Threadless: Leveraging Crowdsourcing to Design Cool T-Shirts Threadless, an online design community and apparel store (www.threadless.com), was founded in 2000 by two students with $1,000 as start-up capital. Jake Nickell was then at the Illinois Institute of Art and Jacob DeHart at Purdue University. After Nickell had won an online T-shirt design contest, the two entrepreneurs came up with a business model to leverage user-generated con- tent. The idea is to let consumers "work for you" and turn consumers into prosumers, a hybrid between producers and consumers. Members of the Threadless community, which is some 3 million strong, do most of the work, which they consider fun: They submit T-shirt designs online, and community members vote on which designs they like best. The de- signs receiving the most votes are put in production, printed, and sold online. Each Monday, Threadless re- leases 10 new designs and reprints more T-shirts through- out the week as inventory is cleared out. The cost of Threadless T-shirts is a bit higher than that of competitors, about $25. Threadless leverages crowdsourcing, a process in Two college students started Threadless, which turned into an online which a group of people voluntarily perform tasks that company that sells millions of dollars' worth of T-shirts annually (pictured here are models wearing Threadless' T-shirts). were traditionally completed by a firm's employees. Rene Johnston/Contributor/Getty Images Rather than doing the work in-house, Threadless out- sources its T-shirt design to its website community. The because it knows the number of people who participated concept of leveraging a firm's own customers via internet- in each design contest. In addition, when scoring each enabled technology to help produce better products is T-shirt design in a contest, Threadless users have the explicitly included in the Threadless business model. In option to check "I'd buy it." These features give the particular, Threadless is leveraging the wisdom of the Threadless community a voice in T-shirt design and also crowds, where the resulting decisions by many partici- coax community members into making a purchasing com- pants in the online forum are often better than decisions mitment. Threadless does not make any significant invest- that could have been made by a single individual. To more ments until the design and market size are determined, effectively leverage this idea, the crowds need to be large minimizing its downside. and diverse. Not surprisingly, Threadless has sold every T-shirt it At Threadless, the customers play a critical role across has printed. Moreover, it has a cult-like following and is the entire value chain, from idea generation to design, outperforming established companies American Eagle, marketing, sales forecasting, and distribution. The Thread- Old Navy, and Urban Outfitters with their more formulaic less business model translates real-time market research T-shirt designs. In 2017, revenues for the privately owned and design contests into quick sales. Threadless produces Threadless were estimated to be $18 million with a 35 (!) only T-shirts that were approved by its community. More- percent profit margin, which equates to some $6.3 million over, it has a good understanding of market demand in profits.4