UGG: Brian Smith. How an epiphany, surfers, and $500 launched an iconic sheepskin footwear company.
Brian Smith, a 32-year-old Australian accountant, imported sheepskin boots to the US in 1979 and spent 16 years building UGG into a recognizable brand through persistent selling, creative marketing, and navigating constant financial crises. Despite losing ownership multiple times due to poor financial deals and partner complications, he ultimately sold UGG to Deckers in 1995 for just under $15 million. Deckers then transformed the brand into a multi-billion dollar global phenomenon.
Summary
Brian Smith's journey with UGG begins in 1978 when, inspired by Pink Floyd's 'Time,' he quit his accounting career in Australia and moved to Los Angeles. While surfing at Malibu and looking for a product opportunity, he spotted sheepskin boots in a Surfer magazine ad and recognized that while nearly every Australian owned a pair, they were completely unknown in the US. With partner Doug Jensen and $500 in samples, and later $20,000 from investors, he began importing what Australians generically called 'Ugg boots' — a descriptive term, not a brand name. Crucially, he trademarked the name 'UGG' in the US for $600, a move he later credited as perhaps his smartest business decision.
The early years were extremely difficult. Shoe stores rejected the product as illogical for California's climate, and even surf shops — a more natural fit — declined to stock them. First-year sales totaled just 28 pairs, generating exactly $1,000. Smith survived by working summer jobs including scraping boats, construction, greenskeeping, and stripping gold components from decommissioned mainframe computers. He sold boots seasonally, October through November, often out of the back of his van at Malibu beach after morning surf sessions.
A major marketing breakthrough came when Smith stopped using attractive models in his ads and instead hired up-and-coming young surfers like Mike Parsons and Ted Robinson. This authenticity caused sales to jump from roughly $30,000-$50,000 annually to $200,000. He also developed the 'six-pair stocking plan,' giving a free pair to store managers who stocked six pairs, which created genuine product advocates in retail stores and dramatically improved close rates.
Throughout the 1980s, Smith repeatedly gave away ownership stakes to secure financing, never quite grasping the difference between accounting and financial forecasting. He lost full ownership when a partner named Neil Fearing died of a heart attack the weekend before Smith was due to receive his 25% stake back. He eventually regained 100% ownership through a $200,000 settlement with Neil's widow. A new partner, Chuck Kaiser, described by Smith as a sociopath and narcissist, created internal chaos that further destabilized operations.
On the supply side, Smith's primary Australian manufacturer George Bercher eventually stopped shipping due to unpaid bills, nearly ending the business. A Melbourne tannery owner named Gordon Jackson stepped in overnight with an informal verbal commitment to supply boots, saving the company. Smith also bought out his litigation rival — an Oregon-based UGG boot maker who had sued him over the trademark — acquiring their factory in the process.
By the early 1990s, Smith expanded beyond the surf market into skiing, snowboarding, and notably the hockey market across the Midwest and Northeast. A celebrity seeding campaign targeting Hollywood stylists began getting UGG boots photographed on celebrities in People and Us magazines, including a notable image of Pamela Anderson on the Baywatch set. A controversial $500,000 ad buy on Rush Limbaugh's radio show in 1994 generated enormous switchboard traffic but moved sales only modestly from $9 million to $11 million, largely substituting existing fashionable customers for new but less brand-aligned ones.
In early 1995, Smith encountered Doug Otto — founder of Deckers Corporation, which had successfully scaled Teva sandals — at the Atlanta Super Show. Recognizing that Deckers' summer-dominant business perfectly complemented UGG's winter seasonality, Smith initiated acquisition talks. Deckers acquired UGG for just under $15 million. Smith declined a VP of Marketing role, choosing instead a consulting arrangement. Deckers subsequently hired Connie Rishwane, a New York high-fashion footwear veteran, whose strategic placement in luxury women's magazines, combined with Oprah Winfrey organically wearing the product, broke UGG through the $100 million sales barrier. Deckers further expanded through Jimmy Choo collaborations, flagship retail stores in New York and Tokyo, and a Tom Brady endorsement. UGG now generates over $2.5 billion in annual sales. Smith expressed no regret about selling, framing the company's journey through a metaphor of human development — conception, birth, infancy, toddling, youth, and maturity — and attributed his persistence entirely to the knowledge that sheepskin footwear was universally accepted in Australia, which told him the product itself was never the problem.
Key Insights
- Smith trademarked 'UGG' in the US for $600, even though in Australia it was a purely generic descriptive term equivalent to calling a product a 'cheeseburger' — a move he credits as possibly his single smartest business decision.
- Smith argues that his greatest sustained marketing mistake was using attractive but inauthentic models in ads, which actually turned away his core surf customer base by signaling the brand was fake — a lesson he only learned by asking teenage surfers directly.
- Smith claims the 'six-pair stocking plan' — giving store managers a free pair in exchange for stocking six — was his most effective marketing execution, because it created authentic in-store advocates who could genuinely sell the product from personal experience.
- Smith contends that being an accountant gave him no advantage in running the business, because accounting describes the past while finance requires forecasting future capital needs — a distinction he failed to understand for over a decade.
- Smith describes a structural growth trap he repeatedly fell into: the faster UGG grew, the more capital he needed to finance production, meaning strong sales growth paradoxically left him more financially desperate, not less.
- Smith argues that Deckers' success with UGG was partly enabled by timing — Oprah wearing the boots coincided with Connie Rishwane's high-fashion magazine strategy, but had that Oprah moment happened while Smith owned the company, he lacked the capital to meet the resulting demand and it would have destroyed the business.
- Smith claims the Rush Limbaugh advertising campaign, despite generating massive inbound interest and costing $500,000, essentially moved the brand sideways by replacing fashion-forward customers with a demographic less aligned with the brand's identity.
- Smith argues that his ability to persist through 16 years of failure was rooted in a single empirical observation — that roughly one in two Australians owned sheepskin footwear — which meant the product was proven and every failure was a personal execution problem, not a product problem.
- Smith describes repeatedly negotiating from the worst possible position: he always approached investors in September or October when he had large unfillable orders, meaning he had no leverage and consistently gave away ownership stakes at unfavorable terms.
- Smith argues that the transition from surf market to mainstream fashion required authentic imagery tied to real subcultures — the same product failed to gain traction with generic aspirational advertising but exploded when associated with genuine surf culture icons.
- Smith claims that the sale to Deckers was motivated not just by capital needs but by a desire to escape a toxic partner relationship with Chuck Kaiser, whom he describes as a narcissist creating internal chaos that consumed more of his time than actual business building.
- Smith frames the entire entrepreneurial journey through a developmental metaphor — conception, birth, infancy, toddling, youth, and maturity — arguing that entrepreneurs cannot give birth to adults and must survive each stage sequentially, with infancy being the most dangerous period where most businesses die.
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