Socialwares

Excerpt from: Juliette Powell

It was the height of the dot-com bubble, and everybody was getting in on the game. So when a couple of college dropouts with no formal Business training got together in 2000 with $500 each and decided to start a t-shirt shop on the web, nobody paid much attention. Not at first, anyway.

Jeffrey Kalmikoff and Jake Nickell got the idea for their online store from a T-shirt design contest that Jake entered and won through an online design and development community they were both part of at the time. The idea of that contest stuck, and they decided to use the same principle to build their own ongoing, community-based T-shirt design contest. Nobody expected that these two college dropouts would go on to become the multimillionaire creators of a new standard of peer production on the Internet.

"In a nutshell, our business is based upon the idea of 'customer cocreation' or 'user innovation' or 'crowdsourcing' or whatever the next buzzword for it is," muses Jeffrey Kalmikoff, cofounder and chief creative officer of online retailer Threadless. After expanding at a rate of 3 to 4 times a year and becoming one of the most popular shirt-makers on the Web, Threadless now pulls in an annual revenue of about $30 million with a profit margin clocking in at an impressive 30 percent.

As illustrated in Figure 9.1, the Threadless Crowdsourcing process goes like this. Seasoned designers and novices alike submit more than 1,000 new T-shirt designs a week to the Threadless Web site. Users then have a seven-day window in which they vote on and rate the submissions. The company finally chooses designs from the top-scoring submissions to be printed in limited quantities of 1,500. Invariably, every single design sells out.