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The Customer is the Company

Some companies actually punish these people by cracking down on unauthorized innovations. Apple has famously "bricked" -- that is, electronically disabled -- iPhones that have been enhanced by their owners. Other companies pay lip service to user innovation but have trouble following through on the concept. "Companies are very good at creating platforms for external input, but they're very bad at using this input," says Piller, who has studied BMW's use of an innovation portal, a website that invites consumers to submit ideas. "BMW gets a thousand good ideas each year," he says. "Maybe they use one every two years." In other words, no matter how much technology goes into prettying up the suggestion box, the suggestions tend to get dumped in the trash at the end of the week.

Threadless is an exception to this. "You could say that what Threadless does is trivial, but it's not," says Harvard's Lakhani. In fact, the very triviality of Threadless's product -- something as low tech and as commoditized as a T-shirt -- proves that vibrant online communities can drive all sorts of nontechnical businesses. This should be encouraging news to entrepreneurs. Customer communities have become exceedingly inexpensive to build and manage; blogging software and social network platforms, for example, are now available for free from a handful of start-ups. "We thought that open source could only work in software, and now it's being successfully applied to a product as mundane as a T-shirt," Lakhani says.

Threadless's headquarters is in a former printing plant on Chicago's Ravenswood Avenue. The 25,000-square-foot office is open to customers, a dozen of whom stop by every day to pick up shirts in person. They sometimes stick around for hours and hang out in a space that resembles a college dorm room constructed on an impossibly large scale. There are video game consoles, go-carts, a giant television, beanbag chairs, action figures, a singing-buck trophy, a Ping-Pong table, and a full-size Airstream trailer that the company uses as a studio in which to produce podcasts.

These diversions and many others are captured in a host of videos published at Threadless's website. There's the one of Nickell smashing a television with a homemade potato gun, the Halloween video with employees throwing pumpkins off the roof, and the one that depicts Threadless employees in a fierce pillow fight. Many videos depict employees dancing, often in ridiculous costumes. In short, the impression is of a teenage paradise -- a company that has nothing but fun.

But take a closer look, and the company is suspiciously companylike. The go-carts generally stay parked, the buck stays mute, and the Ping-Pong table serves as a gathering place for impromptu meetings. "When I started, we spent half the day playing," says Lance Curran, a bearded 29-year-old wearing a beanie, jeans, and a flannel shirt. "That doesn't happen anymore." This is not to say Curran doesn't like his job. On the contrary, he nearly glows when he talks about his rise from a temporary warehouse worker in 2005 to the warehouse manager in charge of a staff of 18 today. When Curran arrived, the average time from an order to shipment was a full month during peak season. Today, it's one day, thanks to a system by which the warehouse is regularly reorganized based on what is selling well. Hot products are placed near the packaging area, which means that packers, who will often walk three miles in the course of a shift, don't have to travel as far to get shirts. "Visitors come in here with degrees, and they can't believe how this place has evolved without any outside help," says Curran.

Like Curran, most of Threadless's employees come with no obvious qualifications for their jobs. The oldest staff member is 33, and many are under 25. The employees do, however, arrive with a deep and abiding love of Threadless, having joined the community long before they entered the work force. Joe Van Wetering, a 21-year-old illustrator who works in the production department, was a frequent visitor to Threadless's offices as a teenager before taking a job in the warehouse in 2006. Ross Zietz had won seven competitions while studying art at Louisiana State University before he took a job as the company's janitor in 2004. He has since been promoted to art director, charged with helping the winning designers get their entries ready for printing. In fact, 75 percent of the company's 50 employees were community members before they were hired.

Nickell makes hiring decisions based primarily on one metric: trust. "It's pretty much the only thing we talk about when we interview," he says. The goal is to find people who can work independently. "It takes a while for people to get adjusted to this place," he says, adding that those who do not display an ability to figure things out on their own are quickly dispatched. (The first and only person over the age of 40 to work at Threadless, the CFO, left after only 60 days on the job in early 2007.)