The Customer is the Company

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But what Threadless lacks in flashy features, it makes up for in steadfast dedication to staying close to its customers. Both Nickell and Kalmikoff spend much of their time cruising Threadless.com -- posting comments on blogs, inspecting designs, and tweaking the website. They publish their instant-message addresses and regularly query the public about changes to design or contest policies. "If someone changes something on Facebook, there's no expectation that some random 14-year-old from the middle of Idaho is going to be able to get in touch with Mark Zuckerberg," Kalmikoff says. "On Threadless, if people see something they don't like and want to talk to Jake, they get Jake."

Employees have long served as the models for the company's shirts; this puts community members on a first-name basis with them. "Ross makes one hot Dylan," reads a recent comment from one of Zietz's admirers in response to a Bob Dylan-inspired pose he struck. (Users are also invited to upload photos of themselves wearing Threadless shirts. For each photo submitted, the company doles out a credit worth $1.50.) Meanwhile, each employee is encouraged to talk regularly with users. For instance, when Curran is planning on cleaning out the warehouse, he alerts the customers on his Threadless blog. The posts typically generate dozens of requests. "Keep an eye out for the XL Corporate Zombie," reads one from a customer eager to score a lost copy of a sold-out design.

In 2005, Nickell got a call from a buyer at the retailer Urban Outfitters (NASDAQ:URBN) about carrying Threadless's shirts in the company's 150 stores. Around the same time, Target (NYSE:TGT) sent him a several-hundred-page contract for a "test" involving tens of thousands of shirts in a handful of stores and on Target.com. Nickell reluctantly declined both offers, fearing a backlash from a community that often uses "Urban Outfitters" as a synonym for uncool. "We would do a deal with Target or Urban Outfitters," Nickell insists. "The only stipulation we need is to have some kind of presence in the store where people are able to easily learn about where the designs come from. You go to Target or Urban, and it's just shirts on a wall. You have no idea where they came from or who designed them," he says. He would like to see a computer kiosk that allows shoppers to score designs and read about artists, but when he pitched the concept to Urban Outfitters -- which approached Threadless again in 2007 -- the clothing giant demurred. "As long as the story isn't lost, we're OK," he says. Urban Outfitters and Target declined to comment, citing company policy.

Still, Nickell is not averse to pushing his model in new directions. In late 2006, he sold a minority stake to Insight Venture Partners for an undisclosed amount. He informed the community with a release titled "Holy Crap, Big News!" With Insight's cash and expertise, Nickell began work on a Threadless retail store and started looking into the possibility of opening a European warehouse to speed international shipments. He also broke with DeHart, who had lost interest in expanding Threadless and wanted to start something new. (DeHart declined to comment for this story. He maintains his ownership stake in Threadless and a board seat but no longer works at the company.)

Last September, Threadless opened a two-story store in Chicago's Lakeview neighborhood. Nickell spared no expense in designing the space, which is appointed with zinc panels, hardwood accents, and 20 flat-screen television monitors. But the most striking thing about the store is how few products are on sale. The upper floor is dedicated exclusively to art, and 20 or so T-shirt designs are sold on the lower level. This layout makes the space feel worlds away from American Apparel (AMEX:APP) stores, which are usually crammed floor to ceiling with all things cotton. Nickell imagined the store as a marketing channel -- a physical embodiment of Threadless.com that would help attract attention to the website, give artists a chance to see their work sold in a real-life setting, and serve as a venue for events such as concerts and art exhibits. He figured it would lose money.

Six months later, the store is profitable, and Nickell is already planning a children's shop in Chicago and a second store in Boulder, Colorado. Eventually, he hopes to open stores in midsize cities such as Austin, Seattle, and Minneapolis. The expansion, which has been greeted positively by much of the Threadless community, is not without its detractors. "Please promise me that this will be the ONLY store you will be opening," wrote a member several days before last year's grand opening party. "Next thing you know, everyone on every other block will be wearing the same shirt." And LovesThreadless.com, one of several independently run fan sites, greeted retail expansion coolly. "Congratulations, guys, but keep it real," wrote the site's creator, Chris Cardinal, a 22-year-old Phoenix-based Web developer.

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