I recently spoke to Brian Smith, who is the author of the upcoming book The Birth Of A Brand. Smith was born in Australia, where he developed his love of surfing. A chartered accountant, he studied at the UCLA Graduate School of Management, and with $500 of start-up money, he founded UGG Imports to bring sheepskin footwear to America. After seventeen years, as sales reached $15 million, he sold the business to Deckers Outdoor Corporation. The UGG brand has since exceeded $1 billion of international sales several times over.
A passionate innovator and entrepreneur, Brian is one of the most sought after business leaders in the country today. As a media guest and inspiring speaker, he is committed to teaching his breakthrough business strategies to entrepreneurs and translating personal vision and spirituality into company culture. In the following interview, Smith talks about how he originally came up with the idea for UGG, some of the strategies that helped him grow the brand, his biggest challenges and more.
Dan Schawbel: How did you originally come up with the idea for UGG and differentiate your product from the crowded market?
Brian Smith: The day I graduated as a Chartered Accountant (CPA) in Australia, was the day I quit the profession. My entrepreneurial neurons were firing and I wanted to go into business for myself.
All of the cool retail trends were coming out of California so I decided to go there and find the “next big thing” to bring back to Australia.
After three months in California, I still hadn’t found my passion and one of my surfing buddies had arrived with the latest copy of Surfer magazine. Inside was an advertisement for sheepskin boots and I instantly felt goosebumps all over my body. I knew that almost every other Australian owned some sort of sheepskin footwear and there was NONE in America.
Importing six pairs of boots as samples, I registered UGG as the trademark and settled down to be an instant millionaire. What I didn’t know was that Americans didn’t understand sheepskin like Aussies do. The shoe trade rejected us due to the misperception that it was hot, delicate, prickly and couldn’t be exposed to mud, slush etc.
But, Californian surfers returning from trips Down Under had brought back boots for their buddies, so they were really well known in that market. I focused on selling through surf shops. The first season I sold 28 pairs, and for the next three years sales hovered around $30k. It wasn’t until some young “grommets” pointed out that the ads I was running featured models “who couldn’t surf,” that I sponsored and ran ads of young pro surfers and sales jumped to $400k in one season. The UGG business finally got momentum.
Schawbel: What are some branding strategies that you implemented that allowed for UGG to become a household name?
Smith: Throughout the eighties the UGG brand grew regionally, driven by surfing on the coasts, skiing in the Rockies and “hockey Mom’s” in the Northeast. Needing a national campaign, I noticed that women were reading “People” or “US” magazines and studying what the stars were wearing on the streets. I found a mailing list of “Stylists” in Hollywood who did hair, make-up, and wardrobe services and sent them an offer for a free pair of boots. Eventually, Ugg boots were showing up in TV sitcoms, in movies and most importantly, in tabloid photographs of the stars walking the streets of Hollywood and New York. That was the turning point for the UGG brand to truly become a national icon.
Schawbel: What were some of your biggest entrepreneurial challenges of breaking into the American marketplace?
Smith: Firstly, I had no blueprint to follow. If I had access to the computerized Business Plan programs of today I would have realized I needed a half million dollars of capital to start. Perversely, if I knew that, I wouldn’t have started and no-one would know of the brand as it is today. It is a beautiful trick of the universe, that to be an entrepreneur requires a certain degree of ignorance and even innocence, since if you knew of all the obstacles ahead, most would never begin.
The hardest part of the business was its seasonality. We made good cash flow for three months and went negative for nine. I recall living off credit cards every Summer for the first four years, and as the business grew into the millions, it exacerbated the situation. In retrospect I should have secured a strong financier to be ahead of the curve in finding money for the growing production requirements each season. The traditional banks and venture capitalists were useless since they all told me for the first ten years “Those things are a fad! They won’t be around next year.”
Schawbel: Can you explain what an intrapreneur is, how you’ve been able to recruit them and why companies need them?
Smith: Without going on the internet to look up this answer, I would say it is an entrepreneur “within” an organization. On the surface, I find the concept to be a bit of an oxymoron. I personally can’t work within a big company, which is why I sold UGG when I did. In theory I could have stayed on as an “intrapreneur” but being subject to committees, consensus, lines of command and the dumbing down of risky ideas would have killed me.
Having said that, if one goes into a project with complete autonomy within a large company (think Steve Jobs returning to Apple) and not be stifled by the bureaucracy, then that name might be appropriate.
My hat is off to every creative and motivated employee who can implement new ideas and risky strategies within a corporate structure. They can be great leaders and help build great companies.
Whether an Entre- or Intra- Preneur, the defining characteristic between them and any other employee is VISION!
Schawbel: What are your top three pieces of career advice?
Smith: I should be last person to advise others on this, since I am so heavily slanted to “doing your own thing.”