna do it in Australia. And I do believe, since I sold the company, the new company, Deckers, I think they have opened up some company stores in Australia. But, you know, the trademark issues really stem around international internet business where there’s a lot of action of, you know, Australians wanting to do everything overseas but the American company keeping the tabs on all of the countries where they have the registered trademark.
But we don’t need to go into that now. I’d rather talk about the marketing and the branding of the company because that’s what your listeners probably wanted to know.
Nathan: Yeah, 100%. I agree. I just wanted to get some clarification. That’s all.
Nathan: So because the UGG…like, the branding piece is a household name brand. Like, everybody refers…like, where I’m from, like, UGG boots, you know, they might not necessarily be by UGG but everyone calls them UGG boots, these sheepskin boots.
Brian: That’s correct. In Australia, yeah.
Nathan: And that’s why I wanted the clarification. So, talk to me, like, how long ago did you start the UGG brand?
Brian: Well, the first samples I brought in 1979. And, you know, that first year of sale was ’79. So, you know, I was thinking this was gonna be an instant millionaire type business. But after that first year, I got shut out, I had to start…you know, I had 480 pairs left and all my investor’s money was tied up there. So, I couldn’t just walk away from it.
And so I started going to swap mates and street fairs. And, you know, the best thing I had going was when I surfed at Malibu, I had a big van and I had it full of inventory and I would just open up the back doors. And the word-of-mouth from all the people who bought from me was so powerful that every day, I got more new customers.
But the sales were only about, you know, $5,000 that next year. And then, I’ve decided to advertise, so I hired some marvelous photographer and we did a shot at the beach here in San Diego. And, you know, perfect hair and clothing and the perfect sunset. And, you know, the boots is looking perfect upright in the ad. And, you know, I ran that in surfer magazine and action sports magazine here. And the sales went to, like, $10,000 which it was super disappointing.
So the next season, I hired better-looking models and a more expensive photographer and we posed them on the beach down, you know, wind and sea here, you know, and ran those ads. And the sales went to, like, $15,000 to $20,000.
And I couldn’t figure out what I was doing wrong until I was having a beer with one of my surf shop owners and I was telling him this problem and just goes, “Ah, shut up, Brian.” And he calls out the back door to his little 12 or 13-year-old and he said, “Hey, guys, what do you think of UGGs?” Every one of them just said, “Oh, those UGGs, man, they’re so fake. Have you seen those ads, those models? They can’t surf.” And instantly, I knew I was sending the wrong image to my target market, you know.
And it was so obvious, I almost kicked myself. So within a couple of days, I called up another Aussie, Pete Town who was a former world surf champion. And he was running a national scholastic surf club up in Orange County. And I called him up. I said, “Pete, do you have any young kids who are gonna turn pros soon because I can’t afford to pay them but, you know, I’d love…I really need somebody.”
So he gave me a couple of young kids, Mike Pearson and Ted Robertson. And instead of posing them on the beach, I just took my little Canon Sure Shot with me and we went surfing at a place called Black’s Beach here in San Diego and another, Trestles which is up San Clemente. And these are iconic surf walks, you know. It’s about a mile to get to the beach and unbelievably good surf at the end of each one and then another mile back, you know. So everyone who has ever surfed knew these walks.
And so, I just ran ads showing these guys, you know, walking to and from the beach. And I ran those, you know, October, November, December the following season, the sales went to, like, $200,000. Just purely because I matched the image of what I wanted the kids to sort of buy into which the ads. And it was amazing.
But in the first ads I ran, the boots were, like, you know, a quarter of the ad, you know, by area. And when I ran these other ones, walk to the beach, the boots were, like, you know, not even a quarter of an inch on a full-page ad, you know. And so it didn’t matter. I learned you don’t advertise your product, you advertise the benefit.
And the benefit for all these little kids reading surfer magazine was, “Oh, my god, if I buy a pair of UGGs, I could be walking on the beach with, you know, those tracks with Mike Pearson and Ted Robertson.” And it struck a really emotional chord with all of the young surfers. And that’s what just launched the business.
And just quickly, that was the beginning of me understanding marketing and advertising. And I eventually became a student. I absolutely loved it. I was able to translate that into the ski and snowboarding markets. And then, you know, back east where they don’t surf, you know, I found that all the kids play ice hockey in the winter so I was able to use that same concept with young pro hockey class. And that’s what really built the brand into a national brand.
Nathan: Yeah, got you. So, you started with surfers and then start to further the niche out?
Brian: Yeah, yeah. It was the only way to build it really, but it wasn’t easy. I mean, those first three years, I was working summer jobs. You know, the first year, I think I was scrubbing boats at Marina Del Ray and the next year I was a construction laborer in Bel Air, down in Beverly Hills. In the third year, I was working as a greenskeeper on a golf course all summer just trying to survive till the winter hit, you know. So it wasn’t easy. But the beauty of it is I never gave up. I always…even though there were times on the golf course where I think, “Yeah, that’s it, I’m just gonna get rid of the inventory. I’m done,” you know.
And so it did cross my mind to give up quite a bit. But I recall that it was like October, and that’s the beginning of the winter season here, and this huge storm hit the coast. And when I got home after the golf course one afternoon, the answering machine had about 30 messages from all, you know, the surf shops just screaming for a new product.
So, when I was one day about to give up, the next day I was fullback in business again. And that happened over and over and over.
Nathan: So, how many years and what stage? How many years? Like, was it four that you started to get real traction or, like, you’re going into the seven figures or…? Like, can you tell us about that?
Brian: No, that…yeah. It was the four or five season where I noticed the advertising wasn’t working and ran the good ads. And that was what really kicked it off, that first 200,000 in sales for Christmas. The next year, we did about 600,000, 700,000 because everybody who had tried to buy the previous year, you know, all the stores were running out and I ran out of product. So it was then that it started to become a business and I had to get in a bigger investor to handle the new volume and then I was able to work full-time on, you know, all summer and bring in temporary help in the winter time.
So it was about the sixth year where it started to get real traction and became an actual business that was outside of my bedroom, because I had three different apartment locations where UGG was in my spare bedroom, you know.
Nathan: Yeah. Wow. So, talk to me about what it takes to create a household name brand? Do you have some rules and principles that you live by?
Brian: The most important thing for me in creating the UGG brand was the customer service. Because, you know, your brand is not your trademark and your brand is not your logo and the brand is not your product. The brand is what your customers think of it, right? Very critical point. Your brand is what your customers think of it.
And so I was always out there trying to work with all my retailers to make sure the product looked good on the shelves, and to make sure they had the right product, the colors, and styles, and sizes. And I just wanted every retailer to be successful. And so what happened is that year after year, I would be out working with the retailers. And because they saw my dedication and because I had the inventory so well stocked in the stores that the product was working.
And it was probably after about, I don’t know, the sixth or seventh year, I was in one store, Surfboards and it struck me, you know, “I’ve been selling these guys for seven or eight years and this year they ordered about $80,000 worth of product from me”, which means they sold it. You know, they doubled the price. They just made $80,000 profit. And I thought, “Well, the rent on this little shop is only about 30,000 a year. So that’s like 50,000 bucks to pay the salaries. And when I figured that you could pay half of your staff and I thought, “My god, everything else he sells in this store, you know, surfboards and leashes and all that, it’s straight bottom line.”
And I started to realize that, “Oh, my god, I’m not…,” you know, I’d always thought of sales as trying to get something from somebody but now I realized sales was giving something. And as soon as I realized it, “My god, I’m giving this guy 80 grand profit”, and I started to think of every other retailer I had and I thought…I started calculating how much profit I was giving every one of them. I then change my complete attitude to 100% customer service and forget the sales. You know, the sales are gonna happen if you service the customers.
And so, you asked the question, “What was the most important point in building the brand?” Well, let’s fast-forward a few years when one of my financing partners died and the supplier I had didn’t think I was gonna be able to pull it together for this season. And unbeknownst to me, he started up with a different distributor over in California but he didn’t sort of tell me black-and-white I’m out. He sort of played along that he was still in my game as long as I could find some money, you know.
And anyway, I got to be close to the shipping time and I’d realized that, you know, “This is bad. I don’t think I’m gonna get any product from here.” And by this time, you know, the sales are $4 million or $5 million. So I had to scramble. I found another guy in Melbourne who owned a big tannery and he supplied to a lot of manufacturers. And he ended up producing products for me but very, very late in the game. In fact, I happened to go up to a trade show that, you know, in September, which was our…you know, every year it sort of kick off the winter season.
And I’d set up, even though I didn’t have my supply intact yet, and I walked over and found this other boots, a company called Thunderwear which was a windsurfing company and they had taken on the sheepskin boot line from my former supplier and I saw all of my product on his shelves with the label “Thugs”.
Nathan: Oh, my god.
Brian: And I just went, “Oh, my god, I am out of business,” you know. And I called up the guy in Melbourne who I’d been talking with but we’ve never really done a deal and I told him what had happened. And, you know, he was sad and we hung up. And, you know, I went to bed that night. And at 2:00 in the morning, he calls up and says, “Hey, screw that. I’ll get you all the boots you need.”
And, you know, I sent the patents down and he duplicated them and sent them out to a bunch of manufacturers. And pretty soon, I was getting 5,000 pairs a weekend. You know, at the end of September, October, November, December. And even though we threw away a million bucks worth of orders, we were able to stay in business with the UGG product.
And the reason I’m telling this story, it’s a little long-winded, is that between Christmas and New Year, the customs broke and screwed up and shipped 2,000 pairs of Thugs boots to me and 1,000 pairs of my boots up to the Thugs guy. So because I needed my boots so badly, I offered to drive up and swap them around, and I did. And I was on the way back to San Diego, you know, about a 60-mile drive, I was halfway back and I was thinking, you know, “How come we couldn’t keep product in our warehouse for 24 hours and it was gone and yet these Thugs guys whose warehouse was bigger than ours was floor to ceiling full of Thugs boots, right, unsold?”
And that’s when it struck me, the loyalty of all my customers, you know, because of the customer service that I’d been giving, the loyalty was so powerful that they would rather forgo, you know, a couple of million dollars worth of profit, you know, combined rather than deal with this guy who they knew tried to knock me off, you know. And that was an incredible testimony to the amount of hours and time I put in becoming friends with all of my customers.
And, you know, in today’s world where things tend to happen with online web pages and clicks and purchases, if you’re in the internet business selling over the internet, you must find a way to reach out and become more personal with your customers, whether it’s putting a hand-written note in the packaging when you send it. You know, something personal, or whether you have a team of people that are calling up random, you know, buyers and thanking them and asking them how the product is working for them. And, you know, those people who can maintain some sort of personal interaction with your customers in this crazy internet world, they’re the ones that are gonna survive. Because if it’s just a click and no loyalty, they’ll never come back. It’s just gonna be another who’s faster, who’s cheaper.
Nathan: Yeah. That’s interesting. So whatever happened to that other brand?
Brian: I really don’t know. In all these years, I’ve been asked that question. I never saw them coming and flood the marketplace, like, the retailers wouldn’t touch them because, again, I built out this incredibly strong, powerful image around the UGG brand and it was so cool to have a pair of UGG boots at school that when mom, she didn’t know, would buy these other boots, you know, the kids would refuse to wear them to school because they were made fun of for wearing fake UGGs.
Nathan: Yeah, I know.
Brian: And so they must have closed them out somewhere. I don’t know, probably South America or something. I have no idea but I saw them come into the marketplace.
Nathan: Interesting. So, it sounds like for a good long time, UGGs was a B2B play. At any point, did you go to B2C, direct to consumer?
Brian: In a small way but not really because I sold it in the late ’95 and the desktop computers were just coming on to the desks at that time and the internet hadn’t even started. So, although I did a few little warehouse sales and stuff like that to consumers, the answer is no. We were always marketed wholesale.
Nathan: Yeah, got you. And when did you end up selling the company? Can you tell me how that came about? Because you said that you got to about 20 million and you see some form of maturity.
Brian: Yeah. It was late ’95. And when I was starting the business, you know, selling out of the back of the van in Malibu, there was another van a couple of, you know, places up with this young guy selling neoprene sandals and they were like high heel, you know, thongs and triple deckers. And he started a company called it Deckers.
And over the years, he built that by bringing, you know, different brands on. He was basically a sales rep for different brands. And he finally got the license for Teva sandals which, I’m sure, were in Australia at some point, the T-E-V-A brand, Teva.
And he took his company public on that brand. And I knew he was sitting around with about 25, 30 million bucks in the bank. And I had just received a report from the pre-season sales of UGG and I knew we were gonna be looking at a $20 million season, and I had no, no idea how to finance the production, all right? And that…
Nathan: Even with previous profit and capital from previous years?
Brian: Yeah, because…well, the trouble was that the bigger the company got, the worse became the cash flow because of the demands. After the season ended, you have to wait to collect all the money from the retailers and put all the trade shows that are happening, all the expenses that were going out the door, new samples which cost a lot of money, because we had 30, 40 reps at this time and they had to have a full product line of samples. So, you know, there was a hundred of thousands of dollars having to go into this pre-season stuff.
And then, you know, when you’re only ordering, you know, 500 pairs of boots, the manufacturer could bankroll you. But now you want 500,000 pairs of boots and, you know, they can’t do that. So, it became a financing issue.
But anyway, I was traveling to a big trade show called “The Super Show” in Atlanta one year…in ’95. And I knew I had this problem because I’ve just seen the reports. And down the other end of the baggage claim was Doug. And I just got goosebumps and I thought, “Oh, my god, it’s so perfect.”
We joked about buying each other out when we saw each other on the road. You know, we would joke, “Ah, you can’t afford me”, and stuff. But, you know, I walked down the baggage claim area and he saw me coming and we high-fived. And I said, “Doug, if ever we’re gonna do it, now is the time.” Because his company died every winter and our company died every summer. So, by putting together, you had a 12-month round cash flow and a 12-month warehouse operation, 12-month sales operation. Everything just clicked so perfectly. And so by that afternoon, we had the accountants talking to each other and we’d figure out, you know, we were gonna join forces.
And so for me, it was like going public without even having to go public, you know? I just cashed out. And it was great. And the time was right because I love starting companies, I love the uncertainty and, you know, the fear that comes in new business, but I really don’t like being corporate America.
Nathan: Yeah. No, that’s fair enough. Are you able to share the details of the sale?
Brian: Well, it was publicized down there but I don’t talk about, you know, on the air. It was…I made many millions of dollars. You know, that’s all I would say. And it was just a fantastic exit.
Nathan: Yeah. Okay. Awesome. Fantastic. So a few questions we have to work towards wrapping up, Brian. It’s a good conversation, mate.
Brian: Okay. Thanks.
Nathan: I’m curious, you said you had investors in the early stage and, obviously, you sold 20 years later. What happened to the…were those investors…like when you, you know, when you get on investors, right, there was generally some sort of anticipation that you will sell. How did you keep those investors at bay running the company for 20 years before you sold it? Or would say investors still…
Brian: Well, it’s…this is a really, really important piece of information for the listeners. If you are starting out and you got friends and family that are bankrolling you and you need to get bigger, this is usually the cycle, okay? So I had some friends and family put in 20 grand, that first 20,000. And that lasted for about a year and a half, two years, and then…that’s about four years.
And then, we had that $200,000 year of sales and we instantly had to scramble for more product. Well, these investors, the original ones, couldn’t…they didn’t have any more money so I had to get a second investor in so we all had to dilute down to 50%.
And then that guy bought a container of which was about $100,000, and that was his investment. And then we needed to get a couple of containers and he didn’t have enough money to go any further. And so I had to find new investors, and I did find some but they didn’t want the old ones hanging around.
So, I personally had to buy out the old investors just to be able to grow the business to the next phase. And then, that one ran really well for about three or four years until now we’re hitting 4 million or 5 million and these guys didn’t have the ability to bankroll it pass that. And so, I was able to get new investors in but they didn’t want the old investors. So each time, I had to keep buying out the old investors. And I had to pay dearly for that.
But the point is, had I not done that…my biggest problem was the bankers would not accept UGG as a viable business. Number one, it was fashion-driven. In their mind, it was a fad, it’ll never be around next year. Even after 10 years, they were saying, “Oh, it’s a fad, it’ll never be around next year.” The other thing was it was highly seasonal. So our sales will happen in two or three months. And, you know, they knew that once we could do the collections, we are dead for the next six or seven months until we sell again. And they knew that the more successful I was, the bigger requirement for cash was gonna be for inventory.
So, even though I was a chartered accountant, I didn’t really understand finance that well. And looking back, if I had to change one thing, I would have brought on a financier, you know, somebody who knew how to model cash flow forecasting because it was, you know, it was an alien thing for me at that time.
So anyway, back to the investors. There is no easy answer unless you have a product that sells 12 months of the year and you can scale it. It’s scalable on the internet, very easy to bankroll. They’re really easy to find, one investor. And that one investor will probably be there when you do cashout in a big way. And that was always the ideal for me. I always thought each investor coming in would be there at the end, but circumstances were different for me, and it will be for many, many of you investors who are in the friends and family stage looking at the early angels.
But, again, if you have a really good, solid product service, whatever, that’s 12 months around a year so you’ve got your own cash flow, you’ll not be holding on anybody else for inventory, then you can scale at your own pace. And that way, you can keep your investors.
Nathan: Yeah. No, that’s great advice. Another question, you talked about spirituality throughout your journey. What did you mean by that?
Brian: Well, I just came to learn that, you know, the number of times I get goosebumps when I’d be faced with a momentous decision, or a major choice or I’d see, like…the minute I saw that ad for sheepskin boots, I just got so many goosebumps there because I just knew, “Here’s a potential of a huge, huge business.”
And what I’ve come to believe is that we’ve got this energy force inside us. And you can call it God or spirit or whatever it is, but it has some sort of pre-knowledge of where it wants to go with our lives. And every time we make a decision that’s in alignment with that sort of, you know, inner leading, it sends us a message. And the only way it can get to us is through this electrochemical system we call our body. And it puts a tingle there.
And I asked people in the audience every time I’m on stage. I’d say, you know, “Who’s had goosebumps?” And I would see every single person in the audience puts up their hand. And I’m talking goosebumps in relation to business decisions and things like that.
So, I’d encourage your audience to, you know, just be aware of that happening. And if you do get the goosebumps, just go, “Oh, my god, what just happened then?” And try and analyze it, and I’ll bet it’ll be something of real importance.
And then there’s the other side of it which is very philosophical. I have these four mantras that I’ve used for the last 20 years. I’ve been carrying these four in my daily planner. I typed them out one day 20 years ago. And it’s, “Feast upon uncertainty,” “Fatten upon disappointment,” “Invigorate in the presence of difficulties,” and “Enthuse over apparent defeat.”
And they sound like negatives but in fact, they are the foremost positive statements that you can ever find. And it doesn’t matter what happens in your business. If you can…you know, if it’s just a horrible thing that happens, if you can feast upon the uncertainty of what’s gonna happen or, you know, get fed on the disappointment that, you know, it didn’t work out the way you thought and maybe next time it will, it’s uncanny how fast things turn around.
And there’s another way of saying it, which is also in my book, which is, “The most disappointing disappointments will nearly always become your greatest blessings.” And put, in other words, you know, I ask the audience, you know, “Put your hand up if you had something really disastrous happening in the last 12 months and now you look back and you think it’s the best thing that ever happened.” And nearly 80% of the audience puts their hand up. So it’s a really, really true philosophical statement.
The one people remember a year later is this one, and that is, “The quickest way for a tadpole to become a frog is to live every day happily as a tadpole.” And it sounds really but that’s the most…that’s probably the best bit of advice I can give to every entrepreneur starting up. Because you’re gonna be in the infancy and you’re gonna be in the toddling stage. And if you can just live every day and now like a tadpole, you know, time’s gonna come when you’re gonna look down and go, “Oh, shoot, I got legs,” you know. “I’m a frog.” And you won’t even notice it happening as long as you are happily doing all the tadpole things.
Nathan: Love it. Awesome. Well, look, we have to work towards wrapping up, Brian. This has been an awesome conversation, mate.
Nathan: But a question, where is the best people can find out more about your book, your work and everything else you do?
Brian: Sure. I have a website which is briansmithspeaker.com. That’s B-R-I-AN, smithspeaker.com. And you can get to me there. If, you know, you’re thinking of getting a keynote going, I would love to come, do it a bunch of keynotes in Australia. I have done some already but I really love coming and talking to Australian audiences.
And also, the book is available. “The Birth of a Brand” is available on that website. But you can also download it on Amazon. And it’s turned out to be a really, really good seller and a really fast-read, I think because most people are never sure I’m gonna be around next chapter so they tend to read it pretty quickly, you know.
Nathan: Awesome. All right, mate. Well, look, we’ll wrap there. But I just want to say thank you so much for your time. This is an awesome interview, awesome conversation.
- Learn more about Brian on his website
- Follow Brian on Twitter
- Explore Brian’s website
- Check out Brian’s blog page
- Explore UGG’s website