Threadless

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608-707
MAY 12, 2008

KARIM LAKHANI ZAHRA KANJI

Threadless: The Business of Community (Text Only )
1

Threadless.com, the online, Chicago-based t-shirt company, was not your typical fashion apparel company. Established in late 2000, Threadless did not have an elite cadre of internal designers that churned out hip, cutting-edge t-shirts. Instead, the company, run by Jake Nickell (Chief Executive Officer), Jacob DeHart (Chief Technology Officer), and Jeffrey Kalmikoff (Chief Creative Officer), turned the fashion business on its head by enabling anyone to submit designs for t-shirts and asking its community of more than 500,000 members to help select winning designs. Threadless encouraged community members to actively participate by critiquing submitted designs, blogging about their daily lives, posting songs and videos inspired by the designs, and, most important, purchasing t-shirts that have won the weekly design competitions. All printed designs typically sold out, and were then retired from the active catalog to make room for new designs. In 2007, Threadless was well on its way to selling more than a million and a half t-shirts. Threadless' success had garnered significant media attention, the New York Times and USA's National Public Radio highlighting its unique community-based business model, and had piqued the interest of large traditional retailers. Nickell, DeHart, and Kalmikoff were now faced with making a decision about a potentially lucrative offer from a major retailer offering to carry large volumes of select Threadless t-shirts in its retail stores. Should they accept?

1 This document is simply a copy of the text found in the multimedia case Threadless: The Business of Community.

Professor Karim Lakhani and Research Associate Zahra Kanji prepared this case. HBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management. Copyright © 2008 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685, write Harvard Business School Publishing, Boston, MA 02163, or go to http://www.hbsp.harvard.edu. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of Harvard Business School.

Threadless: The Business of Community (Text Only)

608-707

Business Model

Jake Nickell met Jacob DeHart on Dreamless, a 3000-plus member online message board for designers, in 2000. "There was a t-shirt competition for an event in London," Nickell explained, "and I ended up winning. So my shirt was used as the official shirt at this event in London. And even today, years later, I still don't have a copy of that shirt!" The experience of winning a t-shirt design competition sponsored by the Dreamless community suggested to Nickell and his Dreamless forum friend DeHart that co-creation with a community was a relatively untapped market. Both were amazed by the variety and high quality of submissions received by the community organizers. "It was just the whole idea and the whole process of designing and winning the competition and voting on my peers' work that was really fun," recalled Nickell. "Jacob and I started talking about how we could turn this idea into a real, ongoing project. We started Threadless as a hobby, and as an outlet for the community of artists on Dreamless. Our next step was starting SkinnyCorp, which was a Web development company. We had Threadless as a side project to prove to our clients that we actually could make Web sites. And then, Threadless just really started growing. At first, we were selling just a couple of hundred t-shirts out of my 900 sq. ft. apartment, and then it started snowballing." In 2003, Nickell and DeHart...
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