Sara Blakely: Shaping the world with Spanx

0:04It's the year 2000. Two women sit in a boardroom, one impeccably dressed, the other clutching a scruffy red backpack. The woman with the backpack is trying to sell her new product to the buyer of a luxury department store chain. The product is a new undergarment, but the pitch isn't going well. Suddenly, the woman pitching stops mid-sentence and asks, Would you mind coming with me to the bathroom? Excuse me, the buyer replies shocked, but she agrees, and in the bathroom the pitcher disappears into a cubicle, slips on a pair of footless tights and steps out. The buyer stares, stunned. I get it, she whispers.

0:38It's brilliant. That moment flipped her world upside down and gave celebrities a whole new look. Welcome to Good Bad Billionaire from the BBC World Service. Each episode we pick a billionaire and we find out how they made their money. We take them from zero to their first million and then from a million on to a billion. My name is Zing Singh and I'm a journalist, author and podcaster. And I'm Simon Jack, the BBC's business editor. And this week we're talking about Sarah Blakely, the founder of Spanx, a company that redefined shapewear. Now, as flattering and maybe as comfortable as they are, this is not a comfortable category for me, I have to say.

1:14I don't know much about it. But what I understand is that it's underwear that smooths out in lumps and bumps. Yeah, exactly. I am not a Spanx wearer myself because I don't tend to wear clothes that necessitates Spanx. Well, that makes the two of us. But from what I hear from friends who have used it, it is an enormously helpful product. And it's also the product that has propelled Blakely's wealth. She has an estimated net worth of$1.2 billion. And yet she launched Spanx from her apartment with just$5 ,000 of her own savings and went nearly two decades without any outside investment. Remarkable.

1:48And since then, her company has become a household name and it's become synonymous with shapewear itself. Yes, Blakely turned herself into Spanx's best marketing tool, from modelling her underwear herself in the early days to judging on Shark Tank, think of Dragon's Den for those listening in the UK, to keep her brand in the spotlight. She shattered glass ceilings to become the youngest self-made female billionaire of her era and now she champions other female entrepreneurs. And just to note, Blakely is American, so she says pantyhose. In the UK, we say tights or, very old-fashioned, hosiery. So we'll be using both.

2:23Oh, yeah, both tights and pantyhose. So let's squeeze into the story and let's stretch it from zero to her first million, Spanx style.

2:36Now then, Sarah Trevelyan Blakely was born on the 27th of February 1971 in Clearwater, Beach City on the west coast of Florida. Her father was a successful personal injury lawyer and her mother was a watercolour artist, so firmly middle class. From the age of eight, she was set on becoming a lawyer like her father. She'd tag along to court to watch him in action. At school, she joined the debate team, often winning local competitions. and alongside the debate team, Blakely was also a cheerleader and popular in school. I think she's still friends with some of those middle school kids. Bet they're very friendly with her.

3:08I bet they are. I would be. Well, she grew up in, as you say, a comfortable upper middle class home. She hustled, though, from a young age like many of our billionaires. So that included making homemade artwork and selling it door to door. She charged her own friends money to rollerblade in her driveway and she set up a haunted house for Halloween and charged local kids the admission fee. For Blakely, she says it wasn't about getting rich, it was about cracking the code on how money works. Yeah, that's a pretty common trait we've seen in many of our billionaires. Lots of them have done paper rounds or sold baseball cards or chewing gum in the playground.

3:44Now, this is interesting. Blakely recalls that during family dinners, her father would ask her and her brother to share their biggest failure of the week. If they had none, he was disappointed. If they did, he celebrated it. And Blakely told the Times newspaper, it taught me at a young age not to fear failure. Very tech bro in a way, you know, trying and failing before you succeed. It's considered kind of rite of passage, almost a badge of honour. It reminds me a lot of what they try and teach in schools in the UK, some of them. This idea of a growth mindset. Have you ever heard of this? Nope.

4:17Where it's not about whether you succeed or you win. It's about the mistakes so then you can grow from them. Yeah. Well, at 16, Blakely's world shifted. Her parents divorced and she saw firsthand how vulnerable her mother was as the lower earning homemaker. And she vowed that she would never be in a similar position. Soon after that, another tragedy, she witnessed her friend die in a bike accident. And a few years later, other friends, including her flatmate and her prom date, also died in accidents. She told The Observer in 2008, grief has knocked me to my knees. There have been some very dark moments.

4:50But now I think that maybe inadvertently I'm living lives with people who didn't get a chance to. Interesting. Yeah. After her parents' divorce, her father gave her a stack of Wayne Dyer tapes. Now, Dyer is a motivational speaker. He preaches that you can create the life you want by changing your beliefs. She memorised all 10 of his How to Be a No Limit Person series during long drives. Apparently, friends, I've sympathised with them, dreaded getting lifts home from parties in her car, as Dyer's voice was always on repeat. Yeah, you can imagine a friend saying, oh, please, let's just play chart radio.

5:24Yeah, exactly. I think I would drive me mad if someone says, oh, yeah, go for your dreams. Just go for it. Change your beliefs. Well, in 1989, she started a legal communications degree at Florida State University. She had plans to go to law school afterwards. She graduated with that degree in 1993, but her hopes of going to law school were soon dashed because she failed the LSAT twice. That is the admissions exam you need to sit in order to get into law school. And she ended up in a very weird place. She ended up in Disney World, of all places, dressed as a chipmunk because she was too short to play Goofy, the role that she'd auditioned for.

5:58OK, so that is her setback, definitely. It's a setback and a half, I think. A setback and a half. You can congratulate that one over the dinner table. But if you've dreamt about being a lawyer since you were eight years old and you failed the entry exam twice, that would knock a lot of people pretty hard, I think. Anyway, she left the Magic Kingdom after a few months for a job selling fax machines to small businesses. Although she was pretty good at sales, she once sold a fax machine to a man running a street food stall who didn't even have an electricity supply, for example. It wasn't her dream job.

6:29She said she would sometimes walk into a small office and when everyone turned to look at her, she'd pretend to have the wrong address and leave. But she stuck it out. At age 25, the company promoted her and relocated her to Atlanta. In Atlanta, Sarah tried her hand at stand-up comedy. She leaned into this dumb blonde stereotype. she told the Times she'd put in bra inserts, go on stage in a tight tank top and say, how many of you guys out there would like to get your hands on these? Then she'd say, OK then, and then pull out the inserts and throw them into the audience. By 1998, Sarah's 27 with a solid but uninspiring job.

7:05She was making about$50 ,000. And every day she wore tights she didn't love except for the smoothing control section at the top. Now, she treated herself to an expensive pair of nearly$100 cream trousers, but they sat unworn in her closet because underwear showed lines, thongs left marks and girdles were bulky. I've got to confess, I'm not sure what a girdle is. So I actually looked this up. It's quite an old-fashioned piece of underwear. If you know Dita Von Teese, the burlesque performer, she always kind of performs in something that looks a little bit like the top half of a slip. It looks a little bit like a really tight mini skirt and it's got the dangly bits down the front that she attaches stockings to.

7:47Ah, OK. Got it. That's a girdle. OK. And then came her eureka moment, right? Before party, she cut the feet off her tights and she told Inc. magazine, I had no panty lines. I looked thinner and smoother, but they rolled up my legs all night. And I remember thinking, this should exist for women. Now, I want to take you back to the 90s. OK. Because in the 90s, minimalist fashion was kind of all the rage. So, you know, you think about silk dresses, Donna Karan, Calvin Klein, Gwyneth Paltrow wearing nothing but a little slip on the red carpet. So you kind of do need to have underwear that doesn't show up and show a bulky line underneath it.

8:24OK, this is a VPL, right? Yes, VPL as in visible panty line. So if you were to come up with a way of solving that VPL problem, that is a real money spinner. OK, so Sarah had$5 ,000 in savings. She used it to fund a prototype of her footless shapewear tights. She first wanted to check her idea was new, so she spent nights at Georgia Tech's library checking hosiery patterns to double-check no one had thought of a similar design and patented it. Now, she couldn't sew yet, but she tried to cobble together a prototype herself by cutting up panels from tights and clipping them together with paperclips.

9:01it didn't work. So she did need a hosiery manufacturer to create a working prototype. And she soon discovered that most hosiery factories were based in North Carolina. So she took a week off work to drive down from Atlanta and knock on the factory doors in the hopes that they would meet her. And they all said, thanks, but no thanks. Also, every owner of those factories that she met was a man. So that prompted her to joke later, maybe that's why our pantyhose have been so uncomfortable for so long, because the people making them aren't wearing them. and if they are, they're not admitting it. That's funny.

9:31So she actually does, she's got stand-up bones in her. Yeah, she's got a good sense of humour for sure. Anyway, weeks later, one manufacturer did finally call back. He had asked his daughters about Blakely's idea, good idea, making Sarah's point there. And they had told him it was a brilliant idea and her timing would have helped too. Hosiery sales had actually plunged over 30 % in the late 90s as bare legs became the trend. So let's talk about what made Blakely's design so different. So shapewear wasn't a new concept. You know, we had corsets. They date back to the 1500s in the 20th century. Like I was telling you, women wore girdles.

10:06But by the 70s, girdles became way less popular. And by the 90s, tights had these things called control panels, which kind of smooth your waist down. Blakely realized that because it was men designing the product and testing it on mannequins, they actually didn't think very much about comfort. So she changed where the waist was so it didn't dig into your skin or roll over. and she added a cotton gusset so that Spanx could be worn without underwear and then she tested the sizing on herself and her friends. So really she's just doing this old DIY. Yeah, and honing the prototype took a year. So Sarah spent the time thinking about marketing.

10:41Now she'd never taken a business class, but she'd read that brand names like Coca-Cola or Kodak worked because they had a hard kuh sound and her comedian friends agreed that the kuh sound often made audiences laugh. Wonder which word that involves. So like many of our billionaires, she went through a long list of bad ideas. She admits the worst one was open-toed Delilahs. That is bad. That is terrible. Before settling on Spanx, spelt with a K, but she quickly swapped the KS at the end for an X when she registered the trademark. She'd also read that made-up names were more successful. She also wanted to be playful and a bit suggestive.

11:19She got a friend from home, who is now a graphic designer, to design the red packaging to stand out among the white and beige packets of typical tights and pantyhose. So it had illustrations of three fashionable women rather than the usual shots of disembodied legs that you get on these packages. And the tagline, don't worry, we've got your butt covered. By 2000, she had a prototype and packaging design, so started cold calling department stores. After weeks of calling, Sarah managed to get a 15 minute meeting with the head hosiery bar at Neiman Marcus if she flew to Dallas. And that is where we found her at the opening of this episode.

11:54Now, after Blakely's before and after demonstration of Spanx, Neiman Marcus signed off to stock it in seven stores. So foot in the door. Yeah. Now, Blakely, like many billionaires, she didn't always have everything figured out. When Neiman Marcus placed their first order, the factory making Spanx told Blakely they lacked enough machines to make the crotches in time. Kind of an essential part of these types. So desperate, she scoured the yellow pages. Crotch was not listed, but Gusset was, and she found a supplier in Norcrest, Georgia. He produced these Gussets and overnighted them to the factory and basically saved the deal.

12:27The seven department stores began selling the first line of Spanx in August 2000 for$20. And to make Neiman Marcus think they were flying off the shelves, Blakely asked friends and acquaintances to go in and buy Spanx. I've had entrepreneur friends who do that, say, I've been recruited in my time to go in and buy stuff or ask for products they don't have so that they can say, you keep asking, then basically they'll stock the product that they don't have. Yeah. She also took some of the Spanx out of the hosiery department and placed them by the cash register in plastic holders she'd bought from a supermarket.

12:57She told Forbes, all the staff assumed someone else had approved it until they caught me on CCTV. Brilliant. They soon sold out in the seven stores, so Neiman Marcus put in an order for 32 of their stores. But her true big break came from one of our other billionaires, Oprah Winfrey. In 1999, when Blakely was struggling to get her prototype made, she'd seen an Oprah episode where Oprah admitted that she cut off the feet of her pantyhose too. Now, as soon as her product was made, Blakely had sent Oprah's hairdresser a packet of Spanx with a handwritten note in the hope that he would send it to Oprah and it would reach the pile of products sent to the celebrity every year.

13:33Possibly the most important moment in this entire story. That hairdresser deserves a lot of credit. Anyway, it worked. Oprah's production team called Sarah to tell her Spanx would be on Oprah's favourite things of the year episode in November 2000. They told her to make sure her website, which didn't even exist at this point, was ready for an order bonanza such as The Power of Oprah. So a couple of weeks before the episode aired, Sarah quit her day job in sales and took out a loan to build up Spanx inventory so she had enough stock. Before the Oprah episode, they'd sold 10 ,000 pairs of Spanx.

14:08But the name drop from Oprah sold 20 ,000 pairs in just a single day. And later, Oprah would call Spanx the product that changed my life and that from the moment she wore her first pair, they'd been, in her words, a staple in her wardrobe. Boom. Within a year, Spanx wasn't just a name in Marcus. It was in Nordstrom, Saks Fifth Avenue, Bloomingdale's and Bergdorf Goodman. These are all high-end kind of department stores in America. Yeah, it is like the roll call of everywhere you want to be stuck if you're a product. And according to Forbes, Spanx had sales of 4 million in its first year and the next year, 10 million.

14:41Thank you, Oprah. As Sarah had 100 % ownership of Spanx, by 2001, we can safely say she was a millionaire. Around this time, she bought a house for her mother and herself a flat screen TV splashing out. She told the Financial Times that months after starting Spanx, friends asked her what her exit strategy was. This is great. She told them, my only strategy was to exit a room looking good in cream pants. Had that line well prepared, tucked up in her back pocket, a very smooth back pocket. Yeah, I mean, she sounds like a character from a Candice Boucher novel, right? She does. Sex and the City. Oh, totally.

15:20Let's take her from a million to a billion. From 2001 to 2003, Blakely was busy out on the road doing in-store demos and local TV spots. Again, she would use herself as the model in her words, lifting up my pant leg and shaking my backside for any woman who would listen. Her next big break came when she landed a five minute QVC slot. Now, this was gold dust at the time because QVC, a TV channel, was reaching 84 million US households. And out of 13 ,000 vendor inquiries, people who were begging QVC to let them sell their stuff on the channel, only 3 % of those people got a deal. Worth explaining a little bit about QVC is it's kind of basically, it's just an elongated advert where lots of people come and try to hawk their wares on TV and it's kind of run throughout the daytime.

16:06It's advertising you can't buy, basically. Anyway, one reason Blakely managed to get her slot was thanks to sending a sample of Spanx that fit the booker for QVC perfectly. I wonder whether she'd actually researched that because that kind of detail is so important. Exactly. Once she got on air, she sold 8 ,000 pairs of Spanx in five minutes and her success gained her a monthly slot on QVC for the next few years. So she's making good money and she's ploughing her earnings back into the business and quickly did a deal with another hosiery mill to deal with demand and new product designs. In 2002, Spanx shifted from footless tights to its breakout product, the power panties, which are control shorts rather than tights.

16:46Anne Blakely finally moved into a small, simple office because, believe it or not, she'd been running this company out of her apartment for the early years. And she also hired a fulfillment firm to handle the orders. She'd actually been paying her friends in pizza to help her pack the orders previously. Her fifth employee was a woman called Anne Goldman, who was a formula Coca-Cola exec and was hired to be CEO. This is a very different approach than you would see in tech world when basically they want to get big quickly. They want to scale up. And because they've got private funding, which basically wants them to grow really quickly, they'll throw money at a fancy office before they've even made any revenue.

17:25They'll have breakfast, lunch, dinner provided private chef. Yeah. You know, perks galore. Exactly. Anyway, now she's had a small team running Spanx. In 2004, she took some time off to compete on Rebel Billionaire. Now, this is a reality TV competition for entrepreneurs which aired in 19 countries. Contestants were competing in physical and business challenges with Richard Branson at the helm. Her father and her lawyers advised her against competing, worried she wouldn't have control over her image. Once you get into one of those reality kind of shows, you kind of lose a lot of control. But Blakely said she wanted to meet and learn from Richard Branson.

18:00We did one on him. Check out that episode. Blakely has a phobia of heights and flying. She said she was cast as a girl who, in her words, would have a meltdown from heights on the first episode and lose her mind. But she kept winning tasks and they included climbing a ladder up the side of a moving hot air balloon at 8000 feet. The equivalent of a 17 story building just to have tea with Branson on top. I mean, I don't care. I feel sick. I don't care if you're afraid of heights or not. I feel like most people would not be able to do that. But it ended up coming second on the show. She walked away with$750 ,000.

18:35She used that money to set up a charity foundation called the Sarah Blakely Foundation. Now, the point is that, you know, even though her father and her lawyers said, don't go into this because you wouldn't have control over your image, it means you're on telly a lot. So why am I on telly? Because I'm the designer of Spanx. Have you heard of them? Now you have. It's fantastic advertising as well. Yeah, every single week, new episode airs, you know, and you get your brand out to an even bigger audience. Yeah, I mean, Branson, of course, would understand this tactic very well himself. He was the master of the big grandiose gesture and stunt, whether it's in hot air balloons or trying to get across the Atlantic in record time.

19:12Rich people seem to love hot air balloons. I wonder if they're into rockets because they needed an upgrade from hot air balloons. I think that's right. The rocket is the new hot air balloon. I think there are some very clear theories why men who want to display their dominance over the rest of humanity choose a large cylindrical pole. A large aerodynamic object. Yeah. By 2005, Spanx had expanded beyond the US to the UK. It was being sold in major department stores like Harvey Nichols, Harrods and Selfridges. Again, these are high-end kind of department stores. In 2006, Spanx also started to sell a lower price line in retail chain Target.

19:48That would have been a big decision to make because you're diluting the brand, some would say, and some advisors wander against that, saying if you go through mass market channels, you know you get rid of the brand's rather premium exclusive image in these high-end department stores but by offering a limited line of products under different branding very key that it was called assets by sarah blakeley spanks managed to serve both high-end and everyday shoppers i mean it reminds me of what martha stewart did because you know she kind of put her products in kmart under a slightly different branding still associated with the martha stewart image and people warned her that the exact same thing would happen.

20:26You know, you're diffusing your kind of luxury premium kind of branding, but it still worked for them. Yeah, because Martha used to wander around her sort of herb patch and she with a little basket and looking like she owned some sort of massive property and it was very high end focus. But she managed to parlay that into sort of being a domestic goddess for everyone, didn't she? Exactly. Well, in 2006, Spanx recorded over$150 million in sales. Now, this was despite Blakely not spending any money on advertising using just word of mouth and herself as the brand ambassador. Obviously, of course, the biggest help was celebrity endorsement.

21:00Aside from Oprah, one of the first people to sign up for Spanx was Gwyneth Paltrow. She said she wore two pairs of Spanx after the birth of her daughter in 2004. I don't think that's advisable, Gwyneth. Also, the ultimate trendsetter here, Madonna. Madonna's stylist asked for an entire outfit to be made out of Spanx material, to be FedExed to Madonna. And soon, Spanx became a stock answer to the what are you wearing question from interviewers on the red carpet. So by now, Spanx did have some competition, but they had achieved what every brand wants to do. People were using the word Spanx to refer to any kind of shapewear.

21:35You've become a category definer. Exactly. You think of Hoover, Kleenex, you know, these are all companies that have become synonymous with the product that they're trying to sell. A few years later, Spanx introduced men's shapewear after Blakely realised Hollywood agents were requesting extra large sizes to help male clients achieve a slimmer look on the red carpet. In the late 2000s, Sarah Blakely met Jessie Eitzler, a former rapper turned entrepreneur at a poker tournament for his private jet clients. You know, these are the circles that some millionaires do operate in. He describes her as 50 % Lucille Ball, 50 % Einstein, and they married in 2008 in Boca Grande, Florida with Olivia Newton-John as the surprise wedding singer.

22:17Now, unlike many entrepreneurs, Blakely didn't stay chained to her business. She carved out time to think, often in her car, to walk, to scuba dive. And after starting a family in 2009, which is now four kids strong, she actually prioritised nine hours of sleep at night and school events over the endless hustle of running a business. I actually think this makes her one of the rarest billionaires on our show. A very rare creature indeed. I mean, you know, because she's not a billionaire yet by any means and yet she's still taking some time out. Yeah, I mean, I'm just envious of her getting nine hours of sleep at night.

22:50But there is still a dash of entrepreneurial quirk. Despite her phobia of heights, she bought a 37th floor New York apartment. Then she invited a Navy SEAL to live with her and her husband to devise escape plans. She stocked her kitchen with jetpacks and an inflatable motorboat. She's obviously expecting some kind of tsunami to flood Manhattan. As she told The New Yorker, we can jump out of the window if we have to. By 2010, Spanx had increased their product range to 200 products. That included clothes that incorporated shaping qualities like trousers, tops, jumpers. And with the rise of photo sharing on Facebook, Twitter and a newly launched platform called Instagram, Spanx started to use social media to amplify that brand and tap into what was becoming an increasingly image conscious population.