Threadless is a very interesting company because of how it has “community-sourced” its product design. If you had told me that a company could succeed by running weekly tshirt design contests and then selling the winning designs, I would have told you that you’re nuts. I met Jeffrey during my tour of the Threadless offices a few weeks ago and posed these questions to him after my most enjoyable visit.
Question: What is your business model?
Answer: In a nutshell, our business is based upon the idea of “customer co-creation” or “user innovation” or “crowdsourcing” or whatever the next buzzword for it is. Truth be told, when Threadless first began, we did what we did because it seemed logical to us.
As entrepreneurs with no formal business training, you go with your gut. It wasn’t until 2004 when Jake, Jacob and I were invited to speak at MIT for Eric Von Hippel that we found out that what we were doing had a name: user innovation.
Threadless is an ongoing, online tee shirt design competition. Designers download a template and upload a design. Each design is scored on its own for seven days. The designs are voted on from 0-5 by our community of registered users. Currently, we have a little over 500,000 of them. There’s not real set “end date” for a contest as each design is available for scoring for seven days from the time it was submitted. However, each week we release seven new designs and two reprints to sale on our site.
The designer of each winning tee receives $2000 in cash and prizes: $1500 cash, $300 gift certificate to Threadless and a membership to the 12-club, a monthly subscription-based line of tees. We receive about 150 submissions per day and have printed a little over 900 designs. We currently sell about 80-90 thousand tees per month and ship them from our Chicago office/warehouse.
Question: What do you tell your parents that you do?
Answer: I’m pretty up-front with my parents about the whole thing. I made sure from the beginning that they understood well enough to tell other people. Threadless is a viral community—who’s going talk about something you’re doing more than your mother? Besides, if you can’t clearly and effectively convey to your parents what exactly you do, you’ll have no chance of explaining it to anyone else. It’s really easy with my Dad though, as he’s a very accomplished and well-respected businessman.
Question: How old is the oldest employee in Threadless?
Answer: I think our oldest employee is thirty three. Regardless of recorded, legal age – you’d never guess how old anyone in our office is. Most people tend to guess about 5 years too young.
Question: Do you look at Threadless as a “user-generated, long-tail, Web 2.0 company” or a “retailer of cool tshirts”?
Answer: Threadless is certainly user generated. It’s certainly long-tail. I hesitate to call ourselves a “web 2.0” company because I really hate that term. I don’t understand why people feel the need to categorize the web into versions. It’s easier to think of it as what’s new. Innovation doesn’t happen in planned, organized, measured steps that you can attach segmented numbering systems to. It just happens.
Nobody called automobiles “car 2.0” when the automatic transmission was invented. It was simply easier to use. Anyway, to answer the question directly, I’d say we’re both. Threadless is a skinnyCorp project that is a retailer of cool tees, and also a company that relies on users to create content, make decisions, and ultimately shape its own future.
Question: Who is your venture capital investor?
Answer: We took on a minority investment for the purposes of resources and not because we needed money to build the business. Our investor, Insight Venture Partners, is unique in that they invest in companies who are already successful and are looking for guidance, and not just needing seed money. They’re a spectacular group of people and have helped us immensely in our desire to blanket the globe with 30-single ring spun cotton slathered in fabric ink.
Question: Does Threadless’s effort in forums, podcasting, etc really increase sales or are they just fun/cool things to do?
Answer: Both, most likely. Honestly, we’ve never really measured their effects because it’d be really boring to do so. Participating in the forums, definitely helps to people understand that the owners and employees of the company really are part of the community and don’t sit up on high looking down onto our business. Most everyone who works for us was part of the Threadless community before they were employed, so it’s a pretty natural thing. The podcast—who knows—but it’s really fun!
Question: What’s the story with the Airstream podcasting trailer?
Answer: When we originally began doing the podcast, Charlie’s “office” went through many iterations. First, he was at a desk—deep in the warehouse where the tees helped to drown out the sound of the work. That was short lived.
The second version or, Studio 2.0, was a converted workspace in our office around which we built walls, a ceiling, and a door. We covered the walls in foam and carpet to try to insulate it from the sound. During the summer, Charlie would sit in there in his underwear because it was so hot. That place smelled awful.
When we moved into our new space, we planned on building Charlie a proper recording studio. I have a friend who builds them professionally, so we were going to have him do that. It never panned out, and at some point someone said, “We should buy an Airstream and gut it and turn it into Charlie’s studio.” That was pretty much the end of that discussion and next thing you know, we have a 1962 Airstream Bambi in our office that Charlie records out of.
Question: What do you want to be when Threadless grows up: Amazon, Wal-Mart, FaceBook, Crazy Shirts, QuickSilver, IDEO?
Answer: I wouldn’t want Threadless to be anything else besides Threadless when it grows up. When Amazon started, I’m sure Jeff had no idea it would become the giant that it is today. I’d like to think that he just kept his mind in his business and concentrated on making it the best Amazon it could be, rather than striving to make it “another whatever.”When Threadless grows up, I’d want it be inspiration for the next innovative new thing, not a new version of an existing thing.
Question: How much do you think you’ve spent decorating your offices?
Answer: Good god, I have no idea! On your blog about your visit to our office, one person made a comment to the effect of “I can’t wait to buy all their furniture at a discount when the go out of business.” I can assure that dude that the amount that we’ve spent on our office is safely within the not-going-to-make-us-go-out-of-business-because-of-a-few-Eames-chairs realm.
Question: Who are your business heroes?
Answer: I don’t really tend to look up to people in that sense unless I know them. There’s certainly people who I know who have really great businesses that they built from scratch who are worthy of praise, and therefore I draw inspiration from these people. Tim O’Reilly from O’Reilly Media, Jason Fried from 37signals, Sean Suhl from Suicide Girls, Zach Klein and Jakob Lodwick from Connected Ventures, Richard Moross from Moo—all these people have really inspiring stories to tell.
My dad, Alan, is a huge business inspiration for me. While he represents the more traditional way of doing business, I feel lucky that I have that level of business expertise so close to me…even if he does give me grief for not dressing up when I speak publicly.
Question: As an entrepreneur, what keeps you up at night?
Answer: We have this ethos at skinnyCorp: “Your project is not good enough.” We’re constantly striving to make all our projects as great as they can be – constantly evolving, constantly refining, etc. I never go to sleep satisfied that what we’ve been working on is done. It’s never done—it’s just “as far as you can take it today”. That—mixed in with thinking about new projects, new ideas, new everything—keeps me up at night. My three cats aren’t any help either.
Awesome interview. I imagine this is a pretty cliche response, but it’s these stories that get me really excited about owning a business. It’s not the idea of buying an Airstream that excites me, but knowing that if I wanted to, I could, and no one could tell me it’s a stupid idea.
Very interesting interview. I had no idea they were pushing that many shirts a month…very impressive!
Threadless has some of the WORST customer service I have ever experienced ANYWHERE. When they failed to send the e-gift-certificate I bought for my sister for her birthday in November of 2006 (a generous $100 gift, I might add), they blamed it on me and wouldn’t refund my money. After a number of emails and handful of unreturned phonecalls, I threatened calling the BBB and Consumer Protection Agency. Then I got my money back….Over a month later…After arguing over and over again and being told that it’s MY fault their system didn’t send the gift certificate. Really unbelieveable. Their answering machine actually says “Maybe we’ll call you back…maybe we won’t.” Needless to say, I buy my cheap t-shirts elsewhere now.
How I Started HireAHelper.com for$3700
Guy writes about starting a company for a little over $12k.
Thats a great article to read if you looking to spend 3 times as much as I did. I developed HireAHelper.com from an initial investment from a couple of my friends of $4000. Not $4000 a piece,…
threadless is definitely cool, a great community, and excellent artists and products. But, their service totally sucks. Everytime they have a sale (and their sales are AWESOME) it can take up to 4 or 5 weeks to receive the shirts, and I live in a suburb of Chicago. 4 OR 5 WEEKS!! Outrageous.
They’ve got room to improve, for sure, and should look to zappos.com as a model for service.
Patrick, when we have our sales we clearly state that there will be a very extended ship time for packages. We do everything we can to get the packages out in time. For our last sale, which ended yesterday we brought in 10 extra people to help, and ran 2 shifts. If the sale you’re referring to was our last Holiday Sale, then yeah – that was a learning experience to say the least. We got so slammed with orders, it took a really long time to get caught up. We even have 25 extra people helping – running 2 shifts, 7 days per week. That was certainly embarassing for us, but also very unexpected. Did you ever see that one commercial where the group is excited to launch their new website and within 30 seconds they have like 300,000 orders? That was what our Holiday Sale 2006 was like. It was sucky for a lot of our customers and we are very open about it and have used it to learn how to better deal with sales.
Jeff, hmm… I dunno what to tell you about your comment. All I know is that we get praised regularly from our customers about our customer service. I’m sorry you had such a large problem, but it seems like it was resolved so that’s good. All I can say is that for us shipping almost 100k tees per month, we only have 1 customer service person – if that gives you any indication of how effective she is, and how good our service can be.
Time to employ another service person :)
I’m sure most of the time Threadless executes well, and prior to this incident, you might have even called me customer evangelist for you all, but in my situation, that was not the case.
It takes THREE days between correspondence (which to Threadless’s credit, they do tell you), but when you’re trying to resolve a billing dispute over goods not delivered, that’s an eternity…especially when Threadless does not offer phone support.
Mical has the right idea. It might be time to think about hiring some more customer service reps. Then you can say you ship over 100,000 shirts a month with only TWO customer service reps! Woo wee!
Live and learn.
Thanks Jeffery and Guy! I just got my first Threadless T-shirt in the mail and I couldn’t be more proud to wear it.
Let’s be really clear… Mr. Bezos had/has EVERY intention of making Amazon as big and great and awesome as it could possibly become. (Get Big Fast ring any bells? That was coined at Amazon if memory serves.)
Hey great interview, I’ve been told by several people i should check out Threadless, I think its a fantastic idea involving the creative community. Its inspiring to look at companies like this.
Basics Before the Bonfire
It means that the focus of a new, small, or early-stage company should be on being being established before growing big fast. The bonfire can represent a big highly visible company or it can be the firesale when a company go…
Kids want to look good and be unique. They also pay top dollar for fashion. It costs as much to dress like a (well dressed) thug as it does to dress like a professional. With Chinese outsourcing, the biz model for stylish clothing is definitely trending like other IP businesses — high costs of R&D, low costs of production and distribution. The open problems are turnaround time from idea to sales and customization. Look at Nike iD as a good example of what can be done. A year ago, it was frowned on by sneakerheads, and now, you’ll find custom AirMax 95s in any sneakerhead’s collection. Heck, even the running shoes weren’t in style a year ago! I can definitely see how nearly custom mass production Ts could be a thriving business.
the answers might seem simplish but jeffrey believes in them. and he executes his projects beautifully. I am so jealous
Boring! We’ve heard all this awe shucks, street smarts jabber too much lately. Threadless are glorified designer pimps. Pay designers… it’s the right thing to do.
Great article. Really inspiring. We’re trying to figure out how we can apply some of these concepts to our business. Contrary to another poster, I think what they are doing is quite innovative and applicable to a wide range of businesses. Have fun, do what you love, get people involved and give them a say in what your business is all about. That’s the real new paradigm.
I think that customization is going to change a lot of businesses. Have you seen Zazzle.com, they have the same type of service and I’m the CEO of PAYjr, which is launching the PAYjr Visa Buxx on July 1st, which will allow teens to upload images or choose designs submitted by the community to design their own teen prepaid card. The really cool things about all of this is that consumers get more choices and independent artist gain an opportunity to make a better living from their talents.
Changing the world, one family at a time!
“Boring! We’ve heard all this awe shucks, street smarts jabber too much lately. Threadless are glorified designer pimps. Pay designers… it’s the right thing to do.”
BW, we pay out well over $50,000 per month to designers for winning submissions. We consistently raise our prize money as our company grows. I’ll admit it… I don’t know very much about the business of pimping. However, the little that I do know tells me we have very different business models.
Haha… thanks for the response Jeffrey. I too know very little about pimping. I still think the stats included in the article that weigh submissions vs. winners make the average take for a designer pretty tiny. 150 submitted daily… but only 900 have been printed in total. At Todays “prize” rate that means you’ve spent $135k in design fees. Given your entire product is basically design and your revenues are in the millions/year are you really going to say you aren’t taking advantage of designers?
How about royalties?
Any person wishing to start a new venture must ignor conventional wisdom and follow their passion, instinct and drive toward the goal. Everything else will follow. Dreams do not become reality by crunching numbers. They become reality by making it happen.