Chicago Production: Producer as Consumer

Threadless | Founded in 2000 | 80 employees

IG: Tell us about the history of Threadless. How did the company start?

JN: I was going to an art school and, at the same time, working in a full-time job as a web developer. I taught myself how to code when I was 14 or 15-years old. When I was deciding where to attend college, it was going to be for either Computer Science or Art, and I decided Art because I was already doing technical computer work for my job and I wasn’t really into it. I actually had a job as a web developer in high school, but then I got burnt out on it. While at art school, I got invited to this forum called Dreamless. It was a pretty small community when I joined, about 300 artists worldwide, and existed for only a few years. But it was a really inspirational thing. I was going to school part-time, working full-time and spending every free moment in this forum. There was all this creative stuff happening there, with people collaborating on projects and doing cool things. We were all making artwork and posting it digitally, but it never really existed in real life. Threadless was really just my contribution to it. It was just a hobby, a project to add to the value of that forum as a member. So I thought that it would be fun to take some of the things we were doing and turn them into real products like t-shirts and posters. But it was only meant for us to have them. One day somebody posted a thread on the forum asking people to design a t-shirt for an event that was taking place in London. So I posted something and it was ultimately used for the event. And I literally started Threadless one hour after that. I just started a thread on that forum saying, “Post designs for t-shirts and I’ll make the best ones into real t-shirts.” It took no money. I was throwing myself under the bus, because I didn’t know how to print shirts, how to charge people’s credit cards online, how to ship orders, I didn’t know how to do any of that stuff. I think a lot of people are scared to do something because they don’t know how, but when you say to a huge group of people that you are going to do it, you kind of have to. From that point on, it just snowballed over the years. That was 12 years ago.

IG: What do you see as the key moments in the development of Threadless?

JN: I started the company with $1,000. $800 were used to print that first batch of shirts and the other $200 I used to get advice from an accountant. I printed that first batch of shirts and sold it, and the company has been profitable ever since. From that first $1,000. During the first two years, any profits we made we used to make more shirts. Those first two years were a key part of the company because we were able to grow 100% by just using the money to print more. We had no expenses other than a $10 monthly hosting fee for our website. We didn’t pay ourselves and we didn’t have any employees. It was just kind of a hobby. Two years in, I quit my job and started my own web consultancy. That’s why there is a parent company called skinnyCorp. Initially we did web design and development for clients. We worked with some of the big agencies here in the city, where they would farm out work to us. We were known for doing CMS systems, database integration, and Flash work. A lot of Flash jobs. Threadless was a side project, but it was also funding us at that point a little bit. So two years in, we looked at our budget and realized Threadless was actually making all the money, but we were spending 80% of our time in this stressful client work. So in 2004, four years into the business, we let go of all of our clients and just focused on our own projects, because we still weren’t focusing completely on Threadless at that point. We started other projects like Naked and Angry, 15 Megs of Fame, Extra Tasty, and OMG Clothing. We started all these other brands and it took us another couple of years to realize we should just be doing Threadless. If we wanted to do something new, we would have to do it under the Threadless umbrella so we have that brand recognition. So, we killed off all those other projects and rolled everything into Threadless. Naked and Angry, for example, would take artist-submitted pattern designs and turn them into pattern-based products like umbrellas, or ties, or dish sets. Now we have pattern challenges that take place on Threadless.

IG: The best-known outcome from Threadless are t-shirts, but there are many other products that come out of the company, all using the idea of crowdsourcing. You are blurring the line between producer and consumer.

JN: Yes, it’s all about crowdsourcing, which I think it is being misused a lot. The way that we started Threadless was by realizing that there is this amazing community of artist doing great things. And we wanted to add to that, helping to do something productive with what they were already creating. However, now when a business has a problem they want solved, they look out at the community and say, “You come and do the work for us.” That’s how they think about crowdsourcing. In reality, the framework that you need to use to do something like that is the same either way. It’s just the way you are thinking about it that is different.

IG: Walk us through the process of producing a Threadless t-shirt.

JN: Our production process starts with a continuous open call, wherein everybody can submit a design for a t-shirt or for any of the other products we carry. We then look at every design that comes in and, once it gets approved, it has seven days to be scored. After those seven days, it is given a final score and then we choose a handful of the top-scoring designs to print. The artist gets paid $2,000 plus royalties for their design. We usually print a design a day or more but, during sale times, we come out with more designs. It is a pretty streamlined process. It seems that fashion usually happens by season, but we come out with new stuff every single day.

IG: Once you get the design selected, do you work with a local printer?

JN: We have five different printers that we work with. Most of them are based here in Chicago or in the nearby suburbs. One is just a couple of blocks from here.

IG: Once they produce the t-shirts and send them back to your warehouse, do you do all the marketing and photography in-house?

JN: Yes, we do all of our own photography in the warehouse. Our employees are the models.

IG: Do they know that when you hire them?

JN: Yes, people are pretty stoked about it.

IG: And then you prepare the orders, package them and ship them from here.

JN: Yes, we ship everything from this facility. About 50,000 square feet, half warehouse, half office.

IG: How many different designs have your printed in these 12 years?

JN: We’ve printed close to 4,000 designs. Maybe more with our GAP deal, but that is in a different database.

IG: How many people work in the different areas of Threadless?

JN: We have about 80 people full-time and about 70 tem in the warehouse right now. Out of the 80 full-time people, 20 or 30 are in the warehouse and about 50 are working on the front end of the business.

IG: In a way, you are producing two things as part of Threadless. One is the physical products, such as the t-shirts, iPhone cases, mugs and many other things, but you are also producing a brand and a sense of community. In this building you not only have the warehouse for the products, but also the offices with a large amount of people working on the website, forum, blog, competitions, and engagement with the community.

JN: We are a weird balance between platform and brand. A mass customization platform like CafePress prints anything that comes in. The difference with us is that we accept everything, but then there is a level of curation, where we apply a brand perspective to it. Most brands have something aspirational about them and that’s why you connect with them. For example, with Patagonia you want to be outdoors doing cool stuff. I think Threadless is about supporting independent artists and finding really talented people, a lot of time those who go unseen. Most big name artists get there because of the network that they build and it’s hard for an artist to break through. In a way, we level the playing field a little bit and allow anybody to be found. In the end, it is about the best artists, because we don’t print everything.

IG: As that is decided by popular vote, you are giving back the responsibility to the community of not only producing the design but also deciding whom the best is. That also makes the community be proactive. There are other companies that people associate with, but they don’t have that interaction, the consumers aligned with their ideas, but that’s it. They are passive consumers.

JN: One thing that I learned is that most of our customers feel that, just by buying our shirt, they are part of the process of making it real. When a customer feels that they are part of the process of making it just by buying, it is really neat.

IG: You are an advocate for making things, as you shared in your TEDx-Boulder talk last year. Why do you think people should be making things?

JN: There are a million different reasons. I am not sure if one of my slides said, “Make your own luck,” but I think that sums it all up. You are not going to get lucky unless you are going to do something to earn that. You have to put yourself out in the world. During our meetings, I don’t like to just discuss things that we could be doing, especially when the ideas never come to life. It’s so much more important to do the work and get the thing out there. We like to get our ideas out of our head and work with our hands.

IG: It refers to the beginning of our conversation, when you said that, when you started Threadless, you had no idea about how to run the business or produce anything, but you just starting making it. This has come up in previous conversations we have had with other people in Chicago. It’s this idea of being naïve that keeps you fresh, because you don’t have preconceived ideas. You just have to figure things out for yourself.

JN: One of the biggest strengths when starting Threadless was my complete ignorance about how any of this worked. Not just how to ship things or charge credit cards, but also how to run a business. I think that, if I had gone to business school and learned how complicated it is, I wouldn’t have even wanted to do it in the first place. It’s this “ignorance is bliss” idea, and then you approach things with a fresh eye, where you do what is not supposed to be done. You carve your own path.

IG: A lot of your content and engagement happens online, but you also have a retail space in Chicago, and you create events for designers to come together. How important to you are the physical and virtual aspects of Threadless?

JN: I think it’s important for us to get out of the way, to allow our community to have relationships with each other rather than individually have a relationship with Threadless. So we do a lot of things to bring people together. We have a few thousand people who regularly participate on the forum. It’s not a huge chunk of our audience or customers, but they are the core people who really care the most. So we do events around the world to bring these people together. Every year we do a thing here in Chicago where people fly in from around the world and hang out with each other. There are usually events in California that we go out to because we have a pretty big crowd there. I was just in Singapore where we threw a party and three thousand people showed up, it was awesome. When you spend time in real life with people and put faces to names it’s super powerful. You are 99% of the time online talking with these people and, when you have that 1% of the time to be together, it makes that relationship so much better.

IG: Are there any other fields that you think could benefit from crowdsourcing?

JN: I think the best place to do it is where there is already an existing and really active community of people doing things that don’t have anything productive, although I’m not sure if that’s the right word. Say it’s a hobby, something that you spend three hours a day working on, and its outcome doesn’t have an impact on the world. It’s those types of communities where I think a company can be formed to help people turn their hobbies into something beneficial. Hobbies like music, cooking, those kinds of activities. Maybe there is something to build around that. One thing about Threadless is that we are not asking you to actually produce the thing or get really technical. You don’t even have to know how to set up your files or screenprinting. So, if we’re talking about cooking, people only need to able to come up with a recipe. They don’t need to know the process of scaling up so a restaurant can produce eighty of them a night. That should be what the company figures out.

Editors’ note

This article is part of our Chicago Production series. See also our articles on Horween Leather Company, Heritage Bicycles General Store, and 37signals.