Photo: Alberto Bravo and Pepita Marin, We Are Knitters founders.
Startup: WE ARE KNITTERS, Madrid. www.weareknitters.com
Activity: We sell kits online to knit your own clothes, including 100% wool or cotton balls from Peru, wooden knitting needles and pattern. All in one kit recyclable supported with video tutorials for beginners. We operate in Spain, Germany and the UK.
Launching: September 2011. 2 employees.
Currently: 6 employees.
Entrepreneur: Alberto Bravo, 25. (the other half of the company is Pepita Marín). Brand & Product Manager. A Degree in Economy at the Autonomous University of Madrid. Two years at PwC and simultaneously followed a Master in Auditing in ICADE.
• What is your business model?
We sell DIY kits that include everything you need to knit your own clothes: 100% cotton or wool balls, wooden knitting needles and patterns. On our website we have video tutorials that teach how to knit if you do not know. Furthermore, the balls of yarn can also be purchased apart. Gradually we will diversify the product offering and business model: we want to become a real reference point in the world of “do it yourself”.
• Is your current activity very different from the one you started?
We were only two people when we started, Pepita Marin and I, so we would cope with everything: designing the website, talking to suppliers, preparing orders and serving customers. Right now we have more tasks distributed among the entire team, thus we are more efficient. Each of us concentrates on what we do better and we have outsourced certain activities, such as logistics. We had such a high volume of orders that we couldn’t cope with it.
• What do you wish you had known when you started that you know now?
Lots of things! We would have loved to know from the beginning how an online shop works: its design is essential to facilitate the customer (at first we just concentrated on what we liked aesthetically). Promotions work so well, we discover them only few months ago! From negotiating with suppliers, we have also learned a lot: at the beginning we accepted their conditions without complaint. Now, thanks to increased demand, we have more bargaining power with payment terms, delivery, etc. The truth is that when we started we knew almost nothing and it was almost like pretending to be adults. Right now we look back and we shake our heads!
• What is the biggest mistake that you have made and what have you learned from it?
It may have been relying solely on a single source of our most important raw material: wool. At first we brought from Uruguay. We work with this provider the first year. Coming from so far, delivery times lasted several weeks between production, preparation, etc.. When we made the order for winter 2012, the provider bailed on us one month before the start of the season, keeping the advance we gave them. We had to pick up the pieces at full speed and eventually found a supplier in Peru which was much better, both in the way they work and the quality of the material. Since then we try to diversify the source of all our materials a bit more. At that time we almost had a heart attack, so we do not want to go through that feeling in the future.
• If you could start over again what would you do differently?
Perhaps we could have been better informed about how to get funding. It does not mean we have done badly, on the contrary, despite the fact that we were not sure about how things between entrepreneurs and investors worked, I believe that we coped with it quite well. However, it is true that we have learned things on the fly. If we had known about this things before, then we have probably managed otherwise.
• Apart from your own capital, how much financing have you raise and from whom did you get it?
We got started because we submitted our project for the ICADE Entrepreneurs Award and we won approximately € 10,000. Thanks to the amount that we won and some money we added, we could form our limited company. Shortly after that, we get a € 45,000 participative loan from ENISA. We managed to grow significantly with that money and now we have just closed our first € 150,000 funding round led by two business angels (Francois Derbaix and Yago Arbeloa) and by the venture capital firm Cabiedes & Partners. Many people recommended that we get “friends & family” financing and we were even making a list of potential interested parties but we finally got the BA and we decided to go forward.
• What was the biggest challenge to get investors?
The truth is that it had taken several months to get funding: many meetings, many presentations, many trips Madrid-Barcelona-Madrid, etc. Most investors liked the project, but there was something they didn’t like at all: the size of our target market. We had prepared an evolution of the business model in the medium term that clarified these doubts and we spent some time convincing them.
• What do you consider to be the most important characteristic of an investor?
We particularly appreciate confidence and trust in the project, which makes us even more self-confident about what we do. We value availability to answer strategic question very much. Our investors are always available for whatever we need. Now we have to work hard to show them that they can trust us.
• What have you learned from raising capital?
It is complicated, requiring many hours of work but it is possible. When we started with the first meetings, feedback was very positive, but after meeting several investors the phone stopped ringing for about a month. We received no emails. We decided to try in Barcelona, where there are also many investors groups and it suddenly renewed the interest in our company. At the end, our investors have been the first ones we met. It is a process that did not happen overnight at first. Perseverance has also been fundamental in our case, we never gave up, not even during that long month.
• How long did it take you to sell your first product?
We left our jobs in a large consulting firm and it took months, talking with suppliers, designing the packaging, designs, web, etc. We spent nearly a year before we launched. One recommendation that we got from other entrepreneurs and that we read in a couple of books, was that we should launch the first version of the product to test it. A product could be perfect in your opinion and you think that clients will love it, but sometimes it doesn’t happen and during that period you have wasted time and money improving a product which doesn’t fit market needs. We have modified our product several times to suit customer requirements.
• How did you manage to get your first client?
We got him through our website. Our first customers were friends, of course. But when we received the first order from a client we celebrated. Fortunately we were invited to attend Madrid Fashion Week the same month we launched our brand. Journalists were interested about our work and we were lucky to appear on some tv programs. The impact was high and many people visited our website and started buying.
• What was the biggest hurdle you have faced or are still facing?
Right now it is maybe entering into the German market. We do not speak the language so we had to hire two German people to help us at every level of the business.
• What do you enjoy most about your start-up?
Almost everything. From the bad things to the good things, as strange as it may seem. In this time we could say we have learned in the School of Hard Knocks. I see that both, Pepita and I, have grown a lot professionally despite our youth. Now we are 25, but when we started we were 23. PwC was an excellent school for us, but now nobody will finish the work if we don’t do it. Responsibilities are greater than before, but the rewards are also greater. It is very rewarding for us to see that our decisions have a direct influence on our business.
• Where do you imagine your company and yourself in five years?
It is difficult to know. At the moment, we have achieved milestones we didn´t even think we could. It is difficult to imagine what will happen within five years. I hope to have grown exponentially in Europe and USA; our main goal. As I said before, we don’t want to stay in a company that only sells kits for knitting. We want to increase our offer so that we reach all ‘do it yourself’ disciplines.
• What advice would you offer to any soon-to-be startup entrepreneur?
Do it, but try to be informed, read a lot, spend hours surfing on Google, learn about your competitor market, learn how to diversify, read news. You can have a wonderful idea, but it may not work. Being an entrepreneur is not the same as being an inventor. This is something that people often find misleading. Test your business model: either there is something similar in the market or collect data that prove that your model works. This is the best cover letter in your future search for funding with investors. And above all, you should persevere and realize how many sacrifices you should make if you devote yourself to your business. Weekends almost disappear and plans with friends, partners, and family are very difficult to arrange but in the end it’s worth a lot.
Thank you very much Alberto for sharing your experience with Passion For Startups. Everything you share with us is really rich informations for new entrepreneurs. The result is a very useful “pill”, with many ingredients.
Good luck with your start-up!
Startup Experience Pill:
– TEAM: Distributing tasks to be more efficient. Focus on business, outsourcing non-critical activities.
– FUNDING: Preparing to start the search for funding.
Finding financing requires time, months of work, it is complicated and requires perseverance – a lot of perseverance. Convincing investors that your business model can work because there is available data to prove it or because there isn’t anything similar on the market.
– PROTOTYPE: Launching the first version of the product to test it and modifying it under customer requirement. Developing a product without client feedback is a very big mistake!
– TIME TO MARKET: When you launch a start-up, it will take a long time until you get to put the first product on the market. (We Are Knitters required almost one year).
– MARKETING: Learn and use new techniques such as promotions, online marketing, etc. Attending events bring yourself to the forefront and presenting yourself originally.
– SUPPLIERS: Working with different suppliers. This is a must when you are purchasing essential raw materials. Trying to negotiate, do not to accept their conditions the first time.
– AND PERSEVERANCE, PERSEVERANCE, PERSEVERANCE…