Threadless: Built on Consumer Passion

Recently read a great Inc. article called The Customer Is The Company (June 08 edition, by Max Chafkin).   I actually read the magazine version first, as I still have a thing for print.  Why do I feel I have to explain myself???  Anyway, before I add my applause for a company called Threadless, I have to say something about 'Welcome Screens'. 

If you go to the above article link, you might first hit a landing page ... a big ad that gives you the option to 'Skip this Welcome Screen'.  Listen, I don't mind advertising.  I used to write and produce radio commercials for a living.  I appreciate a good ad, especially if it uses creative storytelling, doesn't INTERRUPT, and offers a useful product or service.  But for the love of Mike (whomever he is), never, never, never use the term 'Welcome Screen' on an interruptive landing page.  This is very much a Traditional Media technique.  Magazines like Forbes and Inc. do it all the time, whacking you with speedbump advertising that quaintly refers to itself as a welcome mat. Well, if that's your way of welcoming consumers, you need to take a deep Web 2.0 breath and bone up on effective, consumer-friendly marketing.  Start by reading Seth Godin's blog.  And change the text to 'Skip this Advertisement'.  It's honest and not nearly as offensive.  OK, I feel better. 

Back to Threadless. The title of the article is a perfect: The Customer is The Company.  Every business should burn those five words somewhere into the mission statement, because even if your business isn't about user-generated content, it should have a singular focus on the customer. Threadless began as a revolutionary t-shirt business built on a devoted, passionate community.  It's expanding into products beyond t-shirts, but it doesn't matter.  What does matter is the brilliant way the business model was designed.  The article tells of Threadless founder Jake Nickell speaking at an MIT classroom in 2005, an event attended by various business big wigs (General Mills, Clorox, Google) and organized by Eric Von Hipple, considered the top dog on user innovation:

Threadless, Nickell's explained, ran design competitions on an online social network. Members of the network submitted their ideas for T-shirts and then voted on which ones they liked best. Hundreds of thousands of people were using the site as a kind of community center, where they blogged, chatted about designs, socialized with their fellow enthusiasts -- and bought a ton of shirts at $15 each. Revenue was growing 500 percent a year, despite the fact that the company had never advertised, employed no professional designers, used no modeling agency or fashion photographers, had no sales force, and enjoyed no retail distribution. As result, costs were low, margins were above 30 percent, and - because community members told them precisely which shirts to make - every product eventually sold out. Nickell's company had never produced a flop.

The audience members listened, rapt. For years they had suspected that this kind of business model was possible - even inevitable. They had seen the beginnings of it in the open-source-software movement, and they had been trying to make it happen in small ways within their own companies. But somehow, this T-shirt guy had built an entire business around the idea that an online community could drive innovation. "We were blown away," says von Hippel.

I love that Nickell was clueless about the term user innovation at that meeting three years ago.  He hadn't heard of Von Hipple either.  He had no idea back in 2000, when Threadless began as a hobby, that he was blazing a trail that books like Wikinomics would spotlight years later.  Nickell simply had a brilliantly simple idea:  let a community of passionate consumers come up with product ideas, make those products, and sell them to the community.

Nickell is expanding into other products that work well with the user-designed model.  He has to be careful, as the article notes, not to offend his loyal community by coming across too 'commercial'.  He's turned down deals with major retailers (Target is one) because he didn't want the story behind Threadless lost in some display space on a large selling floor.  But there's no reason he can't take Threadless beyond t-shirts, the same way Zappos is moving beyond selling just shoes.  The comparison is not perfect, but go with me on this.  Zappos calls itself a 'service company that happens to sell shoes'.  Its main thing is not the product it sells.  Its main thing is the outlandishly fantastic customer service it provides.  So of course it can expand beyond shoes.  And of course Threadless can expand beyond t-shirts, because it's main thing is not t-shirts ... it's the singular devotion to a community of passionate consumers that provide all the creative juice, marketing and selling it will ever need.

It doesn't matter that your business isn't built on user-innovation, the way Threadless is.  What does matter is that your business has ample opportunity to integrate any one of a number of Web platforms and channels that enable an honest, open dialogue with consumers.  They're out there, right now, ready, willing and able to tell you exactly what's right and wrong about your business.  Why not ask them what they'd do differently?  Seems kind of silly, when we have affordable, simple tools to collect and manage feedback and innovation, not to put them in play.  Your business may not have been built this way, but it can undergo a digital transformation that will enable you to tap the power of Consumer Passion.   

Comments

[Jimmy]

Hi Jeff,
This is funny, I just read the article in Inc on Threadless and wrote this post on User Innovation
http://eastcoastblogging.com/2008/05/28/user-innovation-where-can-it-take-us/

They are a great company and really are positioned well for the near term future in this new web climate

Jimmy

[Jeff Crites]

Jimmy:

That was a killer article in Inc. I knew of Threadless, but didn't have the complete picture. The June issue has an Innovation focus, so I jumped all over it.