How This Guy Turned $500 Into A $1.93 Billion Empire Named UGG

Founder, Brian Smith shares the story:

“At the time, one in two Australians owned a pair of sheepskin boots, but in America, that wasn’t the same story. I looked at my buddy Doug and said, ‘Hey, we have to go into business.’ So we went back to my house, where I found a surfer magazine where I'd seen the ad for these sheepskin boots. I called up the company Country Leather, and we ended up sending him $500 for six pairs of samples.

Since I was terrified of sales, my buddy Doug went on the road as a salesman. He came back after a few weeks and after handing out 150 business cards to every shoe retailer, we had no orders. They told us, ‘We're crazy trying to sell cheap skin in California. It's too hot.’

But I knew that wasn't the reason because Australia's climate is exactly like California.

So we said, ‘Okay, let's go try the surf shops.’ Doug took one area of Los Angeles. I took the beach cities. I remember walking into the first retailer really scared because I was terrified of getting rejected. I opened up my little bag of samples, and he just went, ‘UGG boots? What are you doing with those?’

I said, well, we're thinking of importing them. And he’s like, ‘Oh man, you're gonna make a fortune!’ So that happened all the way down the coast from Malibu down to Mexico. Doug was also getting the same reaction in the Valley.

We were on fire. We thought we were going to be instant millionaires! But we didn't think to ask for any orders because we didn't have any inventory. That backfired on us big time because we ended up raising about $20,000, which in today's money is about $70,000.

We bought 500 pairs from Australia, and when they finally arrived, we went back on the road with a huge duffle bag full of boots and an order pad. I went back to the same store that told me it was gonna be a fortune, and he goes, ‘Well done, Brian. But we couldn't sell them in our store because we just sell surfboards, trunks, and flip-flops.’ 

The next store said the same thing, and the next one. After a couple of weeks, when Doug and I regrouped, we realized that our sales for the year were 29 pairs. It happened to be exactly a thousand dollars.

That was horribly disappointing because Americans just didn't understand sheepskin.”

Q: What kept you from not shutting down the business after all of the failures?

“Well, right after that first delivery at Christmas, which was our first-year sales, I used to go up to Malibu with my Dodge van full of product. I ended up selling about $6,000 worth of boots out of the back of the van in January, February, and March.

The thing that made me never give up ultimately was that every one in two Australians owns a pair of these things, and they think they're the best in the world. So it wasn't the product that was wrong. It must be me.

I had a couple of years where we were advertising with these models on the beach with perfect clothes, hair, and sunset, and the boots were the main feature of the ad. But, I had a beer with one of my good surf shop retailers in San Diego, and he called out the back to these little 12, 13-year-old kids who leave their surfboards in the store and said, ‘What do you guys think of UGG?’

Every one of them just went, ‘Oh man, UGGs, they're so fake. Have you seen those ads? Those models can't surf.’ 

Instantly, I realized I was sending the wrong message to my target market. When I looked at the ads again through their eyes, I was embarrassed at how bad they were.

So, I caught up with a buddy who was running a national scholastic surf association in Orange County. I said, ‘Hey Pete, do you have any young kids who are gonna turn pro real soon? I've got no money, but I can pay them in UGG boots.’

He introduced me to two kids, Mike Parsons and Ted Robinson.

And, instead of posing for photos, we just went surfing. When we ran those ads in October, November, and December, and the sales went to $220,000. It was a night and day difference. That's when I discovered the art of advertising and marketing. Your brand is not your logo, and your brand is not the product. The brand is how consumers think of you.”