Yesterday afternoon I got an email from John Levisay, the CEO of Craftsy. He was positive and upbeat. He’s read the post and all of your comments and he’s written an open letter to us. I admire a company that listens and is willing to engage openly in conversation. Here’s John:
Recently, there have been some blog and social media discussions on Craftsy’s role in the industry. We are very committed to transparency, so I hope this letter can answer some questions and clarify a few important points. In particular, I’d like to talk about the interrelationship between inspiration, education, and physical products, as well as how the online and offline world can co-exist in harmony.
When we founded Craftsy in 2011, our goal was to change the way passionate enthusiasts learned their craft. At the time, the existent modalities for online learning were frustrating and subpar. We wanted to democratize affordable access (no matter where you lived or how hectic your life was) to the best instructors in the world and as a result help reignite growth in hobbies which have been deep areas of passion in my family. We have invested heavily in creating the best online learning platform in the world. As a result, millions of people have been introduced to fantastic designers, amazing instructors and re-engaged in knitting, crocheting, sewing and quilting.
We also believed from the start that it was vital to compensate our instructors very well. Craftsy instructors are not only great artisans, but incredible educators. We wanted to give them a conduit to make a living doing what they loved while taking care of all of the heavy lifting on their behalf in digital marketing, video production, and technology. To date, we have paid instructors over $10,000,000 based on the success of their classes. The vast majority of our instructors have had a wonderful experience (as have we).
Education and increased engagement in a craft naturally creates demand for the physical supplies and materials required. I sincerely believe, and research proves out, that this rising water “lifts all boats” in the industry, whether you are a teacher, an online marketplace, a manufacturer, a designer, or a local shop. In other words, our goal is to grow the overall pie for everyone. We are thrilled when we hear the frequent stories from local shop owners of people walking into their shops with materials lists printed out from classes they are taking on Craftsy.
Local yarn and fabric stores are the grassroots hub of the hobby. The owners care deeply about their customers and are ardent advocates of the craft. I come from a small town in central Illinois, and have a lot of respect and admiration for local shops. Over the last 20 years, big box retailers have put a lot of pressure on local stores. No matter what the industry (See: Wal-Mart, Best Buy, Guitar Center), the phenomenon has been tough on local businesses. In my personal life, I relish spending time in local guitar shops. I love the smell, the sounds and the people. It’s always my first option versus a chain or the Internet.
But many people do not live near a local yarn or fabric store. Perhaps they are homebound. Sometimes the local store doesn’t happen to have exactly what they need to complete a project. This is why our community asked us during the first few years of the business to offer fabric and yarn for sale. This secondary progression beyond big box retailers towards Internet retailers has taken place in almost all industries (Gilt Group, Zappos, Zulily, etc.), and is now gaining traction in the craft space. It’s an inevitable migration for a portion of the industry as expanded access provides an important benefit for many in the enthusiast community, while growing the overall market for all constituencies.
Our entrance into the physical products realm also had a financial component. We are a for-profit business and have a lot of engaged customers in the knitting, crochet, sewing and quilting disciplines. We try to price products such that they are affordable to the average consumer. Depending on manufacturer stipulated MSRP, we sometimes offer discounts on products as doing so makes the products more accessible to a larger group of people. Keep in mind that one of the important differences for customers when they buy online vs. in a local shop is that they have to pay to have the product shipped to them. A product priced at $7 on Craftsy (with $4.99 shipping), costs more than a product priced at $10.00 at local store. Some online yarn and fabric retailers attempt to obfuscate these discounts to manufacturers and local shops by offering coupons or free shipping for their products, but ultimately customers are very savvy. They do the math.
We feel there is an important role for both online and offline retail for yarn and fabric. Most of our customers who are in proximity to a local store will always go there to buy a good portion of the supplies they need. People love seeing and feeling the product, as well as talking to likeminded folks in the store. They tell us this, we encourage it, and see it as an important and persistent part of the hobby.
As a compliment to the many brands of fabric and yarn currently in the market, our customers have told us that they would like to see additional high quality, affordably priced, options. Thus, we have decided to launch a limited line of fabric and yarn only available on Craftsy. We have no intention of becoming a “Branded House”, but rather a “House of Brands”, offering a full line of traditional branded products, as well as some exclusive lines.
Whether we like it or not, we are all competing with Amazon in this new world order, so from our perspective it would be wonderful if the rest of us, who all do truly care deeply about the industry, all get along. It is not a zero sum game, we all want the same thing, to grow enthusiasm and passion for wonderful hobbies.
Pattern designers are the equivalent of songwriters in our industry. They write beautiful music and lyrics, and other people interpret and play their songs. They are an absolutely critical part of the inspiration that drives people to “make”. Just like music, there are a lot of people who can play guitar, but not a lot who can write a great song. To complete the analogy, pattern designers can see a skein of yarn or a swatch of fabric and conceive of an end product, whereas most of us just see….well, yarn and fabric.
As I mention in the opening, our primary product is education. But most people don’t wake up and think, “Today is the day I am going to take a knitting class”. This is one reason why we created our pattern marketplace. Knitters, crocheters, sewists (sewers if you prefer), and quilters all need inspiration in order to drive the desire to seek education. We have always viewed the Craftsy pattern marketplace as a vehicle to inspire people to take a course or buy product, and not a direct revenue center for Craftsy. We believe deeply that pattern designers deserve to monetize their expertise. In just the last few years, independent pattern designers have earned over $8,000,000 by selling patterns on Craftsy, and we have not taken one penny from those transactions. In addition to the paid patterns for sale on the site, designers can also offer free patterns. Free patterns are not a new concept. Some designers see it as a great way to garner exposure to customers and subsequently monetize their paid patterns, other products, or they simply like the notion of encouraging inspiration.
Not only does Craftsy provide a venue for pattern designers to earn a living by marketing their patterns to millions of customers, but we also pay designers directly (both an upfront fee and/or a revenue share) to create custom kits and projects for Craftsy customers. We have paid designers hundreds of thousands of dollars in this manner over the last two years, and plan on scaling this program up over time. Occasionally, we also ask designers if they would like to create free patterns for a given high profile project. When we’ve done this, we definitely have not intended to offend anyone or to convey that we do not value their wonderful work… quite the contrary, we strive to create opportunities for the design community and the enthusiast community to come together and mutually benefit. Participation is always optional and understandably while some designers love this, others choose not to participate. We recognize that this is a sensitive subject and that this week we accidently touched a nerve… I offer a sincere apology to anyone we unintentionally offended.
Each day at Craftsy, we all show up excited to work as hard as we can to nurture, grow, and evolve what we consider to be a great and pure purpose. We want to help inspire, educate, and provide product to people around the world. We believe this helps the hobby overall. We are not always perfect. We run fast and sometimes make mistakes. We strive to be good citizens in the community, serve our customers (and I mean all of our customers), and work together with the manufacturers, designers, local shops and others in the industry to help make everyone successful.
I hope this letter answers some of the questions or misconceptions people may have about Craftsy. I tend to be a private person, and eschew “open letters” of this nature, but felt it was time to clear the air on some things.
If you have questions or thoughts, please feel free to email me at email@example.com