Step 3: Outside
Wrap rectangular piece around cap, leaving a little overhang to allow the end circle to fit in and pin the overlap, and then run a needle, if desired, into the side and through the bottom to keep it all togehter while working. (I don't need this anymore).
Start a knot on the inside bottom overlap and begin a simple whip stitch around the bottom connecting the bottom to the sides.
When you get back to where you started, go up the side seam.