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Case study · Spanx

How Sara Blakely turned $5,000 in savings into Spanx, valued at $1.2 billion in 2021

TL;DR

Sara Blakely started Spanx in Atlanta in 2000 with $5,000 in savings while still working a day job selling fax machines. She solved a problem she personally had, won over one department store buyer in person, and let a single big endorsement carry the brand. In 2021 Blackstone bought a majority stake at a reported $1.2 billion valuation.

How it started

Before Spanx, Sara Blakely sold fax machines door to door for the office supplier Danka and rose to national sales trainer. The idea came from her own wardrobe. She wanted a smooth look under white pants, and she cut the feet off a pair of control-top pantyhose to get it. The pantyhose still rolled up her leg, which told her there was a gap in the market.

At 27 she moved to Atlanta and spent about two years developing the product on nights and weekends while keeping her Danka job. She put in $5,000 of savings. Hosiery companies in North Carolina turned her away at first. Two weeks after she went home, a mill operator in Asheboro called to say he would help. She paid a patent attorney $750 to help finalize her application and bought the Spanx trademark online for $150.

The details matter for a small founder. She did not raise money, she kept her income while she built, and she spent small amounts on the two things she could not skip: protecting the idea and finding someone who could make it.

How they got the first customers

Blakely’s first big win was a single meeting. She pitched a Neiman Marcus buyer and, according to reports, changed into the product in the store’s ladies’ restroom to show the difference. Neiman Marcus agreed to carry Spanx in seven stores. Bloomingdale’s, Saks Fifth Avenue and Bergdorf Goodman followed.

She also sent samples to The Oprah Winfrey Show, and in November 2000 Oprah named Spanx one of her Favorite Things. Reports put sales at about $4 million in the first year and $10 million in the second. In 2001 she signed a contract with QVC.

Notice the order of operations: one credible retailer first, then national press, then a television shopping channel that could demonstrate the product to millions of people.

What drove growth

Growth came from layering distribution. Department stores gave Spanx legitimacy, the Oprah mention gave it awareness, and QVC gave it a way to explain and demo a product that is hard to describe in a photo. Over the following years the line expanded from the original footless pantyhose into a wider range of shapewear and apparel.

Blakely stayed at the helm. In 2012 Forbes put her on its cover as the youngest self-made female billionaire in the world. In October 2021 Blackstone bought a majority stake in Spanx at a valuation of $1.2 billion, and Blakely remained executive chairwoman.

Lessons you can copy

  1. 1Solve a problem you personally haveBlakely did not run a market study. She started with an annoyance in her own closet and built toward it. Your own frustration is a free, honest source of product ideas.
  2. 2Keep the day job while you buildShe worked at Danka for about two years while developing Spanx. A paycheck let her fund the product herself and avoid giving up equity early.
  3. 3Spend small amounts on protectionA $750 patent attorney fee and a $150 trademark purchase were minor costs that protected the whole business. Handle the legal basics early, but do it cheaply.
  4. 4Win one buyer, then let the shelf sell for youOne Neiman Marcus meeting led to seven stores and then other luxury retailers. A single respected retailer is a stronger proof point than a hundred cold emails.
  5. 5Demonstrate the product in personA product that is hard to explain needs a demo. Blakely showed the buyer the difference, and QVC later did the same at scale.

Frequently asked questions

How much money did Sara Blakely start Spanx with?

She used $5,000 of her own savings and kept her sales job at Danka while she developed the product over about two years, according to published profiles.

How did Spanx get into stores?

Blakely pitched a Neiman Marcus buyer in person and demonstrated the product. The retailer agreed to carry it in seven stores, and other luxury department stores followed.

What was Spanx worth when Blackstone invested?

Blackstone’s majority investment in October 2021 valued Spanx at $1.2 billion, as reported by Forbes and The Wall Street Journal.

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