What this study of knitters tells us about entrepreneurship 

When she visited Ravelry.com, a pattern-sharing and social-media website known as the “Facebook of knitting,” MIT PhD candidate Hyejun Kim realized she was watching the journey from hobbyist to entrepreneur happen in real time. With data.

“It’s impossible not to study this,” she thought.

Kim’s resulting analysis sheds light on the hard-to-measure early stages of entrepreneurship, and the social and economic forces that cause someone to flip the switch from “fun” to “profit.”

She analyzed almost 100 interviews and 403,168 profiles of knitters and crocheters in the United States. She found that even on one of the Internet’s great niche social networks, offline encouragement and feedback helped most talented hobbyists recognize their ability and take the first steps toward monetizing it. Success on the Internet was propelled by real-life interactions.

Her work was brought to our attention via an enthusiastic endorsement from trendsetting blogger and George Mason University economist Tyler Cowen.

Kim, who tried to knit but never got the hang of it, calculates that about 96 percent of Ravelry’s users are women. In a time when online side hustles and gigs are proliferating, her work helps us understand the forces that encourage skilled women to step off the sidelines and participate.

Many entrepreneurs emerge from a pool of dedicated hobbyists, but it’s hard to study that transition. You’d have to meticulously track years of activities, interests and output of every person who participates in a hobby. Remarkably, Ravelry’s design encourages their users to do almost exactly that.

The 8 million-plus people who have signed up for Ravelry since 2007 represent a diverse cross-section of the world’s knitters. According to the site, Ravelry makes most of its money through “yarn-related advertising.”

Together those knitters have built the kind of detailed, long-running data set that prior generations of economists could only dream of. They post the projects they complete, the patterns and yarn they use, and the real-world groups they join. They even link their accounts to personal storefronts where they sell patterns to other users.

“For knitters it is great to keep records,” Kim said. “For researchers, it is great to observe every knitting activity of every knitter.”

To better understand what transforms pattern users into pattern sellers, Kim reviewed 99 interviews with knitters on a niche newsletter and threeblogs. The most common answer, by far, was that they’d been encouraged by people they knew, such as husbands and friends. Many had already been modifying patterns and designing their own yarn gnomes and cat costumes, but until they heard from others, they lacked the confidence to step out on their own.

“For many entrepreneurs, I think the biggest personal challenge is believing in yourself — that what you are creating is something that is desired and valued by others,” designer Luise O’Neill told the Patternfish newsletter in 2015.

Kim’s analysis of data on 403,168 individual knitters from 2007 to 2014 backs this up. People who joined a so-called “stitch n’ bitch” group to craft socially were 25 percent more likely than otherwise identical knitters to take the plunge into entrepreneurship. This is true even when correcting for geography, experience, skill level and productivity.

The transformation begins immediately, implying that knitters realized their talent soon after meeting their peers, comparing their work and receiving feedback and encouragement.

Kim found the effect was strongest among those who were already the most skilled knitters. That suggests that in many cases social networks such as stitch n’ bitch groups create entrepreneurs by encouraging those with the most talent, rather than educating those who lag behind.

University of Virginia economist Eric Chyn called Kim’s approach creative and effective. “It’s very compelling evidence using new data,” he said.

“It tells us something about the way in which peers matter,” said Chyn. He was not involved in Kim’s research but has studied similar social effects in different contexts.

Chyn said Kim’s analysis suggested your peers may influence you in ways academics may not typically consider. It’s often believed your social connections can propel you into entrepreneurship by providing information and resources that enable you to start a new business.

Women tended to be skilled stitchers and pattern designers before they joined their stitch n' bitch groups.

But the offline social network of the gatherings gave the knitters something they didn’t have before: confidence.