Unzipping Success: Sara Blakely's Entrepreneurial Story

0:00Like a name is so important. and it's such a part of the equation of the formula. And it came to me while I was sitting in traffic in Atlanta. I had been racking my brain, and literally I just saw the word Spanx come across the dashboard in my mind. How much more successful would you be if you had lunch once a week with insanely successful entrepreneurs who shared their biggest secrets on how they think and achieve success? Grab your seat at the table, because this is Business Lunch with Roland Frazier and Ryan Dice.

0:33Welcome to another episode of Business Lunch. And today's a snackable episode with Roland where he's going to get into some more tactical strategies that you can start using to live a rich and happy life. If this is the first snackable episode you're hearing, I'd encourage you to go back and listen to some of the other episodes that Roland has put out. And if you want to get notified every time we release a new episode, go to the new businesslunchpodcast.com website and we'll send you detailed notes along with every episode. That's businesslunchpodcast.com, www.businesslunchpodcast.com, and you can sign up for the free email newsletter where you'll be able to get all the highlights and resources from the episodes.

1:07I'm really excited to introduce our next guest because we decided a couple of years ago that we really wanted to have her come and share with the traffic and conversion crowd. And we were trying to do that again this year. But it turns out that we carelessly scheduled Traffic and Conversion Summit on her birthday. So she was unable to make that. But she's an incredibly inspiring person with a wonderful story, and she's graciously decided to come here and share that with you guys today. Sarah, you want to come on up? Hi, everybody. Hello, hello. So for anybody who doesn't know, Sarah founded a company called Spanx out of need, an absolute need, and has built it into a crazy successful company.

2:05And just so everybody kind of understands a little bit about the story, would you share kind of how it started and kind of how it came to be? Yeah, sure. I mean, I see a lot of men in the room, which is always really fun and interesting. and being interviewed by a man is also really fun. We were going to distribute Spanx to all of the attendees and then it was like that just could be awkward. Well, I got interviewed by Coach K from the Duke basketball team and he spent 40 minutes interviewing me trying not to say the word panty. Like he was so uncomfortable and finally I just turned to him and I'm like, panty, it's okay, you can say it.

2:43He was bright red, it was really funny. So anyway, yeah, Spanx. I was a frustrated consumer. I had never taken a business class. I had never worked in fashion or retail. And I couldn't figure out what to wear under white pants. So I don't know if this has happened to a lot of the men in the room, but it's actually a really big dilemma or was for women at the time. And I cut the feet out of control top pantyhose to just solve my own undergarment issue because I didn't want to see a panty line. And just to tell you guys a little bit about what our options were as women, there are some women here in the room, so I know that you'll be able to relate to this, but our options were really bad.

3:22If you didn't want to see anything and you wanted to look flawless in your clothes, you had regular underwear that left a panty line. And then you had these heavy-duty, thick girdles that were way thicker than we needed and really uncomfortable. And then they invented the thong, which just put underwear exactly where we'd been trying to get it out of. So those were our options. They were not great. So I set out to make this item. I went on the Internet. I looked up hosiery mills. I found out that... When was this exactly? This was in 1997, 98. 1998, I cut the feet out of my pantyhose so I could go to a party and wear great white pants and strappy heels with no marks or lines that you could see.

4:11and then two years of working at night and on the weekends. I was selling fax machines door-to-door for a living at the time that I cut the feet out of my pantyhose. So two years before the company launched. So this was in 1998. So you went to MySpace and looked up, where can I find? No, not much internet back then. No, no, there wasn't. And I just moved from Clearwater, Florida to Atlanta, Georgia and found out that most of the hosiery manufacturers were in North Carolina. So I started calling them on the phone, will you please help me make my idea? They all basically hung up on me, had no interest.

4:49So I took a week off of work and drove around North Carolina in person and tried to convince the hosiery manufacturers to make this idea. And they all thought it was crazy and a really bad idea. In fact, yeah, so it was interesting because as a girl who grew up on Clearwater Beach who never ever thought about fashion or business, I was standing with all men. They were mostly all men that were making our undergarments. So then it was pretty interesting. I thought to myself, okay, maybe this is why they're so uncomfortable because the people who are - You mean the men talking about panties wearing?

5:27Well, the people who were making all of our undergarments weren't spending all day in them. And if they were, they weren't admitting it. That you knew it, yes. So I was like, and just trying to get it made was really challenging. And then I finally found a manufacturer in Charlotte, North Carolina, that said yes. He had originally turned me away. All of the manufacturers turned me away. And he called me two weeks later and said, I've had a change of heart. And when I asked him why, he said, I have three daughters. So he had run the idea by his daughters over the dinner table, and they said, Dad, this is actually an interesting idea.

6:03We have the same problem. We don't know what to wear under a lot of our clothes either. You should give this girl a chance. And what happened was I actually just took an idea in an industry that was very established that had been doing things the same way for a really long time. So hosiery had been being made to be seen on the leg, and it was in a double-digit decline, this industry. so it the industry and what they had been doing for many many years was no longer really serving women as much as it once was so for me showing up and saying I just want your material and I want to make an undergarment out of your material that nobody can see was so confusing to them I mean it's almost like on autopilot like no we don't understand I was like your material will change the game if you can help me figure out how to make it so that it's underneath the clothes and completely invisible.

6:56I don't even want to see it on the leg. But I knew as a consumer that hosiery material was so lightweight. It was like second skin. It wasn't going to make me feel like I was wearing workout clothes under my beautiful slacks or dress. And that if we could figure it out, we'd fill a lane for women. And that's exactly what happened. So it was a wild experience. He ended up helping me make it. I spent two years working at night and on the weekends to get this product made. I wrote my own patent because I had$5 ,000 set aside in savings from selling fax machines that I'd allocated to sort of take this risk.

7:33And you did that straight from a how to do your patent book, right? Yeah, that's, yeah, I did. I mean, I went to a few, I went to a few patent lawyers, and they all wanted between three and five, three and I think it was three and 10 grand to help write my patent. So I just decided to write it myself. And I went to Barnes and Noble in Atlanta on Peachtree and bought a book called How to Patent and Trademark. And once I wrote it, I realized I didn't know how to write the claims portion, the very legal portion. So I went back to one of the lawyers that had quoted me a really high fee and basically begged and said, I have written the whole thing.

8:09I've done the abstract, the drawings, the this, the that. Well, you just write the claims. And he did for a discounted price over the weekend. Nice. Yeah. But you know he admitted to me later, he thought that my idea was so bad that he thought that I had been sent by candid camera. That's awesome. When I first met with him, that's really, I mean, later he admitted that to me. He said I was either being punked by my friends, I was sure of it, or a candid camera. And I was like, that makes sense. Because he kept looking around the room during my pitch. But he said I wasn't the typical person that walked into his office.

8:43You know, I had my lucky red backpack and pantyhose that I had cut the feet out of and I started holding it up and saying I'm going to change the way women wear clothes and so he thought he was being punked. That's funny. And then the name, you know, I named the product. I had two years of really bad names on every scrap piece of paper you can imagine. Can you tell us what some of the... Okay, so this is how bad my runner-up name to Spanx was. I was going to name it Open Toe Delilahs. Open Toe Delilahs. so bad, right? And I don't think I'd be sitting here being interviewed by you had I named it Open Toed Delilah's.

9:17Like a name is so important. It's such a part of the equation of the formula. And it came to me while I was sitting in traffic in Atlanta. I had been racking my brain and literally I just saw the word Spanx come across the dashboard in my mind. I pulled off the side of the road. I wrote it down. I went home that night and I went on USPTO.gov, which was a website I spent a lot of time on, and trademarked it with my credit card for$150. That's great. And at the last second that I was hitting send to trademark it, I backspaced the K and the S, and I put an X and changed it because I'd done research that made up words do better for products than real words do.

10:00Easier to protect. I mean, better to protect. And they're easier to protect. Yeah. That's super cool. So it wasn't an accident. You actually just said, I'm going to do an X there. Yeah. I stared at it. It was S-P-A-N-K-S. And then I just thought, I'm going to change it in that moment to X. Which is, you know, when I first started the company, my mom, my family, everyone's trying to help me promote it. So my mom told her entire luncheon in Florida that my daughter started this new company and it's Spanx. And she sent them all to the wrong website, which is really dangerous. I was like, Mom, it's an X.

10:34It's an X. So if any of you decide. She's like, you're right. It is three X's. So if any of you decide to go to Spanx.com, it's an X or you're going to get a real treat. That's awesome. So what about like the packaging and all that kind of stuff to get it? Yeah. So the packaging, I knew that I wanted my packaging to be completely different because I didn't have any money to advertise. And I thought, okay, if I get a moment to have any shelf space, it has to advertise itself. so in in the category that I started in hosiery and shape where everything was white beige or cream and it was the same half naked woman on every package it was completely confusing very boring and you had to read the small print in the upper right hand corner so I decided to make my packaging bright red which was completely disruptive in that space no one had ever done that before and instead of photography I put three animated cartoon looking women that were very different looking on the packaging.

11:32And I wanted it to feel like you were buying a present for yourself if you were to go in and buy it. That was my whole goal. I was like, I want it to feel like art or something that you would love to buy yourself, not a dreaded commodity. And it turned out that that was a really great thing because when I did get the shelf space, I mean, my very first account was Neiman Marcus. And when I started Spanx, you know, there was no iPhone. There was no, I mean, like nothing existed at the time. It was 16, almost 17 years ago. Wholesale was king. And being able to get into these wholesalers, especially as someone that was a brand that I just created out of my apartment in Atlanta, was an unbelievable moment for me.

12:14And I got in Neiman Marcus because I called them, which was really interesting. I like to say that what you don't know can be your greatest asset if you will let it. So the key is to have the courage to do it. Because most of the time, if you don't know what you're technically doing, a lot of people will say, well, I didn't go to school for that, or I wasn't trained in that, or we have self-doubt and think, well, why would I possibly be the one that could do this when there's professionals that are all day long, every day, thinking about this? But the courage part is the key. And so once I landed Neiman Marcus, all these people kept coming up to me in the industry and saying, how did you get into Neiman's?

12:53And I would just look at them and I'd say, I called them. And they would go, I go, why? What do you do? And they're like, well, there's trade shows and we set up our booth and we go to trade shows. And I've been setting up the booth for the last seven years, hoping that the Neiman's buyer will come. And I didn't even know there were trade shows. So I had no idea how any of this was supposed to be done. And in many ways it served me and my journey really well. So now was Neiman's the first place that you called or had you really? Yeah. The very first? Yeah. Lucky. Yeah. So Neiman Marcus was my very first account and I called the buyer and said, I'm Sarah.

13:30I've invented a product that will change the way women wear clothes. If you give me 10 minutes of your time, I will fly there and show you. And she said, if you're willing to fly here, I'll give you 10 minutes. So I jumped on a plane. I went there. I had my lucky red backpack with me, which was my presentation bag. This is my backpack from college. Okay. My friends begged me, they were like, Sarah, you cannot go to the Neiman Marcus headquarters with your East pack red nasty backpack. Like that can't happen. And I, they said, you know, go to the store, buy a Prada bag, you know, return it the next day if you need to, like, you cannot do this.

14:07And, um, but it was, it was something that was so important to me as far as I felt like it brought me luck. So I presented to the Neiman's buyer and I could tell I was losing her in the first three minutes. I mean, this woman is impeccably dressed. Her shoes matched her pen that matched her belt. I'm like sitting there with my backpack and I had my prototype in a Ziploc bag and the packaging I created on my friend's, you know, computer cut out and sort of mocked up. And so I, five minutes into it, I could read her nonverbals and I was like, okay, I'm losing her. So I just said, you know what? Will you please come to the bathroom with me?

14:41And she was like, excuse me? I was like, I know it's a weird request, but will you follow me to the bathroom? And I'm going to show you what my product can do on me in person. And she reluctantly agreed. And we walked down the hallway together and went into the bathroom. And I went in the stall. I put the Spanx on with my white pants and without. And she just sat back and she goes, I get it. It's brilliant. And I'm going to put it in seven stores and see how it does. and it was like

15:10and you had you had how many pairs made ready to go at that point well not many right okay so then what happened was I I was I was beside myself and I had spent the last year making the prototype with the manufacturer in North Carolina and he had put me together with this guy Ted in the back of the manufacturing plant who was so southern, you could almost technically say he spoke another language. I mean, I couldn't, you know, every other word, I was like, what was that? So I'd been working with Ted in the back of the factory. And in fact, there's a story about Ted with my patent. When I was writing my patent, my lawyer said, Sarah, I need to know what technically goes into this product before I can finish the claims.

15:51I said, okay, great. We'll call Ted in North Carolina. So I get Ted on the phone. I'm like, Ted, Ted, I got my lawyer on the phone. Can you explain to him what we've been doing and what is exactly in this prototype? And he's like, yeah, well, there's 30 % nylon and 70 % lacquer. And I was like, okay. So, you know, the night before I submitted the patent to the U.S. Patent and Trademark Office, I couldn't sleep at night because I kept thinking, how is there lacquer in this product? And so I called him in the morning, I go, Ted, can you spell lacquer? He's like, yeah, L-Y-C-R-A. I was like, oh, my God, Lycra.

16:28Okay, okay. I call my lawyer. I'm like, do it all change. It's Lycra. So he laughed. He goes, you know how fast you would have gotten a patent trying to make pantyhose out of paint thinner? So they would have been like, wow, this is interesting. Think of how it would have thrown the competition. Exactly. They would have been like, what's happening? So then fast forward. I land Neiman Marcus. I'm beside myself. I called the manufacturer. It was like the second call I made. I think the first call I made was to my dad and my mom. My dad is here somewhere. Where are you, dad? Right back there. Yep.

16:57So my dad's here. I called him. I was like, dad, dad, dad, I just landed Neiman Marcus. He's like, that's fantastic. Then I called Sam, who was at the manufacturing plant, and he was the owner. And it was dead quiet. I go, Sam, it's Sarah. I just landed Neiman Marcus. I'm going to need more of these right away. Nothing. Sam, are you there? Sarah, don't take this the wrong way, but I thought you were going to give these away as Christmas gifts for the next four years. Like, what do you mean you just landed Neiman Marcus? Like, he had no idea that it was a viable idea. I said, I just landed him.

17:28He goes, that's great. I'm going to patch you through to Ted. How many did you need to fill her? The first one I needed 3 ,500. Okay. Yeah. So, and then, yeah. So, he patches me through to Ted in the back. I go, Ted, it's Sarah. I just landed Neiman Marcus. I need 3 ,500 pair of these immediately. And he's like, well that's great but what you gonna do about the crotches I was like what what do you mean what am I gonna do about the crotches like don't they come with crotches we've been making it with crotches and he's like well yeah but we only got one crotch machine and it's being used by somebody else I was like I was like wait so let me get this straight I just landed Neiman Marcus and I have no crotches.

18:15I was like, what am I going to do? I don't know where to go for a crotch. I had no idea. So I ended up looking at the, this is how far this will date me, but I looked it up in the yellow pages under crotch and it wasn't there. And then, and then I found out there's a fancy word for crotch, which is gusset. And that helped my search a little bit. And, um, you know, I had crotches being FedExed in from all over the world to my apartment. My roommate would come home from work and be like, you got another crotch in the mail? But it's a crazy story. 20 minutes north of where I lived in Atlanta, there was a company there that made crotches and fulfilled the order and shipped them to the mill in time for me to fulfill Neiman Marcus.

18:59And the guy who saved the day was actually a guy named Gene Bobo. So Gene Bobo provided me my crotches off and running. and when they shipped to Neiman Marcus, I called every friend that I remotely had in those seven cities, like people that, you know, it's kind of like, hey, it's Sarah. We sat next to each other in fourth grade. Yes, that's me. Right. Yeah. So I invented this product and I will pay you to go buy it. And I was mailing checks out to all my friends to go buy the product. And I would give them the whole thing. I'd say, you got to walk in, you got to say, I've been looking for this my whole life or like, I love this and Spanx and, you know, drum up all this excitement.

19:36And so, um, just as the buyer called and was like, Sarah, you are not going to believe this, but this is blowing out. I was like, you don't say, wow, amazing. So, um, and just as I was running out of money and friends, Oprah called and chose Spanx as her favorite product of the year. That's fantastic. When was that? What year was that? That was in 2000. Okay. Right when I started. And I know you've been on the show. Was that related to that or was that after? Yeah. Yeah. Well, first, well, yeah, I got the call from Oprah that she chose it as her favorite product. And the reason why is I sent a gift basket to her.

20:10I had no money to advertise. So I was just sending it to local TV channels. I sent it to Oprah. She put it on and has basically worn Spanx almost every day since, which has been amazing. But she decided to make it her favorite product of the year. And they called and said, Oprah never has guests on this show. it's always about the product, but she loves that you're taking on a billion dollar industry out of your apartment. And so we're going to send a crew down and they want to film you. And she's going to hold, she's going to show two minutes of B-roll when you're on. And that was quite an experience too, because they all showed up in Atlanta and they were so professional.

20:46They were like clipboards and lighting and all the five to 10 producers. And they're standing at my apartment. And they're like, Sarah, we discussed it on the plane, and we decided we want to film you in your headquarters. You know, I was like, you're here. That's awesome. So I brought them in. They kind of laughed. And then they said, we also decided on the plane that we want to film you having a staff meeting. Well, I said, hold on a minute. And I called Connie that I had met at Mailboxes, et cetera. And I said, Connie, this is Sarah. Can you be at my apartment in five minutes and look like you work for me?

21:22and she's like, I'm on my way. And I called several of my friends. They came over too and we sat in a circle on the floor of my apartment and that was my staff meeting. So the whole journey was like that for Spanx. I mean, that's basically how it started and then it was off and running and I stood in every department store. I got into Neiman Sachs, Nordstrom, Bloomingdale's, Bergdorf, Barney's and I went for two years and stood eight to nine hours a day in the department store selling the product for them so that it was a success. Now, did you have other people doing that too, or was that just, were you a one-woman show for that?

21:58At that time, I was the entire sales department. Yeah. So that would be me, yep. So now the Oprah exposure obviously resulted in a whole lot of orders, I'm guessing, right? Yeah, it was. How did you deal then scaling up from, what was the guy in the back? Sam. Sam, from Sam. Oh, from Ted. Ted, yeah. Ted in the back, yeah. Lacker guy. Lacker guy, yeah. So, well, with Spanx, you know, I never had a business plan. I was very interested in creating a product that I knew I could sell. I actually wrote this in my journal. When I was selling fax machines door-to-door, my life was pretty depressing. I was being kicked out of buildings almost once a week.

22:37I had people rip up my business card in my face at least once a week. And I was trying to sell$20 ,000 worth of fax machines in four zip codes in Clearwater, Florida a month. So all I did all day long was cold call. And I pulled over the side of the road one day and I just started crying. And I just remember thinking, I'm in the wrong movie. Like, this is not my life. Call the director. Call the producer. Cut. This is not right. And I went home and I started asking myself, what am I good at? What could I possibly be good at? And the only thing really in the good column was sales. And so I started saying, well, what do I like about sales?

23:12I like providing things for people that they need or that they didn't know they wanted but can change their life. And so I thought, wouldn't it be cool if I could sell something that I actually created or really loved? So I wrote in my journal, I want to invent a product that I can sell to millions of people that will make them feel good. That's fantastic. And two years later, I cut the feet out of my pantyhose. And so the minute that that happened, I thought this might be the idea I've asked for. So I wasn't going to squander any idea. but scaling and after the product happened I got all of my ideas from customers because I was always standing where they were so you know I'd be standing in the department store and they'd say Sarah you know I don't like the shaper shorts because of this and they have a leg band so Spanx holds several patents the footless pantyhose was the first one that got my foot in the door but we have many many patents and we've created undergarments and products that have never been made before for women like our second product was our best selling we were the first to ever create a shaper short that had no leg band on it.

24:12And before Spanx, every shaper short had a leg band to keep it down. And you could see that through a woman's slacks or dress. So it didn't really solve the problem. It got rid of the panty line or the marks in the back, but put it a big bulge here on your thigh. So, you know, I kept saying to the manufacturer, let's create a shaper short with no leg band. They'd say it can't be done. I'd say we put a man on the moon. And they'd say, And it was always like that. So it's been really fun to provide product. I've been very product-focused. I'm so interested in how to differentiate myself and what is it about my product that I'm offering that's unique.

24:50And that's where I like to play. So one of the things that I thought was really cool was that I read that your dad early on gave you a Wayne Dyer product called How to Be a No Limit Person, I think it was. and you listened to it so many times that you would basically memorize the whole thing. Yep. How did that affect, like when was that in relation to when you came into the Spanx thing and were hanging out in your car and feeling that way and all that? And how did it help you move along in this journey? Well, I was 16 when I had a friend who was run over by a car and killed in front of me. And then a few months later, my parents split up and got separated.

25:32So it was a really hard time for me. And one of the things that happened when my dad was moving out is he handed me this cassette tape series from Wayne Dyer, an inspirational, motivational speaker. And it was called How to Be a No Limit Person. And it just happened to be the perfect storm for me. I think most 16-year-olds may have thrown that in the closet. But I was so hungry and so sad at that time in my life for anything that may have turned my life around or helped me feel better and get through it. so I listened to it so much that I did memorize all 10 tapes front and back and um it became a joke in high school no one ever wanted to be stuck in my car they were like she's gonna make you listen to this shit and um and you know what happened is so funny like 15 I think it might have been 15 15 years or so later I end up on the cover of Forbes and I got so many texts from my friends from high school and they just wrote, damn, should have listened to that shit.