Levi help Jacob patent the famous rivet on the Levis jeans that make the pockets so durable. That is how Levis starts to build the empire.
Dave Young:
Welcome to the Empire Builders Podcast, teaching business owners the not-so-secret techniques that took famous businesses from mom and pop to major brands. Stephen Simple is a marketing consultant, story collector, and storyteller. I’m Stephen’s sidekick and business partner Dave Young. Before we get into today’s episode, a word from our sponsor, which is, well, it’s us, but we’re highlighting ads we’ve written and produced for our clients. So here’s one of those.
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Dave Young:
Welcome to the Empire Builders Podcast, Dave Young, here alongside Stephen Semple. We’re talking about empires, we’re talking about things that people built, businesses, and you know what I mean, empires.
Stephen Semple:
That sort of thing.
Dave Young:
What don’t you get about empires? Come on. Boy, the one you just whispered in my ear as the countdown started, I know a little bit about it just because it’s like a classic business lesson. Right?
Stephen Semple:
Yeah.
Dave Young:
If you’re going to follow the gold rush, man, don’t dig for gold, sell to miners.
Stephen Semple:
Yeah. Oh yeah. Yeah. Big time.
Dave Young:
You said it’s going to be Levi’s, so I assume Levi Strauss and Company.
Stephen Semple:
Yep.
Dave Young:
This is the guy that started the little store to sell to the miners out in California.
Stephen Semple:
Yeah. We’re going way back because Levi Strauss was founded May 1, 1853. So we’re going way back. Today, it’s trades on the stock exchange under L-E-V-I, Levi. They’ve got 3,400 company operated stores. They do like 6 billion in sales and almost 19,000 employees. It is the best selling five pocket gene out there.
Dave Young:
I don’t even think about them as having stores for some reason. That must be outlet mall kind of things.
Stephen Semple:
Yeah, I think that’s primarily what they are because, again, I was the same. I looked, I went 3,400 stores, boy. It’s one of those ones you just don’t think about it.
Dave Young:
Yeah. In high school, man, if you weren’t wearing Levi, button-up five-pocket jeans, you weren’t cool at all unless you had the Jordache back in the day designer jeans.
Stephen Semple:
There you go.
Dave Young:
You either go standard Levi’s or full designer. God help if your mom bought you Lee.
Stephen Semple:
Yeah.
Dave Young:
Or some off-brand from Sears.
Stephen Semple:
Yep. Oh yeah. Then it was going to be a rough week at school.
Dave Young:
Well, take us back to 1853.
Stephen Semple:
The other thing that’s interesting is they hold the original patent for the rivet in the jeans. They actually hold the original patent for that.
Dave Young:
Okay.
Stephen Semple:
You know the little rivet that you see in the jeans?
Dave Young:
Yeah.
Stephen Semple:
That’s their original patent.
Dave Young:
Well, that’s cool.
Stephen Semple:
Yeah. Now, jeans were not invented by Levi, so that’s often a misconception. The company was started by Levi Strauss, and Levi was a Bavarian immigrant. He actually first had a business doing dry goods in New York City. He built that business basically selling these dry goods door-to-door.
Dave Young:
Okay.
Stephen Semple:
As you were talking about, Dave, he hears about this thing called the Gold Rush in California. The boom is amazing. I knew it was a boom, but I didn’t realize this. In the two years from 1849 to 1850, the population in San Francisco grew from 1,000 people to 25,000 people in two years.
Dave Young:
I know the Oregon Trail, but man.
Stephen Semple:
That is just mind blowing.
Dave Young:
I think a fair number of them actually sailed around South America.
Stephen Semple:
When people talk about it being a boom and a rush, you go, holy jumping, like, wow. Just amazing. And as you said, he decides to go to San Francisco, not to pan for gold, but to sell clothing and other retail items. So he arrives in San Francisco in May of 1853. He opens a store on 62 Sacramento Street. Does really well. After eight years, he’s made like $4 million, that would be like 72 million in profit today.
Dave Young:
No kidding?
Stephen Semple:
Yeah. Yes. Yeah. And as we mentioned, he doesn’t invent jeans. He’s only part of the story.
Dave Young:
Yeah.
Stephen Semple:
Enter Yaka Buffus from Latvia. When he immigrates the United States, his name changes to Jacob Davis.
Dave Young:
Okay.
Stephen Semple:
He’s a tailor. He’s done all sorts of business from clothing to brewing beer to pork wholesaling. He tries a bowling alley. None of them last more than six months. In 1870, he’s in Reno, Nevada, and he’s finally getting something working. He’s making a living sewing things, and he’s making overalls using duck cloth. In fact, one of his suppliers is Levi’s.
Dave Young:
Okay.
Stephen Semple:
It’s one of his suppliers. He’s now making money. He has a neighbor who has this disease called Dropsy, which really makes you really swollen. Basically, he doesn’t have any clothes that can fit. So he approaches them and says, “Hey, Jacob, could you do this custom overalls for me?” So he does this custom thing and he charges three bucks. He’s making these really sturdy pants from this off-white duck cloth and he notices he’s got these copper rivets around that he uses for horse blankets. He notices that with the pockets, often, especially the exterior pocket, there’s a spot where they rip off. So he decides, “You know what, I’m going to rivet it on. That’ll make it really sturdy.” So he rivets the pockets and he decides to also put a little rivet on at the bottom of the groin. Four more people see it, and he gets four more orders for this fabric with the rivet pockets, and then more orders, then more orders, and by 1872, he’s making like 200 pairs of these things a year.
Dave Young:
Okay.
Stephen Semple:
He also starts using denim. Denim had actually been around since the 1500. It wasn’t a new idea. The clothing becomes popular because of the rivet. This is the one detail that really sells the product. He decides he wants to patent this whole idea of the riveting, but he doesn’t have money to do a patent. Jacob writes a letter to Levi containing a check for the balance of his account and a pair of pants that he made describing the pants, describing the demand, describing the price that he’s charging for them. He’s charging four times the price of other work pants. He’s charging a full day’s wage.
Dave Young:
For the rivet.
Stephen Semple:
For the pants with the rivet. Right?
Dave Young:
Yeah.
Stephen Semple:
So he wants to file this patent. So he says, “Hey, Mr. Levi, can you join me? Let’s be partners on this thing and help me get this patent.”
Dave Young:
Okay.
Stephen Semple:
So they file for a patent, and they get patent 139121 for the whole idea of the rivet.
Dave Young:
So they both did it. I was waiting for this to be a life lesson in never tell your secret to a guy that’s already made $8 million worth of …
Stephen Semple:
No, they did it and Jacob ended up joining Levi running the production.
Dave Young:
Okay, good. Good. Good.
Stephen Semple:
But I also want you to notice the date. In a lot of Levi’s advertisements, they talk about how they sold these jeans, these riveted jeans to gold miners in the Gold Rush. Well, the gold rush peaked in 1849, this happened in 1873.
Dave Young:
Oh, wow. Okay.
Stephen Semple:
The whole rivet of the jeans actually was post Gold Rush. The whole thing of Levi going and servicing the Gold Rush and all of that stuff, that’s all absolutely true. It’s just the riveted jean happened following the Gold Rush.
Dave Young:
It reminds me of, we have a friend that’s, “I told the truth. I just told it in a more powerful way.” [inaudible 00:08:49]
Stephen Semple:
Yeah, exactly. As I said, he did go out to do the Gold Rush. When they were creating products, they would do them by lot and that’s how the jeans ended up becoming 501. Now, a lot of the history of the company was lost in a fire, so no one knows exactly why it was 501, but they do know that that was the number that was used to designate the copper riveted jeans. Not much has changed, button fly, pocket for a watch, rivets, gold stitch in the back that makes this our circuit stitching. They went into business together, and Jacob became the production manager for the pants. They actually started with overalls, not jeans, and then went to the jeans later. But what they also knew is when they put the patent on, patents are only good for 17 years, so that what they recognized is they needed to do something that differentiate the product moving forward. They wanted to be known as the sturdiest one around.
Dave Young:
Stay tuned. We’re going to wrap up this story and tell you how to apply this lesson to your business right after this.
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Dave Young:
Let’s pick up our story where we left off. And trust me, you haven’t missed a thing.
Stephen Semple:
So that what they recognized is they needed to do something that differentiate the product moving forward. They wanted to be known as the sturdiest one around, so they created this leather patch of two horses trying to tear the jeans in half.
Dave Young:
That’s still on the back of it.
Stephen Semple:
That’s still on the back of it. They did it in leather because it wouldn’t rip off. They did it as a visual because you don’t have to know English or how to read. It’s the two horse brand, it’s kind of how it became known. And they started to name products by numbers such as 501. They run this for decades. In 1917, they get popular as being in the silent movies because there was westerns with William Hart wearing jeans as a gunslinger. Now, cowboys are wearing it, and it’s great for hard labor.
Dave Young:
Sure.
Stephen Semple:
Now, there’s also this funny story. In 1940, they got rid of the crotch rivet because essentially what would happen is, back in the early days, jeans were being worn by miners and cowboys and laborers who would be working long hours, hanging around campfires, hot environments and they would sit down near the fire and-
Dave Young:
Yeah.
Stephen Semple:
… that old rivet in the crotch would kind of heat up and …
Dave Young:
Yeah. No bueno. No bueno, the hot rivet in the crotch.
Stephen Semple:
Yeah, yeah. So they decided that rivet could come out and they could do some extra stitching there to-
Dave Young:
Sure.
Stephen Semple:
… solve the problem. Yeah. And then the thing is, Levi’s jeans ends up becoming part of everyday culture in the United States. It started off as being this work clothing, but then you had-
Dave Young:
James Dean.
Stephen Semple:
Yeah, it being worn in the silent movies, John Wayne, James Dean, Marlon Brando, in the movie The Wild Ones. It got so connected with rebellion, there was a point where jeans were banned in schools. Then they started to create jeans for women, they called them the 701s. That’s actually when they added the zipper. They added the zipper at that point.
Dave Young:
Okay.
Stephen Semple:
Hollywood helps because then along comes 1961, Marilyn Monroe in The Misfits wears Levi’s jeans. It becomes the brand of hippies, because again, it’s that rebellion. And now in the late 1970s, a lot of competition starts because fashion companies now is getting involved, but along comes Bruce Springsteen. Bruce Springsteen was not paid for this. On the cover of the album Born In The USA, is basically a shot of his backside, and he’s wearing 501s for the album cover.
Dave Young:
Sure.
Stephen Semple:
And there’s that little red tab is what really stands out on the cover. That little red tab that Levi’s had added that just says Levi’s, that little tiny red tab that just stood out. Right?
Dave Young:
It’s worth talking about that little red tab. Do you know the story? How did that come about?
Stephen Semple:
I was not able to come across a story of how the Little Red Tab came about. No. Do you know anything-
Dave Young:
It’s so often-
Stephen Semple:
… about that?
Dave Young:
It’s so often … no, I don’t. But it’s so often that it’s something like that, that it makes a distinction, a little note of authenticity-
Stephen Semple:
Yes.
Dave Young:
… and it stands out like it did on the album cover.
Stephen Semple:
Yes.
Dave Young:
Sometimes just that weird little splash of something else-
Stephen Semple:
Yeah and-
Dave Young:
… is what you need. We teach that at Wizard Academy in the Magical Worlds class. You can call it a third gravitating body.
Stephen Semple:
Yes.
Dave Young:
It’s this weird little element that doesn’t really fit, doesn’t really belong, but it wouldn’t seem complete without it.
Stephen Semple:
Right. The thing that’s interesting about items like that, Dave, is sometimes we try to overbrand things. Oh, the brand logos got to be here, and the brand logo has got to be here, and the brand logos got to be here. Often, as you said, it’s that subtle piece that works and even how you position it. I remember when Notebook computers were first coming out, and what would happen is people would put the logo on the computer, so when it was closed the logo was pointing towards the person sitting. That was how computers got logoed. So when you opened it up, it was upside down. Now, that didn’t last very long because Apple taught everybody, no, it should be the other way around so when your computer’s open, everybody knows what type of computer you’re using.
Dave Young:
Yeah.
Stephen Semple:
As you said, little things along that lines that makes the difference.
Dave Young:
I used to have an HP and they just had their HP logo, and when it’s upside down, it’s a DY.
Stephen Semple:
Oh, right. Of course. Yes.
Dave Young:
Which is Dave Young, right? It’s like, oh, well, yeah, that’s obviously my computer.
Stephen Semple:
It’s all my computer.
Dave Young:
That’s my logo right there. Yeah, you bet.
Stephen Semple:
Yeah. So it’s interesting. But yeah, in ’84, when Born In The USA came out was Springsteen’s best-selling album of his career. But the other thing with this whole idea of rebellion and whatnot, in the Soviet Union they were making knockoffs of Levi’s and they were terrible. Levi’s became a symbol of freedom in the West. They were highly-
Dave Young:
That’s right. I remember how sought after … you could make bank going to secondhand stores and buying up 501s to sell to some third party company that was going to go market them in Eastern Europe.
Stephen Semple:
Yeah. They carried all of this cultural cache from all these things. And then in the ’80s and ’90s they needed to go through a bit of a revival, and they created some very stylish ads. In fact, Matthew Burns and I covered one of them on the 501 button-ups in Sticky Sales Stories. So if people go over to YouTube, Sticky Sales Stories and look for the ad on Levi’s … because it was a fabulous, fabulous, fabulous ad that actually Levi’s has tried to revive with Beyonce and actually done a terrible job on it. We actually did a piece on that over at Sticky Sales Story.
But the whole thing is they have carefully, through their entire life, they’ve stayed true to a couple of ideas, and that it is, if you take care of them, they’re made to last. They are special. They are high end. They are not necessarily fashionable, they’re classic and durable. They have not deviated from any of that through the entire history of Levi’s, which I find quite remarkable, especially where there’s this pressure that came out in 2000 for fashion. The 501s, just the 501s is like 800 million in sales of the business. But here’s the other thing that’s even crazier. I came across a report that on their site, the vast, vast, vast, vast majority of the search to their site is 501.
Dave Young:
Oh, wow. Okay.
Stephen Semple:
Even though it’s not 90% of their sales, but it’s like 90% of their search.
Dave Young:
Interesting.
Stephen Semple:
It’s just this crazy thing, which means it’s the entry point for people’s experience with Levi’s. Start with 501.
Dave Young:
I think it’s brilliant. I think the big lesson is how they maintain by sticking to the original. In the 70’s, as you said, all these, they weren’t imitators they were just trying to show you that here’s something different you can do with this Indigo dyed denim fabric.
Stephen Semple:
Yeah.
Dave Young:
Levi’s like, “Well, yeah, but this is what we do with it and this is what we’ve always done with it, and this is what we’re going to continue to do with it.” It maintained their position as the original.
Stephen Semple:
Yes.
Dave Young:
So you want to be careful that you don’t imitate your imitators and follow them into areas that aren’t your business.
Stephen Semple:
Well, and it’s so easy to have that happen, because look, not everybody are jeans fans. It’s easy to look across and go, “Oh, we should do these.” Levi’s does do those other things as well. There’s no question. They make shirts and they make other things, but what they’ve done is these jeans, other than basically the removal of that one rivet, have hardly changed since 1870.
Dave Young:
Yeah. They were the, basically, the working man’s jeans. So many of the jeans that came up in the 70’s and 80’s were jeans that maybe you could get away with wearing to work-
Stephen Semple:
Right. Yes.
Dave Young:
… in a white-collar environment. So the Sergio Leone, you could wear those and tuck a business shirt in and put a blazer on, and it would seem okay, as opposed to these baggy, not baggy necessarily, but just non tailored look of the Levi’s.
Stephen Semple:
Yes. Yes.
Dave Young:
They’re definitely a non tailored look.
Stephen Semple:
Yes.
Dave Young:
I mean, there were jeans with pleats in them for God’s sake.
Stephen Semple:
The other interesting thing from a branding perspective, I found, is they put that patch on the back. So first of all, the leather patch, which one could argue is not great branding because as soon as you put a belt on, which is how most people wear jeans, the patch is covered up. But then just the little tiny little red tab, right, they weren’t the in-your-face branding.
Dave Young:
Yeah. Cool story.
Stephen Semple:
Yeah and hugely successful business that continues to be part of our culture today.
Dave Young:
Yeah. Thanks for sharing the Levi’s story.
Stephen Semple:
All right, thanks David.
Dave Young:
Thanks for listening to the podcast, please share us. Subscribe on your favorite podcast app and leave us a big fat juicy five-star rating and review at Apple Podcasts. If you’d like to schedule your own 90 Empire building session, you can do it at Empirebuildingprogram.com.
