A Conversation with UGG Founder, Brian Smith, on Building a Multi-Billion Dollar, Iconic Brand.

A Conversation with UGG Founder, Brian Smith, on Building a Multi-Billion Dollar, Iconic Brand.

From the sandy beaches of Australia to the bustling walkways of international fashion, Brian Smith has masterfully navigated his entrepreneurial journey with audacity, resilience, and a surfer’s spirit. Born with an insatiable passion for surfing, Brian has not only ridden waves but also the tides of the business world. A chartered accountant turned innovative entrepreneur, he spotted the untapped potential of sheepskin boots and introduced them to California. This marked the genesis of UGG, a brand that faced its share of rejections, only to emerge as an icon in the footwear industry, thanks to Brian’s unwavering faith and tenacity. Today, UGG is more than just a brand; it’s a global phenomenon that has redefined comfort and style in footwear. Generating billions of dollars in annual sales, UGG stands as a testament to Brian’s vision, perseverance, and entrepreneurial prowess.  

The Birth of a Brand: Launching Your Entrepreneurial Passion and Soul” is Brian’s remarkable book – It offers a riveting and candid account of Smith’s entrepreneurial journey, from the conception of the idea for sheepskin boots to building a brand that now garners over a billion dollars in sales annually. The book serves as an indispensable guide for entrepreneurs, packed with timeless lessons and insights that Smith learned during his two-decade-long journey of building UGG. 

In this interview, I speak to Brian Smith, Founder of UGG. We talk about his entrepreneurial journey, why we should see businesses through the lens of life stages, and what it takes to build a global brand with incredible consumer loyalty. 

Q: How did you form your concept of the life stages of a business? 

[Brian Smith]: The realization dawned upon me after selling my company and deciding to pen a book about the journey. By then, I had amassed about 20 years of business experience and was continually amazed at how it mirrored the life cycle of a child. 

Take a look at the businesses listed on the stock exchange page of The Wall Street Journal. Each of them began with a humble $1,000 in sales, an achievement that likely thrilled the founders. Today, many have climbed into the billion-dollar bracket, but they all started with someone conceiving an idea and taking the first step towards its realization, marking the birth of the company. For UGG, this birth was symbolized by the purchase of six sample pairs following an inspired idea. 

Each business then enters an infancy stage that can be quite challenging. It lies stagnant, requiring constant nurturing and attention, akin to changing diapers for a baby. Over time, it transitions into a toddler stage, where it starts garnering attention from magazines and wins its first true believers who advocate for it among their circles. 

This toddler phase then matures into the youth stage, which is a well-coordinated phase where all components of the business, including production, sales, administration, accounting, shipping, and warehousing, are working seamlessly. This synchronization makes managing a company with $25 to $30 million in revenue a plausible task. 

However, if the product or service is exceptionally good, like UGG, the business inevitably enters the teenage phase. This stage mirrors our own teenage years, where we desired to be part of every social event. In business terms, this translates to a yearning to be present at every major trade show and mass retailer. Yet, unchecked rapid growth can be detrimental, necessitating control measures to transition the business into a mature company. 

In essence, every company, without exception, undergoes some form of this life cycle. The journey from inception to maturity is a universal business narrative. 

[Vikas: Why is it important to know where your business is in the life cycle?] 

[Brian Smith]: Starting a business is an exciting venture, often filled with enthusiasm, borrowed money, and a fair share of ignorance. In fact, a certain level of ignorance can be beneficial for an entrepreneur. If you were fully aware of the potential obstacles ahead, you might hesitate to start.  

However, the most challenging phase for any entrepreneur is when the business hits the $1-2 million mark. At this point, your business is too large to be small, yet too small to be big. You find yourself in need of a CFO or someone with a deep understanding of your business, but you can’t afford either. This stage can be incredibly challenging for most entrepreneurs. 

If you manage to persevere and secure the right advice, you can navigate these difficulties. When I started my business 45 years ago, there were no support networks like mentoring groups or business forums. I was like the Lone Ranger, without anyone to consult when trying to solve these challenges. 

My lack of financial understanding was a significant handicap throughout the lifetime of my business. If I had had people to turn to for advice and discussion, the trajectory of my business might have been vastly different. 

Q: How did you create such strong brand advocacy? 

[Brian Smith]: In the initial years, I heavily advertised our products, using models set against idyllic beach sunsets. However, this contrived imagery felt inauthentic and failed to resonate with our target audience. After three years of stagnant progress, I discussed my advertising woes with a friend who owned a surf shop. When he asked the young surfers who frequented his shop about their perception of UGG, their responses were eye-opening. They viewed our advertisements as fake, criticizing the models who clearly couldn’t surf. 

I realized then that I was inadvertently alienating our core audience — the surf community. Despite their understanding of the UGG brand, our advertising was sending the wrong message. This led me to shift our advertising strategy. We started featuring young professional surfers in our ads, often with the UGG boots barely visible. The images of these surfers journeying to popular beaches like Trestles and Black’s Beach in San Diego resonated powerfully with our audience. I was confident that every young reader of Surfer magazine would aspire to be in the shoes of these young pros. This was when I truly grasped the essence of branding, advertising, and marketing. 

We began targeting the youth, cultivating a cult-like following. Before long, owning a pair of UGG boots became a status symbol among 12 and 13-year-olds in high schools across Laguna, Newport, and Los Angeles. While these young trendsetters couldn’t afford UGG boots, their mothers could, which often led to pleas for UGG boots as Christmas presents. 

This successful strategy was then replicated in the snowboard and ski markets, and even extended to young ice hockey players in the East. We focused on the 12 and 13-year-old demographic, knowing that their mothers would also be potential customers, either for their younger daughters or even for themselves. 

This approach initiated a trend that endured over the years, leveraging the power of peer pressure. It transformed each young owner of UGG boots into an ambassador for our brand, proving to be an incredibly potent marketing strategy. 

Q: What was the key to really getting your scale? 

[Brian Smith]: Indeed, our approach was deliberate and patient. We waited 15 years before venturing into the mass market. The aim was to establish a strong presence in niche distribution channels. We gained significant traction within surfing, snowboarding, and hockey communities, but the brand image was somewhat scattered. I wanted to steer it towards embodying casual comfort. 

However, 15 years in, the company was still in its teenage phase, far from maturity. It was an exciting time akin to the Wild West, full of potential and unpredictability. My goal was to get featured on the lifestyle page of USA Today, a target that necessitated a robust PR strategy. 

By this point, we had engaged a PR company in Boston, which helped us reach out to the fashion editor of USA Today. The resulting article gave our brand nationwide exposure and led to some highly valuable endorsements. This marked a significant turning point in our journey, as we transitioned from niche markets to a wider audience. 

Q:  How did you keep your brand relevant? 

[Brian Smith]:  Indeed, I believe it was the innovative nature of the new products we launched online that truly made a difference. Even after I sold the company in the late nineties, I stayed on as a consultant for a few years, helping the new team constantly introduce fresh product lines and colors. Yet, throughout all these evolutions and improvements, we never strayed from the company’s original ethos of being cool and unique. 

We took bold risks with unconventional styles and vibrant hues, but the crux of the matter remained that our marketing image always resonated with a particular sense of cool. It created this compelling narrative: if you owned a pair of UGG boots, you were undoubtedly cool. 

Q: What does success mean to you? 

[Brian Smith]:  There are two dimensions to the answer: financial and strategic. From a financial standpoint, it was roughly 12 to 13 years before I felt secure enough to draw a consistent annual salary. Up until that point, there was always an undercurrent of uncertainty. Eventually, our sales volume swelled enough to cover overhead costs, providing a cushion against inevitable business disasters—be it late product arrivals, lost orders, or quality control issues. It wasn’t until 12 to 13 years in that I felt we had the financial resilience to withstand these challenges. 

Strategically, the key was maintaining our creativity. Since patenting sheepskin shoes or their design and feel wasn’t possible, we adopted a proactive company mantra: we aimed to lead, to be the first out of the gate and then run faster. Every year at trade shows, competitors with cameras would photograph our new products. I knew that by the following year, they would mimic our offerings. To stay ahead, we had to always be one step forward. While presenting our latest products, my mind was already crafting the next year’s innovations, things that did not yet exist and our competitors couldn’t copy. It was this creative foresight that kept us one stride ahead each season. 

Q:  How did you keep the culture flowing as you hired? 

[Brian Smith]: My first few hires were essentially extensions of myself, as I didn’t have an HR department or even a formal understanding of HR. I was keenly aware of the pressure points in building a business, with tradeshows and marketing materials emerging as defining factors each season. Therefore, I sought out individuals who comprehended this cycle, relieving myself of duties like organizing tradeshows and product development. 

While I remained closely involved creatively, I delegated the physical realization of these ideas to others. This delegation, though time-consuming, contributed significantly to our success. Admittedly, my approach wasn’t flawless; I often found myself hiring reactively to extinguish fires. 

However, over time, I learned a valuable lesson that contradicted a common founder’s mindset—that no one else could execute as well as I could, and that everything had to be done my way. I realized that while others may not always do things precisely as I would, they might accomplish 80% or 90% of it, and that was acceptable. 

A defining moment came when I relinquished control over the marketing brochures, my annual pet project. In an era pre-internet, these paper brochures were becoming increasingly sophisticated. I remember delegating this task to a staff member and when she presented me with the finished product, I was stunned by the quality of the work—the texture of the paper, the quality of the photographs, the layout. It was an epiphany, realizing that her output surpassed anything I could have produced. This was a pivotal moment that taught me the value of letting go and trusting my team more. 

[Vikas: have you kept your connection with the brand?] 

[Brian Smith]:  Although I sold the company in the late 90s, I’ve never truly distanced myself from the brand. Just last week, while traversing an airport in Dallas, I noticed numerous people sporting UGG boots. I found myself instinctively verifying that they were genuine UGG products. I still feel immense pride every time I see a pair of UGG boots, even 45 years after founding the company. 

Despite no longer having ownership, my connection with UGG remains strong. I’m frequently invited to speak worldwide on topics such as branding, perseverance, and the strategies behind building a billion-dollar company. This enduring relationship underscores that as the founder, you’re forever entwined with the brand’s identity—a truly rewarding position to be in. 

Q: What does legacy mean to you?  

[Brian Smith]:  Indeed, the book I penned, “The Birth of a Brand,” serves as a comprehensive guide for entrepreneurs. It encapsulates the timeless insights and techniques that I gleaned over the 20 years I spent building and eventually selling the brand. While I wrote the book in 2014, it wasn’t until 2020 that I decided to release an audio version. Amid demands for an audible adaptation and my own desire to modernize the content, I found, to my surprise, that not a single word needed to be changed after reading it twice. 

These aren’t just business lessons; they go beyond graphs and pie charts. They delve into the profound emotional lessons I learned, largely from my failures and catastrophes. The book explores the emotions accompanying these setbacks and how I wrestled with feelings of worthlessness and failure. 

There’s a spiritual dimension as well. As I grappled with these challenges, I had to delve into my spiritual core to muster the strength to endure another day, another week. These timeless lessons resonate with readers, contributing to the book’s continued success. 

I’ve had the opportunity to share these insights at speaking engagements worldwide, to both entrepreneurial and corporate audiences. The responses I receive are humbling. Many identify with my experiences, and different aspects resonate with different individuals. This ability to impact and assist others on their entrepreneurial journeys is what I’m most proud of. In terms of a legacy, I believe this is truly significant. 

Q: What can we take from your journey, and apply to our own? 

[Brian Smith]:  The journey of entrepreneurship often starts with a burst of energy and excitement when you conceive your idea. However, be prepared for a phase when progress seems to stagnate, and your venture feels unresponsive. You might even perceive yourself as a failure. Unfortunately, it’s during this critical infancy stage that many entrepreneurs abandon their dreams. 

Take comfort in the fact that every business, even the most successful ones, undergo this phase. I was struck by this reality when I read “Shoe Dog” by Phil Knight, the founder of Nike. Surprisingly, UGG’s sales in the first five years surpassed those of Nike during the same period in their history. They too experienced their share of stumbling blocks, yet they’ve been generating billions for years now. 

Similarly, Reebok had a sluggish start, languishing for nearly ten years. Only when the aerobics market boomed did they find their stride, propelled forward by the trend. So remember, no company is immune to this cycle of growth. It’s an integral part of the entrepreneurial journey. 

In today’s digital age, companies can scale rapidly, often bypassing the stages of infancy and adolescence. However, the repercussions of such haste are evident in the frequent bankruptcies of these fast-growing ventures. The desire to skip straight to adulthood, without laying a solid foundation or setting up robust internal systems, can lead to their downfall. Investments of millions can be squandered in just a few years if the company lacks a strong infrastructure and fails to put down roots. 

Despite the game-changing nature of the internet, the fundamental principles of business growth remain the same. It’s crucial to cultivate a loyal customer base of true believers who will spread your brand message to the world. Merely pumping millions into advertising campaigns without this base won’t yield sustainable results; most of the investment will be wasted, with only a fraction making a real impact. 

The mentality of quick success and inflated valuations can be misleading. A billion-dollar valuation on paper doesn’t guarantee longevity. Without a solid foundation, such ventures can easily crumble within a few years. This reality underlines the importance of gradual, sustainable growth in business. 

Thought Economics

About the Author

Vikas Shah MBE DL is an entrepreneur, investor & philanthropist. He is CEO of Swiscot Group alongside being a venture-investor in a number of businesses internationally. He is a Non-Executive Board Member of the UK Government’s Department for Business, Energy & Industrial Strategy and a Non-Executive Director of the Solicitors Regulation Authority. Vikas was awarded an MBE for Services to Business and the Economy in Her Majesty the Queen’s 2018 New Year’s Honours List and in 2021 became a Deputy Lieutenant of the Greater Manchester Lieutenancy. He is an Honorary Professor of Business at The Alliance Business School, University of Manchester and Visiting Professors at the MIT Sloan Lisbon MBA.