Tuesday, October 19, 2010

Threadless! 10/14/2010

Today....well last Thursday (It's impossible to keep up with this Chicago pace) we were given the opportunity to visit Threadless, which is an innovative business based in Chicago that relies heavily on the concept of crowd-sourcing. For those who are not aware of the definition of this term, the wiktionary dictionary defines crowd-sourcing as :delegating a task to a large diffuse group, usually without monetary compensation.

The concept behind Threadless is simple, but is GENIUS. Threadless has been able effectively "crowd-source" (not to be confused with out-sourcing) the design and selection process. What this means is in laymen's terms is that...ANYONE can create shirt designs for them. Their website has an almost cult following (of mostly artists, designers, or fanatics of the company) where anyone who signs up (for free) can upload their design to compete against other designs. The Threadless community then votes for their favorites designs and whichever receives the most votes, well.... wins. The artist who uploaded the design then receives $2500 for winning the competition and a certain percentage of the t-shirt sales. This idea has been EXTREMELY successful for this business and is a great model for other businesses as well.

Threadless has also been able to grow organically and by the word of mouth, so they have been able to avoid any marketing costs associated with traditional business models. This has been possible because of the cult-like behavior of the current community. The marketing director for Threadless stated that the only mainstream marketing they've participated in was a 15 second commercial on Comedy Central, which didn't result in a real increase in sales. Since it's beginning in 2000, Threadless has been able to exponentiall grow. ALL WITHOUT ADVERTISING AND MARKETING.

Another thing that Threadless lacks is the structured work force/drone type business. The videos we watched in preparation for the visit gave me the impression of a very laid back feeling among the Threadless workers. They had videos of playing ping-pong, riding around the warehouse on go-karts, and throwing around a football while working; it looked like the dream job. Once we were in the Threadless warehouse/building, the atmosphere was far from what it had been advertised. This was largely in part to the fact that it is getting close to the holidays, so there is an increase in the sales for the company. The company has also been growing exponentially within the global marketplace, so the business has had to keep up with the demand for t-shirts, while still maintaining the cool and hip image in the eyes of the customers. This is one of the major limitations of the Threadless community. The people who are key in this business are the “Threadless Community” and they have been extremely opposed to the idea of Threadless becoming a mainstream t-shirt company. They pride themselves in the idea of owning “original” t-shirts and the idea of few people owning the same shirt. As Threadless grows, the Community will play an integral factor in what new markets are going to be “tapped into”. If the Community doesn't approve of decisions made by the management, then the company is going to lose the “soul” of what has made Threadless successful. Traditional business models (for the most part) had to deal with these issues, because consumers haven't been as interactive with the actual company. By creating a community that is extremely involved with the business functions, they have a level of emotional attachment to the company. This is like a double-edged sword to a certain extent. It creates an extremely dedicated following of people who help Threadless Community immensely because of their involvement within the company. The company is able to adapt effortlessly to the consumer demands because they know EXACTLY what the consumer likes through the structured voting (for designs) system. Threadless doesn't need to spend a dime on market analysis or market research, because the customers provide everything they need to sell the designs. The warehouse manager stated in our tour that Threadless always (most of the time) sells out of the t-shirts because they already know that the customers are demanding them. The benefits of having a very loyal customer base is obvious, however, once the business goes “out of line” and does something the Community doesn't approve of, there will be many disputes to deal with. Traditional model business do not have to deal any of this, because most people are not “attached” to the concept of the business. Most will view the company as an entity that is seemingly untouchable because of the bureaucratic nature of corporations. Most customers won't (often) complain if there any questionable decisions made by the management of the company.


Whew, well anyways. Threadless was a great visit for us (like most of our visits are) and is just another notch in my belt of learning about businesses here in Chicago. Peace.



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