Sara Blakely was once a door-to-door fax machine salesperson. Now, she’s the founder of Spanx – a billion-dollar company that sells undergarments, leggings, and swimwear – despite having no fashion, retail, or business leadership experience. In this episode of The Agent of Wealth Podcast, the Bautis Financial team discusses the ninth book assignment in their monthly Book Club,The Spanx Story: What’s Underneath the Incredible Success of Sara Blakely’s Billion Dollar Empire by Charlie and Stephanie Wetzel.
In this episode, you will learn:
- The Spanx origin story.
- How Spanx became a billion-dollar business.
- Examples of how Sara Blakely embraced failure to find success.
- How Spanx founder Sara Blakely pays it forward.
- And more!
Resources:
The Spanx Story: What’s Underneath the Incredible Success of Sara Blakely’s Billion Dollar Empire | Listen to Previous Episodes of the Bautis Financial Book Club | Schedule an Introductory Call | Bautis Financial: 7 N Mountain Ave Montclair, New Jersey 07042 (862) 205-5000
Welcome back to The Agent of Wealth Podcast, this is your host Marc Bautis. On today’s show, I’m joined by the Bautis Financial Team – John, Kayla and Kyra – for another episode of our Bautis Financial Book Club.
This is the ninth episode of the Book Club series, and this time around, John selected the book The Spanx Story: What’s Underneath the Incredible Success of Sara Blakely’s Billion Dollar Empire by Charlie and Stephanie Wetzel. John, what drew you to this book?
John:
Well, to start, I honestly had no idea what a Spanx was. But I’m a huge Shark Tank fan – I’ve seen almost every episode – and Sara Blakely is one of the guest judges on the show. I was watching an episode and actually recognized her name from Jesse Itzler’s book Living With a Seal, so I began learning a little bit more about her.
I found the story of Spanx to be really compelling, and it reminded me a lot of this idea of the American Dream.
To speak about the company’s origin, I’ll hand it over to Kyra.
Kyra:
Sure! This origin story is exactly how the book began, so it’s a great place for us to start our discussion too.
The Spanx Origin Story
Sara Blakely was 27 years old, working as a salesperson at a company that sold fax machines door to door. Because she was performing well, she was promoted into the training department which required her to move to the company’s regional office in Georgia.
Blakely was invited to a corporate event soon after making the move, and wanted to make a great impression. When planning her outfit for the event, she was drawn to a pair of white pants that still had the tag on them. She liked them – that’s why she bought them – but they hadn’t worked in the past because Blakely couldn’t find an undergarment to compliment them.
She decided to take the pants to a department store to find a solution. There, she was introduced to shapewear, which would have worked in theory… but it was way too uncomfortable.
Soon, she realized that a control-top pantyhose would be the perfect solution. But because the pants were cropped, she would have to cut off the legs. So she did it. She went to the event. And the Spanx was born.
The authors talk about how it wasn’t necessarily an original thought. They were sure people had done it before, but Blakely took a common problem… obstacle… annoyance… (whatever you want to call it) in her daily life, found a solution, and created a breakthrough product.
John:
Exactly. I found it interesting that the authors – Charlie and Stephanie Wetzel – called out that it wasn’t necessarily an original idea… there were so many versions of undergarments on the market, but none of them fulfilled all of Sara’s needs.
We also read that at one point, Sara was watching The Oprah Show and noticed Oprah’s pantyhose visible at the foot area – where her pants exposed them. This happened after Blakely already thought up the Spanx, and seeing that other women were struggling with the same issue brought her a sense of verification. Oprah plays into this story quite a bit, which we will get into later.
But it was just amazing to read how this simple idea sparked a billion-dollar business. It’s pretty amazing.
With that said, there’s a lot more that went into her success than just the idea. Kayla, can you share a bit about what you learned from the book regarding Blakely’s initial investment and business development?
How Spanx Became a Billion-Dollar Business
Kayla:
From a business and financial perspective, Spanx was pretty much self-funded by Sara Blakely.
It started with her investing her own savings – about $5,000 – into the company. In the early days, she also used her credit cards to cover the expenses. Like Kyra said, she worked for a company that sold fax machines, so she was also able to use funds from that for early product development.
In the beginning, she was super frugal. She struggled with finding manufacturers because the order sizes were too small, so when it came to packaging and shipping, she created the boxes herself and would personally deliver them to local stores.
Then, as the business continued to grow, she invested the profits back into the business. She had a little bit of help from family and friends, but she was still struggling with gaining traction with other investors. Still, she continued to reinvest the profits and watched it grow.
Then, in the early 2000s, she started adding more employees and the product line started to expand. By 2008, a private equity firm invested $300 million into the company.
Over the years, Spanx continued to invest in themselves, expand and improve the distribution network.
To sum it up, the growth was self-funded. Sara reinvested the profits back into the business rather than taking outside investments or going public. They also outsourced their manufacturing to keep expenses low, so most of the success could be attributed straight back to Blakely.
John:
Yeah. There clearly was an incredible amount of discipline involved. I mean, she was shipping items out of her house and doing almost everything on her own.
One of the reasons I like Shark Tank so much is because you get to hear about the mistakes some of the most successful people have made… and a lot of those mistakes are related to costs and investments. So, for her to keep costs low and continue to reinvest, it’s very impressive.
I mean, even after Oprah had Sara on the show to promote Spanx, she was still shipping stuff out of her house.
By the time the $300 million was invested, the business was already huge. So to start Spanx with just $5,000… it’s wild.
I really believe she handled the success of the businesses really well. If – all of a sudden – you become a billionaire, on the cover of Forbes, and so on… it can be hard to remain focused. After all, fortune can fall into the hands of the wrong people. But she did a lot of good with it. Kyra, I know you have some thoughts on that.
How Spanx Founder Sara Blakely Pays it Forward
Kyra:
Absolutely. Sara often said the most important purpose of Spanx was always as a platform for giving back. Early on, she set aside a portion of the company’s earnings to give away. But as the company grew, so did the opportunities to make a difference.
Sara was a contestant on Sir Richard Branson’s 2004 reality show “The Rebel Billionaire,” and though she made it to the finale, she was the runner up. But after the winner received his prize money, Richard Branson ended up handing her a check for $750,000 made out to “The Sara Blakely Foundation.” At the time, the foundation didn’t exist. But Branson knew how interested Blakely was in creating a nonprofit organization, so he decided to give the first donation to Sara, which helped her establish it.
The foundation was launched in 2006 with the goal to “Empower Women to Make the World a Better Place.” At the foundation’s launch event, $600,000 was raised to be donated to a college program in South Africa, which helped provide scholarships to 278 young women who would have otherwise been unable to go to college.
Another example is in 2013, Blakely was invited to sign The Giving Pledge, joining her friend Richard Branson (as well as Bill and Melinda Gates and Warren Buffett) in committing to dedicate half of her wealth to philanthropy.
With a net worth still estimated at over a billion dollars, she and her foundation have poured hundreds of millions of dollars into the lives of millions of women.
The book ends with a quote I really enjoyed on this topic. Sara said about money, “I think it’s fun to make, fun to spend and fun to give away.”
John:
I think that’s the last line in the book, right?
Kyra:
Yes, it was a great way to close.
John:
It’s also a very good point.
In the middle of the book, they talk a lot about the culture of the business, and the authors talk about how Sara’s view of failure has molded that culture.
They discuss the contrast between Blakely and the former CEO, Laurie Ann Goldman, on the pursuit of success. It was interesting to me, to see that contrast.
I’m going to hand it over to Marc to give his thoughts on her view of failure and success.
How Sara Blakely Embraced Failure to Find Success
Marc:
I think when you look at someone as successful as Sara – the youngest, self-made female billionaire – you want to deconstruct how she got to where she is. Because she obviously wasn’t an overnight success.
One of the things that really stood out to me was how she embraced failure from an early age.
She was actually forced to embrace it by her dad, a trial attorney. Every night, at the dinner table, he would ask Sara and her siblings, “What did you fail at this week?” It might have been a sports tryout (not making the team), a unit in math, etc.
Whatever they said, he never expressed disappointment in it. Actually, quite the opposite. He was pleased with failure – they would celebrate with a big high five. And the more things that they tried and didn’t succeed at, the prouder he was of them.
Sara and her siblings learned to seek out new challenges they could fail at. Every day, they attempted to be more – do more – than the day before. With that kind of approach, you will eventually be successful.
Obviously, there were a lot of setbacks when Sara formed Spanx, but there were a ton of examples in the book that happened before…
Growing up, Sara wanted to be an attorney like her father. So she took the LSATs, but failed. Embracing failure, she did what you would think: she signed up for an LSAT prep class and studied harder. But when she took the test again, she failed… again.
Next, she thought she wanted to be the Goofy character at Disney. So she traveled to Disney and inquired about the position, only to find out that she had to have three months of experience working in the park. She also had to be a certain height, so she eventually wasn’t able to be Goofy.
It was time for her to move on, and she eventually started working for a copier company. That’s what led to the party that Kyra was talking about and the idea for Spanx.
So many people don’t take risks. They don’t seek out challenges because they’re afraid of failure, and that’s where she’s different.
There’s a lot of famous stories about failure. One, Thomas Edison. The story is that he failed 10,000 times before he was able to perfect the electric light bulb. The way he framed it was, “No, I didn’t fail 10,000 times. I found 10,000 times that didn’t work, and if I didn’t find those 10,000 times out, I would’ve never gotten the success that I got.”
Another famous example is Michael Jordan, the greatest basketball player of all time. Surprisingly, he didn’t make the varsity basketball team as a sophomore in high school. Now, you have two options:
- You can feel sorry for yourself and move on to something else.
- You can practice, improve and try again.
So he took his training to the next level. It’s said that when he was training or practicing and didn’t want to, he would visualize being cut from the team. That served as his motivation to carry on.
Failure is something that she embraced. Now, it’s something that she’s doing with her own kids – that same exercise her father did with her and her siblings. That’s the biggest takeaway I got from the book.
John:
100% agree. As a parent, you want your kids to try a variety of things, and they don’t always work out. So you have to embrace failure through all phases of life.
I think that brings us to the end here. I’ll hand it over to Marc to close the episode out.
Marc:
Thanks, John. That’s all we have for today’s episode. If you’re interested in reading The Spanx Story, the book is available on Amazon. And if you liked this episode and would like to listen to any of our past Book Club episodes, we will link to them in the resources section of the show notes.
Thank you to everyone who tuned into today’s episode. Don’t forget to follow The Agent of Wealth on the platform you listen from and leave us a review of the show.
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