The Birth of a Brand: Launching Your Entrepreneurial Passion and Soul [PART-2]
Harsh Batra
34 INSIGHTS
YOU WILL NEED OUTSIDE FUNDING IF YOU'RE GROWING AT +20%
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.
A lot more than sales that goes into making a successful business. Having the capital or profit cash flow to pay for inventory was just as critical.
I needed a partner to finance production and send shipments, with payment to be made after we collected from our customers.
We were owed more than $200,000 by our retailers, and although we had a profitable season, our lack of timely capital exposed our vulnerability.
“Sorry. No more boots this season. See you at the trade show next March.” Three days before Christmas. What a nightmare!
A lot more than sales that goes into making a successful business. Having the capital or profit cash flow to pay for inventory was just as critical.
I needed a partner to finance production and send shipments, with payment to be made after we collected from our customers.
We were owed more than $200,000 by our retailers, and although we had a profitable season, our lack of timely capital exposed our vulnerability.
“Sorry. No more boots this season. See you at the trade show next March.” Three days before Christmas. What a nightmare!
UGGS STARTED GOING MAINSTREAM WITH KIDS AND MOMS
Kids were telling their moms, “Everyone at school”—in other words, the cool kids—“has UGG boots. I want a pair for Christmas.”
Unaware that sheepskin boots were primarily a surf-shop item, moms were walking into the malls asking at Nordstrom, Kinney’s, Foot Locker, Thom McAn, and even Montgomery Ward, “Do you have those UGG brand boots?”
Unaware that sheepskin boots were primarily a surf-shop item, moms were walking into the malls asking at Nordstrom, Kinney’s, Foot Locker, Thom McAn, and even Montgomery Ward, “Do you have those UGG brand boots?”
SALES NUMBERS
1986—Sales $1.4 million
1987—Sales $2 million
1988—Sales $1.6 million
1989 —Sales $2 million
1990—Sales $2.2 million
1991—Sales $3.6 million
1992—Sales $5.8 million
1993—Sales $9 million
1994—$11 million
1995—Sales $11 million
1987—Sales $2 million
1988—Sales $1.6 million
1989 —Sales $2 million
1990—Sales $2.2 million
1991—Sales $3.6 million
1992—Sales $5.8 million
1993—Sales $9 million
1994—$11 million
1995—Sales $11 million
IF YOU DO WELL, COMPETITION IS GUARANTEED
Every entrepreneur starting out is concerned that their idea will be copied and imitated in the marketplace. If you provide a good product or service, and it does well in the marketplace, then it is almost guaranteed that there will be knockoffs.
All we could do was tell our customers we were done selling for the season. Some of them went behind our backs and started calling other factories in Australia to locate an alternative supply of sheepskin boots, which encouraged those manufacturers to expand into the United States and compete with us.
During the Christmas rush, there were several competing brands of sheepskin boots on sale in all sorts of retail stores. We had orders for about $1.5 million on the books and no way to supply any of it.
Small niche products will only be stocked by the smaller specialty stores, but once a product catches on and competitors proliferate, it becomes safer for the larger buyers to get on board. A rising tide lifts all boats, so they say.
That season, we also noticed many of our competitors were displaying products at the autumn shows copied from the samples and colors we had displayed at our March shows. This was a pattern we’d come to accept as an inevitable downside of our leadership in the market.
During the Christmas rush, there were several competing brands of sheepskin boots on sale in all sorts of retail stores. We had orders for about $1.5 million on the books and no way to supply any of it.
Small niche products will only be stocked by the smaller specialty stores, but once a product catches on and competitors proliferate, it becomes safer for the larger buyers to get on board. A rising tide lifts all boats, so they say.
That season, we also noticed many of our competitors were displaying products at the autumn shows copied from the samples and colors we had displayed at our March shows. This was a pattern we’d come to accept as an inevitable downside of our leadership in the market.
A GOOD SALESMAN DOES MORE THAN JUST TAKE ORDERS
I had learned the big difference between a good salesman who educates, services, and closes versus a mere order taker.
Talking is only a fraction of the sales role, and education, product training, and the art of closing make this a fascinating and rewarding career.
Talking is only a fraction of the sales role, and education, product training, and the art of closing make this a fascinating and rewarding career.
ALWAYS PAY BACK A DEBT
The simple act of repaying a debt, when others might have seen an opportunity to slip away from a deal gone sour, became the basis of a bond of trust and respect that would prove crucial to UGG several years in the future.
IF YOUR BRAND IS PERCEIVED AS THE BEST, CUSTOMERS WILL LEAVE COMPETITORS AND COME
Retailers began calling us, saying, “Can we place an order for UGG? We tried products from a different vendor, but our customers keep returning them. They tell us they just want the UGG brand.”
The cool people at school made fun of them for wearing “fake UGG boots.”
We even had consumers calling our office to ask if they could swap competitors’ boots for real UGG brand boots, because the retailers wouldn’t refund their money.
Perception is everything. The UGG brand had gradually assumed a powerful image.
The cool people at school made fun of them for wearing “fake UGG boots.”
We even had consumers calling our office to ask if they could swap competitors’ boots for real UGG brand boots, because the retailers wouldn’t refund their money.
Perception is everything. The UGG brand had gradually assumed a powerful image.
GOOD REPUTATION BUILDS OVER TIME
When surf shop owners called in, they always asked about me and said good things about me.
My road trips and my style of over-the-top customer service had paid off in valuable brand loyalty.
My road trips and my style of over-the-top customer service had paid off in valuable brand loyalty.
GOOD KARMA FOLLOWS PEOPLE WITH THE RIGHT ATTITUDE
Neil was also impressed that, despite being a non-owner of the business, I had yielded gracefully to perform my job on the road, and I always came in to help out in panic-mode shipping crises. He saw that my obsession with growing the company and the UGG brand took precedence over ego or personal gain. My service in the warehouse was an unconscious act of helping the team through tough periods.
Neil overrode Joe’s objections and began the process of issuing my shares.
There is a Universal law wherein every act of giving has to go full circle to complete its karmic journey.
Whenever outvoted—and it was a lot—I would always fall back on being a team player rather than trying to subvert the new initiative. You may not always get your way immediately, but it’s almost always better to remain a positive part of the team that can then affect positive change from within, than pitting yourself against your colleagues.
Neil overrode Joe’s objections and began the process of issuing my shares.
There is a Universal law wherein every act of giving has to go full circle to complete its karmic journey.
Whenever outvoted—and it was a lot—I would always fall back on being a team player rather than trying to subvert the new initiative. You may not always get your way immediately, but it’s almost always better to remain a positive part of the team that can then affect positive change from within, than pitting yourself against your colleagues.
MAKE YOUR CUSTOMERS TEST RIDE YOUR PRODUCT OR SERVICE
Teach the sales staffs about the importance of having their customers try the boots on without socks.
IMPRESSIONS ALSO COMPOUND OVER TIME AND CHANNELS
Shawn was blasting out over the radio, “This is the surf report brought to you by UGG. The surf is… the water temperature is… and it’s a good day for UGG brand boots!”
STAY AHEAD BY FOLLOWING YOUR OWN VISION
The secret to sustaining your leadership is to always strive for innovation that keeps you one step ahead of the imitators. The greatest asset that you have is vision. You see what is possible, but the imitators just see what you have done.
AN ENTREPRENEUR HAS TO WEAR MULTIPLE HATS
My commission checks were exceeding $20,000 per month.
For the entire month of April, I was a forensic accountant, working backward through the files and two years of bank statements to reconcile income transactions.
I’d gone from being the contented salesman out on the road to wearing every hat in managing and operating the company, in a desperate effort to make things appear as normal as possible to our customers.
For the entire month of April, I was a forensic accountant, working backward through the files and two years of bank statements to reconcile income transactions.
I’d gone from being the contented salesman out on the road to wearing every hat in managing and operating the company, in a desperate effort to make things appear as normal as possible to our customers.
COMMUNICATE OPENLY TO AVOID PARANOIA
Fear of the unknown leads to paranoia.
My own fear of not knowing where the company stood had my head down for fourteen hours a day trying to make some sense of the accounting and legal issues. I was so self-absorbed that I was not aware that my lack of communication with the others was feeding their own fears.
Honest communication always brings enlightenment, and from this episode I learned to keep key people in the loop, especially if things were not looking good.
THE IDEA OF GIVING UP FOLLOWS YOU WHEN IT GETS TOUGH
Along the way, my mind was a blizzard of anxieties. Should I give up? UGG is insolvent! I hate working in Anaheim! No one except me knows all the intricacies of running the business.
Do I owe it to Della to keep working like this when I own only 25 percent of the business? Will UGG ever be profitable?
I was exhausted. It was becoming more and more difficult to keep up the appearance of having things under control, when in reality I had no idea how to get enough boots for the season.
Do I owe it to Della to keep working like this when I own only 25 percent of the business? Will UGG ever be profitable?
I was exhausted. It was becoming more and more difficult to keep up the appearance of having things under control, when in reality I had no idea how to get enough boots for the season.
TAKE ADVANTAGE OF THE TIMES YOU FEEL OPTIMISTIC
On my drive home to Leucadia, for the first time in months I felt energized and inspired. UGG had another chance! I still had hundreds of loyal customers, and I was determined not to let them down.
FACE TO FACE MEETINGS CAN BUILD DEEPER RELATIONSHIPS
I am a big believer in getting face-to-face with the people who are potential partners in my destiny. Spending personal time, especially meeting the various associates and even family of your potential partner and watching how they react with each other, can open doors into their character.
They also get to learn about your personal life and assess your character, and more often than not, that observation can sway the course of a business deal.
The bottom line is that people still like to do deals with people.
They also get to learn about your personal life and assess your character, and more often than not, that observation can sway the course of a business deal.
The bottom line is that people still like to do deals with people.
IN NEGOTIATIONS, CASH IS KING
The truth is, in negotiations, he who has the cash has a decided advantage.
EVERYONE WORKS FOR THEIR OWN SELF INTEREST
Shortly after the show, he called me and offered to supply me if I would give him equity in UGG. I passed on his offer, and he cut me off completely.
BECOME FRIENDS WITH YOUR CUSTOMERS AND SUPPLIERS
I told him we’d reluctantly decided to call it quits; George had cut our supply, and without boots to sell, it didn’t make a difference how many orders we took. We had to shut the business down. Gordon somberly wished us well, and we ended the call. He called back ten minutes later. “Screw George Burcher,” he told me. “I’ll get you twenty thousand pairs. Send me the patterns and samples, and I’ll make sure you get your product.” Just like that, we were back in business again.
I’m sure this call wouldn’t have been made if I had not gone to meet Gordon face-to-face. Because I had been to his home, shared meals, and stayed with his son Graham, we had opportunities to get to know each other personally.
Become friends with your customers and suppliers. Cooperation will beat out competition every time.
I’m sure this call wouldn’t have been made if I had not gone to meet Gordon face-to-face. Because I had been to his home, shared meals, and stayed with his son Graham, we had opportunities to get to know each other personally.
Become friends with your customers and suppliers. Cooperation will beat out competition every time.
YOU CAN'T DO GOOD BUSINESS WITH BAD PEOPLE
Have always had a letter of intent as a minimum—but good business relationships are not made by the words on paper. The most fulfilling deals are always those based on trust and completed with honesty.
SEPARATE YOURSELF FROM THE PACK
“Don’t even attempt to match the others on price. My advice is to keep to the high end of the market, and keep the quality and brand name intact for the next two seasons.”
IF YOU'RE BEING TOLD NOT TO TALK TO SOMEONE, THEN SOMETHING IS OFF
One thing I’ve learned over my thirty-plus years in business: When someone insists that you not talk with another party involved in a business deal, look out! There’s almost always some kind of hidden agenda.
IT IS HARD TO LET GO OF MONTHLY CASH FLOW AND TAKE ON PERSONAL DEBT TO PAY FOR THE BUSINESS
I had discontinued my own commissions when I became an owner again, and without them, money was tight in my household.
I went to the bank and borrowed $12,000 on my personal credit card and deposited it to cover the week’s payroll.
By August, my credit cards were maxed out, and I could no longer pay wages that way. Laura and I agreed to take out a loan against our house, and I banked the entire proceeds, $33,390, into the UGG bank account.
I went to the bank and borrowed $12,000 on my personal credit card and deposited it to cover the week’s payroll.
By August, my credit cards were maxed out, and I could no longer pay wages that way. Laura and I agreed to take out a loan against our house, and I banked the entire proceeds, $33,390, into the UGG bank account.
THE BIGGER YOU GET, THE MORE OFFICE POLITICS ARE LIKELY
I was exhausted from the stress of dealing with the clashing personalities and from keeping all of our retailers believing that everything was under control.
For the first twelve years, I had seemed to be battling outside forces in order to grow the business.. I was soon to find that most of my battles would now be fought within the company.
“Chuck is accusing you of screwing up the Price Club deal,” Alan cut in. “We got a ton of back charges and returns that Chuck says you should have negotiated when you did the deal.” This exchange characterized the extreme highs and lows I was beginning to have to endure. What a tremendous waste of mental effort.
For the first twelve years, I had seemed to be battling outside forces in order to grow the business.. I was soon to find that most of my battles would now be fought within the company.
“Chuck is accusing you of screwing up the Price Club deal,” Alan cut in. “We got a ton of back charges and returns that Chuck says you should have negotiated when you did the deal.” This exchange characterized the extreme highs and lows I was beginning to have to endure. What a tremendous waste of mental effort.
YOU CAN'T KEEP EVERYONE HAPPY
“Brian, I’ll continue to do business with you,” Eddie said in the message, “but I never want to talk to you again.” All I could do was shrug. I felt empty and exhausted.
“Do you realize how many crying mothers I’ve had in my store today?” he raged. “You promised me you’d catch up on the shipments, so I kept taking orders. Now I’ve turned away a hundred moms whose major gift to their kids was supposed to be sheepskin boots!”
At the end what he did by supplying Nordstrom was the right thing to do even though he upset those who was loyal to his brand.
“Do you realize how many crying mothers I’ve had in my store today?” he raged. “You promised me you’d catch up on the shipments, so I kept taking orders. Now I’ve turned away a hundred moms whose major gift to their kids was supposed to be sheepskin boots!”
At the end what he did by supplying Nordstrom was the right thing to do even though he upset those who was loyal to his brand.
LEARN HOW TO DELEGATE
With Alan’s guidance, I began the slow process of the letting go of the day-to-day involvement. When people came to me for detailed answers, I trained myself to say, “Do what you think is best.”
I had always assumed no one else could handle anything about the business as well as I could. Instead, I came to feel a great sense of liberation in being able to concentrate on the big picture and trust that the details would be looked after.
I had always assumed no one else could handle anything about the business as well as I could. Instead, I came to feel a great sense of liberation in being able to concentrate on the big picture and trust that the details would be looked after.
ALWAYS PUT THINGS IN WRITING
One piece of Alan’s advice was invaluable: “Always put things in writing.”
BUILD CONSENSUS
My advice is to never take your proposal into voting meetings without having a majority of potential voters already on your side.
CHOOSE LOVE WHEN YOU ARE OVERWHELMED
Over the years, I have developed a method of handling those times when I lie in bed, unable to sleep because of the loop that plays over and over in my head. In the universe, the two extremes of emotion are fear and love. Most fears are imaginary, and they seem most real when you are in that half-awake, half-asleep state.
When I finally realize that I am in that dread mode, I simply say to myself, “I choose love. I choose love. I choose love,” over and over again. In a short period of time, I feel my muscles and temples relax and as soon as that happens, I drift back off to sleep.
You do not have to be an entrepreneur or business owner to do this. Fears come to everybody and I urge you to give it a try when you next feel the dread.
When I finally realize that I am in that dread mode, I simply say to myself, “I choose love. I choose love. I choose love,” over and over again. In a short period of time, I feel my muscles and temples relax and as soon as that happens, I drift back off to sleep.
You do not have to be an entrepreneur or business owner to do this. Fears come to everybody and I urge you to give it a try when you next feel the dread.
YOUR FANS WILL STAND UP FOR YOU
He told me that the product committee for the USOC had conducted a spirited discussion on footwear selection, and a clear consensus emerged for not selecting UGG. However, the team representative held his ground, saying that a majority of the athletes already owned their sheepskin boots and were demanding that UGG be the boot of choice, and the final vote of the committee was to use UGG products in Lillehammer.
YOU SHOULD CHERISH WHATEVER SUCCESS YOU GET TO
Each and every one of us should work to be successful and happy, but having given it our best shot, we must sit back and enjoy both what we have and what we’ve created, no matter how it turns out.
Everyone involved in the building of UGG—from suppliers, service providers, and customers, to staff, investors, and myself—was simply doing what they thought was best for their own success.
Everyone involved in the building of UGG—from suppliers, service providers, and customers, to staff, investors, and myself—was simply doing what they thought was best for their own success.
ANGER IS A LOSERS GAME
Holding on to anger does no one any good. As they say, resentment is like swallowing poison and waiting for the other person to die.
ARE YOU A BUSINESS STARTER OR OPERATOR OR BOTH?
Over the years, it’s become apparent that I am a darned good business starter—much more so than a business operator.
I’m the first to admit that taking UGG from fifteen million dollars to one billion in sales required a completely different skill set than I possess.
I love sharing my powerful concept: “You can’t give birth to adults.”
I’m the first to admit that taking UGG from fifteen million dollars to one billion in sales required a completely different skill set than I possess.
I love sharing my powerful concept: “You can’t give birth to adults.”