Craft Kit Maker Darby Smart Takes on Supply Goliath Michaels

7/14/14Follow @xconomy

After Nicole Shariat Farb got married in 2011, she wanted to make the thank-you notes she sent to guests herself. Armed with inspiration from Pinterest, she headed to crafting supply store Michaels and Paper Source to pick up supplies and got to work. After investing some time and money into the cards, her final product was a disaster. “They looked like something a four-year-old would make,” she says.

Farb, then vice president and head of emerging private companies group at Goldman Sachs, realized there were huge hurdles between finding a project online and actually making it yourself—even for someone like her who had been crafting since she was a kid. “Why is there a big disconnect between what you see online and having to go to the store and buy it?” she says. “Going to Michaels felt like a really stale experience.” And yet the craft supplies giant, which went public in late June, had the majority of the $30 billion market. Meanwhile, DIY-focused sites like Pinterest were gaining huge traction.

So she quit her Goldman job in spring of 2013 in hopes of building a service that would allow would-be crafters to order the projects they wanted to do with all the necessary supplies included. A couple days later, she headed to South by Southwest, where she raised a big enough seed round to start a company called Darby Smart.

To get a sense of what potential users were looking for, Farb spent some time hanging out in the parking lot at Michaels, asking customers what they thought of her idea. She also “stalked” 10 Pinterest users who had cool projects and broad reach, and asked them if they’d be willing to help and submit and develop projects for Darby Smart.

A year later, chief executive Farb and her nine employees are doing all of the inventory and fulfillment themselves, shipping out craft supplies and full-on craft kits straight from their bright and messy San Francisco office. Every project is tested by employees in the “crafting lab” to make sure that the instructions are easy to follow, and that they like the final product. Darby Smart has signed up more than 2,000 craft designers, most of whom have come to the company directly, without any recruiting, and all of whom have passed through an approval process. Then they submit project ideas, which are tested and approved by company employees, then made into kits for consumers to buy. The company’s designers make a percentage of the sale of each crafting kit, though they are only responsible for the original design. Darby Smart takes care of supply gathering and shipping supplies to consumers. Some of the more serious design contributors are making about $2,000 a month.

In June 2013, Darby Smart mailed out 600 packages of craft products and crafting kits. Last month, they mailed 30,000.

So, demand has grown quite a bit, but the ten-person team hasn’t. Which means going forward, Farb has to decide how feasible it is for her staff to handle all of the work behind the kits. For now, though, making sure that every kit is perfectly made is paramount. “I’ve hesitated to outsource,” she says. “I’m working to build a brand, and I want to build one that people trust. I know I can trust us dealing with operations and making sure we’ve tested every craft supply.”

Trust is important for the brand, but it’s also what differentiates the startup from what Farb sees as Darby Smart’s biggest competitor: Michaels. Sure, the crafting giant is dominant in the market, but, she says, but her company provides the better experience. “When you walk into Michaels, you need to know what you’re looking for,” she says. “They don’t communicate in projects the way we do. You need to know how to navigate the store to get it, which I think is hard for people. I don’t think that’s how that average crafter shops. They need that recipe.”

Elsewhere online, Amazon also offers craft supplies, and there are monthly craft box subscriptions like Whimsybox, but they have a slightly different model than Darby Smart does.

The company provides that recipe and all the ingredients for projects like etched glass decanters, clutches made with magazine covers, branded leather coasters, jewelry, and a whole lot more. “I’m obsessed with wood burning,” Farb says.

When it came time to raise a Series A round, she thought she had an easy sell. After all, she was wellconnected and had worked on a team that invested in private companies. But even investors she had known for a long time didn’t get what she was trying to do. “It was shocking and slightly disappointing,” she says. “But on the flip, there were people who really got it. That was an incredible feeling. But I was frustrated. I left several meetings feeling like, ‘Just because you don’t like this market as a user yourself doesn’t mean it’s not worthy to be informed about.’”

Some people suggested that she send Darby Smart’s craft kits home to investors’ wives (most of them are men). But Farb was more interested in sending them market research reports about the 50 million people who buy craft supplies every year. In the end, she found investors who “got it” in Maveron, Forerunner Ventures, and others, raising a $6.3 million round in May, bringing the company’s total funding to $7.3 million.

The money means the startup has a little room to grow. It is currently looking for a full-time craft tester—which would be Farb’s dream job, if she weren’t running the company.

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