Read the article and answer the 5 question in paragraph form at the end of the article.

White pants. Pantyhose. Scissors. How do these become the opportunity for a highly success- ful business? When you add Sara Blakely to the equation. She was a woman facing the problem of panty lines showing under white pants, so she took a pair of scissors and cut the feet off the pantyhose. Certainly, Sara wasn’t the first woman to do so. However, she was the first to see an entrepreneurial opportunity and create a success- ful venture as a result. Spanx was born out of this “ah-hah!” moment for Sara.

SEEING OPPORTuNITY

IN A PROBlEM

Blakely recognized that women (and men, too) are often bothered by underwear lines and lumps and bumps in their body shapes. She looked at the types of body-shaping garments on the mar-

ket in the late 1990s and was not satisfied, finding them uncom- fortable and ugly. She wanted to make products that were more comfortable and attractive.

Since the introduction of the original Spanx line, Blakely has spotted other opportunities. Her desire for a bra that doesn’t show “back fat” resulted in the creation of “Bra-llelujah.” Her identification of an opportunity for control-top fishnet tights yielded “Tight-end Tights.” In 2010, Spanx added a product line for men, recognizing that many men also had problems that could be solved by shape wear.

Going from idea to product is not always easy. For Blakely and her team, the manufacturer is frequently the naysayer.5 She has to push the boundaries as a contrarian who creates value.

THE WOMAN BEHIND THE BRAND

Sara Blakely was recognized as the world’s youngest self-made bil- lionaire (at the age of 41) by Forbes in 2012. She was also selected as one of Time’s 100 Most Influential People. And, in 2013, she pledged one-half of her fortune to charity through the Giving Chal- lenge. The success of her entrepreneurial venture has enabled hBlakely was raised in an upper-middle-income household where her father, an attorney, routinely challenged the children with the question, “What did you fail at today?”6 This suggested that the kids should have tried to accomplish something, for without trying there is no failure—or success. After college, Blakely sold fax machines door-to-door for seven years. She developed sales and organizational skills during this time.

At a particularly difficult time in her life, Blakely’s father gave her Dr. Wayne Dyer’s How to Be a No-Limits Person, which she credits as a life-changing influence. She learned to see opportunity in adversity and impediments. Blakely became very clear about spending time thinking, to create new ideas. When she cut the feet off the pantyhose, she was poised to spot an opportunity and move forward with it.

RESOuRCES

Spanx emerged through a lot of ingenuity, hard work, and limited financial resources. Blakely kept her sales job for a year while she pursued her goal. She didn’t share what she was doing with anyone, wanting to establish her plan first. She shared it with hosiery mills and potential investors, but not with her family and friends. She used her time and the $5,000 she had saved to create a prototype and promote it. In fact, Blakely did much of the initial patent filing herself, hiring a patent attorney to do only a minimal portion. She understood that the patent was more for marketing purposes than as protection from competition.

Blakely used “guerilla” marketing techniques to introduce Spanx to the market. She stood in stores with a laminated set of photos showing a woman (herself) wearing white pants with and without Spanx. She exemplified and articulated the value proposition—thinner appearance, no lines, no restriction on style of shoe.

She also gave considerable thought to naming and packaging. For example, from her work as a stand-up comic, Blakely knew that words with the “k” sound can elicit laughs. However, for a brand name, the letter “X” gives the impression of strength. Blakely wanted her product names to be memorable. Hence, the originality of Spanx, and subse- quent names of Assets, Red Hot Label by Spanx, and Eur-sleek-A were created. Her packaging was inspired by looking at what was on high- end store displays and making the Spanx packaging more attractive and eye-catching.

In addition to acting as chief salesperson when she started out, Blakely did her own publicity. She also engaged friends who were passionate about the product to assist her. These shoestring efforts yielded fantastic results in 2000, when Oprah Winfrey named Spanx one of her “favorite thingsAt the beginning, Blakely had to fulfill all of the company roles herself, rely on friends, or hire contractors to complete tasks. She had a product concept, but it needed to be produced, tested, marketed, and delivered, in return for payment. She realized that the product’s technical specifi- cations and production were best left to manu- facturers of pantyhose, for whom this would be a use of excess capacity. Blakely relied on their feedback.

Getting the sort of team that she needed was often challenging. For example, hosiery mills re- peatedly turned her away, often rudely. Her eventual

manufacturer initially turned her down. However, after he discussed the idea of footless pantyhose with his daughters, he understood the opportunity and worked with Sara.

Two years after starting Spanx, Blakely was able to begin hiring em- ployees. She focused on finding people who had strengths in her areas of weakness. She recognized that she was more creative than consistent and not well-suited for day-to-day management. She hired a CEO, Laurie Ann Goldman, who has been with Spanx since 2000. Goldman created Spanx’s first business plan. Blakely also worked to move from tasks she did not enjoy to those she did.

SPANX EXPANDS INTO SHAPE WEAR,

SWIMWEAR, AND HOSIERY

Since its launch in 2000, Spanx has experienced phenomenal growth. Its product line has grown from a single style of footless tights to over 200 products, including shape wear, swimwear, and hosiery. The origi- nal Spanx line continues to be sold at many high-end retailers, such as Nordstrom’s, Neiman Marcus, and Saks Fifth Avenue. A line of products for Target has been introduced under the ASSETS by Sara Blakely brand, and for Kohl’s as ASSETS Red Hot Label by Spanx. In addition, the SPANX for Men line was introduced in 2010.

Spanx products are mentioned in a variety of media on a frequent basis. Just about any guide to looking good will suggest Spanx shape wear. Stars such as Joan Rivers and Kelly Osborne have mentioned Spanx when critiquing runway fashions. Sara herself has graced the cover of Forbes magazine.

As of 2012, Spanx, based in Atlanta, Georgia, was estimated to gener- ate $250 million per year in revenue with a 20-percent return. Because Sara Blakely continues to be the 100-percent owner, this private company does not have to disclose its financial information to the public. Spanx has customers in more than 50 nations and is opening retail stores and in-store boutiques across the United States. With all of this success, the mission of Spanx remains, “To help women feel great about themselves and their potential.From the start, Blakely has always been a staunch supporter of empower- ing women, a focus that was built into the Spanx mission. Her parents recall that she was always concerned about constraints on opportunities for women, both in the United States and abroad.7 As the company grew, so did her opportunities to make an impact in this area.

In 2004, Blakely was a competitor on the Fox TV reality show The Rebel Billionaire: Richard Branson’s Quest for the Best. Sara took three months away from Spanx and traveled with Sir Richard and her fellow competitors, accomplishing various business-related tasks along the way. Sir Richard surprised Blakely by giving her the $750,000 that he had earned from the show so that she could start her own charitable foundation. In 2006, he was part of the launch of the Sara Blakely Foundation. The foundation focuses on education and entrepreneurship for women around the globe.

The Sara Blakely Foundation’s mission is: “Dedicated to changing women’s lives through support of awareness education in four primary areas: Self, Social, Entrepreneurial/Financial and Environmental.”8 Oprah Winfrey was a key to Sara’s early success with Spanx and in 2007 the Sara Blakely Foundation made a $1 million contribution to the Oprah Winfrey Leadership Academy Foundation in South Africa.

Sara Blakely has created value for men and women worldwide, cap- tured value for herself, and been able to share her wealth—all by recogniz- ing an opportunity and realizing its worth.

questions that need to be answered

1.What benefits of entrepreneurship does Sara Blakely appear to have attained? 2. Is the desire to earn an income a key motivator for Blakely? Explain your answer.

3.What was Blakely’s opportunity cost when she started Spanx? 4.Which of Schumpeter’s five basic ways to find opportunity applies to Spanx, both at its start and today? 5.What was the opportunity? Which of Porter’s generic strategies best fits Spanx?

 

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