Crafter’s Morgan Spenla on delighting makers with memberships, materials, and a marketplace | E1209

Top Takeaways

• Hire customer service people from Starbucks, they have been trained well and regularly deal with both complicated orders and customers.
• Test and iterate new offerings based on customer feedback. Crafter tested their marketplace model with "pop-ups" before committing to larger inventory purchases.
• By developing sophisticated content production capabilities, Crafter attracts artists to use the platform. Artists bring their followers to Crafter which generates opportunities for Crafter to convert these followers to long-term customers.
• Commerce requires trust. Ecommerce deprives buyers of the ability to touch and sample the product, which decreases trust. Crafter leverages their artists and high production quality videos to bridge the trust gap and make consistent sales.

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Guest: Morgan Spenla | @mspenla

• Founder, Crafter (2015-Present)
• Website: crafter.com

Morgan most recently pitched Jason and his syndicate at Remote Demo Day. Her story was so good that Jason wanted to bring her on the show. Founders, sign up to pitch at Remote Demo Day here.

How crafter differentiates from Michaels

• Michaels is the largest player in crafting with ~$5.3B in revenues. Their business model focuses on selling materials at scale.
• Crafter provides curated expert workshops and high-quality sets of materials & tools delivered to customers' homes.
• The Crafter team is focused on a more mature sophisticated maker/crafter, not younger crafters.
• Crafter serves artists full circle, connecting their work to a community of makers.

The core challenge to solve:

• You can't touch materials in an eCommerce setup, so the experience has to build trust another way.
• Established artists build trust and validate the crafter experience.

Why people craft (What drives Morgans customers)

• Crafting is a way to calm yourself, it's meditative to disconnect and work with your hands.
• Craft art therapy has many use cases, from stress management to applied motor skills development for the elderly.

Crafter's Multiple business models

• Educational platform (teaching people how to craft via videos)
• eCommerce (buying and selling of goods digitally)
• Marketplace (artists can sell custom kits and instructional videos)
• Subscription (via The Crafter's Box - $65/month)

Crafter's Evolution

• Operated solely as a subscription model for the first couple of years of the business.
• The expansion of their product offering is guided by listening to their customers.
• The community wanted to access past workshops, so the Crafter team tested courses in a pop-up fashion and doubled down when the test was successful.
• Crafter's on-demand marketplace now consists of over 100 workshops where you can buy video access and/or materials. This represents 50% of the business.
• The team is testing wholesale partnerships (collaborative live events) with brands like Anthropologie.
• Crafter is experimenting with team health workshops where they send kits out to teams to a project together virtually, Crafter will do in-person events in the future

Differentiating from other alternatives for artists

• Previously, artists would teach classes of 15-20 people at small shops around the country, but the pandemic forced some of them to realize the necessity of developing digital distribution channels (like Crafter).
• Crafter is highly curated with excellent production quality. When artists do self-produced YouTube videos do not have the same conversion.
• Ideally, the balance of selection and curation sits somewhere between Masterclass & Udemy, so there is a symbiotic relationship between the artist & platform brand.

Why artists monetize through Crafter

• Crafter provides highly produced beautiful workshops, which helps artists deliver high value to their followers
• In many cases, the artists and Crafter have a revenue share model where Crafter covers the upfront cost for the infrastructure, and the artist invests the time to design the Craft.
• Because of the seamless customer experience provided by Crafter, they retain customers creating a higher lifetime value (LTV).

Scaling a company

• To scale, once a part of the business is figured out, you need to hand it off to a more capable specialist.
• Training employees is the way to unlock leverage in the business. Doing things yourself will not scale.
• Morgan found a talent advantage by building her core customer service team with Starbucks employees.
• The Starbucks tip: Starbucks employees typically are competent with dealing with demanding customers and can execute high volumes the right way under pressure.
• Similar to Starbucks, there are other companies that operate in lower-wage industries that aggregate & train talent.
• As the team grows, so does the importance of retention. A team is more powerful when it operates together for multiple years. CEOs need to retain their top talent.
• Giving the team a career path to grow is a reliable way to improve retention.

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