Hanky Panky: Building a Business on Empowering Women
Gale Epstein is a creative type, a petite vegetarian who relaxes by riding horses at her upstate New York farm. Her business partner, Lida Orzeck, is more of an urbanite, a Yankee fan who prefers the bright lights of New York City.
But despite their obvious differences, Epstein and Orzeck, co-founders of Hanky Panky, the homegrown lingerie company that pioneered the stretchy thong, have one thing in common -- a successful partnership that dates back to 1977. Their relationship has outlasted two marriages (Orzeck's) and two long-term relationships (Epstein's) and their business is still going strong with roughly $50 million in annual sales.
What's the secret to making a 34-year partnership work?
"We share the same vision," says Epstein, the New York City company's president and creative director. "Our success is based on each of us having our own strengths, our own areas of expertise."
In a fickle industry where hot styles are routinely "knocked off" by big chains at low prices, the two entrepreneurs, now in their mid-60s, have used their design sense, business savvy and legions of loyal customers to retain financial and creative control of the company they founded when they were in their 30s. The 150-employee company sells 2 million thongs a year through department stores like Nordstrom and Lord & Taylor as well as upscale lingerie boutiques across the U.S. Though Hanky Panky also sells bras, camisoles and other lingerie styles, thongs account for roughly 50% of sales.
"We have such a wide demographic now," Epstein says. "Everybody from grandmothers to granddaughters wears our thongs."
Hanky Panky was born in 1977, when Epstein, a Parsons-trained designer, used embroidered Chinese handkerchiefs to create a whimsical bra-and-panty set for Orzeck's birthday. As the country was evolving with the women's liberation movement, Epstein was inspired by the idea of turning the hankie, a dainty Victorian-era relic, into a “confident, overtly sexual” statement of female empowerment. Orzeck, her long-time friend and neighbor, was also her target market. Orzeck, who earned a Ph.D. in social psychology at Columbia University, loved the hand-made gift so much they decided to team up to build a lingerie company around the fashion item. While Epstein sewed, Orzeck dialed up department store buyers and began booking orders.
"Gale made 12 dozen bras and bikinis for Lord & Taylor in one weekend," recalls Orzeck, who serves as chief executive of Hanky Panky. "I read the instructions on how to invoice and loaded them in my car and went to the loading docks."
Hanky Panky grew slowly but profitably, hitting $1 million in sales four years after the company opened its doors. But it wasn't until 1986 that Hanky Panky introduced the panties that would put the company on the map -- the one-size-fits-all thong. The company wanted to "create something that was more comfortable than a G-string but sexy like a pantie," Orzeck says.
Word quickly spread of Hanky Panky's lacey thongs and the embarrassing panty lines they helped erase. In 2004, The Wall Street Journal declared the thong a fashion phenomenon, with supermodels like Cindy Crawford and movie stars like Julianne Moore wearing the company's signature 4811 thong.
"Hanky Panky makes the ubiquitous thong that every woman knows by name," says Claire Chambers, CEO of Journelle Inc., a New York City lingerie boutique that has carried Hanky Panky's thongs since it opened in 2007.
The mania that followed almost sank the homegrown business. Running at sales of about $12 million a year before the Journal article appeared, Hanky Panky was afterward deluged with large orders from major department stores that it scrambled to fulfill.
"It was scary," Orzeck says. "But our contractors are [like] family, and they worked with us when the department stores cleaned us out of our inventory so quickly."
Tapping the company's credit line, the co-founders ramped up production (Hanky Panky manufactures domestically, contracting production to small factories in the New York area), expanded its sales force and created a planning department to help its retail customers figure out which styles were selling the fastest so they could re-order more effectively.
Despite intense competition from national chains, the company's sales remain strong and its founders have no plans to cash out and retire. Hanky Panky is now expanding its business through licensing deals with Collegiate, a college marketer, and Hello Kitty.
"We have a brand name that's so strong that the knock-offs don't matter," says Orzeck, who notes that Hanky Panky's thongs retail for $18 to $20 a pair, triple what a pair of thongs typically costs at popular lingerie chains like Victoria's Secret.
Here are some lessons that Epstein and Orzeck have learned about building a successful partnership:
1. Find a partner with complementary differences. Despite their close collaboration, Epstein and Orzeck have clearly defined areas of responsibility. Epstein is the designer who works with the creative team on new styles. Orzeck leads sales, marketing and operations. Yet both women work together to make decisions and guide company strategy.
2. Keep the lines of communication open. Though they work on opposite sides of their 11th floor Manhattan office space, Epstein and Orzeck stay in touch throughout the day. "We respect each other's opinions so much that, even though we have own specialties, we like to give our input into each other's departments," Orzeck says.
3. Build a management team to support you. No matter how talented you and your partner may be, you can't build a company alone. That's why Epstein and Orzeck have brought in what they call a "B team" to help manage sales, production, warehousing and other functions. There's also a strategy consultant to help guide future plans. "As our business has become more complex, we've relied on our trusted advisers to help us with decision-making," Orzeck says.