Sewing Goes to Silicon Valley: Elizabeth’s Journal #1

A few weeks ago I got a call from Elizabeth Caven, the founder of UpCraft Club. She told me that the following Sunday she was heading off for an incredible adventure. She’d be spending four months living in San Fransisco to be part of a startup accelerator program called 500 Startups.

Elizabeth lives in Iowa. She’s the mom of four children ages 5, 6, 7 and 9. She founded UpCraft Club a year ago as an online distributor of digital sewing patterns. (I wrote about UpCraft Club last spring in this post, Should Sewing Patterns Be Certified?)

Elizabeth Caven, founder of UpCraft Club

A few months into running UpCraft Club Elizabeth began to wonder if there was a way for local quilt shops to sell digital patterns themselves. She filed a patent on a process that would assign a unique code to every pattern and every shop and created pattern cards that shops could display on their shelves. Customers who bought the cards could access their pattern digitally at home.

Elizabeth has big dreams for UpCraft Club. She envisions the company becoming the leading distributor of digital patterns in the same way that Audible is the leading distributor of audio books.

She knew she needed capital to make it happen. By entering pitch contests and securing state and federal grants she was able to raise $61,000, but to really make the idea a reality Elizabeth felt she needed more. That’s where 500Startups comes in. The program is like an intense business bootcamp at the end of which UpCraft Club will secure $125,000 in venture capital (in exchange for giving up 5% control of the company) to make her digital pattern distribution dreams come true.

Taking venture capital is something rarely spoken about in the craft community. Although Etsy was venture funded for a decade until they went public last year and Craftsy and Kollabora are also venture funded, I think most craft businesses don’t ever consider seeking venture capital. And the world of venture capital in the Silicon Valley? It’s equally unfamiliar with the sewing and crafting community. To a degree Elizabeth is headed for a clash of cultures.

Here’s a little bit more about 500 Startups:

As Elizabeth and I talked further we decided it would be interesting to share her experience at 500Startups here on my blog, diary style. Elizabeth is writing entries on what her days are like, what she’s learning, and how she’s feeling and submitting them to me, along with photos of her day to day. I’ll publish them periodically over the next four months so that we can follow her progress.

I hope you enjoy her journey.

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Elizabeth’s Journal

December 7, 2015

Should we take an investor’s money?

People have been telling me not to take investor money. That being a ‘lifestyle business’ and growing the business yourself means you keep control. Once you take on venture capital money, I’m told it’s like having someone breathing down your neck. You are set on a path and a timeline to grow at all costs. Investors I’ve talked to lately have said something like this: “You shouldn’t take investment because you don’t want guys like me to control your company. You’ll be entering a world where there are very few women, and no one is thinking about the sewing industry so you’ll have an exceptionally hard time. Don’t do it. BUT…if you do decide to take investment…we’re in for $x dollars.”

Why does everyone say the venture capital guys are so awful? I’ve heard a few horror stories and am trying to keep my eyes wide open and really weigh out the good and bad before making a final decision. But tonight I got the offer. Andrea Barrica, a partner at 500startups, called and offered me a position in Batch 16 [the 16th group of entrepreneurs to go through the program]. They will make an investment of $125,000 and the standard equity they take is 5%. They do not get a seat on the Board of Directors and so I keep all voting rights and control. Their team is phenomenal at online distribution. This means they are experts at using a variety of channels to find new customers and help e-commerce companies grow. They also have a huge network and founders say this is one of the most valuable parts. It probably goes without saying that they haven’t had any other sewing companies ever come through. Most of the companies are tech related…building apps, new financial technologies, Saas (Software as a Service) platforms, etc.

A big positive for 500startups is the diversity of the companies they seek and invest in. They have a track record for investing in more women and minority owned companies than most venture capital portfolios contain. I’m leaning toward taking the offer…

December 30^th, 2015

Am I a bad mother?

I’ve decided to accept the investment from 500startups and am starting to get things in place for me to move and be gone for 4 months. I have 4 children ages 5, 6, 7, and 9. This is the first year all of them are in full-time school and I’ll be gone for the rest of the school year. My husband is going to pull back the number of hours he works so he can pick the kids up from school while I’m gone and spend a lot more time with them.

I’m pretty shocked by the reaction I’ve received by a few trusted people I’ve told about the upcoming move. Some have been very supportive. But most have looked at me with judging eyes and said ‘how can you leave your kids?’ or ‘I could never do that. A good mother doesn’t leave her children for months at a time.’ The odd thing is that while I’m being blasted as a mom who will have to be away from her kids…my husband is being judged by people who think it’s so strange for a dad to want to work less and see his kids more. This feels like such a double-standard. Ugh! I love my children and my husband…and I love that they are happy for me. My 9 year old drew a picture of me at school around Thanksgiving. He said he was ‘thankful for his Mom because she stands up and tells people about her company.’ His drawing was of me (a stick figure) and words coming out of my mouth in front of a crowd. I’m so happy to be an example to my kids of how they can do big things, not let fear stop them, and show them that they can dream a big dream and go for it.

Jessica Lynds, UpCraft Club’s first employee and former owner of Stitch in Des Moines, IA

January 5, 2016

UpCraft Club’s first employee

I was beginning to reach out to shop owners and spent a lot of time talking with them about the benefits of selling digital patterns using UpCraft Club in their shops. The first shop to carry our Digital Pattern Cards was Stitch in Des Moines, Iowa. Stitch was a very modern and gorgeous fabric and yarn shop owned by Jessica Lynds. I had met Jess a couple years before but we got to know each other a lot better when she started using UpCraft Club’s product and gave feedback that has been invaluable in making the system better.

In December, I took a Knitting 101 class at Jessica’s shop and was so impressed by the patience and fantastic customer care Jess took with each of the women in the class, including me. Everyone was gearing up for the holidays and were busy making gifts for friends and finding lovely products at Stitch.

On Monday, December 7, I had gotten an email from Andrea at 500startups saying she wanted to chat that evening. I had no idea whether this was a good chat or what the outcome would be but I was eagerly watching the time that evening as my phone call grew closer. This was 5:30 pm and my call with Andrea would be at 6. My husband took the kids out of the house for a while so there wouldn’t be any background noise and I sat in my office checking emails while waiting for Andrea’s call.

An email popped up from Jessica, but it did not contain good news! She was emailing to let me know that Stitch was closing. She was announcing it later that night.

It’s so sad to hear about one of your favorite stores closing…especially one that carries your product and has been so instrumental in your business. I was sad for Jess, sad for the customers who loved Stitch so much, and sad for myself.

Then Andrea from 500startups called me. I quickly had to switch gears from hearing sad news to being very upbeat about UpCraft Club’s future. Our chat was short…and she extended an offer for UpCraft Club to join 500startups!! Solo founders are not looked at favorably in most of the startup accelerators because there is always way too much work for just one person. In this case, not only was I a solo founder, but also without any employees and Andrea expressed how difficult that would be. I knew she was right and it was time to hire someone full time.

The next morning was Stitch’s first day of business after announcing they were closing. I got there 15 minutes before the doors opened and there were already people standing at the door waiting to go in.

I am very aware of how emotionally hard it is to close a store. I sold a company several years ago and remember feeling like, once I announced the decision to move on from that business, some people were a bit ‘vulturish.’ The first question my area manager asked me after I told her I was passing the company on to someone else was “who gets your office?” I did not want to be a vulture and swoop in trying to pick Jess away from the business she had worked so hard to build. I wanted to be sensitive…but I had to leave for San Francisco in only 4 weeks and I wanted Jess to be there with me.

She agreed to let me take her to lunch. I tried to make casual chit-chat but eventually just cut to the chase. I told her about the offer to join 500startups and asked her to work with me and go there too. We laughed at how unbelievable the timing was and what a strange situation this was. I was asking her to finish closing her store, then pack up and move for 4 months to work and live with me.

After a couple of meetings talking through the details, she said yes. And January 5^th was her first official day with UpCraft Club. I couldn’t be more grateful to her for taking the leap with me. She is now working directly with shops to get them set up with Digital Pattern Cards and is also leading our efforts to add knitting and crochet patterns to the site.

“We are staying in a short term rental apartment (for $6500 a month!!!!). It’s a one bedroom that’s more like a studio apartment with a glass door to give the bed a bit of privacy. I’m sleeping on the couch. There’s a beautiful rooftop area on the second floor of the building and so far we love living here.”

January 21, 2016

The First Failure

Jess and I flew to San Francisco on Sunday, January 17^th and got to a hotel. We had one day to see the sites a bit and get our bearings in the city. Over the next few days we met everyone in the 500startups Batch 16 and got moved into an apartment we had found for the first month we’re here.

Thursday, January 21 was a kickoff party with all of the companies, the entire 500startups team of employees, founders who were past participants at 500, and even a few investors. There are over 50 companies in Batch 16 so in all, there were about 200 people at this event. Each company was given 30 seconds to pitch and let the group know what they were working on.

I love pitching and telling people about how great the sewing world is. I take pitches very seriously and practice a lot for them, constantly refining how I talk about things to make the biggest impact in a short amount of time. 30 seconds isn’t very long. Could you tell the story of what you do in a compelling way in only 30 seconds? It’s harder than you think. Every time I hear questions after a pitch I use them to refine the process and truly can’t think of a better way to learn to talk about your company than just to put yourself out there. Over…and over…and over again.

I practiced my 30 second pitch and felt fairly confident going into it. We were told to be sure to talk about the traction we’ve seen so far and I had a quick anecdote about sewing to share that shows how big of a market sewing is (because in my experience, a lot of investors and tech people from outside the sewing world think it’s a dying industry and I love showing them how vibrant sewing is), and then I shared a couple numbers regarding our market traction. (This was one of the facts I shared: we have customers in 80 different countries around the world.)

I confidently pitched. Then I made a big mistake and I’m pretty frustrated at myself for it. In the startup world there’s a common saying that you want to ‘fail fast.’ Everyone has failures and every company will fail lots and lots of times before getting it right. The goal is to fail quickly so you don’t waste a lot of time and money, but instead try new things and recognize when something is failing so you can quickly change directions. This is a great principle. But when you actually fail…it doesn’t feel very great.

After my quick 30 second pitch I was asked to further describe my traction for the group. Hmmm…I hadn’t planned on sharing additional numbers with the entire room. But they pressed me to share my revenue numbers. This felt sort of like standing in front of 200 people and someone asking you how much you weigh. Or any other personal detail you would tend to keep private. I was not prepared to share specific numbers to a room full of people I don’t know. Why? Good question. And one I’ve been asking myself many times since it happened.

I can imagine how pink my cheeks suddenly got standing in front of everyone with the microphone in my hand and trying to figure out how to skirt around the question. But I couldn’t. There was no getting around it. And the craziest thing is that, even though our revenue is not where we want it to be, it’s nothing to be ashamed of. Some of the companies are ‘pre-revenue’ which means they have zero coming in and they’re still in the idea and planning phase. We have real customers.

My failure to communicate the revenue without sounding like I was trying to hide something was painful. But hey, I failed fast. I learned a ton. And you know what’s actually good about a big public awkward failure like mine? It was memorable.

We already stick out as a company. A team of two women is very unusual in tech accelerators. So in that way we’re memorable already. And even though I don’t want to be known as the crazy girl trying to be too private with her numbers, I also want to stand out in people’s minds. There isn’t an investor board room on the planet right now where venture capitalists are sitting and discussing how they can put more money into companies innovating in the sewing industry. Some think the market is too small to even waste one conversation on. Standing out is a good thing. And you can bet I learned quickly how NOT to react next time I pitch and am asked a question I wasn’t prepared for.

“Our first day in the city we visited Britex and drooled through all 4 floors of their beautiful fabric.”

January 23, 2016

Sewing Vocabulary

One of the most fun things about being at 500startups this week has been meeting the founders and employees from the other companies. They have come from all over the world. There’s a phenomenal young entrepreneur from Israel, a beauty company from Africa, and I would guess about a dozen other countries represented. We are seated at long rows of tables and throughout each day there are waves of noise and chatter followed by silence as everyone’s eyes stare at their computer screens and sounds of typing fill the air. Jess and I are seated next to a window and across from us is a Russian group developing a fun language learning app. The first day we introduced ourselves one of the men from their team looked at us very confused. “Sewing???” Later that evening we were chatting with two men from Brazil and they also looked at us confused. “Sewing???”

The funny part of this is that the confusion came because they did not have the English word for ‘sewing’ in their vocabulary. They all speak English extremely well and know a lot of tech words that I don’t even understand and English is my native language. But because sewing isn’t something they have needed to talk about in English…they didn’t know the word. So we’ve done a good amount of pantomiming to show a needle and thread with fabric. Our mini games of charades seem to work because each time our foreign friends finally catch on and get to add a few new words to their vocabularies.

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Stay tuned for further updates from Elizabeth as she gets more enmeshed in the world of 500startups.