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Missouri Star Quilt Co: The Disneyland of quilting

The Doan family went from bankruptcy and food stamps to starting the Missouri Star Quilt Co, a YouTube sensation that turned a tiny town into a tourist destination


g_106333_quilt_280x210.jpgRags to riches: Before quilting made her a YouTube star, Jenny Doan says, “I could have written a book on how to feed a family for $50 a week.”
Image: Tim Pannell for Forbes
 
Jenny Doan is nibbling on a plate of andouille pumpkin penne at Blue Sage, a restaurant with soft lighting and black cloth napkins. Once a bankrupt California housewife, she’s lunching with four of her seven children and recalling her reaction in 2009 when one of her sons suggested she post a quilting tutorial on YouTube. Now 60, Doan responded: “Isn’t YouTube where all those crazy teenagers put their videos?”

Nine years later, her 500-plus videos have logged 135 million views and lifted annual revenue at the family’s online fabric retailer, Missouri Star Quilt Co, to an estimated $40 million. Betting that the company would get a leg up on competitors if it had a place where Jenny’s YouTube fans could see her in person, the Doans have remade the one-stoplight town of Hamilton, Missouri (pop 1,900), into what they call “the Disneyland of quilting”, attracting as many as 8,000 tourists a month.

In addition to its 50 percent stake in Blue Sage, Missouri Star has financial interests in three other Hamilton restaurants that serve visitors to the company’s 12 quilting supply stores. Each shop specialises in a different array of fabrics—like Florals, Kids & Baby, and Batik Boutique. The company also owns two retreat centres that feature themes like Wild West and Pajama Party, where quilters pay $400 to spend four days sewing in their PJs, taking classes, eating catered meals and spending hundreds of dollars in the shops. Then there’s Man’s Land, a storefront with nothing for sale, where the menfolk can enjoy leather recliners, a pool table and a flat-screen TV tuned to sports. Missouri Star has become one of the largest employers in the area, its head count leaping to 450 today, second only to the two state prisons in Cameron, 14 miles to the west.

When a store clerk texts Jenny to say one of her fans is at the register, Doan appears in the shop and spends half-an-hour chatting with Patty Painter, 59, a public school IT specialist from Riverside, California. Painter has made the pilgrimage to Hamilton after learning to quilt from a Jenny Doan video. She and seven women friends gather every Tuesday evening, lugging their sewing machines to a friend’s house and working on their quilts as a Jenny tutorial plays in the background. Painter has already spent more than $500 on fabrics and souvenirs like a $2.50 star-shaped plastic refrigerator magnet that says, “Quilt Town USA”.

Brick-and-mortar sales account for 10 percent of Missouri Star’s revenue, says Michael Mifsud, 30, a family friend who took over as CEO in January 2017. The rest comes from online sales of fabric, driven by Jenny ­Doan’s YouTube pitches: “This isn’t rocket science,” she says in one 13-minute video with 2.5 million views. “It doesn’t have to be perfect. Just eyeball it!”

Before moving to Hamilton in 1995, the Doans were scraping by in the central California town of Greenfield. Jenny’s husband, Ron, now 64, made $60,000 a year as a machinist at a Smucker’s jam factory. When their youngest son developed a tumour in a lymph node (it turned out to be benign), medical bills forced the Doans to declare bankruptcy. In search of a lower cost of living, they circled their finger over a map and landed on Hamilton, an hour northeast of Kansas City.

Jenny and Ron didn’t insist that their kids finish high school. One daughter, Natalie, got a GED, had five kids, divorced and wound up on food stamps. Another daughter, Sarah, dropped out, married an electrician and also had five children. A son, Alan, got a GED at 15, spent two years as a Mormon missionary and later earned an information systems degree at Brigham Young University’s Hawaii campus.

After the move, Ron found another job as a machinist at the Kansas City Star, while Jenny started quilting for fun. To have the patchwork stitched to a fabric backing with a layer of cotton batting in between on a single quilt, Jenny paid $80 to a local machine quilter who took a year to finish the job. That prompted Sarah to take out a second mortgage on her home and buy Jenny her own $36,000 computerised quilter. They paid $24,000 for a shuttered antique store and installed Jenny there with her machine, figuring she could earn $40,000 a year finishing other people’s quilts.

Alan eventually took a management job with California software maker Symantec but lost it during the recession and moved into the Toronto basement of his best friend and fellow missionary, David Mifsud. In early 2009, Alan and Mifsud launched an ecommerce site, ­QuiltersDailyDeal.com. Alan persuaded Jenny to let him shoot ten YouTube videos to promote the site. Nervous at the first recording session, she tripped over a sewing machine cord and broke her leg. Orders trickled in.

In 2012, the founders started paying themselves $7.45 an hour and bought another empty storefront. They renovated it themselves, ripping off old wallpaper and restoring tin ceilings that date to the 1800s. By 2013, Jenny had become a YouTube star, annual revenue had topped $4 million, and Jenny’s fans were turning up in Hamilton. Alan had moved back to town to manage the website. A certified financial planner, Mifsud handled the books from Toronto, and Sarah oversaw the staff, store design and fabric selection.

Mifsud persuaded his brother, Mike, a 2012 Utah State grad, to leave his job as a credit-risk analyst in Goldman Sachs’s Salt Lake City office and sign on as Missouri Star’s chief financial officer for $15 an hour. “We were taking a ­startup approach to a traditional industry,” says Mike.

Sarah, now 38, led Missouri Star’s brick-and-mortar expansion. Relying on bank loans, the company picked up most of its storefronts for less than $50,000 each and then spent between $100,000 and $250,000 per rehab, investing a total of $3 million in the shops and restaurants. Alan says they are profitable, as is the web operation.

But as Missouri Star’s sales surged, systems broke down. “It felt like running a marathon while building the track at the same time,” says Mike Mifsud, who negotiated a $1.4 million small business administration loan to finance a new warehouse. Though Alan had designed custom software to manage purchase orders, the company’s thousands of fabric offerings were scattered among the warehouse and the shops. Fabric was sometimes lost in transit, causing shipping delays that frustrated customers, who then tied up the 20-person customer service team. Until the new warehouse opened in 2016 with a conveyor system that seals and sorts packages, staffers were taping boxes manually and walking the 75 yards between packing and shipping.

In August 2016, Alan, Sarah and David Mifsud agreed to form a board of directors and promote Mike Mifsud to CEO. Mike has made other executive hires, including Morgan Williams, 35, a colleague from Goldman Sachs who started as chief financial ­officer in March 2017.

The quilting market in the US totals $3.7 billion, according to Quilts Inc, but Mike says only around $200 million has migrated online. For now, the plan is to expand Missouri Star’s ecommerce business organically while planning further expansion in Hamilton. The company owns five vacant properties, including an old theatre, where it may offer live demos by Jenny.

Even with the Goldman Sachs alums, Missouri Star remains a family enterprise. Thirty members of the Doan clan are on staff. And Jenny continues to design a quilt every week, tape four tutorials a month and travel to conferences across the country, where she and Ron stage a two-hour trunk show that usually sells out. “I love what I do,” she says. “I talk and I sew.”