Spanx vs Skims | Kim-Oh-No | 2

0:07It's June 2019 and Kim Kardashian paces the floor of the offices of her shapewear company. Sitting on the couch watching her are the co-founders of the company, husband and wife team Jens and Emma Greedy. Kardashian turns to the couple and asks them how they could have all been so stupid. For two years, Kardashian has been building her shapewear company. She served as the creative designer and fit model for every garment the company has ever developed, giving detailed feedback on the cut and feel of each piece, weighing in on which fabric they should use. And a few days ago, she officially announced to the world via her Instagram account the start of this new company.

0:48She thought it would be a triumphant moment. This isn't her first foray into launching a brand. Over the years, she's launched beauty lines, perfumes, a jewelry collection, a mobile game, and more. They've turned a profit, helping her build a net worth of more than$50 million. But this shapewear company is her baby. She fully believes in it in a way that she hasn't with past endeavors. But now she's wondering if that confidence is misplaced. She turns back to the Greedys. She asks how they waded into the backlash they're facing right now. In retrospect, their error is blatantly obvious. Jens agrees.

1:29They did make a misstep. And it's not how they would have wanted to kick off their new company. But what's done is done. They need to figure out how they're going to respond. Emma agrees. She asks Kardashian what she wants to do. They can push forward with their original plan, or they can hear what people are saying online and adjust course. It's up to Kardashian. Kardashian flops into a chair. She's no stranger to controversy. She's one of the most polarizing celebrities in the world. If she gave in every time people on the Internet were mad at her, she'd never do anything. But this time, Kardashian isn't sure.

2:07She wants this company to be more than successful. She wants to dominate the shapewear market and dethrone Spanx. She's invested her personal funds into this project, but it's more than just that. This is her pride on the line. She has to respond correctly. But maybe it's too late. And her new business, her baby, is doomed before the first piece is even for sale. Kim Kardashian is no stranger to controversy, but she always seemed to find a way to weather the storm. So what was the decision that nearly took down her budding empire?

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4:57From Wondery, I'm David Brown and this is Business Wars.

5:27In 1998, Office Equipment Sales Representative Sarah Blakely cut the feet off a pair of pantyhose to have something to wear under a form-fitting pair of white pants. In those footless pantyhose, Blakely felt confident and svelte, and she realized that with a little tweaking, this could be a hit product. Blakely spent the next two years developing a better version of footless pantyhose that would help women feel confident in their clothes. She called her company Spanx. It skyrocketed to success. The company was profitable from day one, and by 2011 it was bringing in an estimated$250 million a year in revenue.

6:07And Spanx became synonymous with the concept of shapewear. Blakely was a master marketer, and part of Spanx's success was thanks to Hollywood stars openly embracing the product, mentioning they were wearing Spanx on the red carpet, and in interviews. In fact, one such star was Kim Kardashian. Known for her hourglass figure, Kardashian often wore spanks and other shapewear that accentuated her curves. And over the years, she found herself customizing the pieces, cutting them, dyeing them, sewing two different pieces together. In 2017, she realized it was time to put her expertise to use and start her own shapewear company.

6:48She decided she was going to go directly after Spanx by offering a kind of anti-Spanx ethos in her marketing. But while Kardashian had her pulse on the zeitgeist and fame on her side, there was no guarantee her new products would unseat the category leader or succeed in the long term. And while Spanx grew quickly and dominated shapewear for decades, that strong customer association with a singular product could also be its downfall. This is Episode 2, Kim Oh No.

7:29It's 2017 in Los Angeles, California, two years before Kardashian's shapewear company launched and faced immediate backlash. Kim Kardashian welcomes Yen's greedy into her home. Kardashian's mother, Kris Jenner, and her sister, Khloe, have both worked with Yen's wife, Emma. Not long ago, Kardashian told Emma about her idea to start a shapewear company. Emma suggested that Kardashian talk to Yens. She thought he might be interested in getting involved. Yens started his career working for various men's magazines, both in his native Sweden and then in London, before starting a successful marketing agency.

8:09In 2012, Yens made another career transition, launching a luxury denim company called Frame. Kardashian likes Emma, and she knows Yens has a reputation as a savvy marketer. But Kardashian needs to be sure that he's the right partner, as confident as she is in her knowledge of the shapewear industry. She also feels vulnerable launching this company. It's going to be based on her body, after all. She needs to completely trust whoever she works with. Sitting across from him in her living room, Kardashian tells Yens how she's been a big user of Spanx. He nods. As far as he can tell, she played a significant role in the success of Spanx.

8:51She essentially gave it unpaid advertising. Kardashian agrees. But she's okay with that. She thinks Spanx makes an incredibly useful product. It's allowed her to wear clothes she never would feel comfortable wearing without them. But their options are too limited. There should be more colors, more shapes, more sizes. She tells him how she had to dye her slip in a bathtub a couple of hours before appearing on the Khan red carpet the year before, and all the other tricks she's used over the years to make the shapewear fit her needs. Compared to the average American woman Kardashian's shapewear super user, most American women don't attend dozens of red carpet events or wear revealing couture, but that means she knows every limitation in the current shapewear market, and she can offer solutions that others can't.

9:43Jens nods enthusiastically. He loves working with people who know exactly what they want. Jens confesses that he's less interested in shapewear specifically and more in the larger underwear category. He thinks the whole market has gotten stale. It's ripe for disruption. Kardashian leans forward excited because that's exactly what she wants to do. Spanx has always been pitched as helping women flatten, hide, and contract their bodies. But Kardashian thinks shapewear shouldn't be so much about hiding what you don't like and more about accentuating what you do. Yen says he loves that. It fits much better with the growing body positivity movement.

10:25The way Spanx is marketed can come across as fat shaming, and there's a push to move away from that. He knows this could be big. In fact, he believes in it so much, He's willing to put up his own money. Kardashian grins. Now this is the kind of passion and belief she's looking for in a partner. Kim Kardashian and Yens Greedy decide to go into business together, and Emma comes on board as well. As a black woman, Emma agrees with Kardashian that shapewear should be more inclusive. Kardashian takes on the role of creative director while Yens is CEO and Emma is chief product officer. They spend the next two years developing their line.

11:06With her fame and millions of Instagram followers, Kardashian knows her fans will probably buy one piece purely out of loyalty. But to keep them coming back, they need to put out a good product. Kardashian highlights problems she has with existing shapewear, whether it be the shape or the fabric or the seams. Her team works on a design, and then Kardashian tries on the prototypes, providing feedback. Kardashian wants to make a clean break from the idea of shapewear as constrictive underwear. She wants it to be comfortable enough that women don't just wear it under formal wear or business attire, but also under sweats.

11:46She wants it to be something you wear every day. That versatility should also boost sales. And to lean into the company's body positivity mission, she decides to call what she's developing solution wear rather than shapewear. Kardashian's pieces are designed to help women flaunt what they do like. You see what's happening here? History is repeating itself. Sure, Spanx was a sensation and it unleashed a world of copycats, but there's something different about what Kardashian seized upon, and she's even calling it out by name when she uses this phrase, solutionware. Solution? To what exactly? It's not just that Kardashian has identified a need, just as Sarah Blakely, the founder of Spanx, did, Kardashian's determined to find a solution, just as Blakely did.

12:36But she has one key advantage the founder of Spanx didn't have, the fame and the fortune. Okay, that's two advantages, but you get the idea. And those advantages, high visibility and money, can help a rival outmaneuver another's first mover advantage if you don't try to get too clever while you're taking advantage. Yet some just can't seem to avoid creating a big stir.

13:05Now, Kardashian needs a name for her company, and in 2018, she, Jens, and Emma Greedy, and other members of the team, gather in their Los Angeles office to brainstorm. Kardashian sits at the head of the table, and an assistant stands at a whiteboard with a marker uncapped. Kardashian tells the group that she likes company names that either play off Kim, like her app Kimoji, or her initials, like her makeup company Skin, spelled S-K-K-N. Jens claps his hands together. All right, let's just start throwing this out there. Uh, skimpy. Kim body? Skimpier. Oh, kimchi. Skimpiest? Kim briefly. You know what?

13:48Just put every variation of skimpy up there. Kim's where? Skimming. A kimbo. Kimono. Kardashian's head snaps up. She says she likes kimono. Sounds elegant. She asks what the others think, and there's a murmuring of a scent around the room. Kardashian says they should go with kimono as the name. Great. I'll handle the trademark. As the meeting breaks up, everyone's excited about the name. They're one step closer to launching. Kardashian's team trademarks the name Kimono Intimates and keeps working on their products. Because of Kardashian's strong social media presence, Kimono is going to launch with only direct sales through the company's website.

14:38They won't be in stores. This will keep overhead low, but it means that almost all customers will be coming via Kardashian's social media. This launch has to be perfect. And in June 2019, Kardashian posts to her Instagram a carousel of images of herself and a diverse group of models wearing different pieces of shapewear in a variety of colors. She writes a lengthy caption announcing kimono and says it's something she's been thinking about for the past 15 years. It's her take on shapewear that will provide solutions for all women. She promises her garments will come in sizes ranging from extra extra small to four extra large and in nine different tones.

15:22They're set to go on sale in July. When Kardashian makes the post, she's excited. After years of work, she's finally launching Kimono. And she's quite proud of what she's come up with. These pieces are high quality. They're comfortable. They'll make women look and feel good. But the backlash starts almost immediately. A Japanese kimono designer posts on Twitter that she objects to Kardashian trademarking the word kimono, a garment which goes back over 1 ,200 years in Japan. Another kimono designer posts a petition on change.org saying that kimono means clothing in Japanese and she doesn't think the word should be associated with an underwear brand.

16:07The petition garners 11 ,000 signatures in one day, and the hashtag Kim Ono trends on Twitter. The mayor of Kyoto even writes an open letter to Kardashian urging her to change the name. At first, Kardashian stands by the name. She clarifies that the way she filed her trademarks doesn't preclude anyone else from using the word, and she insists that she has a deep respect for the significance of the kimono in Japanese culture. But her statement does little to stop the backlash.

16:45Kardashian and the Greedys hold an emergency meeting two days later. Kardashian paces, bemoaning that they made such a large, unforced error. They should have seen this coming. The question now is what to do about it. They can push on and hope that Kardashian fans will ignore the backlash and purchase the products anyway. and that the controversy will eventually blow over, or they can issue an apology and change the name. That will mean delaying the launch from its planned July date. They have millions of pieces ready to ship with the kimono branding. If they change the name, they'll either have to throw all those pieces away or figure out how to rebrand them.

17:27It's not as simple as just changing the tags, and that's because there are no tags. Kardashian wanted the pieces to be completely seamless, so the brand name is printed directly onto each piece. Kardashian doesn't know what to do. She knows from her trademark application that other non-Japanese companies have trademarks on the word kimono. There's even a condom company that's trademarked the name. But they didn't face this kind of criticism. It doesn't feel fair that she's held to a higher standard. Emma and Yens agree, but they remind her that that higher standard is because she's famous, which will ultimately benefit the company.

18:06After three days, Kardashian makes the call. They'll change the name. She's pitching her product as inclusive and diverse, and now a lot of people are telling her that the name doesn't reflect those values. She just hopes she hasn't blown her chances at overtaking Spanx before she's even gotten to try.

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21:20On September 10th, 2019, Kim Kardashian and Yansan Emigridi officially released their first shapewear drop two months later than originally planned. They've renamed the company Skims. As they hit the button for the website to go live, there's a sense of cautious optimism. Kardashian has done a slew of traditional press promoting the line as well as pushing the products on her personal social media channels. I've always been obsessed with shapewear. It was like when everyone was getting bras and underwear, I was always getting shapewear. Celebrity friends and other influencers have also joined in to help promote the brand.

21:59From a marketing perspective, all the stars have aligned. But it's still unclear how the kimono name misstep could affect the launch. Kardashian has a lot of fans, but she also has a lot of haters who would be happy to see her fail. and there are some people inside the company who have doubts about the products. Kardashian is most proud of her one-legged control shorts. She frequently tells the story about all the time she had to cut one of the legs off her Spanx to accommodate a dress with a high slit. But some executives aren't sure how many average consumers will have a need for such a garment.

22:36But almost as soon as the site goes live, the orders flood in. They sell out in under 10 minutes, and the website breaks under the traffic. The first drop is a success. But for SKIMS to have enduring success, it's going to need these drops to be successful week after week. SKIMS is aiming to distinguish itself from SPANX by offering more variety. They tout more size options, a larger array of colors, as well as more shapes. SPANX downplays the differences between the two. A representative from Spanx tells reporters that many of their products come in extended sizes, and some of their collections come in multiple colors.

23:17The representative says that Spanx continues to innovate and remains the category leader. All their communication seems to indicate that Spanx has no intention of changing course. They've faced copycats in competition before and have remained at the head of the pack. But Skims keeps growing. They push out weekly drops, arranging collections around a fabric or a shape or a fit. They keep their orders low. This helps create a feeling of scarcity and excitement to entice customers into buying pieces while they can. It also prevents them from being stuck with too much inventory if one of the pieces is a dud.

23:58It's a winning strategy. Repeatedly, pieces sell out in just minutes. Now let's pause for a moment and think about something else lots of folks wear, or at least would like to. Ever wonder why Rolex is so successful? They make great watches, to be sure, have a storied history, make more money than almost any of their rivals. Their secret? The strategic use of scarcity and exclusivity. Just try buying that special Rolex you've always dreamed of at an authorized dealer. Get back to me on how that goes. Skims used a drop model to create buzz and scarcity, driving consumer urgency and sustained interest.

24:38Could they make more? Oh, sure. Sell more? Well, that depends. Controlled scarcity can enhance demand and create a perception of exclusivity, even if you're as popular as, say, a Kardashian or a Rolex. Almost immediately, Skims branches out from just shapewear. Just one month after the launch, they drop the Cotton Collection, which features underwear, bras, t-shirts, and so forth that don't include any compression. And two months later, in December 2019, they debut the Cozy Collection. It's a full line of robes, loose pants, shorts, and tank tops made from soft knitwear. It ends up being fortuitous timing.

25:19In March 2020, the COVID-19 virus spreads around the world, and stay-at-home orders abound. The demand for constrictive shapewear is down, and the desire for comfy, cozy clothes is way up. And people are also spending more time shopping online, creating a boom for direct-to-consumer companies like Skims. As the world shuts down, Spanx realizes that it needs to change strategies. Over the years, Spanx has also branded out to other types of apparel beyond compression garments, including regular underwear, leggings, workout attire, even jeans. But they're still primarily known as a shapewear company.

26:01If they want to survive this new COVID era where sweatpants are king, then they need to figure out a new strategy. And fast. You might have thought the founder of Spanx would have picked up on an important lesson from those early days. Did you pick up on it? Remember when the founder, Sarah Blakely, was shopping around her idea for that first compression underwear? All those hosiery manufacturers she visited said no. until one changed his decision after his daughters endorsed the idea. Well, ditto with Kardashian, who rebranded Kimono to Skims in response to public criticism. She didn't have to, but there's a reason she's successful here and in other ventures.