‘The Greatest Gift Any Entrepreneur Can Have Is Ignorance’

You could start a serious fracas over who invented ugg boots. Sheepskin footwear has been a fixture in Australia and New Zealand pretty much ever since shepherds’ toes got cold, and ugg has been the colloquial phrase for such boots. But there is not much argument over who took this utilitarian work-wear and set it on the path to a massively successful global fashion brand, UGG. That visionary was Brian Smith, although when he started on this journey in 1978, the only vision he possessed was that he was a fully trained accountant who hated accounting.

Ready for a new and exciting career, the 29-year-old Australian headed for the U.S., “where all the cool things came from,” in search of a breakthrough object. For the next three months, the would-be entrepreneur led a slacker’s life, hanging around Santa Monica, Calif., surfing and waiting for inspiration. When it finally arrived, it took the form of an ad in a surfing magazine for an Australian company that sold mail-order sheepskin boots. They had become wildly popular among dedicated surfers.

Q: So you saw the ad, and the lightbulb went on?

A: Absolutely. Half of everyone in Australia wore these boots, but they were unknown here. Americans had a completely wrong impression of sheepskin. They thought they’d be hot and that you couldn’t wear them in the rain. I called the manufacturer and convinced him to let me be his distributor in the States. I figured we’d become instant millionaires. I borrowed $500 to get some samples and headed to a shoe show in Manhattan, where I rented a tiny part of a table near the restrooms. I didn’t get an order.

Q: Weren’t you discouraged?

A: The greatest gift any entrepreneur can have is ignorance—or at least innocence. Because if you knew the obstacles you were going to face, you wouldn’t bother. We were not discouraged. We went back to California, and fortunately the surfers were excited to see us. We got the boots in all the surf shops and had good business at the swap meets.

Q: How long did that go on?

A: Quite a few years. You can’t start a big business any more than you can give birth to an adult. You have to go through each stage and endure the growing pains. Infancy is horrible. You have no resources, and you don’t even know if you’re going to survive. Youth is a happy phase—you’ve had some success, some consistent orders and you are optimistic. The teenage years are dangerous: You want to be everywhere at once, there are a lot of pitfalls, and usually you don’t know what you don’t know.

Q: What didn’t you know?

A: Financing. If you have an unpopular product, that can kill you, but a successful product can kill you just as dead. To sell one pair of size 7 boots, a store has to stock sizes 5 to 12. You therefore acquire a huge inventory in order to sell anything, which you have to pay for a long time before any money rolls back in. Had I understood that, I would have hired a finance expert. Nor did I know about seasonality. You’d think it would have dawned on me that nobody bought boots in the summer, but it didn’t. Year after year we’d make really good money from September to December, then be so broke by May that I was scraping boats in Marina del Rey, Calif., to get by.

Q: What turned things around?

A: Our first customers were surfers, so we hired a photographer and some models and created ads for surfing magazines. They completely backfired. Our models had the wrong look. We heard surfers say, “Oh, UGGs are fakes.” We were undermining our own credibility. I hired real surfers and went out to famous surf spots and shot new ads myself. They got big results. Sales reached $400,000. All of the cool kids wanted UGGs for Christmas.

Q: How did you break through nationally?

A: After several years, we were strongly established among surfers and snowboarders but were unknown east of the Rockies. We got a big boost when we started advertising in Let’s Play Hockey newspaper; suddenly every hockey mom in Minnesota wanted UGGs. But the real key didn’t come until we had been in business for 15 years.

I saw a photo spread in People featuring actresses. It was all about what kinds of clothes they were wearing. I said, “I wonder how we can get UGGs in there.” A friend said to try the stylists, meaning the people who do the celebrities’ hair, makeup and wardrobes and help them create their looks. I had never heard of stylists but sent free boots to 40 of them. Soon we were on TV. We were in the movies. People in Europe were special-ordering. We even heard a story—perhaps apocryphal—that Madonna sent an assistant to Sydney on a private plane to get a pair in a particular color. True? All I know is that this is why you can never give up. Serendipitous things can happen. If you give up, you lose the chance to get lucky.

Q: Yet soon after that you decided to sell the company. Why?

A: I had taken on new partners. What that experience taught me was that I’m good at starting companies, but I’m not necessarily good at running them. I had built a company that reached $15 million in sales. I wasn’t the fellow to take it to $20 million. I suddenly found myself in a lot of committee meetings. We’d be talking about a new product, and I would say, “That’s cool. Let’s do it.” But my partners would conclude that the venture was too risky. And I’d think, But that’s what I do! I take risks! They were sucking the life out of me.

Then one day at an airport, I ran into Doug Otto from Deckers, a sandal company, and I realized that this was the perfect match. After we made the deal, I made the audacious prediction that the new company would have $200 million in sales. Well, now it’s got $1 billion, and there’s no end in sight.

Q: You had many ups and downs with Uggs. Is there a lesson you can pass on?

A: The degree to which you can accept risk is the degree to which you are an entrepreneur. Twenty-five years ago, I was reading a book—a religious book—and I came across a passage four lines long that so impressed me that I wrote them down and put them in my wallet. The lines are: “Feast upon anxiety. Fatten upon disappointment. Enthuse over apparent defeat. Invigorate in the presence of difficulties.” If you do this, you’ll never get caught up in playing the victim. When things go wrong, get over it and move to the next thing. Uncertainty is the most exciting part of being in business. 

Risk can weigh heavy on the mind behind the idea. Be aware of the 5 (worth it) emotional challenges you’ll face as an entrepreneur.

 

This article appears in the October 2015 issue of SUCCESS magazine.

Jamie Malanowski
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