How Two Women Created a $50-Million-Dollar Business Without Selling Out


Hanky Panky is a $50-million lingerie business that began when Gale Epstein made a bra and panty set out of handkerchiefs for her friend Lida Orzeck’s birthday. Over 40 years later, they’re known as the Jobs and Wozniak of thongs, except they never went public, never took outside investment, never advertised, never outsourced production, and never entertained the hefty offers to be acquired. They talk with Nancy about bootstrapping, product innovation, buzz marketing, and alternative exits.





Episode 7:Hanky Panky Transcript

Our interview with Gale Epstein and Lida Orzeck, the founders of Hanky Panky.

Nancy: Welcome Gale and Lida.

Lida: Thank you.

Nancy: The two of you started Hanky Panky how many years ago now?

Lida: Forty-one years ago now.

Nancy: Forty-one years ago. Okay, so the year is 1977. What were we all doing in 1977? What was going on then? Women’s movement?

Gale: It was. There were marches. It was, well it was a little post-march.

Lida: 1968 was a very, very political time. In fact, that was when I graduated from college, in ’68, here in the city. And by then I already knew Gale.

Nancy: How did you guys meet?

Gale: We met through a mutual friend. A woman that I grew up with, a childhood friend, schoolmate in St. Louis. She came to Barnard to go to school, met Lida-

Lida: Meryl and I, we were best friends at Barnard, and Gale was already in the city and she introduced me to her good friend from St. Louis, Gale.

Nancy: And it was love at first sight? You guys were like-

Lida: We became friends. Meryl had graduated 4 years later and moved away and we continued our friendship. We were friends for about 10 years before we started Hanky Panky.

Nancy: So now you’re friends, where are you living? What are you two doing?

Gale: I have been designing since even before I got here, since I was a child basically. So when I arrived here, I tried to change my major to illustration from design. I was still design, I couldn’t help myself. I was working for a manufacturer and learning all about the garment industry while having my little studio at home and making things for boutiques.

Nancy: Oh, you were? And so you actually learned how to take one of your ideas?

Gale: I knew how to sew.

Nancy: You knew how to sew?

Gale: Yes.

Nancy: Did you know how to bring it to a manufacturer to get it replicated?

Gale: I knew how to make it myself, even on the first order I made myself after Lida came back with large orders, actually.

Lida: But Gale was working for manufacturers. In addition to the stuff she was doing on the side, she was immersed in 7th Avenue. So she kind of knew the business from that view. I, on the other hand, was just going to school. After I graduated from Barnard I went across the street to Teacher’s College and continued with my psychology studies and got a PhD in social psychology. We were close friends, but on two very different paths. I was always extremely interested in what Gale was doing, however, and Gale was always giving me little gifts of things that she made. And that’s when the significant gift came along.

Nancy: Talk about the gift.

Lida: Well the gift was a little brown bikini set that Gale had made from hand-embroidered cotton handkerchiefs, of all things, that she had cut up and redesigned into this little brown bikini set. She gave that to me for my birthday and I was wowed. And we just started talking about it, and other people would love this too.

Gale: Once the name happened, the Hanky Panky.

Nancy: How did the name happen?

Gale: It was just so appropriate it popped out.

Nancy: Really, like that?

Gale: It was the handkerchiefs. It was the handkerchiefs. It was so intuitive and obvious.

Nancy: And obvious. Because lots of people, when they’re starting a business have lists, pages long trying to come up with the name. Because the name’s the beginning and could be the end of a business if it’s not…

Lida: It really is the impetus if it’s right.

Nancy: Yeah. And Hanky Panky is completely, for all the meanings it has, perfect.

Lida: Yes, a double, triple entendre.

Gale: It was wonderful, then, when Lida went round with the sample collection. It was an unforgettable name and a very different look from what was in the stores.

Nancy: Did you have a logo?

Gale: Yes.

Nancy: Alright, you have these samples and you’ve got a name called Hanky Panky. Do you have a little card that goes Hanky-

Lida: Gale created the first logo.

Gale: And does anybody remember Letroset?

Nancy: No.

Lida: Ok. Well, that’s how Gale created the first logo. There wasn’t Photoshop or any of that stuff. And it was a very girly, feminine logo back then.

Gale: We changed it 20 years later.

Nancy: And you, Lida, go walking into stores to try to sell it?

Lida: Well I didn’t exactly just walk into stores. What happened was, I was working. I had gotten my degree and I was doing research for the City of New York. And once we decided we were going to sell these things, I called stores. Stores meant department stores to me at the time because that’s really where a lot of the shopping for female apparel went on. There were a lot more department stores back then.

Nancy: And there weren’t lingerie boutiques yet. Victoria’s Secret hasn’t happened yet.

Lida: Victoria’s Secret went into business the same year we did. There’s a little side story about that too. So I was calling Macy’s and Lord and Taylor. I had a vacation planned for the West Coast so I called all the stores out there. And there were so many in the West Coast that don’t exist now or have been absorbed, like Bullocks and Robinsons and Annie’s. Anyway, every store I went to with the samples that Gale made for me. Everybody was so intrigued.

Nancy: You carried them in a bag?

Lida: Carried them in a shopping bag.

Gale: They don’t take up much space!

Lida: And that was a time when buyers would just say, “I love it. I’m placing an order.” And then we take a piece of paper and write. We’d walk out of the stores with orders. Every single one of them.

Gale: It was a very different time when buyers had the autonomy to create a department around their own vision.

Nancy: And they could make the decision right there.

Lida: Yes, exactly.

Nancy: Okay, pricing. You bring it in, now they want to take it. Did you know how much you were gonna sell it to them? Did you know wholesale, retail-

Gale: I knew from experience.

Nancy: You knew that. So you had a price already.

Gale: Worked it out, yes.

Nancy: You worked it out, so you would make a profit.

Lida: Yeah, fortunately we sort of knew what we were doing. Gale more than me but to enough of an extent that we were killing ourselves from the start and properly priced for wholesale.

Nancy: They were properly priced. Now you get them into the stores, how do people know to go in to buy them?

Lida: That was before the internet, but-

Gale: We got a lot of editorial publicity initially because it was so different. We called magazines and they responded.

Nancy: You called them.

Lida: Yes.

Nancy: So you didn’t have a publicity person?

Lida: Oh no, we did everything ourselves.

Nancy: The two of you are in apartments? Where are you at this point?

Lida: Well, at this point, my job did come to an end. I had been working, doing research for the police department and then for Health and Hospitals Corporation and they were finite research periods of two years each. So my job came to an end, so I had the time to spend. We started off in our apartments. Gale continued with a full-time job, which meant she was working-

Nancy: Twenty-four-seven.

Lida: It was not good. It was very difficult.

Nancy: But I want everyone to hear that, all you future startup people. It’s a twenty-four-seven life. Even if you don’t have a full-time job, it’s twenty-four-seven.

Lida: Exactly. So we started in our apartments but then we took a small space in a building opposite the New York Public Library, which was the showroom, and our storage area for our inventory, and our cutting room.

Gale: We had a table that the sides flipped up, and we had a spreading machine so at night we would spread the fabric and I would cut it, and then assemble it into packages to send out to… Actually we had a cottage industry at that time. Women sewed at home.

Lida: You can’t do that any longer.

Nancy: How did you afford that space?

Lida: Well we had put together, what I remember, about $15,000 back then.

Nancy: The money from the two of you?

Lida: Yes. Yes. I think that’s about right. And we bought handkerchiefs, we paid sewers.

Gale: We had these early orders that we delivered and, probably, I said it had to be paid for right away. So in other words, COD for all orders. And we were approaching some smaller stores also, so there was some money coming in and it went right into the business. We weren’t paying ourselves. It’s called boot-strapping and it is the way to not need too much money if you’re disciplined.

Nancy: Did you ever raise money?

Gale: No.

Nancy: You’ve never raised money?

Gale: We’ve never had investors.

Nancy: You’ve never had investors?

Gale: No.

Nancy: No friends and family, no venture capitalists?

Lida: Well we had family who helped us with collateral for our first loan, which we gave them back the collateral immediately when we got the loan.

Nancy: Okay, I just want to underline this, and those of you listening will hear this throughout the interview. I need to underline this because the current paradigm is: get an idea, go out and raise as much money as you can raise, and then begin your business. And there’s something so appealing about the way you guys did it. It was, boot-strapping, and that the money would come and you just stuck to your knitting, so to speak.

Gale: Most people do not have the knowledge or the resources, the connections, the network, to raise money. Most businesses really have to start this way. But it is, as you say, that’s not really well known. That’s not what people assume.

Lida: That’s not what you learn in business school.

Nancy: And neither of you went to business school, correct?

Gale: No. No.

Nancy: So you’re creating this on your own, and another key thing you just said. You did not pay yourselves a salary.

Lida: No, not for a long time.

Nancy: How long was that, that you didn’t pay yourselves?

Gale: As I recall it, because our items were properly priced, we were able to take a little bit out for ourselves. That’s the other thing. You can’t become homeless. Some people do when they’re struggling to get something started, but you have to be responsible to yourselves as well as to your customers and the right way of doing things. So we were taking a very small amount out as needed for ourselves, paying the rent, covering costs for all of the raw materials, paying the sewers. But we were doing it, we were just selling items, taking the money in, paying everybody off, continuing to sell, and there was margin in there. So we could-

Gale: And the cash flow that we had, and have always had, was important to accomplish that as well.

Lida: And you didn’t have to go to business school to figure that out.

Nancy: And you never did a business plan.

Lida: Never.

Gale: No, we never have. Most people, I bet don’t.

Lida: They just say they do.

Nancy: Do you think that’s true?

Lida: Yeah, because there’s so many unknowns. I do personally believe that business plans are worth the paper they’re written on in most business situations unless you have a history and can really predict what your next quarter, what your next year, and possibly your next five years could look like.

Nancy: And do you think, had you gone out to raise money, would this idea in 1977, with your little bikini bottom and your little bra-

Gale: We would never have thought to go out and raise money.

Nancy: But had you gone out, do you think you would’ve gotten any?

Lida: Well I’ve got two responses to that. Doing our research, I learned about the SCORE. Those are the retired people, the executives. All men, and I did go see them. This is when I was working downtown and their office was downtown as I recall. And when they learned that the area I was interested in was apparel manufacture, I was funneled toward a retired garment executive who was completely discouraging about our continuing in this. So that was one meeting and that was that, I-

Nancy: ‘Cause he just didn’t think bras and panties were a big business?

Lida: No, I was just…it’s hard to go into business.

Gale: Especially for women in the business.Women at that time had more difficulty convincing people like that, that it was time.

Lida: I think he had one model in mind. It was probably the company he came from, I have no idea what it was. It was probably not intimate apparel, it may have been sportswear, but whatever it was, he just was discouraging about our chances. That’s one thing I have to say. The other thing I have to say is, although we didn’t think this way at the time, and we didn’t want to do that because Gale and I are fiscally really cautious and careful and smart. We could have probably raised some money from family and friends because we grew up middle class people. A lot of people who start companies don’t have that privilege. On the other hand, we also aren’t connected at the very highest levels financially either, so we couldn’t have raised the kinds of millions of dollars that people need to do these Silicon Valley sorts of endeavors. But whatever it is we needed, we might’ve done it that way but our way of doing things was, you make a little bit of money, you put it back in. Gets a little bigger, you make a little money, you put it back in. And that is the way the company grew.

Gale: We didn’t want to have outstanding debts either, because we didn’t want to pass those charges along to the customer. Increase the price of the collection. So we didn’t do advertising per se, our reputation spread through word of mouth.

Nancy: Yeah, you were doing buzz marketing before the internet came on the scene. I mean, you didn’t do any advertising. Is that correct?

Gale: We had a lot of wonderful editorials, we sort of didn’t have to.

Nancy: And the editorial. Now, you’re calling the magazines, you’re getting write ups, and that was enough for your marketing campaign.

Lida: It really was enough until what we started making took on a life of its own. And through the genius of Gale’s creativity and ideas.

Nancy: We’re moving forward to 1986?

Lida: Yes we are. Take it away Gale.

Nancy: It’s a big year for Hanky Panky.

Gale: We transitioned from mostly cottons, the handkerchiefs and associated collections, to lace as it evolved when it became softer through technology and through Lycra, spandex fibers with stretch properties and softness that it hadn’t had before. These ingredients were available to me at the time and I started playing with them, understanding that there was a void in the market for a thong that was comfortable, because there were a few in the market that were unbearable to wear. Fashion was becoming more fitted with the tight pants and jeans, and women were wanting a comfortable panty that didn’t show a visible panty line.

Nancy: Oh yes, I remember that.

Gale: So I just worked and tweaked and tweaked until I did accomplish the world’s most comfortable thong.

Nancy: This is something, also, that I so admire about what you did. The world’s most comfortable thong. So you are playing around with the lace. Do you think to yourself, “This is going to be the world’s most comfortable thong?”

Gale: Absolutely.

Nancy: Or do you go, “This already is the world’s most comfortable thong.” And then you immediately did copyright, right?

Gale: Of course.

Nancy: Of course. You say of course-

Gale: Trademark.

Nancy: Trademark. All these lines you’ve come up with, you guys trademarked.

Gale: Yes.

Nancy: So many people wouldn’t think.

Lida: We had wonderful advice, first of all. Wonderful legal advice.

Nancy: Ok, how did that happen? Because that’s a really big piece of advice to pass on to everyone. I wrote down all the great lines that you’ve come up with. Okay, “the world’s most comfortable thong”, trademarked. “Signature lace”, is that yours?

Gale: That’s not trademarked actually.

Nancy: That’s not trademarked. “Supima Cotton with a Conscience”-

Gale: No.

Nancy: And Hanky Panky…What’s your thing? “The name on everyone’s hips,”? I mean it’s like you come up with these lines and then you go, “Boom. It’s ours, and we gotta trademark it.”

Gale: It’s very important, to make a company more valuable, to own these.

Nancy: That’s right. And how did you get that advice? Who told you that whenever you come up with a great positioning statement like that-

Lida: That is something that you ask, “What advice do you have for other people?” That would be top on our list, is to find and work with great advisors. The people who advised us legally early on, there have been changes. We have some advisors who’ve been with us almost the entire length of the company. But legal changed around a bit. At the beginning, though, we did have folks, who, first of all, when the internet began we were advised to buy the domain name Hanky Panky. You can imagine if we didn’t own it how much we would have to pay for that these days. And we own it since whenever the internet, very shortly after the internet was invented.

Lida: Taglines, we became savvy after a while about these sorts of things. There is one thing that cannot be copyrighted or trademarked and that are actual designs. In this country, apparel designs cannot be. Hence, there is so much copying in the apparel industry and our thong, people have tried to copy it. That is where its unique properties became known to the users and word spread and that’s kind of an asset that you can’t even pay for. All of the advertising that our own customers did around the actual comfort and beauty of what we were making that no other company could meet.

Nancy: So even though there were all these copycats, lower price point, your customers became the barrier to entry. They became your barricade to protect you.

Lida: Because it’s not hype. There’s a reason, first of all, why it is more expensive, it is more expensive to make. It is made better, all of the ingredients are better.

Gale: It’s made in the USA.

Nancy: How did you make it into that little thing?

Gale: The roll.

Lida: For you listeners, you’re describing the roll.

Nancy: Yes, I’m rolling my hands and I need to say that Gale, by the way, is wearing around her neck, it’s like a lace cravat, like what Ruth Bader Ginsburg would wear in court. It’s a white lace-

Gale: It’s just a piece of lace.

Nancy: Okay, it’s just a piece of lace but would I put that around my neck? No.

Gale: It’s just what I find on my desk.

Nancy: But anyway, it’s just completely great. So how did you turn it into that roll?

Gale: I just played ’till it rolled properly.

Nancy: But why did you even think roll? I mean at that point, everything was hanging on a hanger, wasn’t it? Or laid out on a shelf?

Gale: That’s true. I don’t know if I deliberately thought about it. Most of my ideas are sort of inspired, channeled something. But it seemed like a great marketing, something to allow it to sit by the cash wrap, take up very little space, real estate, and also take us into another type of store. A different lifestyle store instead of just lingerie boutiques.

Nancy: What were those stores?

Gale: Sportswear stores, mostly specialty stores.

Lida: Well, an Alice and Olivia type that this may be the only intimates they have.

Nancy: Sure, so a clothes store would put it in.

Gale: Exactly.

Nancy: A boutique.

Lida: So once our reputation was established and people knew what they were looking for, they recognized that they saw each season new colors sitting there.

Nancy: Your colors are so key, too. So the thong comes out in 1986, now can we move to 2004? Big, big year. What happened in 2004?

Lida: Another huge learning experience that people need to understand about business. It was June 18th, 2004, that the Wall Street Journal printed a story about the phenomenon that is the Hanky Panky 4811, world’s most comfortable thong, our original rise thong. One very enterprising journalist had discovered us. Again, this is so early. We weren’t advertising. So you have to sort of hear about us through word-of-mouth. And then she kept hearing about it more and more so she became very intrigued, came to talk to us. She was the small business editor at the Wall Street Journal. She did admit while she was coming in occasionally to interview us she was gonna have to convince her editors that this story was worthy. And I must say at that point I thought, “Oh okay, this is not gonna happen.”

Nancy: And her editors were men at that time?

Lida: Of course. Of course

Gale: The one who placed it on the front page was a woman editor who was, I don’t know the name.

Nancy: Okay. But it took a woman to put it above the fold, probably.

Gale: I believe so.

Lida: Anyway, we were not led to believe this was gonna be a front page story but it was. And as Gale says, it was above the fold, it was a center column, with pictures of us, colored pictures of the thong. And all hell broke loose. We had been in business at that point for about 26 years. We were growing every year even though we had, at that point, lived through three recessions, two more to go after that. We were profitable every year because Gale and I wouldn’t have it any other way, but we were slammed by people demanding our products. And that is the kind of thing that usually… If you haven’t already gone out of business in your first five years, that’s when you’ll go out of business.

Nancy: With success.

Lida: With an unexpected, unplanned-for success. We wouldn’t want that happen either.

Gale: After the initial department store orders that Lida received, we became more of a boutique specialty supplier. So that was our business up until 2004. That day, the next day, after that article, the department stores came clamoring. So it was very, very tricky to scale and appease everybody.

Nancy: And get all those orders out. And meanwhile, the good news is, you’re doing all your manufacturing. That’s part of your DNA. Here, in the city, in the United States. You weren’t sending it abroad. So that had to help a little bit, I would guess, but not enough.

Lida: Well some people might have said, “Ah, now is when we must go abroad. Now is when we have to scale up that way and bring prices down and all that.” Well no, we-

Gale: We were committed to staying-

Nancy: The two of you are just very clear about what matters to you and what your principles are. That’s a big part of why you’ve stayed so tried and true. Now, at this point, didn’t the big guy companies come in saying, “We’d like to buy you, Hanky Panky”?

Lida: That’s when it started, oh yes.

Nancy: That’s when it started. Okay, so now they’re knocking on your door.

Lida: Yes

Nancy: And you say?

Lida: Well we’re not talking to them, actually. We’re putting them off to somebody else who’s taking names and saying, “They’re really not interested, but thank you for your interest,” kind of thing.

Gale: The ladies aren’t interested at all.

Nancy: But did any big company ever say a big enough number that you went, “Well, hold on, maybe we should-“?

Gale: We did not think about the numbers. We knew at that time that if anyone took us over, we would not have the same company. Even if we had the same contracts to stay on, for us, for our customers, because they would take it offshore. It would be a less quality product. It wouldn’t have the same culture. The company wouldn’t have the same culture.

Nancy: And you wanted to keep doing it?

Gale: Exactly.

Nancy: As opposed to, cash out.

Lida: First of all, it’d be unlikely. Maybe they’d keep Gale for a little bit if somebody bought us, as a designer. That’s where the special sauce is. I would be chopped liver. But honestly, we never even sat down with anybody. We never even heard a figure. We were not interested and it really wasn’t only that we wanted to keep working. We had a wonderful thing here that was employing, before the Wall Street Journal article, we were employing about 50 people. Now, we have about 175 people who work for us but that’s direct payroll. We also touch so many hundreds of others who work for the company. The contractors who sew for us, the merchandisers who are in the department stores keeping the displays tidy and bringing out stock from the back rooms and all that. These people work directly for us. They know a lot about our company, are in close contact with us on a regular basis — our sales reps. Oh boy, we have them all over the world.

Nancy: How many sales reps do you have?

Lida: Well, we have several in the United States. There are smaller and larger organizations who rep us depending upon the territories that they cover. And then we have our global distributors. So these are people who we’re in touch with all the time who are really a part of the company. So we wanted to keep this operation going with the value system that we believe in and developed. And there was absolutely, absolutely no way. So it never really occurred to us.

Nancy: And when you say, “No, we’re not going to be bought,” who owns the company now? The two of you?

Gale: Not any longer.

Lida: Well we do have part-ownership. What Gale and I have found out with the help of an advising team, our accountants who have been working with us for so very long, that the father was working for us when his son was born and now his son is a CPA who works very, very closely with Hanky Panky. So we have Terry and Jonathan. They introduced us to the concept of an ESOP, an Employee Stock Ownership Plan, which is a complicated structural format to put into place but is extremely beneficial to the employees who all become part owners in effect. It is a trustee format, which our accountants call “a 401k on steroids.” Everybody who works for us owns a piece without having paid one penny. They have shares in the company based on their salaries, the longevity, vesting. They will all make money from having worked here.

Nancy: Which brings me to, you were late going onto the web, I would say. For good reason, not wanting to compete with your retailers. But when you guys went onto the web, at least what I see now, is just one of the happiest, most productive retail websites I’ve ever seen. And I almost wanted to apply for a job. You have the description of what it’s like to work there. Anyone who’s listening you have to go to the Hanky Panky website, plus you get Hanky Panky points, and then you can do Lingeriecycle, so you get to recycle. Everyone, you must read about it. But there’s a happiness factor to Hanky Panky that, I don’t think you guys just sat there and went, “We’re gonna create this happy brand.” But there’s a playfulness in your product that also comes across in all your messaging, which I guess is you guys. You’re funny, right? And on the website I just would smile, and then you do that handshake.

Gale: Oh, the Hanky Panky handshake.

Nancy: The Hanky Panky handshake. How did I miss out on that?

Lida: That happens constantly.

Nancy: There’s a video, everyone, on the website, of the Hanky Panky handshake. Which is, what, women meeting on the street?

Lida: And just said, “Oh! Hanky Panky, yeah yeah yeah!”

Nancy: And you pull up your shirt or you pull down your pants and show your Hanky Panky.

Gale: Right.

Lida: Exactly.

Nancy: Oh my God. So, to wrap this up, I think you’re such an important role model for any women entrepreneurs out there. It’s a different model than what I see most of the time now of the big money raise and then you go do it and then you cash out. You created lives for yourselves. You both seem happy and not completely stressed. They look really good, everyone. That you’ve created good lives and you’ve created a great company that also now has hundreds of people working with you and also, I’m assuming, being happy. If that website’s any indication, it’s happiness. So I just think that’s such important lessons to be shared. And I would like to say one last thing. As much as you’re playful in your brand, it seems to me you’re dead serious in running the business in just a real responsible P&L way. You don’t wanna owe people anything, you wanna run a good, tight business.

Lida: There are no ping pong tables. No happy hour.

Nancy: Free food? No happy hour? No free food, no?

Lida: Not really.

Nancy: Okay, but everyone make sure to go to the Hanky Panky website and watch all the videos, listen to the music, and sign up. Is that what it’s called, Hanky Panky Points?

Gale: Hanky Points.

Nancy: Hanky Points. I’ve already earned some. And wait ’till you see the holiday collection, and the sparkles. Thank you for being here today.

Lida: This was a treat.

Gale: Thank you so much for understanding our mission.


Gale Epstein // Hanky Panky


Gale Epstein has been designing and selling clothes and accessories since the age of twelve. She grew up in St. Louis, studied at Washington University and then came to New York City to attend Parsons School of Design. Before starting Hanky Panky she had her own business making her designs for hip NYC boutiques while designing sweaters for a New York women’s sweater brand. Now, she is President and Creative Director of Hanky Panky. In addition, she is a board member of Sing Sing Prison Museum and a member of WellMet Philanthropy group. In her free time, you can find Gale riding or driving her Morgan horses. She is also a passionate environmentalist and animal rights advocate.


Lida Orzeck // Hanky Panky

A Brooklyn native, Lida Orzeck graduated from Barnard and continued on to earn a PhD in Social Psychology from Teachers College. After grad school, she spent a few years working as a researcher, first for the New York Police Department and then for Health and Hospitals Corporation. Today, she is Hanky Panky’s Co-CEO along with Brenda Berger. She is also a board member of the Southern Poverty Law Center, the International Organization for Women and Development and is a trustee of Barnard College. Advancing equity in educational access and racial fairness are her philanthropic touchstones.