The Birth of a Brand: Launching Your Entrepreneurial Passion and Soul

This book spans the first seventeen years of building the UGG brand.

Beginning with the first early adopters on the beaches of California, I slowly expanded into the ski areas and eventually established UGG as a casual comfort brand across America.

“I don’t get it,” he said. “Boots? Who wears boots?”

“Exactly,” I said. And nobody did! Not in America—but in Australia, where sheep outnumber people, it seemed like half the population owned some sort of sheepskin footwear, and certainly no surfer would be caught dead without at least one pair of sheepskin boots. But there were no sheepskin boots in America.

If half of all Americans—or even half of one percent of all Americans—bought sheepskin boots, and I was the only one selling them… My God. I’d be rich!

1980—$30,000
1981—$35,000
1982—$40,000
1983—$200,000

I am a firm believer that when you take those first baby steps, you don’t have to know exactly where you are going to end up. If you do not take the first steps, then you will never come across the forks in the road that lead to new opportunities for growth.

Building a business—just like raising children—takes work and determination. That’s not news. Nine women can’t have a baby in a month.

Conception: There is the blissful aha, then, little by little, the concept continues to take embryonic shape.

Birth: The concept is introduced to the world and attracts the first true believers who love it with all their heart.

Infancy: The concept just lies there, needing lots of feeding and constant attention.

Toddler years: It begins to crawl, then stands up and reaches out, and you don’t dare take your eyes off it for an instant.

Youth: The passing of weeks and months falls into a routine that is more or less predictable and enjoyable. Healthy growth seems natural and surprisingly controllable, yet every time you turn around there are unexpected expenses and needs. You struggle to keep up.

Teens: They seek popularity and want to be at all the parties, everywhere at once, setting the world on fire. Rules are broken, and despite your best efforts at establishing controls, they refuse to be contained.

Adulthood: With luck and hard work, the child survives in the real world. Expectations become realistic and growth settles into a manageable long-term pattern. The product begins paying for itself! Basically, it can now stand on its own at last; however, sometimes, real opportunities are overlooked or discounted as mature judgment overrules unbridled enthusiasm.

One thing I’ve realized is that who you are in business is who you are in life, and when you act with integrity, stay true to your ethics, and just treat everyone with simple respect, you’ll be successful, but more importantly, you’ll be happy.

Building brand awareness is a slow, often disheartening process requiring imagination, constant monitoring and feedback, course corrections, persistence, and above all, patience.

Building a brand, like any natural process, is a gradual, organic, and wildly unpredictable experience.

A vision of big success is typical of the blind optimism shared by most people during the “aha” moment when they conceive their new dream.

I believe that for a true entrepreneur, some degree of ignorance is a key ingredient for success. If you knew at the time all the obstacles you’re up against, you’d never even start.

The first obstacle we faced was that we were both broke.

A week or so later, Doug came back from his road trips feeling pretty down. No one in the shoe trade really got what the boots were about.

They wondered why on earth we were trying to sell sheepskin in Southern California. Didn’t we know it never got cold here?

When you get back to the beach after an hour or two in cold water, the best feeling in the world is a pair of sheepskin boots, wet feet and all. The wicking nature of the fleece evaporates the moisture, and the insulating properties immediately bring warmth back to your feet. These were two vitally important pieces of product knowledge lost on the New York buyers—and on Americans in general.

Sales growth was also stymied by the fact that Americans believed that wearing the boots required socks and that sheepskin was delicate, hot on their feet, and useless when wet.

When I prepared a business plan to raise money from banks and venture capital firms, they all told me the same thing: “Those boots are a fad. The business will never last.”

I tried to get an appointment with the Nordstrom buying office, only to be told, “We don’t see a big enough demand to invest in the brand.”

In Chicago, I ran into rejection from every big-store buyer. The big chains were risk averse. They wouldn’t carry an innovative product like sheepskin boots until it became risky not to carry it.

For three days, only those buyers who happened to be lost or on their way to the bathroom walked by my table.

The table received zero glances, zero questions, not even a flicker of perplexity or curiosity. Nothing.

As I packed up to go home, I found myself searching my soul for direction: Should I give up? Was this too hard? Why the hell didn’t Americans get sheepskin?

The courage required to cold-call strangers and try to sell them something was a huge emotional stretch for me.

“If you’re going to import those boots, you’re gonna make a killing.” Wow, this is the validation I was hoping for

“My friends have some of these, and they love them.”

“Those boots are great. A ton of guys we know have some. It’s about time someone started selling them in the States. That’s a killer product. You’ll do well with them.”

It took some time, but eventually I would walk into any store committed to connecting with the buyer on human terms first, before showing the product I was selling.

After three years of humbly shuffling into surf shops to beg a few moments of their time, I realized these guys were becoming my friends.

Once you set a new course and take action, the universe will conspire to work with you.

Fate stepped in with two seemingly unrelated but life- changing events. I arrived home from the golf course damp and tired to find dozens of messages from surf shop buyers clamoring for inventory and even offering to drive to San Diego to pick up their orders! With COD invoices in hand, I began collecting cash flow for the new season. Just like that, I was out of grass skiing and back in the boot business!

I kept telling myself it was just a matter of volume. If I could build the sales enough, I would have money left over to weather the summer expenses and still be able to afford new inventory for the coming season.

We began to see that every store had to have a minimum of fifteen pairs of a style to ensure one customer could be satisfied.

In order to sell one size, we had to stock at least eight sizes of an expensive product.

“It’s not how big you are that matters,” he said, “but how big you’re perceived to be.”

Perception is extremely important in life, because the majority of people accept what they see as reality.

People judge you on your first impression.

I advise all new entrepreneurs to put every effort into making their website look like a million dollars, as the perception of viewers from all over the world is what counts.

I opened my order book, and said, “Okay, how many do you want?”

“Oh, Brian, I know these are great, and you’re going to make a killing, but we couldn’t sell them out of this shop. Our customers just want surf shorts and boards. We hardly even sell sandals. But good luck! You’re gonna do great!”

“We can’t sell them out of our shop… They’re too expensive for our customers… We love them but… You ought to try the shoe stores.”

If the weekend was sunny and mild, we sold only one or two pairs a day. Yet when it was cold and squally, we sold ten to twenty pairs a day. I knew better than to visit retailers on hot, sunny days, when sheepskin was the last thing they wanted to see.

Seasonal: Although we made a lot of money during the three months (October through December) of the annual UGG selling season, with practically no income for the other nine months, we couldn’t afford to run an office for the entire year or hire permanent employees.

Profit margin: Because our product was so expensive compared with other footwear sold in surf shops, we had tremendous consumer resistance.

The boots sold at retail for $80. We sold them to the stores for $40. Since our cost was $30, our gross profit was around $10, or 25 percent.

I learned (many years later) that a business cannot survive long without gross profits of at least 35 to 50 percent.

Receivables: We were expected to offer thirty-day terms to vendors in the surf market and one hundred and twenty days in the ski industry.

When retailers had their own cash flow problems, our invoices were the last to be paid.

Cash flow: Most of the marketing expenses occurred in the first few months of each year, including costly trade shows and acquisition of new-season samples. All the money we made during the winter was gone by March or April, leaving me to live off credit cards for six months of the year.

With no cash reserves and no cash flow, UGG simply wasn’t going to survive.

I asked each store manage to try on a pair of boots without their socks. Their positive reaction was universal, and soon I was opening up new accounts on every trip.

“Oh my God!” she exclaimed as she wiggled her toes around in the fleece lining. “These are soooo comfortable! I could sell these as after-ski boots.” She placed a large order.

Our new try-on-a-pair innovation immediately converted into orders.

I couldn’t figure it out. I had quadrupled the advertising spending, driven twice as many road trips, instituted a smart incentive program, and put in at least twice as much time packing and shipping—yet sales reached only $41,000. Once again I wondered if I should give up on UGG.

Of all fears, the fear of the unknown is the most debilitating.

The mental pressure from not knowing if the business could survive, added to the pressure of how to make ends meet at home, became so unbearable that I had to find some release in physical activity.

In the midst of all this positive energy, came a calamity. Valerie and Trevor Smith from Coos Bay, Oregon, called me and said, “You can’t use the UGG name in America. We own the registration for UGHS, and you’re infringing on our trademark.”

The essence of good marketing through advertising is to transport the reader into the scene, to make him or her want to belong in the picture.

The more emotional the desire, the more powerful the ad, and the more disposed the viewer is to buy.

If you aren’t getting results from your targeted audience, find out why by asking them directly.

In June, with my completed business plan in hand, I presented the virtues of our product and the forecasted profits to the manager of the Peninsula Bank.

He said no, as did half-dozen other banks. My wealthy friends said no. Friends of friends said no.

“You’re crazy; those things are a fad” was the common refrain.

“If it hasn’t worked in the first six months,” he told me, “it’s never going to work. So just drop it.”

In the times of building UGG, I felt like a loser for always needing more capital, but now I know that if your business is growing at more than 20 percent each year, it is virtually impossible to finance that growth with retained profits from within the business.

Investors are primarily interested in one thing: how can I get off the bus, with my capital intact and a good profit?

Investors only want to see three or four pages of the highlights of how much money is being requested, what the company’s advantage is in the overall market, and when and how they can exit.

I violated the first rule of negotiation: When you have a good deal, shut your mouth!