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- [00:00]
David Brown
Wondery subscribers can binge all episodes of.
- [00:03]
Kim Kardashian
Business Wars TikTok versus the USA early.
- [00:06]
David Brown
And ad free right now.
- [00:07]
Kim Kardashian
Join Wondery plus in the Wondery app or on Apple Podcasts.
- [00:19]
David Brown
It's June 2019, and Kim Kardashian paces the floor of the offices of her shapewear company. Sitting on the couch watching her are the co founders of the company husband and wife team, Jens and Emma Greedy. Kardashian turns to the couple and asks them how they could have all been so stupid. For two years, Kardashian has been building her shapewear company. She served as the creative designer and fit model for every garment the company has ever developed, giving detailed feedback on the cut and feel of each piece, weighing in on which fabric they should use. And a few days ago, she officially announced to the world via her Instagram account the start of this new company. She thought it would be a triumphant moment. This isn't her first foray into launching a brand. Over the years, she's launched beauty lines, perfumes, a jewelry collection, a mobile game, and more. They've turned a profit, helping her build a net worth of more than $50 million. But this shapewear company is her baby. She fully believes in it in a way that she hasn't with past endeavors. But now she's wondering if that confidence is misplaced. She turns back to the Greedys. She asks how they waded into the backlash they're facing right now. In retrospect, their error is blatantly obvious. Jens agrees they did make a misstep, and it's not how they would have wanted to kick off their new company. But what's done is done. They need to figure out how they're going to respond. Emma agrees. She asks Kardashian what she wants to do. They can push forward with their original plan, or they can hear what people are saying online and adjust. Course, it's up to Kardashian. Kardashian flops into a chair. She's no stranger to controversy. She's one of the most polarizing celebrities in the world. If she gave in every time people on the Internet were mad at her, she'd never do anything. But this time, Kardashian isn't sure she wants this company to be more than successful. She wants to dominate the shapewear market and dethrone Spanx. She's invested her personal funds into this project, but it's more than just that. This is her pride on the line. She has to respond correctly. But maybe it's too late. And her new business, her baby is doomed before the first piece is even for sale. Kim Kardashian is an stranger to controversy, but she always seemed to find a way to weather the storm. So what was the decision that nearly took down her budding empire? Need care for ed, hair loss, skin care, or other common health concerns? Amazon one Medical pay per visit lets you quickly connect with a provider right from home. No insurance needed, no scheduling hassles, just straightforward, affordable health care when you want it. Start a virtual visit anytime 24 7. Their providers will create a personalized treatment plan and if medication is right for you, get fast free delivery through Amazon Pharmacy prime members can even save up to 92% on ED medications compared to competitors. Quality care shouldn't be complicated or expensive. That's why they offer transparent pricing with a simple flat fee per visit. This is the kind of new thinking many folks have been hoping for. And with health care costs spiraling, well, bottom line here you can get care and meds for less with Amazon. Head to Amazon.com bwom to learn more. A provider determines eligibility. Prices may vary.
- [04:00]
Emma Greedy
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- [04:36]
David Brown
From wondering I'm David Brown and this is business wars. In 1998, office equipment sales representative Sarah Blakely cut the feet off a pair of pantyhose to have something to wear under a form fitting pair of white pants. In those footless pantyhose, Blakeley felt confident and svelte, and she realized that with a little tweaking, this could be a hit product. Blakely spent the next two years developing a better version of footless pantyhose that would help women feel confident in their clothes. She called her company Spanx. It skyrocketed to success. The company was profitable from day one, and by 2011 it was bringing in an estimated $250 million a year in revenue, and Spanx became synonymous with the concept of shapewear. Blakely was a master marketer, and part of Spanx success was thanks to Hollywood stars openly embracing the product, mentioning they were wearing Spanx on the red carpet and in interviews. In fact, one such star was Kim Kardashian, known for her hourglass figure Kardashian often wore Spanx and other shapewear that accentuated her curves. And over the years, she found herself customizing the pieces, cutting them, dyeing them, sewing two different pieces together. In 2017, she realized it was time to put her expertise to use and start her own shapewear company. She decided she was going to go directly after Spanx by offering a kind of anti Spanx ethos in her marketing. But while Kardashian had her pulse on the zeitgeist and fame on her side, there was no guarantee her new products would unseat the category category leader or succeed in the long term. And while Spanx grew quickly and dominated shapewear for decades, offering a kind of that strong customer association with a singular product could also be its downfall. This is episode two Kim oh no. It's 2017 in Los Angeles, California. Two years before Kardashian Shapewear Company launched and faced immediate backlash, Kim Kardashian welcomes Yen's greedy into her home. Kardashian's mother, Kris Jenner, and her sister Khloe, have both worked with Yen's wife, Emma. Not long ago, Kardashian told Emma about her idea to start a shapewear company. Emma suggested that Kardashian talk to Jans. She thought he might be interested in getting involved. Jens started his career working for various men's magazines, both in his native Sweden and then in London, before starting a successful marketing agency. In 2012, Jens made another career transition, launching a luxury denim company called Frame. Kardashian likes Emma, and she knows Jans has a reputation as a savvy marketer, but Kardashian needs to be sure that he's the right partner. As confident as she is in her knowledge of the shapewear industry, she also feels vulnerable launching this company. It's going to be based on her body. After all, she needs to completely trust whoever she works with. Sitting across from him in her living room, Kardashian tells Jens how she's been a big user of Spanx. He nods. As far as he can tell, she played a significant role in the success of Spanx. She essentially gave it unpaid advertising. Kardashian agrees, but she's okay with that. She thinks Spanx makes an incredibly useful product. It's allowed her to wear clothes she never would feel comfortable wearing without them, but their options are too limited. There should be more colors, more shapes, more sizes. She tells him how she had to dye her slip in a bathtub a couple of hours before appearing on the Cannes red carpet the year before and all the other tricks she's used over the years to make the shapewear fit her needs. Compared to the average American woman, Kardashian's a shapewear super user. Most American women don't attend dozens of red carpet events or wear revealing couture. But that means she knows every limitation in the current shapewear market, and she can offer solutions that others can't. Jens nods enthusiastically. He loves working with people who know exactly what they want. Jens confesses that he's less interested in shapewear specifically and more in the larger underwear category. He thinks the whole market has gotten stale. It's ripe for disruption. Kardashian leans forward, excited, because that's exactly what she wants to do. Spanx has always been pitched as helping women flatten, hide and contract their bodies. But Kardashian thinks shapewear shouldn't be so much much about hiding what you don't like and more about accentuating what you do. Yen says he loves that it fits much better with the growing body positivity movement. The way Spanx is marketed can come across as fat shaming, and there's a push to move away from that. He knows this could be big. In fact, he believes in it so much, he's willing to put up his own money. Kardashian grins. Now this is the kind of passion and belief she's looking for in a partner.
- [10:24]
Kim Kardashian
Kim.
- [10:25]
David Brown
Kardashian and Jens, greedy, decide to go into business together, and Emma comes on board as well. As a black woman, Emma agrees with Kardashian that shapewear should be more inclusive. Kardashian takes on the role of creative director, while Jens is CEO and Emma is chief Product officer. They spend the next two years developing their line. With her fame and millions of Instagram followers, Kardashian knows her fans will probably buy one piece purely out of loyalty. But to keep them coming back, they need to put out a good product. Kardashian highlights problems she has with existing shapewear. Whether it be the shape or the fabric or the seams. The team works on a design, and then Kardashian tries on the prototypes, providing feedback. Kardashian wants to make a clean break from the idea of shapewear as constrictive underwear. She wants it to be comfortable enough that women don't just wear it under formal wear or business attire, but also under sweats. She wants it to be something you wear every day. That versatility should also boost sales and to lean into the company's body positivity mission. She decides to call what she's developing solution wear rather than shapewear. Kardashian's pieces are designed to help women flaunt what they do. Like, you see what's happening here? History's repeating itself. Sure, Spanx was a sensation, and it unleashed a world of copycats. But there's something different about what Kardashian seized upon, and she's even calling it out by name when she uses this phrase, solutionwear. Solution to what, exactly? It's not just that Kardashian has identified a need, just as Sarah Blakely, the founder of Spanx, did. Kardashian's determined to find a solution, just as Blakely did. But she has one key advantage. The founder of Spanx didn't have the fame and the fortune. Okay, that's two advantages, but you get the idea. And those advantages? High visibility and money can help a rival outmaneuver another's first mover advantage if you don't try to get too clever while you're taking advantage. Yet some just can't seem to avoid creating a big stir. Now Kardashian needs a name for her company, and in 2018, she, Jens and Emma Greedy and other members of the team gather in their Los Angeles office to brainstorm. Kardashian sits at the head of the table and an assistant stands at a whiteboard with a marker uncapped. Kardashian tells the group that she likes company names that either play off Kim, like her app Kimoji, or her initials, like her makeup company Skin spelled sk K N. Jens claps his hands together. Alright, let's just start throwing this out there. Skimpy Kim body Skimpier.
- [13:22]
Jens Greedy
Oh, Kimchi Skimpiest Kim briefly.
- [13:27]
David Brown
You know what? Just put every variation of Skimpy up there. Kim's where Skimming a Kimbo kimono, Kardashian's head snaps up. She says she likes Kimono, sounds elegant. She asks what the others think, and there's a murmuring of ascent around the room. Kardashian says they should go with Kimono as the name.
- [13:53]
Jens Greedy
Great. I'll handle the trademark.
- [13:56]
David Brown
As the meeting breaks up, everyone's excited about the name. They're one step closer to launching Kardashian's team trademarks the name Kimono intimates and keeps working on their products. Because of Kardashian's strong social media presence, Kimono is going to launch with only direct sales through the company's website. They won't be in stores. This will keep overhead low, but it means that almost all customers will be coming via Kardashian's social media. This launch has to be Perfect, and in June 2019, Kardashian posts to her Instagram a carousel of images of herself and a diverse group of models wearing different pieces of shapewear in a variety of colors. She writes a lengthy caption announcing kimono and says it's something she's been thinking about for the past 15 years. It's her take on shapewear that will provide solutions for all women. She promises her garments will come in sizes ranging from extra extra small to four extra large and in nine different tones. They're set to go on sale in July. When Kardashian makes the post, she's excited. After years of work, she's finally launching kimono, and she's quite proud of what she's come up with. These pieces are high quality, they're comfortable, they'll make women look and feel good. But the backlash starts almost immediately. A Japanese kimono designer posts on Twitter that she objects to Kardashian trademarking the word kimono, a garment which goes back over 1200 years in Japan. Another kimono designer posts a petition on change.org saying that kimono means clothing in Japanese and she doesn't think the word should be associated with an underwear brand. The petition garners 11,000 signatures in one day, and the hashtag Kimono Trends on Twitter. The mayor of Kyoto even writes an open letter to Kardashian urging her to change the name. At first, Kardashian stands by the name. She clarifies that the way she filed her trademarks doesn't preclude anyone else from using the word. And she insists that she has a deep respect for the significance of the kimono in Japanese culture. But her statement does little to stop the backlash. Kardashian and the Greedys hold an emergency meeting two days later. Kardashian paces, bemoaning that they made such a large, unforced error. They should have seen this coming. The question now is what to do about it. They can push on and hope that Kardashian fans will ignore the backlash and purchase the products anyway, and that the controversy will eventually blow over. Or they can issue an apology and change the name. That will mean delaying the launch from its planned July date. They have millions of pieces ready to ship with the kimono branding. If they change the name, they'll either have to throw all those pieces away or figure out how to rebrand them. It's not as simple as just changing the tags, and that's because they're are no tags. Kardashian wanted the pieces to be completely seamless, so the brand name is printed directly onto each piece. Kardashian doesn't know what to do. She knows from her trademark application that other non Japanese companies have trademarks on the word kimono. There's even a condom company that's trademarked the name. But they didn't face this kind of criticism. It doesn't feel fair that she's held to a higher standard. Emma and Jens agree, but they remind her that that higher standard is because she's famous, which will ultimately benefit the company. After three days, Kardashian makes the call. They'll change the name. She's pitching her product as inclusive and diverse, and now a lot of people are telling her that the name doesn't reflect those values. She just hopes she hasn't blown her chances at overtaking Spanx before she's even gotten to try. You know, it's funny.
- [18:10]
Kim Kardashian
Sometimes self care looks like binge watching cooking shows in your PJs and other times it's just making sure you're taking.
- [18:17]
David Brown
Care of the basics.
- [18:18]
Kim Kardashian
And that's what Liquid IV is for. It's a little daily ritual that makes hydration actually exciting. Let me tell you what makes it special. It's powered by live Hydra science, a blend of electrolytes, essential vitamins and clinically tested nutrients. You just tear open a stick, pour it into water and boom, you've got hydration that has three times the electrolytes of the leading sports drinks. I keep some sugar free Liquid IV packets in my car Console White peach is my favorite. Just pull into a gas station, grab some bottled water, pour in some Liquid IV and that feeling of constant thirst on the road just disappears. All you need is one stick, 16 ounces of water and it hydrates so much better than just water alone.
- [18:59]
David Brown
So what's your ritual?
- [19:00]
Kim Kardashian
Well, break the mold and own it. Treat yourself to extraordinary hydration from Liquid IV. Get 20% off your first order of Liquid IV when you go to LiquidIV.com and make sure to use code BW at checkout to get that 20% off discount. That's 20% off your first order with code BW@liquidiv.com We've all been there, sitting through another mind numbing presentation. You know the kind, tiny text you can barely read templates and slide transitions straight out of the 90s. But here's the thing. Your presentations don't have to put people to sleep. With Canva presentations, you can create something that actually keeps your audience engaged. We're talking stunning templates you can customize in minutes, not hours. Just drag and drop from their massive library of professional images and graphics, add some smooth animations and even throw in interactive polls to keep everyone on their toes. Need to collaborate with your team? Just share your presentation instantly and edit together in real time. And here's something I love. Their AI tools can help summarize your text or even generate entire slides from a prompt. No wonder 95% of Fortune 500 companies use Canva. We just put together a very professional looking presentation for our team using Canva and the first thing everyone said was this is great. Why haven't we done this before? Well, maybe they didn't know about Canva. You'll love the presentations you can easily design with Canva. And let me tell you something, your audience will too love your work with canva.
- [20:33]
David Brown
Presentations@canva.com On September 10, 2019, Kim Kardashian and Janzen Emma Gridy officially released their first Shapewear drop two months later than originally planned. They've renamed the company Skims. As they hit the button for the website to go live, there's a sense of cautious optimism. Kardashian has done a slew of traditional press promoting the line as well as pushing the products on her personal social media channels.
- [21:16]
Jens Greedy
I've always been obsessed with shapewear.
- [21:19]
David Brown
It was like when everyone was getting bras and underwear, I was always getting shapewear. Celebrity friends and other influencers have also joined in to help promote the brand. From a marketing perspective, all the stars have aligned, but it's still unclear how the kimono name misstep could affect the launch. Kardashian has a lot of fans, but she also has a lot of haters who would be happy to see her fail. And there are some people inside the company who have doubts about the products. Kardashian is most proud of her one leg control shorts. She frequently tells the story about all the time she had to cut one of the legs off her Spanx to accommodate a dress with a high slit. But some executives aren't sure how many average consumers will have a need for such a garment. But almost as soon as the site goes live, the orders flood in. They sell out in under 10 minutes, and the website breaks under the traffic. The first drop is a success, but for Skims to have enduring success, it's going to need these drops to be successful week after week. Skims is aiming to distinguish itself from Spanx by offering more variety. They tout more size options, a larger array of colors as well as more shapes. Spanx downplays the differences between the two. A representative from Spanx tells reporters that many of their products come in extended sizes and some of their collections come in multiple colors. The representative says that Spanx continues to innovate and remains the category leader. All their communication seems to indicate that Spanx has no intention of changing course. They faced copycats in competition before and have remained at the head of the pack. But Skims keeps growing. They push out weekly drops, arranging collections around a fabric or a shape or a fit. They keep their orders low. This helps create a feeling of scarcity and excitement to entice customers into buying pieces while they can. It also prevents them from being stuck with too much inventory. If one of the pieces is a dud, it's a winning strategy. Repeatedly, pieces sell out in just minutes. Now let's pause for a moment and think about something else Lots of folks wear, or at least would like to Ever wonder why Rolex is so successful? They make great watches, to be sure, have a storied history, make more money than almost any of their rivals. Their secret? The strategic use of scarcity and exclusivity. Just try buying that special Rolex you've always dreamed of at an authorized dealer. Get back to me on how that goes. Skims used a drop model to create buzz and scarcity, driving consumer urgency and sustained interest. Could they make more? Oh sure. Sell more? Well, that depends. Controlled scarcity can enhance demand and create a perception of exclusivity, even if you're as popular as, say, a Kardashian or a Rolex. Almost immediately, Skims branches out from just Shapewear. Just one month after the launch, they dropped the Cotton Collection, which features underwear, bras, T shirts, and so forth that don't include any compression. And two months later, in December 2019, they debut the Cozy Collection. It's a full line of robes, loose pants, shorts and tank tops made from soft knitwear. It ends up being fortuitous timing. In March 2020, the COVID 19 virus spreads around the world and stay at home orders abound. The demand for constrictive shapewear is down, and the desire for comfy, cozy clothes is way up. And people are also spending more time shopping online, creating a boom for direct to consumer companies like Skims. As the world shuts down, Spanx realizes that it needs to change strategies. Over the years, Spanx has also branded out to other types of apparel beyond compression garments, including regular underwear, leggings, workout attire, even jeans. But they're still primarily known as a shapewear company. If they want to survive this new Covid era where sweatpants are king, then they need to figure out a new strategy, and fast. You might have thought the founder of Spanx would have picked up on an important lesson from those early days. Did you pick up on it? Remember when the founder, Sarah Blakely, was shopping around her idea for that first compression underwear? All those hosiery manufacturers she visited said no until one changed his decision after his daughters endorsed the idea. Well, ditto with Kardashian, who rebranded kimono to skims in response to public criticism. She didn't have to, but there's a reason she's successful here and in other ventures. When you're open to feedback from both internal and external stakeholders, when you're willing to second guess yourself, when you're open to feeling the environment, you learn to adapt strategies to address valid concerns. It becomes ritual, habitual. The Cozy Collection is another example of that. And though Spanx has been the leader in this space for years, the originator is now forced to play catch up to a rival. In spring 2020, Sarah Blakely logs onto a Zoom meeting for all senior leadership at Spanx. Four years ago in 2016, Blakely decided it was time to become CEO of Spanx rather than hire someone else for that role as she had in the past. And now she's facing her biggest crisis.
- [27:06]
Jens Greedy
Hey everyone, thanks for joining. How's everyone doing?
- [27:11]
David Brown
There's a dejected murmur from the executives.
- [27:15]
Jens Greedy
That good, huh? No, I get it. Things are hard right now, but we can get through this together. Three weeks, three months at a time.
- [27:25]
David Brown
She looks at her chief financial officer, Kim Jones.
- [27:28]
Jens Greedy
Kim, can you start us off with an update?
- [27:30]
Sarah Blakely
Thanks, Sarah. Obviously, any hope that we had that this would be a short lived crisis is over. Obviously sales are way down. We've made as many of the short term changes as we can. We've cut back our manufacturing orders. Every department has recalibrated their budgets to reflect our new reality. But now it's time to get creative.
- [27:55]
David Brown
Blakely nods.
- [27:56]
Jens Greedy
I love how you said get creative because I truly believe that the key to a successful business is to turn obstacles into opportunities. And there are a lot of obstacles right now, which means there are a lot of opportunities.
- [28:12]
David Brown
An executive in the lower right of Blakely's screen unmutes. I was thinking about masks. It's clear that people are going to be wearing masks for the foreseeable future. With our deep knowledge of different fabrics and sewing techniques, maybe there's a way we can improve on the typical mask.
- [28:27]
Jens Greedy
I love that. Let's definitely get a team working on that. One thing I wanted to add is I know that in general our brand is associated with formal wear and business attire, but we all know that's not all we do. We need to push our leggings and athleisure hard. Right now.
- [28:46]
David Brown
An executive with his camera off sighs. I agree, but I think I'm worried that it's going to be hard to get people to associate us with comfort even if we do push our non compression clothing.
- [28:57]
Jens Greedy
I'm not saying it's easy, but we need to change the narrative around our brand. Sure, we're known for shapewear, which isn't always comfortable, but we know women's bodies, we know fit, we know all about comfortable waistbands, we know soft materials, and we have these other clothes that are comfort forward.
- [29:18]
David Brown
I just hope it's enough.
- [29:19]
Jens Greedy
It probably won't be, which is why I think we need to keep innovating and any ideas people have for other products, we can be developing that suit this moment. I want to hear about them. Tell everyone I don't care if someone's a receptionist or a vp, if they have an idea for a product they should submit. Got it, Got it.
- [29:40]
David Brown
Got it checked.
- [29:41]
Jens Greedy
I'm serious, everyone. I know things are hard right now, but good can come out of this. We can have new products, a new emphasis on online sales, and maybe some time to reevaluate some old processes that are no longer working for us.
- [30:00]
David Brown
Blakely ends the meeting and logs on to her next zoom. Over the course of 2020, Spanx pushes its leggings, athleisure and pajamas and manages to hang on. But while Spanx is just surviving, Skims is thriving. By the end of the year, Skims has expanded into both the United Kingdom and the Middle east. And Skims has continued to broaden its offerings, including a summer sleep collection and a maternity line. By the time 2021 rolls around, Skims is on track for Shapewear to make up less than a fifth of their total sales. They have successfully established themselves as an apparel company rather than just a shapewear one. For Spanx, their pivots are likely too little, too late. Their status as a category creator served them well when competitors moved into the shapewear market, but it makes it harder to change people's perceptions about the company. Overall, Spanx's sales decreased by 30% early in the pandemic. As vaccines roll out in the spring of 2021 and people begin to venture out into the world again, the shapewear category rebounds, but sales still remain well under what they were pre pandemic. As a private company, Spanx has always held its finances close to the best. But industry analysts estimate spanx made between 300 to 400 million in 2020, less than what they estimated it made five years earlier in 2015. In 2021, Forbes drops Blakely from their annual billionaires list for the first time in almost 10 years. Meanwhile, Skims continues to grow. In 2021, the company is named the official underwear provider for Team USA. The company is valued at $1.6 billion, and as a majority stakeholder, Kim Kardashian takes her place on the billionaires list. With Spanx struggling to maintain its market share and facing its fiercest competition yet, Blakely considers a shocking move, one that she's resisted for almost 20 years.
- [32:20]
Kim Kardashian
This episode is brought to you by State Farm. You've got to be kidding. It's something you might say when your small business has a problem, but that won't get you the help your business needs. What you should really say is something that can help. Like a good neighbor, State Farm is there. Their agents are ready to help you with your claim, to help you get back in business on the phone or in person. Your State Farm agent is there to help.
- [32:45]
David Brown
Like a good neighbor, State Farm is there.
- [32:49]
Emma Greedy
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- [33:45]
Jens Greedy
Foreign.
- [33:48]
David Brown
It'S fall 2021 in New York City. An Chong takes a seat at the head of a conference table at the headquarters of private equity firm Blackstone Group. She looks around the room at the four other women seated around the table. Chung has led investments at Blackstone in a variety of products, including oat milk maker, Oatly furniture manufacturer Walker Edison and Sunscreen company Supergoop. And now she has her eyes on another brand.
- [34:15]
An Chong
Everyone ready? You have your talking points down.
- [34:18]
David Brown
The women all nod. Not long ago, Chung heard that Spanx founder Sarah Blakely was thinking about taking outside funding for the first time in the brand's 20 plus year history. Chung thinks Spanx would be a great addition to Blackstone's portfolio. She secured a meeting with Blakely, but Chung and the other women on her team know that they need to nail the meeting to convince Blakely to let them buy in. Blakely may be thinking about taking outside funding, but Chung knows that actually pulling the trigger will still be a big leap. After a minute, the door to the conference room swings open and Sarah Blakely follows an assistant into the room. Chung stands up, extending her hand.
- [35:02]
An Chong
Sarah, it's so great to meet you. Please take a seat.
- [35:06]
David Brown
Blakely shakes Chung's hand and looks around the room, smiling.
- [35:10]
Jens Greedy
Wow. An all woman team. That's incredible. One of my side hustles, if you will, is supporting women in business. So seeing an entire conference table of women is like my dream come true.
- [35:23]
David Brown
Chung smiles to herself as she and Blakely sit. She knows full well about Blakely's passion for supporting other women entrepreneurs. It's a coincidence that this team is all women, but Chung had hoped Blakely would respond well to it.
- [35:37]
An Chong
Would you believe this was totally organic?
- [35:40]
Jens Greedy
That's even better. Just shows how far we've come in the business world, right?
- [35:44]
An Chong
Absolutely. Look, we can jump right in. When we heard that you were considering bringing in an outside partner for Spanx, we knew right away that we wanted to have a meeting with you.
- [35:55]
David Brown
The women around the table nod vigorously.
- [35:57]
Jens Greedy
I appreciate that. However, I do want to be upfront that while I'm considering taking outside funding, it's not something I'm 100% committed to. I'm keeping all my options right now.
- [36:10]
An Chong
We completely understand. This company is your baby. You need to do what you think is right for it and for yourself.
- [36:17]
Jens Greedy
Exactly.
- [36:18]
An Chong
Well, let me lay out what we see in Spanx, because there is so much we love about it. Obviously, you have great market penetration and brand awareness and your E commerce sales are very strong. That said, there's still so much potential for growth, especially if you broaden out the products you offer.
- [36:35]
Jens Greedy
Honestly, that is one of the reasons I'm thinking about an outside investor. I want to continue to expand our product line. I think the pandemic showed us the downside of being so associated with one type of product and I think a partner will help us do that. To be clear, though, I still want to be heavily involved.
- [36:54]
An Chong
Oh, of course. You built this company from the ground up, and you've steered it for over 20 years. We'd be fools to not want to take advantage of your expertise. What I see our role as is taking what you've done and amplifying it, providing the resources and advisors who can help you write the next chapter of this iconic company.
- [37:13]
Jens Greedy
That sounds great. Obviously, there's a lot more left to discuss.
- [37:17]
An Chong
I hope this is just the first of many conversations.
- [37:20]
Jens Greedy
Me, too.
- [37:22]
David Brown
Chung grins. She feels good about this meeting. Not much later, Blackstone announces that it's acquired a majority stake in Spanx. Blakely will stay on to oversee operations and will become executive chairwoman. You know what? This reminds me of? Someone, an old friend who spent years building up his business, and once he was well, up and running, had established a reputation and was at his very peak. And this at a time when it seemed like there was nowhere to go but up. He knew he needed some rocket fuel to get to that next level. In business, that can often be a big jump. He needed funds, and he went outside the organization to get him. He struck a deal with an investor, a deal that may have been hard for him to swallow, since he'd have to give up making all the decisions for his company. But he was promised he'd be staying on to oversee operations. Got a fancy title and everything. A few years passed, and the next time I heard from him, he was on vacation, trying to cool down from having been kicked out of his company. Why'd you make a deal in the first place? You know what he told me? Because he was promised a position that would let him keep on doing what he loved without having to worry about the money. Eventually, he lost his position in cost cutting, and the company he built was taken right out from under him. The lesson? Beware that next giant leap. You may be tempted to take the money you need in exchange for the promise of getting to do what you love. Running your business. But at the end of the day, there's a reason they call money the bottom line. And if times ever get tough for the company, you may find yourself below that bottom line before you even realize what's happened. Sure, Spanx may have new cash now, but things are about to change. In fact, almost immediately, Blackstone starts making changes at Spanx. They bring in new executives, including a new chief operating officer and a new head of product. They open an office in New York, and they move into a new, bigger warehouse. They quickly begin expanding into more types of apparel. They release new lines of Athleisure, jeans, outerwear and more. And in March 2024, they launched their first global advertising push to promote their new products. They feature women wearing different Spanx products doing a variety of activities, including taking a zoom meeting, playing tennis, having dinner with friends. The tagline is we live in Spanx.
- [39:53]
Jens Greedy
It's the clothing we can achieve in and breathe in. The pants that make us feel good around people. The dress where we feel good around ourselves. We live in Spanx.
- [40:11]
David Brown
They push it across Facebook, Instagram, YouTube and more, all part of an effort to recast Spanx as a company that's more than just Shapewear. But while Spanx may have more cash now, it's still struggling to change the public's perception of it. Spanx is embedded in people's minds as a shapewear company. While Spanx struggles to broaden its image and attract new consumers, Skims is flexing.
- [40:36]
Jens Greedy
Its might Skims, the shapewear and clothing.
- [40:39]
David Brown
Brand founded by billionaire businesswoman and television personality Kim Kardashian, officially opened in Georgetown today. This D.C. location is now the first to permanent Skims location. Other locations outside of D.C. soon follow, including Houston and Miami, and in December 2024, they open a flagship store on Fifth Avenue in Manhattan. At nearly 7,000 square feet, the new York store showcases the range of products Skims has developed over its five years in existence. The flagship store and Skims other retail locations are something of a risk. Skims historically kept its overhead relatively low by using a direct to consumer model and focusing on drops of limited numbers of select items. This model kept inventory low and allowed the Skims team to assess which products resonated with customers. But retail stores require rent, staff and inventory. Moving into the physical retail space represents a big increase in Skims overhead costs. Rumors fly that Skims will go public at some point in 2025. Both Spanx and Skims are private companies and are a bit cagey about their financials. However, industry observers estimate that by 2024, SKIMS brought in $1 billion in net sales. Meanwhile, in a 2024 call with investors, Blackstone executives described Spanx as underperforming. Despite the new products and an advertising push, it remains to be seen if Spanx can get its mojo back. When spanx started in 2000, it grew in popularity, thanks in part to a primitive form of influencer marketing. Spanx did no paid advertising for 16 years. Instead, the company relied on celebrities, including Oprah and, as it happens, Kim Kardashian to hype the brand in interviews and on the red carpet, as well as Blakely's appearances on QVC. But when Kardashian launched SKIMS in 2019, influencer marketing had reached the next level, and Kardashian was a master user of social media from the beginning. Skims courted relationships with creators across a variety of social media platforms, and Kardashian leveraged her personal connections with a list stars Sza, Patrick Mahomes, Usher and more all promote Skims. Skims is riding high, but it has one major weakness. It is still very closely associated with Kim Kardashian. She is the face of the company, still its primary model. So far, she's managed to capitalize on her fame, but the public is fickle. One slip up on her part and people could turn against the company even if she doesn't make a misstep. Fashion is notoriously fickle, too, and celebrities go in and out of style. Could Skims outlast Kim Kardashian? Could another shapewear company replace it down the line? We'll see if there's anything Kardashian has proven over the years. It's an uncanny ability to command public attention and stay in the spotlight. But what about the rest of us who don't carry the last name Kardashian? Business is business, but to founders of a company, business is personal too. What was it Cicero said? Know thyself. Admittedly, there are masters of business survival, and we've documented quite a few over the years here at Business wars. You may be one of them, but beware the alluring taste of success. Though sweet to be sure, you never know whether that next big bite might leave a very bitter and unexpected aftertaste. If you like Business wars, you can binge all episodes early and ad free right now by joining Wondery plus in.
- [44:36]
Kim Kardashian
The Wondery app or on Apple Podcasts.
- [44:39]
David Brown
Prime members can listen ad free on Amazon Music.
- [44:42]
Kim Kardashian
Before you go, tell us about yourself.
- [44:44]
David Brown
By filling out a short survey@wondery.com survey from Wondery. This is episode two of Spanx versus Skims for Business Wars. A quick note about recreations you've been hearing. In most cases, we can't know exactly exactly what was said. Those scenes are dramatizations, but they're based on historical research. I'm your host David Brown. Austin Rackless wrote this story. Our producers are Tristan Donovan of Yellow Ant and Grant Rutter. Sound design by Josh Morales. Voice acting by Chloe Elmore and Jenny W. Chan. Fact checking by Gabrielle Drollet. Our managing producer is Desi Blaylock. Our senior managing producer is Callum Plews. Our senior producers are Emily Frost and Dave Schilling. Karen Lowe is our producer emeritus. Our executive producers are Ginny Lauer Beckman and Marshall Louie for Wondery.
- [45:49]
Unknown
Introducing Instagram teen accounts. A new way to keep your teen safer as they grow. Like making sure they always have their seat belt on.
- [45:56]
David Brown
Alright, sweetie pie, buckle up. Good job.
- [45:59]
Unknown
Or ring the bell on their bike.
- [46:01]
David Brown
Okay, kid, give it a try.
- [46:03]
Jens Greedy
Nice.
- [46:04]
Unknown
Or remember their elbow pads.
- [46:07]
David Brown
Knees, too. Okay.
- [46:08]
Jens Greedy
Yep.
- [46:09]
David Brown
There you go.
- [46:10]
Unknown
New Instagram teen accounts. Automatic protections for who can contact your teen and the content they can see.