Saturday, August 14, 2010

Hipster Fashion Line Rides Crowd Sourcing To Business Success

Jake Nickell, founder of Chicago-based t-shirts, had no intention of turning his hobby into a career. But after three years of running an Internet-based clothing company, Nickell soon realized that he had the chance to transform something he loved doing into his job, He hasn’t looked back since.

Over the last decade, Threadless has grown from an art school project run out of Nickell’s home in Chicago into a crowd sourcing pioneer, with 75 employees and a brand that has become an iconic name in casual fashion.

“It was initially a hobby. It was never intended to be a business,” Nickell said. “We just want to be the awesomest [sic] place for people to hang out. We don’t think of it so much as selling t-shirts, but as a place to hang out and make art.”

Unlike old-school art “happenings” that took places in artists’ studios, warehouse space or industrial districts, this one, until recently, resided exclusively on the Internet.

Art and commerce

From day one, Nickell established a business model that encouraged artistic expression. Designers post their t-shirt concepts to the Threadless website, where an active and critical community rates the picture. Threadless then prints the highest rated designs onto t-shirts available for purchase on the website.

Despite the system leading to millions of shirts sold every year, Nickell didn’t initially intend to make money from his project. Since it’s inception, Nickell has had only two goals for the business: Provide artists with an outlet where they can simultaneously distribute their work and make money, and give wearers a voice in which designs get produced..

“I think my lack of understanding of traditional business stuff has actually helped us. It has been really helpful for our corporate culture,” Nickell said. “Even today, a lot of our decisions about doing stuff are based on how cool it would be.”

The artists receive $2,500 if their design makes it onto a shirt and another $500 if popular demand leads to a reprint of the shirt after the initial run. In recent years, Threadless has moved beyond t-shirts, printing the designs on everything from water bottles to iPod cases. If an artist makes it onto one of those other items, they also receive $500.

That high fee comes from Nickell’s respect for the artists, and many designs never make the company any profit at all.

“Because our award is so generous, many designs never recoup their costs,” Nickell said. “However, we strongly believe in a model that equally rewards all printed artists for the first printing of a tee. This contributes strongly to the ‘all for one and one for all’ spirit of our community.”

Crowd sourced success

By tapping into a community of artists to design the products, and a community of fans to vet them, Threadless became one of the first companies to take advantage of an Internet business model now called crowd sourcing. However, Threadless’ model predates the coining of that phrase by four years, and Nickell hates the term.

“I don’t like [the term] crowd sourcing. It seems sterile and one sided, like a company needs something and goes to the crowd to do it for them,” Nickell said. “We’re more passion-based. We see people doing these awesome things, and we want to help them with it.”

To emphasize that connection with its artists and its customers, Threadless is going on tour this summer. Nickell has transformed a camper trailer into a mobile store that will drive across the U.S., giving customers and artists a chance to meet each other and the company’s employees.

Similarly, in 2007, Threadless opened a brick-and-mortar store in Chicago. Even though the store is far less profitable than the website, it grows the brand as a community center and venue for t-shirt and art classes, Nickell said.

Deliberately opening a store destined to be less successful than a profitable website might seem like a step backward to most business owners, but that move is yet another example of how Threadless has succeeded by putting art first and money second.

“If I had to give up one thing, it would be the money I made from this, because the relationships I’ve made with artists is so valuable,” Nickell said.
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