Ep 471: Blue Jeans To Billions With John S. Pennington Jr.

www.johnspenningtonjr.com In Episode 471 of the podcast, hosted by Daniel Martinez, guest John S. Pennington Jr. recounts his entrepreneurial journey from "Blue Jeans To Billions," detailing his innovative approach to business right out of college in 1989. Leveraging the fall of the Soviet Union, Pennington and his partners capitalized on the high demand for Levi 501 jeans in Eastern Europe, buying them cheaply in the United States and selling them at a significant markup. The story highlights Pennington's strategic problem-solving skills, as he navigated challenges with thrift stores and competitors by directly engaging with the public and building a robust supply chain that outpaced competitors. The business thrived for about nine years until changes in fashion, currency valuations, and geopolitical sentiments in the late '90s led to its decline, showcasing the importance of adaptability and market awareness in entrepreneurship. Introduction to the Guest and Topic (0:00-0:21): Daniel Martinez introduces John S. Pennington Jr., highlighting his return to the show to discuss a deal breakdown and share a cool, interesting story about his first business venture involving Levi 501 jeans and the opportunities following the fall of the Soviet Union. The Initial Business Model and Challenge (0:47-2:06): Pennington shares the inception of his business in 1989, focusing on collecting and exporting Levi 501 jeans to Eastern Europe, and how he and his partners initially sourced their inventory from thrift stores across the Western United States. He discusses the challenge when thrift stores raised prices after learning the business model. Strategic Shift and Expansion (2:41-4:18): Faced with competition and thrift stores selling to others, Pennington describes how they pivoted to buying directly from the public, advertising in newspapers, and setting up buying events. This strategic shift not only resolved their inventory issues but significantly expanded their operation across the West, eventually establishing a network of 650 locations that supplied jeans to their business. Conclusion of the Business (6:42-7:35): Pennington reflects on the factors leading to the end of the business around 1999, including changing fashion trends towards baggy jeans, the rising value of the dollar, and shifting sentiments in Europe post-Gulf War. Despite the decline, he shares his fond memories of the venture and the lessons learned in problem-solving and adaptability in business. Text 📱 210-972-1842 Text 📔 "Course" to learn how to make 6 figures on one land deal. Text ✴️ "Hive" to get added to weekly meetings. Text 🍎 "Apple" to schedule a 1-on-1 call with Anthony & Daniel. Text 🛬 "Land" to join The Million Dollar Land Mastermind 🔍 Need Inbound Real Estate Leads. https://www.hiveleads.io/ 🔍 Follow Us on YouTube https://www.youtube.com/channel/UCbulcrC4WbOy5Fzu0eWzNVQ/?sub_confirmation=1 🔍 Follow Us on Instagram https://www.instagram.com/hivemindcrm/ 🔍 Check Out https://www.hivemindcrm.io/ 🔍 Check Out Our Land Mastermind https://www.milliondollarlandmastermind.com/landmastermind 🔍 Pick Up All Event Recordings here. https://thehiveislive.com/recording 🔍 Follow Us on TikTok https://www.tiktok.com/@hivemindcrm?lang=en 📍Join the FB Group https://www.facebook.com/groups/137799891494707 📍 Check us at Join Us! https://thehiveislive.com/ Help support the show. https://anchor.fm/hivmindcrm/support

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Transcript

hey welcome to the hyp podcast I'm your

host Daniel Martinez today we have

returning guest John S Pennington Jr if

you not haven't checked episode please

go check it out we talk about

manipulation Bitcoin gold dollar talk a

lot about cool stuff but today is deal

breakdown we cover cool interesting

stories today we have a deal breakdown

John what is your deal breakdown a cool

interesting story that you have for us

[Music]

today interesting story on a deal

breakdown I I I I don't know if I

exactly I'll give you a deal but I'll

probably give you a problem solving

right because a lot of entrepreneurs

that's what they do they problem solve

problem solve problem solve absolutely

so this is my first business R out of

The Initial Business Model and Challenge.): Pennington shares the inception of his business in 1989, focusing on collecting and exporting Levi 501 jeans to Eastern Europe, and how he and his partners initially sourced their inventory from thrift stores across the Western United States. He discusses the challenge when thrift stores raised prices after learning the business model.

college and it was

1989 and the Soviet Union had just

fallen and the cold war was over and

that allowed people from United States

to sell their goods to Eastern block

countries and me and my partners started

collecting huge Levi 501 jeans all over

the

West all over the western United States

and shipping them to Eastern Europe and

selling them and you could make like

aund you could buy them over here for

like 13 bucks brand new or six bucks

used and you could sell them for $100

over in Eastern Black Country so this

was the problem so we started buying

from thrift stores and then the we

taught the thrift stores what we were

doing and we up their price and we gave

them more money than they can actually

if you put it on the shelf for six bucks

if you send it to one central location

we'll pay you $10 and they were like

what so these thrift stores all over the

West would ship them to one central

location and we'd pay them $10 for you

know a no hole no stain used Lei 501

genan that would normally sell for $6 on

the retail shelf but in addition we

would buy the ones with holes in the

knees which they couldn't sell back in

that day no one wore holy jeans it's

it's it's it's great now everyone wears

them but back in the day you didn't and

so we would pay them like three or four

dollar for the holy ones and so their

profits went way up and so after a

while they started letting compet we

taught them all this they started

letting competitors come in from Los

Angeles and buy the jeans away from us

and so this we were really mad at the

moment we were really mad we felt

betrayed that we had taught you the

thrift store something how it worked and

then you use that knowledge to to to

hurt us so we decided listen forget the

thrift stores in the pit of despair we

decided to problem solve and so we

Strategic Shift and Expansion.): Faced with competition and thrift stores selling to others, Pennington describes how they pivoted to buying directly from the public, advertising in newspapers, and setting up buying events. This strategic shift not only resolved their inventory issues but significantly expanded their operation across the West, eventually establishing a network of 650 locations that supplied jeans to their business.

started advertising in newspapers to the

public we buy used Levi 501 jeans if you

need $10 and your Levis don't fit bring

them to us and we'll pay you $10 cash

holy ones

$4 and we started buying more jeans than

we could we ran out of money that one we

we we had one weekend we ran out of

money we sit there and just paay jeans

people were lineing up door jeans jeans

run out of money and so then we decided

to go all over the West so we would go

to let's say um to Pika Kansas and we

would advertise three days only come to

the mall we're buying used Levi 501

jeans and jackets up to $10 holy ones

blah blah blah come see us and the week

we adverti on the radio that two weeks

we ad the radio we would go in early and

we would talk to all the thrift stores

all the consignment shops and all of the

pawn shops and we said to the pawn shop

owners and the consignment shop owners

listen when we leave here on Monday

morning we want you to continue buying

jeans from the public and we're going to

teach you how to if you pay $1,000 out

in a week you should sell it to us for

$2,000 you should double your money

almost every week and if you're not

we'll we'll retrain you so when we left

there and we said come to the mall watch

us we they'd come to the mall we'd have

hundreds of people lined up we'd buy

$20,000 worth of Levis in one weekend

wow and so then after we left we would

go to each for the next couple days we'd

go to each consignment store each pawn

shop put up signs in their Windows give

them charts train their employees and we

go back to Salt Lake City where all the

jeans are going to come we're going to

sew them we're going to redy them and

then we're going to ship them to Europe

and sell them we would leave that little

town with 17 locations for people to

sell their used Levis and so over a few

five about a 5year period we built up

650 locations that were buying from the

public boxing them up shipping to Salt

Lake City I had washers and dryers and

steam rooms for tar stains I had we had

I believe seven seamstresses that

fulltime eight hours a day repaired used

Levi 501 jeans with their with their

sewing machines and so we did I did that

for nine years nine years we did that

and then eventually the thrift stores

called us back they said come we want

you to come start buying jeans we come

we came back and we found out they were

letting our competitors only buy the

jeans with no holes no stains we had a

we had tens of thousands of jeans piled

up over here that were holes and we were

buying holes so we used that leverage to

say listen well we're the only ones

buying holes and if you got to make the

other guys take the holes and so we use

leverage so we kept we started buying

back from thrift stores but we had a

supply So when you buy from thrift

stores and you buy a thousand jeans you

usually

get 200 with no holes no stains 800 with

stains and holes when you buy from the

public it's opposite you get 800 no

holes no stains and 200 with holes and

stains so our quality in Europe was we

were beating every competitor that we

there was no competitor that could beat

us because of our supply chain our

supply chain was directly to the public

our supply chain wasn't directly only

the thrift stores everyone else's supply

chain was through thrift stores and so

when you competed against Europe and we

had competitors coming in then we always

had the best quality so what I'm trying

to say on your deal question it's more

of problem solving we solved a problem

that no one else could solve and we paid

for our trips by going TOA Kansas

advertising buying $20,000 with jeans

leaving there with a profit and also

developing 16 to 17 locations that would

continually ship us jeans for years and

years and years and years and then that

thing lasted about nine years maybe 10

almost 10 years and what happened in the

Conclusion of the Business.): Pennington reflects on the factors leading to the end of the business around 1999, including changing fashion trends towards baggy jeans, the rising value of the dollar, and shifting sentiments in Europe post-Gulf War. Despite the decline, he shares his fond memories of the venture and the lessons learned in problem-solving and adaptability in business.

9798 Ronald Reagan had kept the dollar

low for a long time and that helps

exports well the dollar started going

like this up up up that was '97 97 the

kids started wearing the baggy look and

you know 501 ones are tight fitting

jeans the baggy look and the third thing

that happened was the Gulf War after

after the wall fell in

98 of the Soviet Union everyone loved

America they wanted made USA products by

90 by 98 we had had the first Gulf War

and people in Europe were like ah the

Americans are bombing for oil right and

so those three things all happened kind

in the same year and we knew it was

going to die one day we didn't we didn't

know it was going to go nine years but

fashion always changed and it just

changed really it changed in one year it

was it wasn't a bell curve it was a

cliff and we got out of the business in

1999 that's how it happened anyway

that's how if you ask me a deal and how

to problem solve we problem solved that

and it was it was a great business it

was so fun the the used Gene business it

was I was traveling to Europe back and

forth you know I opened we opened a

second office in Barcelona it was and we

had you know an office in Germany we we

were my partners were selling retail in

Prague it was just fun to build and have

employees on two continents and and all

the states tra it was it was a it was a

blast and I'm sad it kind of died but it

died and then I went into the fun world

and it it got better but uh anyway it

was a really fun business for about nine

years right out of college that was my

first business I started I I love this

business and I'm so glad you told me the

story because I love the the problem

solving you took to to to overcome those

issues and you having offices in Prague

and Europe and Germany and Berlin like

that is insane flipping jeans that is

really insane I know I know I know it's

crazy it's crazy yeah I I love that you

told me that story I don't know when the

last time you told that story was but

I'm glad you shared it here because I

think that's an amazing story and I I I

don't know man that that is so cool

because it's Arbitrage Arbitrage is

great yeah and you find where you can

buy low and sell High simp form of

business and I think exactly exactly K

hey man I gotta go but thank you that's

been really good catching up with you

again and good luck to you in your

Enterprise appreciate you no thank you

so much for everybody here thanks for

tuning in thank you John go check out

his book John Penington

jr.com yeah yeah yeah get this book

dollars golden Bitcoin just came out on

Amazon and I signed yours for you it

just it's on audible.com and it's my

voice for six and a half hours I went a

studio and recorded it so you can speed

it up do whatever you want but

audible.com

amazon.com dollars gold and Bitcoin and

I have a chapter in here that's called

called Blue Jeans to billions and it

talks about it talks about the uh the

the experience I just shared with you

how I built the jeans how me and my

partners built the jeans business so

good luck if you want to buy the book

please do thank you thank you so much

thank you so much for coming on I

appreciate you so much thanks for your

time it's been amazing for everybody

here like subscribe you know what to do

we'll see you thank

[Music]

you

English (auto-generated)

Daniel Esteban Martinez

Host/ Ceo/ Speaker

I have been an entrepreneur since 2018. I come from a regular home just like most people. My dad worked on the roads in the Chicago area for over 30 years. He always taught me to work with my brain, instead of my body. Your body can only take so much abuse. I learned so much from my father. He always pushed me to work smarter and not harder.

I have owned and operated a trucking business for 2 years. I started learning real estate in 2019. Fell into the Data & Skiptracing business in 2020. My partner Anthony & I started Hivemind in 2021.

I have done a ton of different jobs coming up from painting, to door-to-door sales, telemarketing, truck driving, and loading trailers. What I learned most is that I want to stay in the digital business space. The leverage you can have delivering digital products to the marketplace can yield limitless possibilites.

I started The List Guys in 2020. It is a data and skiptracing service. We provide seller and buyers list nationwide. My clients have been getting great results and I am proud to help people killing it.

I started the Hive in 2021 with my partner Anthony Gaona. It is a real estate and business mastermind. It also comes with a all in one CRM, that can host unlimited websites and users.

Starting the Hivemind has been an amazing journey so far. Seeing one of our users make his 6 figure month in June 2021 leveraging our software, I know there will be plenty more to come!

John S. Pennington Jr.

co-founder - $28 B family of funds

About John S. Pennington Jr.
In 2008 – John S. Pennington Jr. co-founded a family of private equity funds that by the time of his
retirement – grew to well over $28 billion of Assets Under Management (AUM). During his tenure and
before obtaining partner emeritus status, he served on the board of directors, held signing authority on
over 1,200 bank accounts as the deputy chief financial officer (DCFO), was president of over 100
corporations, was the Anti-Money Laundering Officer (AMLO) for all companywide feeder funds located
in the Cayman Islands and oversaw all U.S. Securities and Exchange Commission regulatory
requirements as chief compliance officer (CCO). In 2021 – he retired with the company listed on the
NYSE.
In 2004 and 2007 – John co-founded Bridge Loan Capital Fund I and II.
In 1988 – John earned a degree from the University of Utah in economics. He and his wife, Jane, have
three sons, two daughters-in-law with five grandchildren and have been married for over thirty-eight
years.