How They Started Page 2

  Two things she saw on the tour would shape her company’s approach to the business. First, she saw that to save money, most manufacturers utilized one average-sized elastic on all their products’ sizes.

  Second, she discovered that the manufacturers all used hard-plastic forms of women’s bodies to test their garments. Now she knew why so many women’s undergarments didn’t fit well: small and large sizes didn’t have the right-sized waistbands, and real women never tried on the products before they hit stores.

  Sara saw how to stand out in the market: her product would be customized to fit different sizes and be tested on real women.

  “They’d put the underwear on the form,” Sara recalls, “and then these men would stand back with their clipboards and say, ‘Yep, that’s a medium.’”

  Immediately, Sara saw how to stand out in the market: her product would be customized to fit different sizes and be tested on real women.

  Several weeks after Sara’s road tour, she got a call from one manufacturer she’d visited in Charlotte, North Carolina. He informed her that he had decided to help her make her “crazy” product.

  “What made you change your mind?” Sara inquired.

  He responded with: “I have two daughters.”

  A name with “K” appeal

  From the start, Sara knew she needed a fabulous, attention-getting name for her product. But it took more than a year to come up with one.

  She wanted to incorporate a “K” sound. She knew two of the most recognizable brands were Kodak and Coca-Cola, and both had a strong “K” sound. Also, from stand-up comedy, she knew it was a trade secret that the “K” sound can make people laugh. Suddenly, driving through Atlanta traffic, the name hit her: she would call her sassy new undergarment Spanks.

  “The word came to me, like it was written across the windshield of my car, and I pulled over to the side of the road and wrote it down,” Sara says.

  At the last minute, she changed the spelling to SPANX, as she knew it was difficult to trademark real words. The “X” gave her the “K” sound she wanted while forming a unique, new word and it signaled what the product did: help women make their butts look better.

  Up to this point, Sara had not told anyone but lawyers and manufacturers about her invention. She didn’t want to risk hearing any negative feedback about it.

  “A great idea is most vulnerable at the moment you have it,” she says. “Something just told me intuitively to keep it inside. I had a year under my belt before I said, ‘OK everyone, it’s footless pantyhose.’ And of course they all looked at me like ‘Are you crazy?’ But if you’re a user of your product and you know it works, then just stick with it, and find the people who will help you get it made.”

  Making shapers from lacquer

  Heartened to have a manufacturer on board, Sara moved to complete her patent application. She recruited her artistic mother to make a sketch of her wearing the product to submit on the application. The final step was to decide what legal claims the product would make in its packaging and marketing.

  For this touchy area, she went back to the Candid Camera lawyer and asked if he would help. He still didn’t understand her idea, but he told her for $700 he was willing to spend a weekend on it. The attorney asked to speak to her manufacturer to get the garment’s technical specifications.

  The manufacturer was Southern with a deep accent. When the attorney asked what the garment was made of, he replied, “Cotton and lacquer.” The attorney duly noted this and completed the application.

  That night, Sara couldn’t sleep. She planned to file her patent application the next day. She kept wondering: how was there lacquer in the product? The next day, she called the manufacturer back.

  “Ted, can you spell lacquer for me?” she asked.

  “Shore,” he drawled. “L-y-c-r-a.”

  With the lacquer mystery solved, the application was quicky changed and sent on its way. For $300, Sara trademarked her name on the US Patent Office’s website, and for $150 incorporated her business name.

  Seeing red

  The next step was to design the packaging for Spanx. Sara toured hosiery departments in big stores and noticed the department was a sea of beige and gray. Every package looked identical, down to the same photo of a half-naked model. She knew she wanted her packaging to have a completely different look, so that if she could land shelf space with a big retailer, SPANX would immediately stand out. Also, she had no money for advertising, so the package essentially would be the ad.

  “I chose red, which was extremely unconventional,” she recalls. “Then, I put on three cartoon-illustrated women who were very different-looking. No one had done that, either.”

  The original footless SPANX packaging.

  She worked on her design nights and weekends for three months on a friend’s computer, while working days at her fax-sales job. Her goal was to make the package look like a present a woman would buy for herself, rather than a commodity women dread buying. To write the package copy, she bought 10 different pairs of pantyhose and read the packages. Whatever language they had in common Sara concluded must be needed for legal reasons, so she added it to her package.

  Her tagline proclaimed the brand’s attitude: “Don’t worry, we’ve got your butt covered.” To gauge whether her sassy approach was offensive, she tested the packaging out on her mother and her boyfriend’s mother.

  “They laughed hysterically,” she reports.

  She knew she wanted her packaging to have a completely different look, so that if she could land shelf space with a big retailer, SPANX would immediately stand out.

  She sent The Oprah Winfrey Show a gift basket with a few prototypes of SPANX in it. A long shot, but a girl can dream.

  Putting her own butt on the line

  In October 2000, with a product prototype and package ready to go, Sara thought big. Her first sales call was to her local Neiman Marcus store. Once they finished laughing, they instructed her to call the buying office in Dallas. She did.

  Sara told the buyer, “I invented a product that’s going to change the way women wear clothes, and if you will meet with me, I will fly there.”

  Incredibly, the buyer agreed. Sara took a Ziploc® sandwich bag from her kitchen, put a prototype inside it, and loaded it into her lucky red backpack. As she prepped for the trip, friends begged her to take a designer handbag. Surely, they thought, she wouldn’t take her ratty old backpack to a meeting at temple-of-luxury Neiman Marcus … her friends even prompted her to buy a Prada bag and return it later. But Sara was firm: the lucky red backpack was going. She also wore her cream-colored pants.

  Sara modeling SPANX under cream-colored pants.

  At Neiman Marcus, Sara found herself standing before the most impeccably dressed and groomed woman she’d ever seen. Even her pen was fabulous. Sara had brought a sample and a color copy of her packaging prototype. After about five minutes of pitching, Sara felt a growing panic. This is my shot, she thought. How could she make this woman understand how unique SPANX was? Suddenly, she knew.

  “You need to come to the bathroom with me,” Sara told the buyer. “I’m going to show you what my product can do.”

  She quickly did a before-and-after for the buyer, modeling the cream-coloured pants with and without SPANX on.

  “She instantly got it,” Sara says. “She said, ‘Sara, this is brilliant, and I’m going to try it in seven of our stores.’”

  Searching for new crotches

  Floating on a cloud, Sara returned home to Atlanta and quit her fax-sales job. She called her manufacturer and exultantly shared the news of her first big order. Neimans wanted SPANX in stores in three weeks, granting the product a single display “pocket” in seven stores. The manufacturer was less excited than she expected: he had only two machines for making the crotch of the pantyhose, known in the trade as the gusset. And both of his machines were already in full use by another client.

  The manufacturer confessed that he hadn’t reserve
d any plant capacity for her; he assumed she planned to give away her initial run of SPANX as Christmas gifts for a few years, and that would be the end of it. If she was going to produce a large order quickly, Sara would have to get her gussets made somewhere else.

  “I was like, ‘Let me get this straight. I just landed Neiman Marcus, and I have no crotches?’” Sara recalls.

  A frantic search began for another company that could fill her gusset order. The savior for her crotch emergency appeared in the form of seasoned apparel-maker Gene Bobo, who was then 80 years old. His factory, just down the road from Atlanta in Norcross, Georgia, would make her gussets from then on.

  Creating word of mouth

  When you have a brand-new product nobody knows about and limited funds, how do you create buzz around it? This was the question Sara now pondered. For the first year, she toured stores for sales trainings and public appearances, happily pulling up her pants legs to show customers her SPANX. She also called on dozens of media outlets, garnering media coverage for Spanx in fashion magazines and on talk shows.

  With SPANX in stores in seven different cities, it was hard to be everywhere at once. Sara got out her rolodex and started calling anyone she knew in a town where SPANX were stocked. She developed a pitch that went like this: “Hi! Remember me, your friend from fourth grade? Can you go to the Neiman Marcus store and tell them you’re looking for SPANX, and I’ll send you a check? Great.”

  The gambit worked: Spanx was profitable from the first month, and topped $1 million in sales the first year. Sara celebrated the milestone by buying a flat-screen TV.

  “Hi! Remember me, your friend from fourth grade? Can you go to the Neiman Marcus store and tell them you’re looking for SPANX, and I’ll send you a check? Great.”

  Just as she was running out of both friends and money, Sara got the life-changing phone call that is every inventor’s dream. In the vast ocean of products Oprah’s show is sent each year, Spanx got noticed. Oprah had tried SPANX and loved them. It turned out Oprah had been cutting the bottoms off support pantyhose to wear them with pants and open-toed shoes for years.

  Oprah planned to do a show naming SPANX one of her favorite products of 2000, and wanted to specifically highlight both Sara and her company.

  The first orders shipped from Sara’s apartment.

  The Oprah team asked where the company was headquarted, and Sara answered, “my apartment.”

  She explained it was a two-person show with her boyfriend at the time. “When someone called and asked for the shipping department,” Sara says, “my boyfriend would say, ‘One moment please,’ and then hand me the phone.” She was spending nights packaging and shipping the product from two card tables. The Oprah team loved the story, and soon a 10-person film crew descended upon Sara’s tiny Atlanta apartment to shoot a video of her operation. To create the Oprah video, Sara called friends over to sit with her on the living-room floor for a “staff meeting.”

  Building a team

  After the show aired, interest in Spanx exploded. Other major department stores including Nordstrom wanted to stock the product. Movie stars wanted to wear it under their Oscar-night gowns. Spanx lasted 18 months operating out of the apartment before growing into an office in Decatur, Georgia, in 2001 and growing its staff up.

  In hiring, Sara looked for people who were enthusiastic about the brand, then trained them for their roles. A friend of a friend heard she needed an assistant and came over to help. Two weeks later, Sara asked her to be the head of product development, a job she still holds today. Likewise, Sara once walked to a bagel shop with a woman who recognized her and raved about Spanx. Sara hired her to be head of public relations. A key hire in 2002 was former Coca-Cola executive Laurie Ann Goldman, who became Spanx’s CEO. The staff numbered 11 by year end.

  One rule Sara made was that everyone who works at Spanx wears the products. Even the men. Most of the company’s new product ideas over the years would come from feedback from customers and staffers. This period saw the company add Control-Top Fishnets (the package proclaimed “No more grid butt!”), Power Panties and Mama SPANX Maternity Pantyhose. In 2003, Spanx outgrew that first headquarters and moved to more spacious quarters in Atlanta’s Buckhead neighborhood.

  Shocking the BBC

  As word of Spanx spread, Sara planned a trip to pitch London department stores, including Harrods and Selfridges. As part of her trip, Sara managed to secure an interview with the BBC, but it didn’t go quite as planned.

  A staid male news anchor asked Sara, “Tell us what SPANX can do for women in the UK.”

  Sara began to explain, “It smoothes and separates your fanny … ” only to see all color drain from the anchorman’s face. “Fanny” is actually slang for vagina in Britain. The trip wasn’t off to a great start, but Spanx did manage to enter the UK market in 2003.

  The company continued adding products, expanding beyond hosiery into intimates and apparel. All of its product names have the same cheeky attitude, from Bod-a-Bing! dresses to Skinny Britches lightweight shapers.

  Where are they now?

  Today, more than 200 styles of SPANX are sold online, through catalogs and in apparel chains including Bloomingdale’s, Dillard’s, Lane Bryant, Neiman Marcus, Nordstrom, Saks Fifth Avenue and the Sports Authority. From that single pocket of space in Neiman Marcus, SPANX now enjoys ample shelf space in many chains, including its own boutique inside New York’s flagship Bloomingdales store on 59th Street.

  In 2006, Sara started The Sara Blakely Foundation to provide help to young women entrepreneurs. The foundation donated $1 million to The Oprah Winfrey Leadership Academy Foundation in South Africa the following year.

  Spanx has continued to innovate and create new product lines, expanding into bras and swimwear. In 2008, Spanx introduced Bra-llelujah, a back-fat-concealing bra which Sara now calls her favorite product. The next year, a lower-priced line, ASSETS by Sara Blakely, was created and sold into Target stores, making Spanx shapewear more affordable to more women everywhere. Next came the high-fashion Haute Contour line, and in 2010 Spanx leveled the playing field and introduced SPANX for Men, a line of support T-shirts and cotton comfortable underwear. In the summer of 2011, Spanx also introduced its first line of active apparel. What’s next for Spanx? Sara concluded, “If I can invent a comfy stiletto, then I will retire!”

  Electronic Arts

  Winning the game

  Founder: Trip Hawkins

  Age of founder: 28

  Background: MBA and former Apple Computer executive

  Founded in: 1982

  Headquarters: Redwood City, California (originally San Mateo, California)

  Business type: Multi-platform games

  Not many entrepreneurs spend 11 years planning their business’s start. But from his first foray into business at age 17, Trip Hawkins knew he wanted to start one. He just didn’t know what it would do. Then, in 1971, he got a glimpse of an early prototype microcomputer at a friend’s house, and an idea began to take shape. In the future, he realized, home computers would be commonplace.

  From that initial flash of insight, the biggest company in digital gaming would arise. Trip knew it would take time for home computers to catch on, but he began laying a course that would position him to profit from the coming electronic age.

  He chose a date for his business launch: 1982. Just as planned, Trip did start a home-based, one-man business that year. That company became Electronic Arts, which now employs 7,600 and raked in a $677 million profit in 2010. How did it happen? Trip puts it down to a couple of personality traits: persistence and fearlessness.

  “I was feeling completely sure of myself and totally confident about what my plans were, and pretty bulletproof,” Trip recalls.

  The very first game

  Trip’s interest in games began in childhood—and so did his interest in business. While still a teenage student at Harvard University, he borrowed $5,000 from his father to create a board game centered on his
love of sports, AccuStat Football. The money allowed Trip to create several hundred copies of the tabletop game.

  The game was loved by players but was a commercial failure, teaching Trip indelible business lessons that would shape his future plans.

  “It was a thorough business experience for me, as I had to design, manufacture, have a marketing plan, and even assemble the product,” Trip recalls. “It helped me realize I was going to be an entrepreneur, but I was also disappointed that I failed. It made me a lot more careful and thoughtful before I started EA.”

  At Harvard, Trip graduated magna cum laude with a self-designed major in strategy and applied game theory, then added a Stanford MBA in 1978. Trip chose his first employer, Apple Computer, deliberately. He had seen the Apple II debut at a computer fair the year before, and wanted to work for a home-computer company.

  The Jobs years

  In Steve Jobs, Trip found a mentor who would greatly shape his outlook. It was early days at Apple: the company based in Cupertino, California, had just 50 employees when Trip joined.

  Trip’s responsibilities at Apple grew over his four-year tenure, but he never lost sight of his primary goal: to acquire business savvy and watch for personal computers (PCs) to become more popular and powerful. From Jobs, he’d learned to think of himself as creative and unstoppable.

  The time was growing ripe for his startup. One gaming company, Brøderbund, debuted in 1980. Trip heard from one investor who was interested in funding a game startup. He worried he was getting behind the curve.

  In Steve Jobs, Trip found a mentor who would greatly shape his outlook. ... From Jobs, he’d learned to think of himself as creative and unstoppable.

  His dream of starting a company had crystallized into what Trip thought of as his “big idea.” Most software companies, he’d realized, treated developers like serfs instead of fostering their creativity. He wanted to start a game company that would operate like a music label.