The Customer is the Company

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In a superficial way, Threadless resembles these Web 2.0 firms. It is an online business, built around a social network, in which users collaborate with one another. The difference is that Threadless is not a software or media company. It designs, manufactures, and sells actual stuff. "They're the beginning of a new wave," says von Hippel, the author, most recently, of Democratizing Innovation. Von Hippel envisions a future in which most companies essentially abandon market research and product design and instead rely on communities of users to figure out which products to sell. Tim O'Reilly, the founder of O'Reilly Media and the guy who coined the term Web 2.0, goes even further. "As manufacturing technology gets richer, this model will be much more widely applied," he says. Already, the prices of rapid prototyping gadgets like three-dimensional printers and laser cutters are plummeting, a fact that O'Reilly believes will allow for open-source electronics, furniture, and toys. "How far off," he asked in a 2006 essay posted to his blog, "is a future in which the creative economy overflows the thin boundary that separates 'information' from 'stuff'?"

Nickell had no such vision as he put the finishing touches on a T-shirt design in late 2000. It was for the New Media Underground festival, an informal gathering of Web designers in London. He had no intention of attending the event, but he cared about it deeply. At the time, Nickell was 20 years old, living in a tiny Chicago apartment. He spent his days on the sales floor at CompUSA; at night, he was a talented if unenthusiastic part-time student at the Illinois Institute of Art. Though his girlfriend visited him each weekend, he had few close friends.

When he wasn't working or studying, Nickell was tinkering with Web design, a hobby he indulged in on Dreamless.org, an Internet forum for illustrators and programmers. He would spend hours at a time cruising the forum, talking with his online friends and engaging in a pastime called Photoshop tennis. In it, designers pass digital photographs back and forth and challenge one another to manipulate the images in the most outrageous way possible.

Nickell's design for the New Media Underground festival -- three lines of gray text that mimicked the layout of the Dreamless website -- was an entry for a contest that the festival's organizers were holding online. The design was simple and not quite pretty. But it was strikingly clever -- a physical representation of their digital community. The Dreamless members agreed. Nickell won the contest.

In concrete terms, this accomplishment meant exactly nothing: He got no money or even a copy of his winning shirt. But the experience was exhilarating. Dreamless members spent a lot of time batting ideas back and forth, but their creations rarely made it out of the digital realm. Suddenly, Nickell had an idea: What if the best designs were printed on T-shirts and sold in the real world? He suggested as much to Jacob DeHart, one of a handful of friends he had met on Dreamless. DeHart, a student at Purdue University, loved the idea, and each pitched in $500 -- enough to pay a lawyer to set up the business and print the first round of shirts.

Nickell and DeHart held their first contest in November 2000. They asked the designers on Dreamless to submit their best work and to pick their favorites. The grand prize: two free shirts and the promise that any proceeds would be reinvested in future contests. They called the competition Threadless, a play on thread -- either a clothing item or a discussion topic on an online forum. In all, they printed two dozen copies of five shirts out of slightly fewer than 100 submissions with in-joke titles like "Evil Mother F---ing Web Design" and "Dead Sexy Designer." The shirts went on sale in January 2001 for $12 each and sold out quickly. In the months that followed, Nickell and DeHart ran regular competitions using an automated rating system that allowed users to score designs on a scale from 1 to 5, but it never occurred to them that they had a real company. "It was just a hobby, a way for people to get their artwork out," Nickell says. By 2002, the hobby had surpassed $100,000 worth of T-shirts and attracted more than 10,000 community members, mostly artists in their teens and 20s. Even so, Nickell, DeHart, and Kalmikoff -- who joined the company that year -- spent much of their time doing freelance Web design to pay the bills.

Shortly after founding the company, Nickell and DeHart began awarding small cash prizes to the artists whose T-shirts were selected. Initially the prizes were $100 per winning design, but they gradually climbed to $2,500, plus reprint fees. But the appeal of Threadless to artists has never had much to do with getting paid. "It wasn't so much the money," says artist Glenn Jones, who won $150 in a contest in 2004, at age 29. "It was how cool it was to get your shirts printed." Young illustrators had few outlets in which to display their art, and within a few years of the launch, Threadless had acquired a sort of American Idol cachet. It was where unknown designers went to make their names.

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