Craftsy.com growing by tapping community of crafters
The Craftsy studios on the outskirts of Denver were hopping.
Beth Ferrier had flown in from Saginaw, Mich., to shoot a class on appliqués, and Amy Herzog of Somerville, Mass., was in another studio laying down some insights on knitting.
In a third studio, Gwen Bortner of Le Grande, Calif., was ready to tape a class on turning your craft into a living.
And that, in essence, is precisely what Sympoz Inc. is doing.
The 3-year-old Denver startup has turned crafts — such as quilting and breadmaking — into a multimillion-dollar cash stream through its Craftsy website.
“These enthusiast communities are small but are willing to pay for quality,” said Jason Mendelson, a managing partner at the Boulder-based Foundry Group, which has invested in Sympoz.
The company has raised about $20 million from investors, and its staff has grown from five to nearly 100, said John Levisay, the company’s chief executive.
Sympoz started out as an online education vendor, but after trying academic classes, cooking and wine tasting, it hit it big with crafts.
“By far and away, knitting and quilting outperformed everything else,” Levisay said.
That led to the creation of the company’s platform Craftsy in May 2011, but it wasn’t until last spring that the site took off.
Craftsy’s classes — there are 140 classes in such subjects as paper arts and cake decorating — have had 840,000 enrollments, with 401,000 paying $15 to $50 for an average four-hour class.
Some free or discounted classes are also offered.
The company’s revenue for 2012 was about $12 million, Levisay said, with about a quarter of that coming from the goods and materials the company sells online for courses.
Those dollars are coming from a “highly motivated” customer base that is almost 100 percent female, with 83 percent older than 41 years old.
In a break during her shoot on machine-finished hand appliqué, Ferrier explained: “You understand we are just crazy about what we do.”
The craft market, Sympoz estimates, is $30 billion a year — sewing alone has 26 million “sewists” and $2.7 billion in sales.
So providing online video instruction on demand looks promising.
“The question was, What is out there?” Levisay said. “There is low-quality video that gets posted on YouTube, and there are TV shows, which are often low on substance.”
To be sure, there are competitors. Companies such as F+W Media, which employs 200 people in Broomfield and Loveland, offer a wide range of instructional magazines, DVDs and online crafts instruction.
“We’re actively hiring digital- media professionals in the state,” said Chad Phelps, F+W’s chief digital officer.
The Craftsy formula is finding good instructors and working with them to develop a presentation. The instructor’s presentations are then produced into high-quality video.
Instructors get an upfront fee and a share of the profit from class enrollments. Some, Levisay said, are making $60,000 or more from a class.
“We are trying to create an experience,” Levisay said.
Part of that comes from the bells and whistles attached to each class.
As a customer watches a video, there are places to take notes and send the instructor a question. There is a “loop” function so a particular technique can be watched multiple times.
And there are well-used message boards for the women taking the same course. A look at the basic-sewing-course board turned up comments from England and Chile.
Craftsy also set up Facebook clubs to promote its crafts and says it has 2 million fans. The quilting club has 267,000 fans.
“It is a great focus group to see what people are interested in,” Levisay said. “A place to post a video of a technique or announce a new class.”
The company launched an Apple iPad application in October and is preparing apps for the iPhone and Android phones.
The attention to site architecture, applications and social media speak to the fact that the founders of Craftsy aren’t knitters but online entrepreneurs.
The four founders — Levisay, Josh Scott, Todd Tobin and Bret Hanna — met working at Golden-based Internet company ServiceMagic (now called HomeAdvisor), which connects homeowners with contractors.
Levisay and Sutton were Silicon Valley refugees coming from online auctioneer eBay.
At eBay, Levisay helped develop music and photography categories and the industrial category where a buyer can find large equipment such as a CT-scan machine.
“I’d had enough of California,” Levisay said.
The four decided to start their own online business, and Sympoz was born.
As the company grew and looked for venture capital, they met “with the usual suspects in Silicon Valley,” Levisay said.
“Everyone kept asking if we were moving the company to California,” Levisay said. “We wanted to stay here in Colorado.”
Sympoz eventually got backing from Foundry, whose Internet investments include Zynga and SendGrid.
Last summer, New York-based Tiger Global Management also invested in the company.
“This is a relatively new area,” said industry analyst Jeff Kagan. “In a space like that, all it takes is a new and great idea that captures the imagination of the marketplace.”
“If they can do this, then it gives them a foundation to build on,” Kagan said.
That, however, poses another challenge for Sympoz since, once a class is purchased, a buyer has unlimited access to it.
To grow, Craftsy must keep producing new courses and expanding its audience.
To that end, Sympoz is putting together a foreign market team, Levisay said, and is producing 15 new courses a month.
The top areas are quilting, knitting, sewing and cake decorating.
“You say, ‘How many quilting videos can you make?’ ” Levisay asked. “Well, modern quilting and traditional are completely different.”
For Foundry’s Mendelson, Sympoz taps into a core transition being made on the Web.
“At first, everything on the Internet was free since no one could figure out what to do with it,” he said. “Now, people are paying for convenience. You shop at Amazon, even if you could get it more cheaply, because it is convenient.”
“That’s what Crafty does — it makes it convenient, giving you the instruction when you want it,” Mendelson said. “Then, they lay in the quality. That’s their secret sauce.”
Examples of online classes offered by Craftsy.com:
Vintage Cakes – Modern Methods
Adorn your cakes with vintage flowers, golden filigree and cameo embellishments. $39.99
Mittens and Gloves Galore
Get a handle on knitting an array of cute and cozy hand warmers. $39.99
Free Motion Quilting – A Sampler
Your unfinished quilt tops are calling you. Become the confident quilter you long to be. $39.99
Learn John Russel’s trade secrets for a buttercream finish. Free mini-class
Learn serge setup stitches that will be used to make three posh products. $39.99
Metal Smithing at Home
Solder rings, bracelets and earrings. $39.99
Learning professional gift-wrapping tips. $9.99
Learn how to make beautiful crocheted garments. $14.99
Sympoz Inc., founded in 2010. Craftsy, created in 2011.
Founders: John Levisay, chief executive; Josh Scott, operating officer; Todd Tobin, technology officer; Bret Hanna, director of design and development
2012 revenue: $12 million
Registered users: More than 1 million