How Thinx, the buzzy underwear company once worth $230 million, lost its way (2024)

Walk into any New York subway station in 2015, and there they were: the Thinx ads.

The striking, minimalist posters featured an image of a blush-tinted halved grapefruit. Crucially, the fruit was not sliced horizontally to reveal the starburst pattern common to brunch tables. It was instead peeled and crackedopen longitudinally, creating a suggestive shape.

The only other words in the advertisem*nt—“Underwear for women with periods”—confirmed that you weren’t imagining what body part the grapefruit was meant to signify.

Such clever and edgy ads, which initially faced resistance from the city’s transit authority, have typified how Thinx made millions aware of its products. Though it wasn’t the first company to create a period panty when it launched in 2013, it indisputably pushed the concept closer to the mainstream. From the beginning, it produced innovative products in on-trend cuts like boy shorts and thongs, strategically advertised its wares, and infused its online shop with corporate activism and period education. The formula catapulted Thinx into a business worth nearly $100 million in revenue within eight years and allowed the company to capture a fraction of the $2 billion per year women spend on feminine hygiene in the U.S.

Today, however, Thinx is yet another relic of the “girl boss” era—no longer an independent “it” brand but a family of SKUs under Kimberly-Clark, the $46-billion conglomerate behind single-use paper products like Kleenex, Kotex, and Huggies. After an initial investment in 2019, Kimberly-Clark took a controlling stake in the company in 2022 and fully acquired it at the end of last year. All told, the larger company purchased Thinx in a cash deal worth more than $230 million.

By then, sales revenue had reportedly dropped from just under $90 million in 2022 to $60 million, a nearly 40% decline compared to the highs of 2021. In February, the company issued a notice under the WARN Act, indicating that all 95 of Thinx’s employees in New York were at risk of an acquisition-related mass layoff. In the end, 58 staffers were let go, and 32 employees were integrated into Kimberly-Clark.

It’s a fall from grace for a storied brand that holds lessons for leaders of other cult-favorite startups who hope to avoid the dreaded accusation of “selling out.”Fortunespoke to six former employees and one person who retained their job after the merger. All requested anonymity citing agreements with the company. While a few ex-staffers say they are proud of Thinx’s next big-box chapter, others harshly criticize Kimberly-Clark for abandoning Thinx’s dedicated employees and failing to capitalize on what worked: a decidedly progressive, transparent, and irreverent voice; and a collaborative workplace culture.

When the consumer goods giant took control in 2022, it began to undo years of trust the company built with customers, some former employees say. Most egregiously, the parent company took a hands-off approach when news broke that Thinx was settling a class-action lawsuit over forever chemicals in its underwear. The company settled the suit for $5 million in 2023 without admitting to wrongdoing. However, it failed to communicate how much risk consumers actually faced by wearing Thinx underthings. Once-loyal customers felt confused and jilted—and sales never recovered.

For its part, Kimberly-Clark says the 152-year-old company will embrace Thinx’s role as a champion of women’s health issues while enhancing the brand and making it more accessible. “Thinx will continue to pioneer game-changing innovation,” Nicole Pawlukowsky, Kimberly-Clark’s vice president in charge of feminine care, tells Fortune, pointing to a newly released model of period underwear that can hold 12 hours’ worth of blood without leaking. “Our goal is to grow the reusable period underwear category,” she says. The rapidly expanding category is already worth $150 million globally, according to company data.

Still, the acquisition has raised concerns among former Thinx employees who fear that the brand, once known for its cheeky voice and high standards, will be compromised, made unrecognizable, or even one day cease to exist.

The provocative cofounder

Back in the mid-aughts, Thinx’s sex- and body-positive ethos was established and personified by its cofounder Miki Agrawal. The larger-than-life serial entrepreneur eschewed business attire for Coachella-ready outfits and an oversize hat, and routinely talked about periods, blood, and vagin*s in press interviews. (She also cofounded the bidet maker Tushy, so she talks poop and pooping too.)

Within a few years of launching, Thinx became one to watch in the direct-to-consumer field, joining a constellation of women-led brands adored by millennials. Like many of its ilk, the company added social purpose to its business model, initially donating a percentage of sales to AFRIpads, a maker of reusable pads for women and schoolgirls in Uganda. It expanded into incontinence underwear and period panties for teens and, later, activewear. Thinx made its biggest mark, however, by leveraging its e-commerce platform and artful, boundary-pushing advertising to overturn taboos.

To be sure, the New York subway ads and other campaigns have been derided as empty pseudofeminist capitalism by some, but the brand also became an advocate for women and others who menstruate, including trans men.

How Thinx, the buzzy underwear company once worth $230 million, lost its way (1)

By 2017, Agrawal was a celebrated, if controversial, figure. She famously donated her breast milk for lattes at Burning Man and posted a photo of her production process on Instagram. Earlier that year, however, she had resigned from Thinx after an employee sued her for sexual harassment. In the complaint, the employee detailed how Agrawal spilled details about her sex life during work conversations, publicly discussed and fondled the employee’s breasts, took video calls from bed apparently nude, and often changed clothes in her glass-walled office. Agrawal settled the suit, calling the accusations baseless, and the complaint was eventually withdrawn. Agrawal, who declined a request to be interviewed for this story, has since reestablished her reputation as a savvy, inventive disruptor.

The company Agrawal built was sturdy and compelling enough to convince Maria Molland, a former executive for the now-defunct e-commerce company Fab, who had held leadership roles at Dow Jones and Yahoo, to accept an offer to take over as chief executive. Molland did not respond to a request for comment, but she told Inc. at the time that after assuming the role, she immediately went to work establishing systems, creating an HR function, greatly expanding employee benefits, and doubling the staff to avoid overworking the small existing team. Though Molland shook off the startup’s chaotic culture, she embraced the best parts of the original Thinx, according to former employees. She was passionate about the feminist mission and happily gave employees autonomy and agency.

Under Molland, Thinx became a hot employer again, a place where purpose-driven workers who believed in period equity enjoyed perks like unlimited vacation. “I never thought I would be in a meeting talking about sweaty vagin*s,” says one former employee, one of many who called their former Thinx role a dream job.

But if Molland had been impressed by Thinx when she first found a scrappy team in 2017, she was less confident about its future one year later. Revenue increased 20-fold between 2015 and 2016, reaching “tens of millions,” according to reports. It rose to $40 million in 2017, then growth slowed considerably. Revenue reached only $50 million at the end of 2018. Molland told Inc. at the time that online marketing—particularly after Facebook made price and privacy changes—was no longer buoying sales as it once did. Thinx looked for other investors and experimented with different sales avenues, including selling its wares in stores like Nordstrom and Target. When the Irving, Texas–based giant Kimberly-Clark invested $25 million in Thinx in 2019, both parties benefitted. Legacy firms like Kimberly-Clark were under pressure to develop more sustainable products; Thinx was lucky to survive.

Chemical claims

In hindsight, that investment may have portended the beginning of the end of the OG Thinx, says one longtime employee. But it’s not the moment employees pinpoint as the real start of the company’s descent. To them, that dubious honor goes to the brand’s handling of a major forever-chemicals lawsuit and how Kimberly-Clark responded to it.

Forever chemicals called PFAs, an acronym for per- and polyfluoroalkyl substances, have lately attracted attention because, it turns out, they’re everywhere and are indestructible. These man-made chemicals are used to make clothes waterproof and stain-resistant, but they’re found in a wide range of everyday items, like nonstick cookware, not to mention soil and drinking water. Some research has linked exposure to even small amounts of PFAs to kidney cancer, hormone disruption, and thyroid problems.

In 2020, a journalist for an environmental magazine asked a lab to test Thinx and its competitor Lunapads for PFAs, discovering trace amounts of the chemicals in both. Then-CEO Maria Molland posted a response to the journalist on the Thinx site, explaining that Thinx’s testing did not find the chemicals in the underwear. It didn’t stop new lawsuits, including a class-action suit alleging the company marketed the products as safe, knowing they contained potentially harmful compounds. Some claimants complained of irregular menstrual cycles and urinary tract infections they believed were caused by the PFAs.

In early 2023, when news broke that Thinx had settled that particular lawsuit for $5 million, customers assumed the worst. Although the company denied misleading buyers, that detail didn’t translate to social media. “To this day, you can go on Instagram and see people slamming Thinx,” one employee says.

By this time, Kimberly-Clark held a controlling stake in Thinx through a $180 million deal made in February 2022. The parent company instructed Thinx to keep communications about the lawsuit to a minimum. Legal headaches like the PFA case were the cost of doing business for a company like Kimberly-Clark, a former leader at Thinx says, so the firm stuck to its nothing-to-see-here playbook.

Although it hasn’t been proven, some chemical experts suggest that PFAs can be washed out or nearly eliminated in clothing after a few laundry cycles. The risk of wearing period underwear seems lower or no worse than wearing other chemically treated fabrics. But Thinx didn’t make that information clear to its customer base when it had the opportunity two years ago, say former workers. “We had full control over how we handled it the first time,” one ex-employee says, recalling the 2020 incident. Employees at Thinx warned the new leadership team that customers would expect transparency from the brand and much more education. “You don’t know our consumers,” former workers remember employees telling Thinx leaders two years later, but their warnings were ignored.

As a result, Thinx customers, who had cherished the brand largely as an alternative to putting chemical-soaked tampons in their bodies, felt betrayed. Many stopped buying Thinx, and most didn’t come back, according to some ex-Thinx workers.

For Thinx, the PFA crisis was exacerbated by the brand’s early positioning as a virtuous and ethical company. The fallout also seemed to impact sales indirectly, according to a longtime employee who says a couple of key partnerships with influencers and a potential deal with the prestigious MoMA Design Store collapsed after the PFA problems surfaced. Winning a spot among the store’s carefully curated products—akin to being anointed one of the world’s most innovative modern designs—would have been a badge of honor for the brand, sure to propel sales, this former employee says. Whether or not the store admitted it, she suspects that the PFA controversy played a part in the undoing of that relationship. (The MoMA Design Store did not respond to a request for comment. Kimberly-Clark representatives said they were unfamiliar with these discussions.)

In a statement to Fortune about the forever-chemicals controversy, Kimberly-Clark cited a safety promise that it published earlier this year, adding, “We care deeply about the materials used in our products and put safety at the core of our design, development, and manufacturing.”

Culture clash

The same year Kimberly-Clark gained a controlling stake in Thinx, former Johnson & Johnson executive Meghan Davis replaced Molland as CEO. The two had little in common, former employees say. Molland backed Thinx’s feminist ethos and flatter structure, but Davis came from a large public company, where decisions are more often top-down, with limited input from employees. Davis declined to speak on the record for this story.

Compared to Molland, Davis took over amid a radically different market environment. In 2021, companies like Thinx saw sales soar thanks to the online shopping habits of consumers stuck at home during the pandemic. Kimberly-Clark does not share sales data, but reports claim Thinx’s revenue reached a high of nearly $100 million that year. In 2022, the pandemic tailwinds evaporated as direct-to-consumer companies generally hit a wall, and Thinx sales dropped to a reported $90 million.

Thinx employees who had worked at the company before its Kimberly-Clark era also became increasingly concerned about the extreme corporate makeover. At Thinx, not only did the once-democratic work environment become more like a dictatorship, former employees say, but there was little transparency about the company’s next moves in the last few months of 2023, even as it became obvious to employees that the numbers were bad. By then, company culture had slowly disintegrated, according to some ex-employees. Veteran employees complained of toxic personalities and mismanagement that led to a culture of fear, not one that invited inquiry and productive debate. Through the turbulence, Davis remained well-liked but conspicuously absent, says a former worker.

Under Davis, Thinx also started selling a cheaper version of its underwear at Target and Walmart to help lure in first-time buyers. Thinx data showed that many women were willing to get over the underwear’s “gross” factor and experiment with the product if the price was less prohibitive.

A former leader paints the Target rollout as a success, arguing that the wider availability brought the underwear to people who weren’t shopping for it online. “We grew the pie and market share,” says the ex-leader. But other former employees say this pricing strategy created a headache for online sales campaigns, where Thinx’s premium underwear was priced at $35. The company didn’t do enough to educate buyers about the product differences, contributing to sales that were already suffering after the PFA scandal, claims a past worker familiar with the data. Another person also saw the downturn as a symptom of Davis’s lack of experience with direct-to-consumer e-commerce.

Still, former employees say they believed Kimberly-Clark was prepared to weather the downturn despite the drop in revenue. They were blindsided when, in late January, Davis called a last-minute Zoom meeting to inform employees that Kimberly-Clark would move into the final phase of its Thinx integration, a change that would involve substantial job losses.

Kimberly-Clark HR representatives and Thinx leaders took an entire day to meet with every employee, most of whom would not be part of the “go forward” team, ex-staffers recount. It was a brutal experience. Worse, Kimberly-Clark set up the exits with an unusual requirement: To receive severance, those who were let go were required to continue working until May 1.

The revolution pivots

Not every former Thinx worker felt disillusioned by the layoffs. Though they were painful, those who supported the sale saw the job losses as a natural part of a brand’s maturation. Startups get acquired all the time and often involve mass layoffs, says one past member of the leadership team. Another acknowledged that “if you haven’t been through this type of thing, it can feel personal.”

That ex-employee and others pushed back against the “meltdown” narrative for Thinx.

Today, there are more than 20 period underwear brands on the market, and nearly all of them live in the underwear aisle—if in stores at all, many employees note. But the underwear section is not where people shop for period products. Thinx sits next to pads and tampons in the feminine hygiene row of big-box shops in the U.S. and Canada, which is killer real estate, says an ex-employee who called the mainstreaming of the brand “critical and revolutionary.”

Thinx’s acquisition should be recognized as a successful exit for a female-founded, female-led company, that former worker says. “We talk about how there's not enough funding for female-led companies, and then we get it, and no one cares,” she says of the mostly negative response to Thinx’s acquisition. “I find [the reaction] to be just incredibly patriarchal, which is ironic for a brand that is built to be the opposite.”

She and others read the angry responses of some laid-off employees as naive, a sign of a lack of experience with big corporate acquisitions. They also condemn what they see as some former workers’ elitist views about mass-market selling. After Kimberly-Clark became a majority owner of Thinx, it produced a suburban-mom-friendly commercial about a teen in distress over her first period. Ex-employees felt that the spot did little to remove taboos or reframe periods as anything but a depressing hassle. Yet that offensively mainstream ad was also a top performer in 2022, leading to more searches, site traffic, and sales, according to a former Thinx employee who now works at Kimberly-Clark. The advertising shift was a conscious choice “to try to reach more people, to be a little bit less polarizing, to be a little bit less an urban millennial brand,” she says, “because far more people have periods and bladder leaks than just those who live in coastal cities.” And wasn’t the company’s goal to reach as many people as possible?

Still, employees who feel spurned believe Kimberly-Clark could have simultaneously maintained goodwill with Thinx’s early adopters and employees while going mass-market. Instead of working with the Thinx team to thread the needle between its past and its future or asking employees to share ideas for shoring up revenues, Kimberly-Clark looked at the numbers and made a stark choice.

Some of the brand’s recent choices are already questionable, says one past employee, noting that several underwear cuts, including Thinx’s once top-selling period thong, are no longer available on the site. Kimberly-Clark is going to make Thinx very “basic,” predicts an ex-staffer sullenly.

“Thinx was a disrupter,” she says. “It was one of the reasons why I joined, you know? I wanted to be a part of the brand that had those subway campaigns.”

This story was originally featured on Fortune.com

How Thinx, the buzzy underwear company once worth $230 million, lost its way (2024)
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