The simple method to ride a trend wave to tremendous success

A great privilege of being a business author is you get to interview quite a few people. And as I'm looking back on my career, probably one of my favorite interviews of all time was with Brian Smith. He is the founder of UGG. And as of this recording date, this interview may go back 10 or 15 years ago. I spent a couple days interviewing him and learned about the journey of his business. In short, what Brian did was he timed the market perfectly. Somewhat by intent, somewhat by good fortune. I think when opportunity presents itself, if you grab that tiger by its tail and you know what to do in that moment, it can have extraordinary results. And that's exactly what Brian did. What we're gonna explore together in this series is timing the market and exactly how you do it. I remember meeting a woman named Becky Blanton. She actually has a TED video if you get a chance to look at it. She was homeless, unhomed, for over a year of her life, living, I think she was sleeping in an abandoned car. And she shared a story of how she would get money without working. And it wasn't through begging. It was through these butterfly traps.

Hear me out.

She would stay near Walmart, for example, and first thing in the morning before the store would open, she'd just do a walk around the Walmart. But she would go to certain spots that she said would just catch the butterflies. And what it was was someone would take something out of their wallet and a dollar or two would come loose and the wind would take it. And she goes there was a couple spots that inevitably majority of money was found. It was the milk crates outside the store, I think out front, whatever, that they would stack up after deliveries and the delivery guy would pick up in the morning. Well, when the wind would blow, those things acted like butterfly traps, if you will, catching the dollars. She found often near storm drains is where they would find money that would get washed. You know, someone dropped some money and would get washed down into this or near the storm drains, and she'd find dollars and quarters and nickels and different amounts of money there. When I was interviewing her, I remember this, we went to a Waffle House, I think it was, where I interviewed her. And she shared the story, I'm taking copious notes and so forth, and as we're walking out, she just looks around automatically scanning, and she found a $20 bill. And she picked it up, she looked at me, she goes, "Ah, must be my lucky day." Yeah, Becky, like every day is your lucky day. She had this discipline of looking in the right spots for opportunity. That's what I want you to learn in this series of how to identify where you need to be what you need to look for in the right spot, and opportunities will present themselves. And then you can perhaps have a Ugg-like experience if that's what you desire.

I want to show you the model we're going to use. I did write a book about this, and these are the 5 stages that we use to identify what we need to do to capture an opportunity.

The first is to separate.

And what I mean by this is identifying a distinct market that we're gonna target. So if you believe that any customer is the right customer, if you serve anybody and everybody, you're not gonna be able to identify trends.

What we need to do is identify the right area for the right time. My uncle, who passed away back now, but used to have a joke that he loved to do with anyone new he met. He would say, "Hey, I have a joke I wanna share with you. Is that okay?" And they're like, "Yeah, by all means." He's like, "Okay, but you have to participate. All you need to do is ask me, what do I attribute my comedic talent to?" And so the person would say, "Okay, what do you attribute your—" And as they would be midway through their sentence, he would simply say, "Timing." "So what do you attribute your timing?" he would say. And he would get a chuckle. And what it spoke to though is how you can own a market. If you can address a need before the entire opportunity is identified, where everyone else can see it, if you can see it before anyone else, you can act on it before anyone else, and the opportunity will present itself. So let's go back to Ugg Boot.

The first thing that Brian Smith did was he identified a distinct market.

Now he was interested in a surf scene. He's Australian guy, and he was interested in what's going on with fashion and so forth, and thought the opportunity may be for him to go back to the mecca of surfing, if you will, which is the Pacific Coast, California, and to study what was going on in the fashion scene with surfers. And he could then bring back these ideas to his market in Australia.

The first thing he did was he identified the right market. He then looked for patterns And this may have been a conscious or subconscious thing, but looking for patterns that are happening now and the future. So this community, what are they unifying around? And it's pattern-seeking identified by needs now and in the future. He went through a process of rallying.

He rallied the groups or the community to believe in something new.

So let's pick up his story again here in the Unify section. So Brian goes to the Pacific Coast.

This was in the '70s, I think it was Southern California, and he's watching these people surfing to see what the fashion interest is.

And what he notices as he's watching the surf scene and participating—

he's a surfer himself— that a lot of these surfers were coming in out of— after doing a set on the ocean, in the Pacific Ocean, and running to the fire, the bonfire they made on the beach to warm up their feet. And what he noticed is that surfing had changed. There was advancements in the surf culture, particularly around neoprene, that material you wear when it's cold in the ocean to keep your body warm. Neoprene by the '70s had become a thinner material, giving you more mobility, and it was applicable to surfers. So now surfers could surf into the cold winter without freezing to death, but their feet were exposed. You gotta grip the board. Their hands were exposed. You gotta paddle. And so they would run in after being out in the ocean for a few sets trying to warm up their feet and their hands 'cause they're freezing to death. Some people would wrap in towels and so forth. He's like, oh, neoprene's advancing.

People are surfing in the cold and their feet are freezing.

Why don't they address that?

What I want you to notice in that story is there is a pattern of needs. Now my feet are freezing. In the future. So what's interesting is the neoprene advancements brought about new opportunity for now for this distinct community. This market of surfers saw neoprene as a new tool they could use that changed the paradigm of surfing.

Now surfing had become a year-round sport. So Brian Smith said there's an opportunity here and it's already solved.

This is another remarkable thing is you'll find that pockets of communities already exist and are rallying around something. So it happened to be in Australia, people already were addressing the cold feet situation through a product they would call an Ugg, an Ugg boot.

So he already knew that there was a community that was adopting this quote unquote technology, the Australian market, just wasn't in the US market. So what he originally wanted was what fashion statements can we bring it back to Australia? He said, oh my gosh, there's an opportunity here. Here. Got to spot the waves. And inevitably there's this kind of ripple effect that I want you to pay attention to.

The ripple effect is this: something new happens and then there's this cascade of effects.

Right now AI is huge, right?

I mean, AI is a game changer.

The question to ask yourself is, how is the market going to forever be shifted going forward? What's the ripple effect? I'll give you a couple more examples. Tesla just released the Cybertruck. I saw the first one in my town. This bizarre truck driving around. I think it's bulletproof and it can do some other cool functions. But bulletproof cars, have we had that before in the public market? Yeah, I know, for security details, so forth. But what does this mean? Will there be military applications? Will people want bulletproof cars? Will gangs purchase this? But we gotta think of what's all the cascade effect? That's going to happen.

Another example, if we look at this, is Uber. Uber comes about, distinct market.

The question then is, what is the patterns that people are unifying around?

We're moving away from traditional taxis, now it's on demand.

It brings rise to what ripples? Well, the ripple effect was the gig economy. And so now there's new accounting technology, for example, specifically for Uber drivers. And so what are all the things that are going to cascade out? The classic example, which I'm sure you heard of, is the gold rush. What company made the most money during the gold rush? Levi's, Shein's, right? So what are the cascading needs that people are gonna have when there's a shift in the market? That's what you have to look for.

And that's exactly what Brian did with UGG.

With the community known, Brian started working on more of the rally phase.

So first, identify what market is unique to you.

That you can cater to so that you can observe. That's the key.

Then look for patterns that are happening, current patterns, and look for cascading effects. Then you have to rally the community.

So with Brian Smith, the interesting thing was the rally phase. What he realized now is we have a need in the market, which is the warming of cold feet. There's been this cascade effect. Neoprene enters the market. It causes people to surf year-round, and now the consequence is cold feet. And he says, we're gonna rally around warm feet.

So what he does is he encourages folks to do the rally. What he's doing is encouraging the community to surf and keep their feet warm.

And he does this through testing things out. So he brought the product from Australia, the Ugg boot, back to California, and he starts giving demos. He starts encouraging people to use the product, to start testing it out. And I was like, my gosh, warmer feet. There is a potential solution. He modifies the design of the boot. Now, if you've ever seen an UGG boot, it kind of, you know, is about that high. I hope the measurements come across probably on the screen, but I would say 12 to 15 inches high. It goes up halfway up someone's calf.

Well, that was a particular design, and he did that way so that when people walk down the beach and sand kicks up, it doesn't get in the boot grinding your feet.

So you don't want something shallow, you don't want something high because it's impedance. So that was the perfect height. He also used a material called shearling. Shearling is a, um, natural material from sheep that doesn't collect bacteria or odor. So you can put your wet feet in there and it'll warm up, but it won't smell bad. So the product is designed around the needs to warm your feet without any consequence. Uh, easy to do, throw them right— take them right on and off. You don't have to wear socks, you just throw them on and off. All those elements catered to that community. Then we moved on to the next stage, which is gather.

Gather is where you engage the audience to market for you.

There is a book by Malcolm Gladwell, I think it was Outliers, don't quote me exactly on that, but what he wrote about was the rise, the re-rise if you will, of the penny loafers in urban communities. Certain kids made it cool again, and everyone starts copying that behavior. Identify who are the cool kids in your community. I saw it with Tesla. I remember the very first Tesla car driving around our town. The owner of that new Tesla, this is before Tesla was popular, before they had cars out, the first person that had it was showing off to everybody, would always park it in the premium spot. It was a show-off person. So the cool kids usually express themselves very publicly. Now there's a Cybertruck driving around and that guy parks it anywhere he can give it exposure., and that may trigger this trend. Doesn't guarantee it, but you have to get the cool kids on board to up your odds.

Well, that's exactly what Brian Smith did. What he did was he started placing ads, and the ads were for his Ugg boots, and it would be a model, you know, holding the surfboard and, and wearing a pair of Ugg boots, and he had a slogan and so forth. The funny thing was it wasn't selling boots.

One day Brian was at a store, a surf store, talking to the owner in the back room, and a customer walked in. So the owner walked out to greet the customer. Brian stayed in the back, and the customer and the owner start discussing UGG. The owner's like, hey, have you seen those UGG ads? And the surfer says, yeah, yeah, I see them everywhere. They're for posers. And the owner goes, what do you mean? He goes, those aren't models that are demonstrating those boots. Those aren't real surfers. I'm never gonna get those. And Brian overheard this and said, oh My God, I'm using the wrong community. I'm not using the cool kids, I'm using models, I'm using posers. So he changed his ads. He hired the semi-pro and pro surfers to be his models, to have the boots on, and that started to trigger the change.

So for your business, we identify a distinct community, we look for existing patterns that are happening, We then have a rallying cry. What's the improvement? What's the movement that's happening and how are we part of it?

And then get the audience to market for themselves.

The final stage is called expansion. And this is kind of a sellout stage.

I mean that in the non-negative way, but there is a negative connotation to it. So what's the expansion stage? Expansion is where the community absorbs your product, falls in love with it, starts using it, but now you've exhausted that community. There's no more opportunity there, or it's very limited. That's exactly what happened to Brian Smith. He starts selling the Ugg boot, surfers start using it, they see the pros and semi-pro athletes wearing it, it starts going everywhere. But at a certain point, there's only so many surfers to go around. So Brian says, how do I keep the Ugg sales going? He said, who else has cold, wet feet? So look for a common problem, and it was snowboarders, ice hockey players, ice skaters, skiers. So look for those communities. But there was only so much. And use the same method, using the semi-pro and pro athletes in those space to represent the brand. And then the ultimate sellout was when it became a fashion statement. It was around the year 2000 that Brooke Shields wears a pair of Uggs, and it's on the COVID of, I think, People magazine or something. And the next day, every teenage girl in America is wearing Ugg. It explodes. It became a billion-dollar brand. Surfers, when they see this, like, this was for surfers. Ugg is sold out. They're not for me anymore. And the surfers will never be caught dead wearing these. And that's the natural trend of a surge. The wave caps and that spreads out and the water's everywhere, but there's no more wave. And so we identify the next opportunity or stay with the great new market and realize you're gonna lose the original market. And that's what Brian Smith did. UGG continued on to become a fashion statement and no longer cool.

So there you have it. This is the sequence for capturing momentum.

Just wanna recap it one more time so we have it absolutely clear.

First, you must separate a community, meaning you gotta pick the niche that you're gonna target for.

I will give you a tip that the more familiar with the community, more you're gonna be able to speak their language. It's not absolutely necessary, but you're gonna get them much faster and get you much faster if you understand the market. If you go into a market you don't know, spend the time to learn the language, make the investment of that time. Secondly, look for pattern spotting.

What we wanna say is what is the community unifying around?

What's the new trend?

Bulletproof glass, or is it neoprene clothing?

Is it AI? I mean, just look at what's going on with ChatGPT and all the competition. There's an opportunity there, but the bigger opportunity for most businesses is the cascade effect. What will this lead to? Will there be less need for knowledge workers? Well, these people are going to need to seek employment in a new fashion. What is the opportunity there? AI, what can it do and what can it do? It's great at calculations and brainstorming and so forth. Not good at emotional connection. Maybe there's opportunity in that, that, that people can move to more of the human connection. Maybe there's other things. Maybe technology is great at XYZ, but it's not good at experiential componentry. And so maybe businesses that offer more experiences are going to be served better.

But think about all the potential new needs that are going to come about from this shift. Then rally people around a solution. Why are you the solution? Inevitably, it's further encouraging the wave, not fighting the wave, but it's encouraging.

So yes, this is the new standard, and as a result, we're going to want to do this and we're going to want to do that, and we're the providers of the this or the that.

Then get the people in the audience using the products. You have to get those early adopters, those penny loaf folks.

And finally, as you get momentum, be prepared for the expansion, which is the sellout stage. Okay, so now we have— we've got this system here. What I want to do is I will throw it back up on the overhead, but I'm gonna go through each element here and just give you some tools and strategies you you can use in your business to do these stages of the surge. So let's start off with the separate stage. You know what it is, it's identifying that niche. What or how do you go about it? What you need to do is look at your existing clients. So if you have an existing client base, look at those, identify who are your best clients. These are what I call gateway clients. They can give you access to a community and better understanding it. I think most businesses say, I'm going to do everything for everybody because We know, don't put all your eggs in one basket, that diversity brings around stability. Those are both true, but they also prevent growth. So if you diversify, sure, you will be quote unquote stable, but you'll have no opportunity to grow dramatically because you're not committed to one community. So I found in many small businesses, as we diversify further, we actually start growing more slowly because we're not specialists in any one thing. So identify that community.

Another thing to do here is to join groups. So consider your best customers. They can give you gateways, or they can give you access points to the community.

Join those communities that the best customers can point you to. So whatever groups they're in and so forth.

And then identify the top influencers. These are the cool kids. And with that knowledge, you'll be able to—

you join the communities, identify who the top influencers are. You'll have access to start the next stage, which is the unifying stage. And again, unify is what is the big shift that's happening and then the ripple effects. Let's talk about a new market.

How about cryptocurrency? So cryptocurrency is now becoming pretty significant, but albeit new pattern in the market.

What are the potential waves from it? Well, you know, there's gonna be regulatory shifts, of course, but what about like banks? Banks are gonna have to behave differently.

What about commerce, you know, retail receiving and processing cryptocurrency.

Maybe there's going to be new technologies around the blockchain.

Maybe there'll be bartering using cryptocurrency.

Those are just some kind of like low-hanging fruit, obvious things. What are the potentially other changes? I would spend lots of time researching, ideating about that.

And then do you have something that could fit this unifying pattern that can leverage the Ripple? So 3 or 4 things to ask yourself when you see a new pattern in cryptocurrency, you ask yourself, well, what are the problems with this new technology? What are the pressures people are experiencing from it? What are the promises, kind of like the needs that people have? What are the desires and hopes this new technology will bring about? I just invite you to ask all of these questions, the problems, the pressures, the promises, desires and hopes that people have around this new trend, and then you can identify ways that you can cater to these elements, because these are all the ripples that come out from a new big wave.

So first you separate, then you unify, and then let's talk about rally next. I think the most important part about the rally that is overlooked is the promise of what you're doing so that people can parrot it very easily. So as an example, in an established market, as an author, I promise to simplify entrepreneurship, and I want to be known as that guy. Like, oh, you read Mike's books, he simplifies the entrepreneurial journey, or he makes entrepreneurship easier, however people say it. But, but the tagline, if you will, is entrepreneurship simplified. If we go back to UGG, it's warm feet for surfers. If we look at Tesla, it's, it's cutting-edge technology or environmentally responsible.

There's many ways to position it, but you've got to identify what message you want the community to rally around and repeat over and over. So the element here is what is the messaging you're offering around this ripple effect?

That's the rally.

And then we're gonna get the cool kids here to adopt it. So now let's talk about gathering. This is the cool kids. And I think the strategy that is really effective is the fly on the wall approach.

And I remember meeting with the owner of, or the founder of Life is Good. It was two brothers. I met with one of the brothers, and forgive me if I can't remember his name, but they had an apartment in Massachusetts he was sharing, and they were living check by check. It was poor living. And what they were both was, was artists. They would draw figures and ideas and sayings and so forth, and then they would go to local parades and so forth and try to sell t-shirts for the day and use that for beer money. Back home and throw a party. Well, they had one room in their house that they were just drawing all over the walls, and then people would make comments on it or expand on it. Well, one drawing they made was the famous smiley face of Jake, and they made that little smiley face, and they also had a saying, "Life is good." And what they noticed is that people were circling that icon of Jake and putting check marks to it and saying, "This is awesome." They found their guy. "Life is good," people underlined that and said, "Wow." That's a great phrase. Then they made a t-shirt with Jake and Life Is Good. And when they were selling t-shirts, they noticed something else, another kind of fly-on-the-wall experience, that everyone and their mother was trying to buy the shirt. It spoke to bikers and grandmas, young kids. Everyone wanted the shirt. In fact, they said when people try to steal shirts, and that happened too, that was a shirt people tried to steal. They said, my gosh, we've found it. They found their thing. Pay attention to the market?

What is the community trying to do?

Are there cool kids that will do anything to get it? Because they'll do anything to speak about it once they do have it. That's the key to the gather phase.

And we'll wrap up with expansion. This is simply about choice. Do you want to go big or do you want to stay put? And you have the option to do either.

You don't have to go big for big's sake. They say if a business isn't growing, it's dying. That's not true. The business needs to be constantly generating revenue. It's got to be constantly serving a, a community to keep the business healthy. But you don't have to get bigger for bigger sake. The right size business will find you. That's a key point to remember. But if you do choose to expand, there's a certain point that you'll outgrow your existing initial community, and they will call you sellouts. And be prepared for that transition. It's okay, but that's how they'll see you. Or you can stick with your community forever, you just won't have that size,, but that community will be loyal to you. So that's a choice you can make.

So there you have it. This is the surge process.

Now you have a lot more details on it. I hope you have some actions that you're going to take because this is how you capture market momentum. A lot of people think it's like, I got to run more ads or market more aggressively, and you can get growth that way, but it's really identifying what does the market need next? Because that is the biggest driver of demand, hands down. If you can anticipate the the market's needs and be in front of that wave, you will never be able to out-market that. That is all the energy. So get in front of the wave.