How Spanx CEO Sara Blakely Built a Billion Dollar Business

In 2012, Sara Blakely joined an elite club of just 2,604 people in the world. That year, Forbes crowned her the world’s youngest self-made billionaire, and Sara was welcomed into the world of the Walton family, Carlos Slim, and Warren Buffett. Pretty good for a girl who once failed her audition for the part of Goofy at Disney’s Orlando theme park.

It wasn’t the only failure Sara had experienced before she hit the quarter-century mark. In fact, nearly anyone else would have given up on success long ago if they’d faced as many setbacks and disappointments as Sara did.

Sara’s story showcases two major themes — failure and grit. As a young woman, Sara got a major dose of both. It wasn’t that she came from a hardscrabble background. In fact, Sara grew up in Clearwater, Florida under an artist mother and a lawyer father. Her failures were her own, not her family’s. During childhood, Sara’s entrepreneurial spirit had sparkled. On Halloween, for example, she set up a Haunted House and charged admission to the neighborhood children.

Many kids do things like that, but very few hit one of Forbes’ “Richest” lists. What made Sara’s childhood different?

Failure Paves the Way to Success

According to her, it was her dad’s view of failure. Sara’s dad knew what all successful entrepreneurs have to learn: failure is integral to the process of success. When Sara and her brother Ford were growing up, their dad would invite them to share their failures at the dinner table. Then, instead of coaching or correcting them, Sara’s dad would celebrate their efforts. “What it did was reframe my definition of failure,” Sara later said about this experience. “Failure for me became not trying, versus the outcome.”

Her dad’s lessons stuck. It was a good thing, too. Without the ability to get up, dust off, and try again, Sara would have been down and out before she got started.

 

Law, Comedy, or Goofy?

After graduating from Florida State University with a legal communication degree and a background in debate, Sara planned to be an attorney like her Dad. First step toward that dream? Admission to law school. So Sara, who was a terrible test taker, studied hard and took the LSAT (Law School Admissions Test). She failed.

Never one to let something as small as a poor test grade get her down, Sara “studied my ass off” as she later put it while moonlighting at comedy clubs and took the LSAT again. She scored one point lower than she did on her first try. Eventually, Sara had to realize that law school — and with it, her lifelong dream of following in her Dad’s footsteps as a trial attorney — just wasn’t going to come true.

So in classic Sara fashion, she drove to Disney World and auditioned for the part of Goofy instead of showing up for law school. Unfortunately, Sara was too tall to play the character, but she did get a shot at being a Chipmunk. She never actually wore the costume, though, as she actually spent her days working at Epcot. When that got boring, she went home to her Mom.

 

Just the Fax, Ma’am

Back in Clearwater, Sara had no idea what to do with her life. Law school had bombed before it started. She was burned out on Disney. And what practical merit was there in a legal communications degree? Rudderless and frustrated, Sara landed a job with Danka, an office imaging and document management equipment company. “It was the kind of place that would hire anyone with a pulse,” she later said.

The managers there literally put Sara on the street to sell fax machines with no sales list, no numbers, and no leads. Traipsing from door to door in the Florida heat, Sara was met with icy shoulders, slammed doors, and even a police escort. But she didn’t let rejections get her down. In fact, Sara spent seven years selling fax machines through cold leads.

During that time, she learned two important lessons. One, she figured out that she had a knack for sales (Danka had promoted her to national sales trainer at age 25). Two, she didn’t want to sell fax machines. “I’d love to sell something that I created and actually care about,” she thought.

And then she found it. At the bottom of her pantyhose.

Sara never liked the way the lines on her hose ran across her toes nor the way the stockings looked on her feet. Pantyhose did have other benefits, though, like making her butt look super cute. One night, on her way to a party, Sara got creative. She cut the feet off the bottom of her pantyhose and wore the top as a replacement for underwear beneath her white pants. The refreshingly cool feel on her lower legs plus the shape-creating benefit of the nylon at the top gave Sara an idea.

“The moment I saw how good my butt looked,“ she later said, “I was like, ‘Thank you, God, this is my opportunity!’”

 

Experiments with Pantyhose

Sara now had a product idea, but it wasn’t yet an MVP (minimum viable product). While the cut-off hose had some benefits, they weren’t a viable concept. For one thing, the bottoms of the cutoffs tended to roll up, which felt uncomfortable For another, cutoff hose just aren’t a product you can sell in the marketplace. You need something a little more dashing to launch a company with. Sara thought she could get that.

Still working for Danka, Sara took all the money she had in her name, $5,000, and moved to Atlanta. The year was 1998, and Sara was 27 years old. She worked 9-5 with fax machines, and spent her spare time at the Georgia Tech library learning about hosiery patents. She also visited craft stores to find just the right fabric, and cold called hosiery mills to gauge enthusiasm for her concept.

Sara got a lot of rejections again. But filled with passion for her idea, she decided to drive to those same hosiery mills in the Carolinas and show the (mostly male) executives her idea. It didn’t work. They gave her two thumbs down in person, too. Who wanted to buy cut-off pantyhose?

 

Breaking up the Boys Club in the Industry

Finally, one mill manager called Sara back. His three daughters had convinced him that Sara Blakely was on to something. Sara, too, knew she was on to something. She was a woman, so that meant she actually wore pantyhose — a big improvement over the standard industry leaders, nearly all men who wore slacks, socks, and boxer shorts.

There were, Sara was starting to realize, big benefits to being a woman in the hosiery industry. Female entrepreneurs sometimes feel marginalized. Although their numbers are growing and their businesses are performing well, women can feel like they are playing a man’s game. But Sara saw her gender as a benefit for a woman in a female-centric business, and she intended to use her female experience to benefit her entrepreneurial idea. She had a lot to learn, but Sara Blakely wasn’t afraid to fail along the way.

“Don’t be intimidated by what you don’t know,“ she tells people now. “That can be your greatest strength and ensure that you do things differently from everyone else.”

 

Spanx: Launching a Company

Of course, no entrepreneur can afford to get too vulnerable. Still working for Danka, Sara had to keep hush hush about her underwear side hustle, just working on it nights and weekends.

To save money, she wrote her own patent and created her new company’s legal structure herself. Coming up with a name hadn’t been easy. She liked “Spanks,” probably because she associated her product with how cute it made her butt look; and .. well ..spanks and butts kinda go together. The quirky name wasn’t whimsical enough, though, so Sara changed the spelling to “Spanx.” Then, with $150, she bought the Spanx trademark.

Sara Blakely was officially in business.

She still lacked two key elements of a successful enterprise, however — products to sell and buyers to purchase them. Armed only with her prototype, Sara flew to Texas where she met with the folks from Neiman Marcus. “We were smitten (with Sara) from the beginning,” Neiman Marcus CEO Karen Katz said later. Sara also got affirmative nods from Bloomingdale’s, Saks and Bergdorf Goodman. Still working at Danka to pay the bills, Sara sat up nights, stuffing Spanx into white envelopes and mailing them off. She was a 24/7, one-woman customer service machine.

 

Making the Difficult Business Decisions

At this point, Sara Blakely made a critical decision: she was determined to take no outside funding. She put everything she earned from Spanx back into the business. This decision allowed her to keep 100% of the equity in her company, though it required her to grow slower than she might have preferred. To this day, Sara owns her company outright. No partners. No stockholders.. and no board of directors. All the profits go in Sara’s pockets.

From its first year in business, Spanx proved a success. In 1999, Sara’s company pulled in $4,000,000. That year, she sold from a table in Neiman Marcus using a before-and-after picture of her own behind as her major marketing tool. The next year, she could take down that effective-but-embarrassing sign, however, because Oprah had signed on to the idea of Spanx. Then the nation’s top media personality, Oprah named Spanx her favorite product of the year, and her team told Sara to be ready for a deluge of orders on her website after the show. Also, in 2021 Oprah actually invested in the company because she loves Spanx that much.

One problem: Sara didn’t have a website.

That didn’t stop her, though. For $18 a month, Sara launched a website and ran a profitable e-commerce trade in undergarments on it for quite some time. With Oprah’s backing, Spanx earned $10,000,000 in revenue. The next year, Sara appeared on QVC, a television shopping network, where she sold more than 8,000 units in less than six minutes. Just over ten years later, Sara became a billionaire.

 

New Projects & New Horizons

Sara’s story doesn’t end with landing a unique spot on a Forbes “Richest” list for her unlikely underwear company. Not only has Spanx grown far beyond the original product but Sara herself has branched out into other entrepreneurial ventures, too.

First, she hired a professional CEO to run her company so she could focus on what she did best — selling Spanx. Second, she landed a spot on Richard Branson’s show Rebel Billionaire, which proved to be a savvy move for the young entrepreneur. Sara so impressed Branson that he wrote a $750,000 check to help her start a charitable foundation. Now called the Sara Blakely Foundation, this organization empowers women to become successful social entrepreneurs.

Sara is also part owner of the Atlanta Hawks, a professional basketball team. She’s guested on several episodes of Shark Tank. And she’s donated to numerous charities and causes.

 

Getting Personal with Sara Blakely

Sara Blakely is known to have a heart of gold, and in late 2021 she proved that even more. To celebrate Spanx’s massive partnership with Blackstone – she gifted employees with two first-class plane tickets and $10,000 to spend on their trip. What a generous way to show your employees you value them!

Blackstone bought the majority stake in Spanx, valuing it at $1.2 billion. So, it seems she had a little spare money to be able to share.

None of the great business stories lack failure as a key ingredient. Sara Blakely failed often and sometimes in cruelly disappointing ways. But consider this: if Sara had passed the LSAT, she might be a respectable, modestly successful trial lawyer in Clearwater, Florida, taking home awards from the local civic clubs. Instead, she’s one of the world’s wealthiest and most influential people.

Sara doesn’t shy away from the role failure plays in her story, either, and today, Sara continues her Dad’s dinner time tradition. She encourages her own children to share their failures while she praises their efforts.

After all, with a little effort, a $5,000 investment, even a seemingly goofy idea can net a billion.