This Week in Startups - Crafter’s Morgan Spenla on delighting makers with memberships, materials, and a marketplace | E1209

Episode Date: May 5, 2021

Morgan Spenla shares why her company Crafter delivers a wonderful experience to makers (01:06), how they monetize (15:04), why she hires customer support from Starbucks (48:07), and more!

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Hey, everyone. Welcome to another episode of this week in startups. And this week we have for you. You guessed it. A startup. Everybody knows that crafting is a giant industry. Now, you may not be into it, but your aunt, your grandma, your cousin, maybe your brother or sister. They're crafting.

And it is a huge industry. You drive by, you see Michaels all the time. and you get birthday presents of sweaters that don't fit or things that go under pots. I'm not sure what those are. But it's a lot of fun. And we do a little bit of in our household, actually. It's a great thing to do with your kids and your family. Today, we have the CEO of a crafting company that got to present at something we call

Remote Demo Day. What is Remote Demo Day? Well, during the pandemic, which thankfully is ending because I'm losing my mind for the last a couple of months of it. We said, founders can't meet investors. Let's just, we'll do a Zoom call. We'll get a couple hundred investors. And I was lucky enough to meet today's guest, Morgan Spanla from Crafter. Morgan, did I pronounce your name correctly? Yes, you did. Great job. So you heard my little preamble there. And we might as well get right to it because you have a crafting website, which people can see at crafter.com, also is a business. Obviously, it's not

just a beautiful website. But I'm sure your entire life is investors and perhaps even some consumers saying, how is this different than Michaels, which is like the Amazon or 800-pound gorilla of your space? Is that correct? Yeah, definitely a huge player in the space, but we're quite differentiated in the types of crafting that we do, our target audience, and our offering. So if you were a maker, visiting crafter.com, you would find full workshops led by incredible artists from around the world and how to solder stained glass art or weave giant wall tapestries or knit a sweater, for example. So we're focused on a more mature, sophisticated crafter versus a younger crafter. And we collaborate with artists very closely. So

our goal is to build a community and to serve artists full circle by both allowing them to teach what they do and then allowing them to connect their patterns, their work, their continued teaching directly to a community of makers, avid makers, over 180 million crafters in the U.S. alone. And so what I'm reading there, just as an investor, is Michaels is a store with aisles and a bunch of stuff on it. But, and so you kind of start with commerce, hey, here's everything you can buy. And then you work backwards to, well, what would I use this for? And how might I get joy or pleasure or some kind of output, an object? But in your case, it's, hey, let's start with somebody who is just amazing, a virtuoso or extremely talented at crafts and work backwards.

And it's almost secondary what you need to do this. It's more about what the outcome would be. Am I correct? And how you approach your business versus, say, a store. Yes, exactly. So when we thought about what would be the roadblocks to someone purchasing physical goods online, a lot of crafters are going to want to go into their corner yarn store and touch all the yarn and have the experience of working with a sales associate or whatnot.

Maybe not so much at my goals where it's sort of like mass quantity over quality. It's Walmart. Yeah. Yeah, exactly. So we try and make a connection. Two of our biggest brand partners over the last couple of years have been Nordstrom and anthropology. That's our level of, you know, that's where our audience lives primarily. But so the roadblock of purchasing goods online is.

So what do I do with these and how do I make with this? And how can I trust that this is actually the softest yarn, sustainably produced in Peru and, you know, all of the wonderful attributes that we're sharing about it? And that's by bringing in artists that are well established in the space, well known, to validate. And they do that through leading workshops. They do that by, you know, bringing you along on the journey, the maker journey, so that at the end, you do have that finished, beautiful piece to hit. hang in your home. And there's a lot of pride behind it because you both made it. You know where it

came from, where the materials and tools came from. And you learned you had a one-on-one experience with the artist that led the workshop. And so do people do this in your experience? Is the motivation for a crafter, the act of crafting being in the moment, the flow experience of building, let's say, or is it for most people the output, or is it being part of a community and having friends because we are humans and we're social beings? Because I've always seen some elements of each of these, but I'm wondering what you personally believe is the driving force behind this. I would say it is primarily the first.

So it's primarily the art, the craft of actually that meditative state, that flow, putting down technology, getting your hands, you know, arm deep and, you know, at a potter's wheel and just kind of zoning out. But I would say also what we found and the reason that the workshops, most of our workshops right now, and we offer, we offer community to crafters, we offer all-a-card items, we offer lead workshops. We have a ton coming out later this year, the pipeline of brand new areas that we are servicing crafters. But I would say the reason our workshops do so well is because there is this confidence. that at the end, you are going to have a finished piece to hang on your wall that you will be so

proud of. So there is that moment of, you know, I made that, you know, whether you gifted or whatnot. That is exactly what I thought. I had this assumption that the reason people become addicted to crafting, and it is a very addictive thing, it seems. Like when people get into it, this becomes a lifelong pursuit, perhaps decades of it, is that there is something about the act of making that is so primal to humans that we just love the I mean, we are toolmakers, we like to solve things. And we're so disconnected from that because we just make a billion of whatever item we need in a factory, click a button on Amazon and get it. And that actually removes from humanity, you know, this primal need to build a fire to then go, you know, harvest vegetables

and then put it together and make soup. And getting soup in a can, it's just so unromantic and so, you know, unpleasing aesthetically and in all aspects that going back to this, paradoxically, I think is the right word as opposed to irony, but paradoxically, you would be a happier human to spend more time making your sweater, making, you know, some piece of art that goes on the wall. Because to humans actually, we have time. So do we do we actually want to enjoy something? I think this is why people have anxiety sometimes is that they've removed some of the tasks,

what would previously be considered mundane tasks, and replace them with just clicking a button, which is just wholly unsatisfying. Yeah, I think that's very true. And I think, you know, I think there's so much more pride and there's so much more feeling of, I did that, I made that, I'm probably wearing this sweater. You actually appreciate it for on a whole different level, right? but I think a big part of it, and we're noticing that there is a huge trend towards, for lack of a better word, homesteading kind of crafts, just like there is this big push

towards growing your own food and understanding what the process is, and then you appreciate it so much more with slow cooking, slow eating, or slow food, I suppose. Yeah, I mean, I think those are the components of slow food, the cooking and the eating of it. The eating. You don't need to just. Especially slow, but, you know. Yeah. Yeah. It actually is helpful, I think. Just slow down for a second. My wife always like, slow down. You don't have to, your meal's not going to get off the plate and run away. You can, you can take more than five minutes to eat.

For me, I mean, I just on the, I, I appreciate being able to buy a cashmere sweater and have it made and know that it's going to fit me well. But I, if I don't take a couple of hours, you know, every couple of weeks or what have you, and actually sit down. and focus on whether it's knitting, which I couldn't knit a cashmere sweater. But if it's within my craft realm, because I am a maker, and that's definitely, you know, if I don't spend a little bit of time focused on that well-being and that balance, I can feel it. I feel the burnout as someone as an entrepreneur works 80 hours a week and also as a family. It's burnout. And crafting and making, woodworking, whatever it is that you do, you do that to reset yourself,

right? It's important. Right. there is absolutely a mental health crisis in the United States. I'm curious if there are any studies that correlate this behavior. And also one of the fundamental concepts of Burning Man is this radical self-reliance, which used to be known as being an American because we came here with nothing and we had to kind of make it work, this radical self-reliance where you can make something.

You can fix your shoes. You could change, you know, you could fix your dishwasher or something. I did this recently. I fixed something in the dishwasher. The amount of joy was on par with investing in a unicorn for me. Like just the fact that I did something I was self-reliant. It just opens up so much serotonin in your brain. I'm curious if you've found that there is a correlation or any studies around mental health

and the act of doing this because I had a friend, I remember in the 90s, And he was studying music therapy. And I was like, what's that? He's like, oh, it's just perfectly correlated. If you learn to play an instrument and you do music, you'll be a happier person. And I was like, really? Are there any studies like that that you're aware of? Or do people like give crafting and making stuff as a prescription to maybe be less anxious or depressed?

Oh, yeah. There's, I mean, so craft or art therapy is widely used across the board. It does. It brings our heart rate back down. It allows us to focus. It improves cognitive behavior. It improves memory. As we get older, it's very good for, you know, small, what's the word that I'm looking for? Small movements. Oh, fine motor skills. Thank you. Exactly. Refined motor skills. I got this Montessori school being dialed in. Find motor skills. Super important. So yes. And I think I think that there is when you, take on a hobby like that, whether it's crafting or whether it's cooking or whether it's fixing your car, you can feel it. You know, like I think there's also a very tangible self, you know, just like you said, I did it. And that's pretty wonderful too.

Yeah, I have a new thing in our household that I've been doing, which is before we call anybody to fix anything, we found this website, YouTube. I don't know if I have it in your town yet. But if you type in, how do I? And then you type in the name of the product, it just immediately drops down the top 50 problems. And then there are 17 videos on how to fix anything. So in my company and at home, I just, if anybody comes to me with a problem, like, did you? And they're like, YouTube it? Yeah, I watched a video.

I did it. But this one requires that you have an electrical license before I rip the electrical vehicles out of the wall. So I'm not comfortable doing it. I'm like, okay, yeah, in my case, that's well, I'm an electrician. Every startup needs business insurance. Please get your business insurance tight. And you don't need to look any further than my friends at in broker. If you don't have insurance, you basically failed the first step of running a company.

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TWIST. You are pursuing multiple business models at once. I am very often, you know, admonishing my partners on doing too much while I do too much myself personally take away too many projects. But you have a subscription box. You have educational videos. You have, you can buy individual products. and I don't know if you charge for content or webinars.

Is that part of the business that people pay for these webinars? It's part of the community model if you are a subscriber. You unlock some access there. Got it. How much is a subscription cost? $65 a month. $65 a month. I get a box and I get the content.

That's right. Okay. And that is the primary driver of the business. That's what's gotten you where you are today. Am I correct? So we were solely a subscription. model for the first couple of years of the business. And every time we've layered on, it's been out of the community reaching out and saying, this, please this, please this, please this.

And so I would say, agreed, doing too much can be difficult for our startup. We've been, we've given each of our new revenue models, you know, a year, 18 months to kind of grow and live on their own. So we haven't, in my mind, we have, we have layered very thoughtfully. And we were just responding to, you know, the growth. And also this desire to be the resource. Crafter.com, that's where you go for all the things. It's such a great domain name. So tell me, what have you layered on to that core subscription box and just ballpark?

Is it hundreds of people are subscribing thousands? You know, what's the footprint of the business today? I know it's an early stage startup. Yep. So we began as a subscription with this idea that we could manage two skews. No big deal, right? and what we found over time is that there was this desire to access workshops that we had launched in the past, amazing collaborations with artists from Australia and Canada and all over the U.S.

and once that subscription box was gone, we didn't carry it anymore, we didn't want to inventory it. So the first layer in 2018 was allowing our community to access past workshops twice a year in a pop-up kind of fashion. That was so successful that within six months we launched that as a permanent e-commerce model. So we have a marketplace on a website where you can buy now more than a hundred different workshops and different kinds of makings. And they come with, you can buy just the video or you can actually get the kit of tools and materials delivered to your doorstep. That is now about 50% of the revenue of the business. The next layer was all-a-card items. So you made a sweater, you love that particular wool yarn.

Now you can purchase just the single skews of wool yarn from us as well. Then we layered on wholesale partnerships. I mentioned Anthropology and Nordstrom being two of the biggest ones, and those were immensely successful. So we began doing collaborative live events or Zoom events just like this. Oh, wow. We began reaching into, we went to the B-to-B side. So we've been piloting some really interesting team health types of workshops where we're sending out 100 kits to 100 different employees and they're joining in with one of our artist instructors and participating in a half day workshop altogether as a team building exercise.

So we will keep layering and we have some pretty interesting ways to connect artists directly with their community and so forth, live and hopefully in person. but for right now Zoom or a platform that we're working on behind the scenes. And we have lots in store for what we hope to launch by Christmas of this year. So that makes total sense to me. I mean, you put all this effort into curating a box and I guess, I don't know if they call them influencers in the crafting space, but a crafter. How's that you are crafter.com. So it takes you however much time, hundreds of hours, I would assume.

I'll pick a number 200, 200 hours to get. get this box and experience together for February, February goes, and now all that is gone. But if you make an extra hundred boxes and you put them on a shelf somewhere, the fact that people can then pre-order them or there's a drop which creates a little exclusivity, that's not actually like adding a business. It's just kind of evolving a business in my mind as a business line. But doing the business where you try to solicit companies to do a hundred person item, that's the same material kits, but you do have to have a salesperson or executive, I believe, go and chase those people to do these experiences or market it in a different way.

Has that business become meaningful? And by meaningful, I'll put it at 15, 20 percent or more of your business. No, not yet. Actually, most of those are all inbound leads that we are responding and reacting to. And that will then sort of, you know, internally within our team, we'll say, okay, we need to focus on this. How do we grow this? Part of the reason that we're fundraising is because we've identified these areas that we know that we can crush it, but we need the resources to be able to do that.

Yeah. Yeah. And you must have witnessed that teaching, coaching has become a ginormous business all of a sudden. What are your thoughts on the new coaching and teachable and you to me and just so many other platforms emerging. Because it does feel like you're kind of a marketplace because you do have creators on one side and what do you call the teacher instructors. Is there a term for a crafting teacher instructor?

Are they just crafting influencers? Artists, great. You're really a marketplace where you think about it of artists on one side and connecting them with these crafters. So have you thought about this more as a marketplace place than, you know, as curated of an experience as it is today? Or do you think eventually it becomes just a teaching platform where you have a curriculum and you buy into it like

masterclass, right? Because these are very different things. We like to think that our existing workshops sort of represent that not necessarily the masterclass business model, but the experience of actually getting access to that incredible artists who may have had a display. And, you know, they are influencers, they have spaces, they have communities that they have personally grown. And so that is a level that we're trying to deliver highly curated, right? You're not going on YouTube and trying to watch the dimly lit, you know, whatever it might be, video on how to do XYZ. And this is highly curated. We film all of these workshops and a very professional, gorgeous, you know, light-filled space.

And we're walking you through. And what we feel is the very easiest way to achieve, you know, the final resource. But that being said, what we have learned from the pandemic is that a lot of these artists would previously, they would, you know, they would do a road show. They would travel to U.S. and they would teach 20 students in Austin, Texas, and then 20 students in Brooklyn and 20 students in San Francisco. We were trying to solve that problem through pre-recorded content, which has done very well for us. But there are so many artists out there who have lost the ability to connect with students in that way and lost a huge part of their income. So they are working to figure out how to serve that similar audience in a virtual or a digital way. And that's where the marketplace, I believe, for us, comes in where you could log on on a given Saturday and say, what's going on today?

I'm going to take a class. I want to hop into a class right now. Oh, really, like a live class. Like a live class. Oh, so really, that's like the Peloton model where, hey, there is a permanent schedule here. And any day you want, you can pick an instructor or an intensity level. I like that a lot. We would like to, and we would like to, and then connect with, you know, those smaller studios in Brooklyn

who are teaching an in-person class, and they can list their calendar of classes and plug it into our calendar. And we can be the broker of bringing the artist and the maker together in an even different way. There's also very successful models around artists being able to promote their own patterns. So you're a knitter, and you've got 50 incredible patterns, but you can only sell it through the Instagram community. that you've grown? What if you could take those patterns and put them in a space, a marketplace, that you are actively running alongside your workshops and your digital offerings, you're pre-recorded, you're live, you can schedule one-on-one office hours with your students, you can really kind of service that maker that you've been, you've been working to grow on your Instagram platform or

whatnot in just a brand new way? So it's not a free-for-all open marketplace like Udeme, a little bit more towards the curated marketplace of content like a masterclass, right? So that you don't want to have, you know, a hundred people teaching or a thousand people teaching poker like you to me of varying degrees of quality. Masterclass said, hey, let's just pick Daniel Negriano, Phil Ivy, and just have two, you know, or for acting, we'll just pick two or directing, we'll pick one or two. They really have like, have this concept of just picking the best. that's a better model for you or do you think more open?

I think it's going to be somewhere in between. So I think that to ensure that our standards and what people have come to expect out of the look and feel of our aesthetic and who we're trying to align with, I think that there is going to be curation. But this for us, this is not how we've built the company for the past few years. So this is new. This is an area that we get to kind of dip our toes in the water and test and iterate and test and iterate and focus group and bring a product to our community that's going to be,

we know that it's desired, we've received that feedback, we've done the surveys, we've done the, we have a large audience already, we have a large community. So I'm excited. I don't know exactly how and what the final product will look like, but I know it's going to serve our community in a way that nobody else is doing out there today. This new world of remote work is here to stay. So are all of the HR and IT headaches? Like how do you register your startup with dozens of state tax agencies or comply with the gazillion different labor laws? How about managing remote employees' computers? Another pain point. Ripling, which I use for my fully remote team at Inside can answer those questions. They make it super easy to manage all of your local and remote

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up there, $700 or so. So do you think about, you know, just having content only as an option or, and do you offer that now, like the classic $10 a month, $60 a year or $70 a year subscription? We don't offer that today. At one point, we did have a digital-only subscription, and I would say about 2% of subscribers actually took advantage of that. It was more about the goods and materials than that curation of what, you know, you walk into a Michaels or a blick art and you look at the wall of paintbrushes, and you're

like, I need two, but I have no, there's thousands here. It's overwhelming. It's overwhelming. So overwhelming. So when a professional watercolor artist can say, I'm going to send you the two that I have been using for the past 10 years and they're the only two you need. I think there's a huge value in that. But that being said, we do have workshops that are not part of the subscription. So again, we are that higher tier. So we have a modern quilting workshop that's a $500

workshop, but you're getting a computerized brother sewing machine with it. So I mean, we are. But once we've created that quilter, the lifetime value of that quilter for us, just keeps going. It's exponential. I think that's actually a really interesting concept of, you know, gamification. Like you take the quilting level one, it comes with the quilting machine, but then you could have quilting level two, quilting level three. And these can be increasingly intense, profitable, and keep sending people on that journey, like in martial arts, you know, the belt system or in video games or Dungeons and Dragons,

whatever, leveling up as it were, you know, higher education, all of those. kind of systems work really well. What is the process for you to get these artists on the platform? Because it does seem like they're very entrepreneurial and because their crafters, they're very self-reliant. So they can open up a Squarespace website with commerce. They could use teachable themselves. And now you're coming to them saying, hey, instead of you doing it all yourself, you should come to us. What is that reason? What is your argument for them to, hey, you know, I know that you got your Squarespace website with e-commerce. I know you got your Shopify.

I know you got whatever they happen to use. What is, how do you argue to get them onto your platform? Yeah, that's a great question. Over the years, that has become a bigger part of the conversation. I would say when we were initially starting their options were a self-filmed YouTube video or working with, with someone like us. And, and I think that that was a value ad is that, you know, we were building for them. this highly produced beautiful workshop

that they could sell into their community of 300,000 Instagram followers or whatever it might be. Over time, I think, I hope that the way that an artist looks at us is collaborating with us on a workshop is kind of like being chosen for that master class, that there is a little bit of, you know,

affinity. They'll represent that craft. Yeah. Anointing. I mean, that's certainly, how I hope that they are to see our community and our aesthetic and the pride that we versus sort of just mass, mass, mass, mass. I try to do that with this podcast, you know, like I always tell my team when they're making

the clips, like, take me out and feature also because I'm like uncomfortable with, you know, because when I have these conversations, I like to talk a lot and really get into a dialogue. So I'm always like, can you try to take me out a little bit and really feature the person the guest and then we'll actually put money behind, you know, promoting the guests, right? And it really does, I think, help us get future guests when we represent them well on the show. And I think there's something about cherishing the guests like you coming on here. If we do a great job and then somebody else sees it, they go, oh, you know, Jake House team was so nice to Morgan, I want to have that treatment, you know, it's kind of like going to have a great experience at a restaurant or whatever,

You know, just you feel like you were taking care of and you were represented well. Another thing that we've seen in the industry, some really well-funded companies and are even starting to look at, well, what is a pain point for somebody who is very independent and very able, which is, you know, your artists, also journalists, you know, some subset of journalists are very independent and they tend to skew highly intelligent. and they also journalists tend to skew, and podcasters, as it were, they skew very, a subsection of them, skew very resourceful, able to learn things quickly. So, substack, Patreon, Shopify, all. And I think Clubhouse has now announced this all have announced maybe a little pre-funding or an advance against future revenue.

If you did happen to have funding, not sure how that could ever come to pass. But if you did, if you knew somebody who loved to make crazy bets frequently and who believed in you and you did have cash, would you ever consider giving them an advance perhaps and saying, hey, listen, we estimate this is going to make $25,000 a year. We're happy to give you $10,000 when you sign up against the $25 that we'll make each year. So you can just get that 10K right now, put it to work, and really just other platforms obviously don't do that. YouTube's not going to do that.

or Squarespace website or Spotify's not going to do. I'm sorry, Shopify's not going to do that. I mean, Shopify does give, I think, factoring. Like, you know, if they haven't established revenue stream, they might do that. Have you thought about that? Advances or that kind of thing? Yeah, and a little bit of our model involves that now. So to bring that artist to our production studio, I mean, we are committing to a certain dollar

value. And actually, it's really interesting. In the crafting world, um, I am most surprised by how, you know, one particular workshop and technique will resonate so well with our audience and one that we think will be equally well received doesn't have the same attraction. And so by, you know, by turning that into a little bit of a, you know, both models of based on how, how a revenue share model where that artist can promote their workshop and continue to talk about their workshop and bring up. others to our platform. I mean, as a bootstrap company, that's how we were able to grow and survive for so long, is that we worked with artists to bring makers onto our platform, right?

And then on the other side, when we think about, you know, workshops that we think will do really well and be well received, we will compensate that artist up front. We have thought about this in a different way, though. When you mentioned the Peloton model, we've talked to a lot about that internally. If we had perhaps artists on staff who were, who were, um, yes, who you could rely on that regular Saturday morning weaving class and how that could be a different level of, um, of community. And then that would require, uh, similar, uh, capital model. That's right. Yeah, but I mean, a crafter getting offered, you know, $50,000 or $75,000 or $100,000 a year, that might be, or an artist, that might be

incredibly compelling, or God forbid, in America, at least, health care, which we deny to our citizens while every other country seems to have figured out how to give a base level of health care. I mean, I think if you offered minimum wage plus kick-ass health care and, you know, whatever, 30 hours a week or something, I mean, that might be the reason that people would do it is just to get that world-class health care be part of your organization. So I love the way you're thinking about that. Okay, so we talked about the Michaels, right, which is every VC's first question for you. We got it out of the way.

That's not how this investor thinks, but sure, I don't think about competition. I think about beating competition. I don't worry about competition. I see that as like the whole point of the exercise is to beat people. Like, isn't that what entrepreneurship is about? I don't understand these VCs who are just obsessed with, you know, the fear of being beaten by another competitor. I mean, why would you even be in the game if you're scared of competition? But let's talk about something I think is, I think.

My intuition tells me Etsy is in some way a collaborative force for you, or it could potentially be something competitive. If the output is good enough and people see this incredible, give me the class that you think is the most popular right now in terms of the output. What is made? Is it pottery? No, it's a frame loom weaving class. Weaving is very popular right now.

Got it. Okay. So this is great. I would like you to make me a Doge coin since I'm team Doge. I'm just absolutely completely committed to the most insane cryptocurrency since I'm now going to join the crypto revolution. I'm just picking the one that's the most absurd. Could you not say, hey, these crafter, if you complete this class and you hit a certain level of dexterity, well, you could sell it on Etsy, but we could also have. your stuff.

And listen, I know I just talked about not heading business models before you perfect the last one. But ultimately, five years from now, I wonder if the output is Etsy or craft where you have a craft or marketplace where people can buy the finished products. Are you thinking that way or do you look at like crafty as Etsy as a compliment? Today, it's a compliment. So that's like the finished goods. And we're the platform for teaching you how to make the finish goods.

But I think certainly in the future we could have, there can be a symbiotic relationship. I think you just got your crafter box. Oh my God. You got your new loom. It's May. You just got a box. I heard you ring doorbell. You need to get it?

I think we should get the box. Okay. Somebody else in the house will get it. This is the leave it in. To my producers, leave it in. This is a historical document of us all working from home. It's absolutely fabulous when somebody's dog, child, or UPS, FedEx, Amazon. delivery. Uber Eats, of course, come to the door. It's absolutely wonderful.

In the past, selling your business was a miserable, miserable task. Months of negotiations, tons of legal fees, and sometimes you'd have to sit there and watch the new owners. Yes, sadly, trash your business. I saw this. I saw Weblogs Inc. to AOL and they were good stewards for a period of time. And then, all of a sudden, 98 blogs turned it to 10, 5, 3, 2. The only thing left, auto blog and gadgets. I wish they had to have. had been better to those bloggers at the end. Oh, all my effort. But now there's Tiny.

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easy, breezy, lemon squeezy in about 30 days. Tiny partners with founders to give them quick, straightforward exits and protect the team and the culture, which is what we all want, right? If you're going to exit a business, you just want the acquirer to protect your team and the brand. Get in touch. Tinycapital.com slash this week.

Tiny capital, t-in-y-com, slash this week. And they're going to let you know in a couple of days. That's tiny capital.com slash this week. Okay, let's get back to this amazing episode. what's been the most challenging to you as a founder in running this business? Yeah, that's that's a great question. I think, so I'm used to wearing all the hats and assuming all the roles, like employee, you know, employee one, right?

To now we're a team of 22, I think we are right now. Oh my Lord. And I would say it's, it's just keeping up, right? Like, it's keeping up with being, you know, building an incredible culture within your company, building a community that, you know, is actively seeking out your company. It's, what's wonderful, too, about growth is that you can hire experts in those spaces. But for a long time, you're kind of the stopgap. You are the person that makes those decisions.

So we have a leadership team for the first time. Incredible. Wow. Oh, such a great feeling. It's such a great feeling. Yeah, I've been there. challenges, you know. A different type of challenge, keeping people motivated and engaged and holding people accountable, but you then gain, you know, this wonderful thing of delegation where maybe you get to focus

on the things that are in your zone of excellence. And the things that you don't actually enjoy, I mean, I think it's one of the most wonderful things when your company hits some level of profitability and, you know, it's maybe even, you know, highly profitable. You say, you know what, I'm going to take some of this profit and I'm going to hire a chief operating officer or a director of content. And instead of me hustling to make the content, I'm going to look at the content and I'm going to give notes as opposed to me actually being in the weeds making it, right? But it's just every time I get a company to that point, I find my enjoyment of running the company and my ability to grow the company just hits a different level, right? It's like escape velocity.

It's like getting out of growth, the Earth's gravitational pull. you're kind of just floating in space now. Like, ah, this is easy. But what do you delegate? I'm curious, what, what do you, what have you delegated with great results? And what do you need to delegate next? Do you think about that? Yeah.

So my mind is always on the next big thing. And it's always on where are we going to be in six months a year, three years from now. And so one of our biggest recent hires was a VP of e-commerce. You know, I had, I had built this machine that could produce incredible. workshops with incredible artists and the curation and what needed to happen on the supply chain and fulfillment and production side. And we had replicated that over and over again. And now I get to take that model and hand it off to someone that we brought on about six months ago who has built eight other subscription product and let them apply their knowledge and go. And now I can I can focus on

this two-sided marketplace that we were just chatting about. And that gets to be my baby and I get to grow it and grow it and grow it. That's an amazing feeling. You're a product, your zone of excellence, I assume from what I'm hearing is conceiving of new products and then iterating on them and making them. But having to tend to them in year five might not be as rewarding for you or just not the best use of your particular zone of excellence. Am I correct? Yeah, definitely. I mean, I think I've gotten, I've gotten to be a little bit it good at everything, right? But I would say that what I bring to the table is product and that and how to how to bring a community into that product. So a little bit of marketing there as

well. But bringing folks on who do that much better and full time and have done that before is what will be where our growth is. Yeah, it's a, I really have been working with my founder partners on this concept because I struggled with it in my 30s where I just, I would get very frustrated with people who couldn't hit the level that I needed personally to see in the products. And it would almost be like, you know, somebody's cooking the scallops and I'm trying to cook the steak and they're doing the scallop appetizer. And I look over, I'm like, that's not the way to cook scallops. And I just grab the pan from them and I just step aside. And then it's like, well, why are they here? And then something clicked in my brain that is just, you know, Jake, you got to learn to teach people.

If you're not happy with the way they're making the scallops, it's on you to teach them how to make the scallops properly. And it might take three or four, you know, plates of scallops getting thrown in the garbage, like Gordon Ramsey style, like garbage, horrible, trash, it's raw. And now, you know, like legal work, negotiation, and even the production of this podcast, I'm so blessed to have so many great people around me. I don't have to worry about the sound quality. I don't have to worry about the guests having the right sound. It's just every time it's perfect.

And it's just such a wonderful experience. And it's what I wish it for every founder, but it does take, I don't know if you experience this, you know, that year or two years of personal development to learn how to get what's in your brain that you know innately into somebody else's brain and also get them to buy in that that is actually the right way to cook the scallops, that that is the perfect temperature, that is the perfect browning. But you seem to have gotten there, yeah? I mean, I still pull the scallop pan back and say, well, let me just move around a little bit.

But I think it's on the hiring side too, right? And this has been a lesson for me. as I have had the opportunity to interview a lot of folks over the past few years and hire and build that team. And then make sure they stay, right? You find a good, awesome person. Part of the job as a CEO, a big part is making sure that that team stays together and continues to grow. And we've been really fortunate there, so I feel blessed.

I think this is another really important thing for the founders listening that when you find somebody great, you got to give them a career path. And the better they are, the faster they want that path to go. And we were taught, I believe, maybe you had this experience 10 years ago or I'm not sure how long you've been in the workforce, but we were taught that you're supposed to shut up and pay your dues. Well, what if you're an overachiever? Do you need to pay your dues if you're an overachiever? If you make the scallops perfectly and you do it a hundred times, shouldn't you get to make the stake next?

or do I have to make you make the scallops a thousand times for some sadistic, you know, bizarre reason that you have to wait in line. You have to, you know, there's people above you on the ladder. You have to wait for them. Like, I want to kick the ladder down. I want to scale the wall myself and my bare hands. And I really have thought about career path now. So when I hire people, I say, hey, in my mind, I architect, where do you want to be in five years?

And almost universities. I want to be a venture capitalist like you. And I'm like, okay, well, here's a business. path four years, five years. And four or five years, I feel like a person can grok. I'm talking about an elite person, somebody who wants to aspire to greatness. I feel like four or five years is something in their brain they can buy into. So I literally was going over to my manager team. I was like, screw it. I'm going to make a website. How to get a job in VC.com. And I just explained it. I said, here's the career path I architected at my company. Here's the other ways you can get a job in

VC. Spend $250,000 at Harvard. Or I'll pay you $250,000. for four or five years and boom, four years. And now you're a venture capitalist. Congratulations, the end. And have you thought about career path for your people? Yeah. Is that something to, you need to add to your skill set? No, I mean, it's something that I'm constantly learning how to do better, right?

Because I feel like with a startup, especially when you hire from the bottom up, when you're bootstrapped, you know, you're first bringing in executors all over the place just kind of, and you're managing all, you know, all the people across the organization. versus hiring from the top down. And I had to learn the hard way. Everyone wants to know where they're going and what's happening. But I think what I've learned is that the best folks for our team are the ones that where autonomy is just, I mean, they're all about it, right? Like, you can give them a problem and you say, I don't care how you unbox this problem. But when we hit the end, when we, when we figure out that buy plan, when we figure out whatever it is that, that you have figured out

how to do it. So I would say the couple of times that we have not had matches within the organization that I've had to learn from all-star players or whatnot. It's because they needed this micromanaging that you might find in a huge corporation where as a startup, you've got to get people into that startup mindset of today I'm wearing this hat and tomorrow I'm wearing this hat and this is way below or above my pay grade. I'm going to figure out how to do it. I'm going to YouTube it. I'll figure it out. And those are the people in my mind that are just the all-stars that you know, you thrive and grow with. How do you manage those folks and how do you find those folks? How do you identify them or do you just have to wait and see? And then if they are that person,

how do you keep them engaged? You have any techniques that you can share with our founders in the audience? So I have a couple of examples that might be helpful. So when we were building our customer service team, I wanted Starbucks employees. This was actually advised. to me by my first customer service hire who was former Starbucks. And she's, you know, it's a job that you are just like, you are just honoring and loving on that customer, right? And some people can't do it. And some people can. And very early when we needed a team of four awesome customer service people, I started with one and we slowly grew, you know, a little bit. The way that customers were trained in a coffee shop or barista.

Starbucks specifically. Yeah, I would say so. I mean, this particular, so that became kind of a, that became a little bit of a note in my head of, you know, look for somebody who already brings that skill set, empathy, compassion. They learned it in their previous job to the table. For those higher level folks, a lot of that has happened through personal networking, through recently a semi-competitor of ours was closed down by NBC. Universal. We brought over a couple of their really good people. I mean, there's, I mean, poachy, poachy. Well, the company is gone. So they needed, they needed a job. They gave him a safe landing. You're like, gave him a safe landing. That plane's out of fuel. I got a

landing strip right here. That's right. You're clear for landing. Bring it in. Oh, I love it. But you got to have your ear, like, to the ground. You've got to be aware of all that stuff. And that's like, we've got the tech stars network. Like, you just, you know, part of your job is making sure you know what's going on out there in all the places. Well, you put in 80 hours a week. So, and by the way, for my producers who are listening right now, writing the, we have something called pod notes, which are the lessons that come out of this. My brain just lit up on fire when you said hire Starbucks employees because, and you

have to finish a sentence because people yell at them if they do two pumps instead of one pump. People give them an order that is so meticulously absurd for their coffee, this temperature, this size. Not only do I want the vent day, I want a vent day in a grande cup. My friend did that. My brain exploded. I was like, so it doesn't spell. He's like, exactly. I was like, thank you, Brian Alfie. I'll take a vet, whatever it is, vent day and a grande, and they'll do it for you. But I was with somebody who ordered, and they wanted a specific temperature because they were like, I like my copacino hot because I got to walk. This is the most brilliant idea. For people listening, this is why you listen to this podcast.

This is why you can't stop listening. You like my anecdotes. You love the guest selection, of course. But one or two times every episode, there is a knowledge drop that is like you just gave everybody a lightsaber. This is incredible. What does Starbucks pay? Fifteen bucks an hour? What does a startup pay for a customer support person?

In one, you have to interface with a, and just be on your feet all day long and have people yell and scream at you because their precious little venti soy latte with two pumps isn't perfect. I mean, you can deal with crafter or SaaS or, you know, whatever. I mean, we have the best customer service team. I mean, our NPS score are all of. of those things are just like the highest level. And I think it's because those are also the people hiring the people that are coming in next. Yes. And that is one of the great. I mean, I am so blessed, too, with an incredible customer support team. And I tell them, I don't care how much time you take on these calls or getting to know the people who are having problems, get to know them. I mean,

you don't want to enable them. Because you don't want to make it so delightful to talk to you that you become their best friend and they're calling the service line because they're lonely or britt you know but they do have back and forth sometimes three or four emails and this could have been solved in one and i'm like i'll allow it you're building a relationship sure feel free to do that final one and let them know that you know what town they live in and how's everything going in michigan or whatever it's it's it's you know or you went to michigan college and whatever some university of michigan it's so delightful i'm almost right now i'm just absolutely tempted to cut out this Starbucks hack and literally just send it to my founders and not included in the show.

That's how good that tip is. That's how good it is. I came from one of my people, so I can't take credit for it. Yeah, hat tip to whoever that person is. It's just extraordinary. Morgan, it has been a delight. And I'm very, very excited to get to know you. And maybe, who knows, you're a founder, I'm an investor.

Who knows? We can't say anything here. but who knows? Peanut butter and chocolate. Sometimes they go good together. Maybe you and I will be in business someday. Who knows? Just throwing it out there that maybe at some point we could do business together.

I really have enjoyed getting to know you. And what a crazy story. My amazing researchers and associates emailed you after finding you in like a venture database and they looked at the website and they're like, this website's really good. I'm going to email them and try to get them at Remote Demo. So Marine does that. And then you say, I know you guys. Tell the rest of the story.

Oh, it was, yeah. So I was super honored to be invited. I really, I mean, I've listened to the podcast. I really, my experience from a lot of, I went to Founder University for a couple of days when you did the all women group. Founder University is a two-day program for free where we teach people how to grow their businesses. Yep. You came two years ago? It was last year.

Oh, last year, okay. Last year. And then we were invited to pitch and we came in, I think, at the top of, you know, your choice in the community. And then we came back and we did something similar where I think we came in, you know, we came in pretty high there. And it started the relationship. And yeah. That's great. It's just so weird that like my research stream is doing such a good job that we're hating people more than once.

It's such an important lesson for me that getting customers, and in this equation, if we were investors in your company, you would be our customer, right? We want to delight you and really make sure that you feel coveted and that we service you well as your partner. And so three touchpoints. You watch the podcast. You came to Founder University. You did remote demo day.

And there's only one touchpoint left, which is I have a backpack full of cash over here. This is only one left, Morgan. So this has got to go one or two ways. Either I've just got to ship you the bag and you've got to secure the bag or that's it, end of relationship. So we'll figure it out. But that'll be for another time. I put my address in the chat bar. Oh, it's in the chat?

Okay, great. Is it your Ethereum address or your Dogecoin wallet? I'll ship it anywhere. What's a bag of physical cash, right? I am a fan of bricks of cash. But that's just because I grew up in Brooklyn just watching gangsters with huge knots of money, you know, doing all sorts of illegal shit. But, you know, I think I can get behind a Doge wallet.

Sure. If you have a, I don't know if I can ship you my Doge from Robin Hood, but I think we're having a Doge Day. I think today's Doge Day. You're not so big on the Doge? I know how that works out. I might advise you to keep 10% of your money in imaginary assets with no value, but except for comedic.

Like high comedic value. So I think it's good for every. I'm completely joking. Please do not buy Doge. Don't buy Doge. It's a joke. It's a meme. People, I keep telling people to not buy it.

They keep buying more. Stop buying Doge. Please. Okay. This has been awesome. Everybody go to crafter.com. Are you hiring? We are hiring.

Do you have crafter.com slash careers? Crafter.com slash jobs. It's actually, it's under our LinkedIn. LinkedIn right now. Oh, well, LinkedIn jobs is unbelievable. I mean, that is the best way to hire great people. So search for crafter.com and you will see the jobs on their LinkedIn profile page. That's right.

The best place to place it ad. In my opinion, that's where I get all my great people. We'll see you next time on this weekend startups. Bye, bye. Thanks, Jason.