Craftsy Has Created an Arty Online Empire, One Frosting Curlicue and Cross-Stitch at a Time
"Work your fingers down and around the thigh, and get that butter right up against the leg."
Three cameras zoom in on the action as Ian Knauer massages roasted-garlic-infused butter under the skin of the raw chicken lying on the cutting board in front of him. Surrounded by gleaming granite countertops and stained wooden cabinets, Knauer is working in a spacious professional kitchen in the Icehouse building in LoDo, the former home of the Mise-en-Place cooking school that's now functioning as a full-scale film set. Before the cameras rolled, the director carefully walked Knauer through the shot -- massage in the garlic butter, stuff the bird with orange and thyme, then truss it up -- referring to a lengthy script that details every move and comment that Knauer is supposed to make. Between takes, a chef's assistant hurries over to wipe up errant chicken juices from the cutting board. A finished, roasted chicken lies on a nearby countertop; it will stand in for Knauer's chicken later in the segment so they don't have to wait around for this bird to cook. It's already starred in an "action shot"; earlier, when Knauer pulled this chicken out of the oven, a cameraman was right there with him, capturing the smoke and sizzle of the freshly roasted bird.
A Pennsylvania-based farmer/chef who was a food editor at Gourmet magazine and star of the PBS show The Farm, Knauer is used to high-end cooking productions -- but even he is struck by the sophistication and polish of this three-day film shoot, for which he was flown to Denver. "This is a much bigger production value than our PBS show," he says once the cameras are off. "This is the real deal."
But this segment isn't for a big-budget cable cooking show. Instead, the results of this shoot, which is likely to end up costing more than $10,000, will go up online, a place where most kitchen tutorials are either bare-bones YouTube clips or viral memes depicting what happens when you microwave a lava lamp.
The film shoot is the work of Craftsy, a local online-education company that's breaking all the rules of startup culture. Since 2011, the operation has been producing three- to five-hour video tutorials on some of the most traditional, tech-averse subjects imaginable, including quilting, knitting, sewing and cake decorating -- but those old-fashioned subjects are now luring 350 new class enrollments every hour. And over the past year, Craftsy has expanded its curriculum to include classes on subjects like cooking, among them Knauer's The New Chicken Dinner, which will go up online early in 2015.
While some people wonder whether online-education programs can ever make money, Craftsy has been charging $20 to $50 per class from the get-go and collected more than $24 million in revenue in 2013, double what it made the year before. The vast majority of its users are female and over forty -- the antithesis of the typical tech audience -- and its enrollment now stands at a total of five million students from all fifty states and 180 countries.
Ignoring all suggestions to move to Silicon Valley, Craftsy has been quietly thriving in Denver, outgrowing one office space after another. It now boasts 225 employees and plans to hire 100 more in the new year. Last spring, Governor John Hickenlooper designated May 21 as "Colorado Craftsy Day," celebrating the company as one of the standout successes in the region's growing tech scene. And Coloradans aren't the only ones taking notice of this unusual startup. In November, the company raised more than $50 million in financing, nearing $100 million in total venture capital.
But Craftsy is doing more than turning heads and making money. It's fashioning a bold new way to digitize the burgeoning maker movement -- turning quilting teachers into online celebrities, cake-decorating aficionados into successful small-business owners. And it won't stop until it has revolutionized the $30 billion U.S. crafts market, one crochet stitch and frosting curlicue at a time.
As Knauer says between takes of his cooking-class shoot: "These guys are pros."
John Levisay says he's not crafty -- but Craftsy certainly is.
Craftsy is all about fusing the old and the new, marrying corporate tech with timeworn analog. The company's 25,000-square-foot headquarters (soon to be expanded to 43,000 square feet) in the Denver Place building on 18th Street downtown has the atmosphere of a stereotypical startup: It's a wide-open space boasting hundreds of Apple flat-screens and amenities like a game room and a DJ booth. But there are also quilting magazines in the front lobby, baskets of yarn on some employees' desks, and, in various communal spaces, half-eaten designer cakes appropriated from recently filmed baking classes. (On a recent day, a cake that uncannily mimicked an oversized Quarter Pounder with fries was left largely uneaten.)
Along with its cooking studio in the Icehouse, Craftsy operates five film studios at the mixed-use TAXI complex in RiNo, where state-of-the-art video-production equipment shares space with tableaux straight out of Better Homes and Gardens. The studio for drawing and art classes is made up to look like a bohemian New York City loft, the quilting studio is lined with shelves brimming with colorful fabrics and threads, and the baking studio resembles a spotless home kitchen, right down to the jars of flour and well-worn cookbooks on the shelves.
The operation is designed to fill a gaping hole in the Internet. "We are in many ways the bridge between Pinterest and Etsy," says Craftsy CEO John Levisay. "You see something cool on Pinterest, and you can go buy it on Etsy. But what if you want to make it?"
Levisay, who grew up in central Illinois, readily admits that he's not particularly crafty himself; he's more likely to buy something on Etsy than to try to whip up a homemade version. "I would say I am a jack-of-all-trades, master of none," he says. Yes, in 1999 Levisay took a detour from what had been a successful financial career because, as he puts it, "I wanted to build something." But he wasn't thinking about building a coffee table or a model airplane; he wanted to build an Internet company. That's why he went to work for eBay and helped launch the then-nascent company's "Motors" division, at a time when most people couldn't imagine buying a car online. By the time he left, six years later, eBay was the largest vender of used cars in the world. And while he was at eBay, Levisay discovered the enthusiasm and purchasing power of hobbyists, courtesy of the collectors who would do anything to score a 1960s Italian sports car or a late-'50s Chevy. "I saw this level of passion that goes into these lifelong hobbies, where people use their primary hobby as their defining characteristic," he recalls.
The power of these hobbyists came back to Levisay several years later. In 2008, he'd moved to Colorado for a job with Service Magic, the Golden-based tech company, now known as HomeAdvisor, that connects homeowners with repair specialists. But in the spring of 2010, he left that outfit along with fellow Service Magic employees Josh Scott, Todd Tobin and Bret Hanna, and the four of them launched Sympoz, a general online-education website. "Our ultimate goal was not financially motivated, per se," says Levisay. "There was an opportunity to change the way people pursue their passions and the way people learn, and it felt big. For all of us, it was time to take a chance. Ninety percent of startups fail, and three of the four founders had young children. In retrospect, it was kind of a crazy move."
Levisay was one of those with kids, and when a few of their offerings -- like classes on wine tasting and personal finance -- didn't take off as they'd expected, he might have wondered if he'd been crazy to make that move. But those letdowns were offset by something wholly unexpected: Courses on quilting and knitting, which they'd pegged as niche offerings, became huge sellers.
Levisay and his partners had unwittingly launched their company at ground zero for the country's $3.76 billion quilting market. Quilters Newsletter magazine, a long-running publication, is headquartered in Golden; Interweave, a major arts and crafts magazine publisher, is based in Loveland. "We have all these instructors and writers and people who are really involved in the industry here in Colorado," says Carol Ann Waugh, a Denver-based fiber artist who was one of the first quilting experts Sympoz approached about teaching classes. "I don't think they had any clue, but they opened in the heart of it."
But the company's Colorado base wasn't the only reason that classes or subjects like quilting, sewing, knitting and cake decorating took off. While these subjects might have seemed niche-based and old-fashioned, Levisay and his colleagues soon realized that they were "first-paragraph hobbies," the sort of activities that for some people are integral to their identity: My name is Jane, I'm from Wisconsin, and I am a mother and a quilter. Such individuals already spend their disposable income on high-quality supplies like fabrics, wool and baking utensils. Now, armed with high-speed Internet and tablets they could take anywhere in their homes, they weren't thinking twice about spending money on video tutorials that would improve their stitching and fondant-smoothing.
"This is a sector that has been profoundly underserved by technology," says Josh Scott, Craftsy's chief operational officer. "Our customers are incredibly technologically savvy; it's just that most tech founders haven't shared their passions."
To remedy that situation, in June 2011 Sympoz shifted course and launched Craftsy, an online crafts-education platform with a simple tagline: "Learn it. Make it."
Company employees gather to consider new courses.
"We are in Magical Meringue land." So begins Denise Mickelsen's presentation at a recent "green-lighting" meeting on potential courses in a glass-walled Craftsy conference room -- the "Tardis Room," decorated with Doctor Who memorabilia. Craftsy has recently launched more than thirty new classes a month, and that number is growing quickly; the company plans to nearly double its current catalogue of 550 courses in the coming year. So several times a week, Craftsy managers get together to make final decisions on which classes the company will produce next -- and today, Mickelsen, Craftsy's cooking-acquisitions editor, is pushing to green-light magical meringues.
It's not easy coming up with new Craftsy classes, figuring out which subjects will pull in enrollments and warrant thousands of dollars in production costs. Employees survey existing Craftsy students, scour social media, poke around trade shows and search for new hot sellers on eBay and Etsy to determine how to expand existing popular subjects and which new topics to explore. (Sometimes the company doesn't have to look too far; a popular bra-sewing class was created after people kept calling Craftsy's customer-support line and asking to learn how to make their own undergarments.) Once a class idea comes up, editors such as Mickelsen (who, like many Craftsy employees, is an expat from the more traditional media industry; she was formerly a senior editor at Fine Cooking) will track down potential instructors, plan the class structure, then finally bring a detailed "course brief" for sign-off at a meeting like this.
Mickelsen thinks she's found the perfect instructor for a class on meringues: a pastry chef and cookbook author who's won multiple James Beard Foundation awards and appeared on TV programs ranging from The Oprah Winfrey Show to Martha Stewart Living. Still, such bona fides don't matter that much to Emily Lawrence, Craftsy's vice-president of content and education, who's running the meeting. She's interested in a much more important credential: "What is her teaching experience?"
This question highlights one of the three main ways that Craftsy courses are different from, say, free video tutorials on YouTube: the quality of the teaching experience. "We wanted to curate the supply side of the equation," Levisay says. "We wanted to get the best instructors in the world in these categories and democratize access to them. We all know from school that not everyone is good at being a teacher." So Craftsy seeks out instructors around the world -- but the company cares less about brand names, hot-shot clothing designers and cooking-show stars than it does about finding people who can make a video tutorial interesting and engaging. "We focus on educators," explains Lawrence. "It's not as sexy, but it is a heck of a lot more impactful."
Mickelsen convinces Lawrence and her colleagues that the meringue instructor she's found is a true educator, and the meeting green-lights the class. From here, the course concept moves to the second way that Craftsy seeks to differentiate itself from other online classes: top-of-the-line video production. Forget the glorified slide shows or boring, back-of-the-classroom Steadicams that folks associate with online classes; the Magical Meringue class will be filmed in high-definition video with multiple camera angles, extensive editing and even post-production motion graphics that will help illustrate concepts like the science of how egg-white proteins are transformed into meringue.
The finished video will be uploaded onto Crafty's slick user interface, the final example of how the company is trying to stand out from the competition. "We set out with the question, 'How do we re-create the magic and benefits of a live classroom while producing video that customers can consume at their own pace and at any time?'" says Scott, the company's COO. To answer that question, Craftsy designed a unique question-and-answer feature for each class, in which the teacher answers student queries pegged to particular moments in the video. That way, Scott notes, "You can enjoy learning from questions from your fellow students about different moments of the class." At the same time, the program allows students to take online notes about what they're learning, bookmark important tips, speed up or slow down video speed, and put tricky parts of the lesson on endless repeat -- to minimize what Scott calls those "Oh-crap moments," when everything you're learning suddenly seems to make no sense. Craftsy also syncs your class progress across multiple devices -- so that you can continue watching the cake-decorating class you started on your laptop on the tablet that you've positioned on your kitchen counter next to your flour and mixing bowls.
Craftsy's unique production process isn't just creating compelling classes; it's also making a nice chunk of change for its teachers -- who reportedly get between 10 and 15 percent of the revenue from each class -- and turning some into superstars. Although Carol Ann Waugh was already established in the local quilting scene, thanks to Craftsy, she says, "in the fiber-arts community, I am kind of famous now. And that was kind of a surprise to me. It's like I have a fan club, and it's wonderful." So far she's taught three classes -- Stupendous Stitching, Stitch & Slash and Snazzy Stitched Portraits -- that together boast nearly 35,000 enrollments.
Before 2008, Jessica Harris had never baked a cake. But then the Portland-based stay-at-home mom began working on her daughter's birthday cake, using her engineering background to develop easy ways to replicate hot cake trends, and soon came up with a waxed-paper transfer method to apply intricate frosting designs and an upside-down cake-frosting process to make crisp corners in her fondant. When she uploaded blog posts and YouTube videos of her homespun techniques on her personal website, they became online hits. So when she heard about Craftsy in 2012, she applied to teach a class.
Craftsy flew her out to Denver and produced a five-hour video course, broken into twenty-minute segments, on her techniques. When the resulting Clean & Simple Cake Design course (fee: $40) went live on Craftsy's website, the company made $29,000 from it in the first two days. Since then, that class and two others by Harris have together logged over 35,000 enrollments. Before teaching, Harris had never had a Facebook page; now she has 70,000-plus likes. And with the commission she earns from each class enrollment, she's making a comfortable income from something she still considers a part-time hobby. "It's been crazy, actually," says Harris. "For me and my family, it's been a huge blessing." The success comes with a few drawbacks, like the hours she spends each week fielding student questions about how to craft accent flowers out of molding chocolate and apply perfectly even crumb coats. Still, she's compelled to answer each one; she doesn't want to disappoint her fans.
Carol Ann Waugh teaches on Craftsy.
Monday night has become Julie Chickillo's learning night. "I maybe make some popcorn, have a glass of wine and watch a Craftsy class," says Chickillo, who lives in Stapleton and goes easy on the vino when she's working on more complicated classes. "Wine, popcorn and sewing don't really go together," she notes.
The seeds of learning night were sown about a year ago, when Chickillo, who works in IT, was looking for something creative to do, like the way she spent time in the darkroom before she had kids. Spotting an online ad for Craftsy, she purchased the Sewing Designer Jeans class. And even though she'd never sewn anything more complicated than a straight line, she soon was crafting her own jeans like a pro. "They were so easy because you could stop and start whenever you want and chat with the instructor," she recalls. "It's much harder if you have to go out and go somewhere physical."
Designer jeans was just the beginning. Since then, Chickillo has taken Classic & Creative Brioche Pastries, The Classic Tailored Shirt, Growing Heirloom Tomatoes, Sewing on the Edge, Professional Family Portraits, Design Your Own Handbag and Simple to Sensational Doughnuts. In all, Chickillo has purchased 27 Craftsy classes over the past year. "There are emotional benefits, for sure," she says. "I definitely feel happier watching Craftsy videos for an hour than watching an hour of TV."
Scientists are finding evidence that backs up what Chickillo says: The meditation-like state triggered by repetitive processes such as knitting may decrease depression and anxiety, studies show, and the process of building something from scratch can be a powerful ego booster. Making stuff might even give you a brain boost, helping to protect against dementia. "For a while, we thought the connections we had in our brains were all that we had and we couldn't make any more, but we now know that is not the case," says Catherine Carey Levisay, who's married to Crafty's CEO but also happens to be a clinical neuropsychologist who's studied cognitive impairment. "And in a lot of these crafts, like sewing, knitting, cooking and making music, you are pulling from different parts of the brain. As you do that, you're building new connections in your brain and strengthening the connections that are already there."
Chickillo and her fellow Craftsy students aren't the only ones turning off the TV and getting their hands dirty these days. The maker movement has become a global phenomenon. Every year, more than a hundred Maker Faires are held around the world, in locations as varied as Washington, D.C., and Johannesburg, South Africa; meanwhile, cities are investing in "Fab Lab" construction workshops to help tackle youth unemployment and economic woes, and consumers can find MakerBot 3-D printers for sale at Home Depot. Makerspaces, where tinkerers get together to share tricks and tools, are sprouting up along the Front Range, from the new Maker Lab in Denver to the Boulder Hackerspace to the Gizmo Dojo in Broomfield to the Loveland CreatorSpace to the Fort Collins Creator Hub. Libraries, too, are getting in on the action, with the Denver Central Library, Belmar Library in Lakewood, Anythink Library in Brighton and many others opening all-ages makerspaces.
Craftsy is helping to fuel this maker revolution, says Elizabeth VanDyne, executive director of Making Progress, the Loveland-based nonprofit that produces the Denver Mini Maker Faire (to be held at the Denver Museum of Nature & Science in June) and the NoCo Mini Maker Faire (at Loveland's Rocky Mountain Center for Innovation & Technology in October). "Craftsy is one of those elements that has enabled the maker movement to thrive," she says. "The Internet has taken the training of people that used to be one-person-to-one-person and made it Internet-based, so now that knowledge and expertise is available to everybody. The same is true of 3-D printing and computer-aided design. Skills and tools of production that used to be in the hands of the few are now in the hands of the many. That is incredibly exciting. This whole shift is happening, and Craftsy is a big part of it."
According to VanDyne, it's not uncommon for someone to take a few classes through Craftsy, then end up at a local makerspace, looking to take their skills in new directions.
Still, the divergent approaches of makerspaces, which are mostly nonprofit cooperatives, and the for-profit world of companies like Craftsy highlight a major concern in the maker movement: How do you make crafting -- both making stuff and teaching others how to make stuff -- financially sustainable? A Denver hackerspace called the Concoctory, for example, transitioned into a for-profit art incubator called Cabal Enterprises after it ran out of funding this fall. "I think about this question all the time in my life -- not 'What do I create?' but 'How do I create value and show value?'" says VanDyne. "That is the critical question in the creative marketplace. Having an unprotected market really spurs us to answer that question."
Some Craftsy students are already finding ways to create value from their newfound skills. Kristina Norman began taking cake-decorating classes through Craftsy soon after the company launched, and her growing interest in the subject spurred her to quit a sales job with Apple and in August 2013 enroll at the Bonnie Gordon College of Confectionary Arts in Toronto. Now she's back in Denver, running her own company: Aspen Charm Cakes and Pastries. On the side, she still takes Craftsy classes to improve her techniques. "I would pay anything for a Craftsy class," she says. "I know these are skills I could do anything with."
She's even thinking about pitching a Craftsy class herself -- on how to turn a baking hobby into a profitable cake business.
A look inside the Craftsy studio.
Craftsy isn't the only company using the Internet to bring DIY classes to the masses. CreativeLive, a four-year-old Seattle-based startup, includes a variety of arts-and-crafts topics among its 600-plus online courses, which are first broadcast live for free, then available on demand for $19 to $249. Locally, Golden-based Quilters Newsletter magazine has been streaming and selling quilting tutorials through QNNtv.com since 2012. Even Google is getting in on the action, selling video tutorials on art, cooking and other subjects through a program called Helpouts.
"Like all markets where a company achieves traction, there are sure to be followers," says Levisay. "I feel confident that our maniacal focus on customer experience, embodied in the quality of our courses and best-in-class educational platform, will continue to lead the industry." But another aspect of Craftsy's operation could also lead to competition from more traditional arts-and-crafts companies. Users can now go online and buy Craftsy-brand tools and materials to accompany each class, and this e-commerce accounts for roughly a quarter of the company's revenue. That puts Craftsy in the same business as craft giants Michaels and Jo-Ann Fabric -- a potentially tricky proposition, considering that both companies now use Craftsy as their online education provider. But Levisay downplays any potential for friction. "Our size to them currently is insignificant," he says. "We are never going to re-create the retail footprint that these great retailers have built."
But if Craftsy keeps growing, it might threaten not just these retailers, but an even bigger industry: online education in general. Companies like Udacity and Coursera offer university classes to millions of people around the world through their massive open online courses, or MOOCs; how much money they're making from all those students, though, is still very much an open question. Craftsy, on the other hand, seems to have navigated the pay-to-learn challenge with ease.
"Is the platform we've built and a lot of the experience we've gained in Internet production and user interface potentially applicable to academic spheres? Of course," says Levisay. Not that Craftsy plans to take on MIT or Stanford anytime soon, he adds: "Right now we are a venture-funded startup, and we are enjoying a lot of success in the aspirational-learning field, and for the time being, that is where we are going to focus."
Besides, Levisay has other things on his to-do list, like taking cake-decorating Craftsy classes with his daughter. "I felt like I was back at age ten, putting together those airplane models," he says. "You are literally creating something from nothing."
After creating a DIY company from nothing, maybe Crafty's CEO will become a crafter after all.
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