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How the Threadless founders turned a website into a multi-million-dollar business

I’m at a conference in the Times Center on 41st street at 8th Avenue in NYC. It’s called The 99% Conference . (The title is a riff on the famous Thomas Edisonquote, “Genius is 1% inspiration and 99% perspiration.”)
Sponsored by Behance , a kind of New York-based industry association for creatives, and coolhunting.com , a website that has built a massive online following by aggregating cool stuff, the idea is to ask successful creative people to explain how they get things done in the complete absence of any precedent or structure.
The lineup ranges from Cheryl Dorsey , president of Echoing Green , a global nonprofit that functions as a kind of venture capitalist firm for social start-ups, to Ji Lee, the creative director of New York-based Google Creative Lab. (He’s the guy behind those white speech bubbles that cropped up on billboard and poster ads all over the world a few years ago.)
We’re also hearing from Scott Thompson , the designer of the Obama campaign’s new media strategy, and Seth Godin , marketing blogger extraordinaire and author of business bestseller the Purple Cow. (For the session on Thompson, Obama’s new media guru, check out my Twitter feed here .)
Oddly, the organizers decided to dispense with time for questions, which is of course disappointing to a journalist. It’s also a bit weird, given the line-up are all people whose success depended on others’ participation and ideas.
However, the caliber of the people presenting just about makes up for the lack of interactivity.
Right now, the two guys who founded Threadless are explaining their working process.
Threadless is a company that uses opensource design to develop new T-shirts. Graphic designers email designs to the company, which means new T-shirt designs can go up on the site every week. A client selects a design; the company prints it and mails it to them. The company has been around for about nine years. It is now a multi-million-dollar going concern.
The guys who founded it are two designers named Jeffrey Kalmikoffand Jake Nickell.Standing at the podium, both sport the ubiquitous Brooklyn-creative uniform – skinny jeans, running shoes and T-shirts.
“From 2000 to 2004, we had no idea what the potential would be,” explains Nickell. “I did not take a penny of any sale that came in, we used every penny to develop t-shirts.”
By 2002, they started building websites for clientsbut didn’t leave their jobs to build Threadless. “2002 was where I came in,” explains Kalmikoff. “I was laid off, so I decided to come and work in their offices. We worked for every agency and our focus in working on Threadless was twofold – to keep it going, but also to show to clients that we could use Flash. It became our working model. So for the entire time it was just this fun personal project for everyone involved.”
“The site was 100% reactive to what the community wanted,” says Nickell. “If people were saying, ‘you should print on this T-shirt, not this T-shirt,’ then we’d do that, no questions asked.”
“We didn’t need Threadless to do anything for us,” Kalmikoff goes on. “It was basically just serving this small group of people, with no client and no clear-cut consequences. So we learned to be 100% reactive to our own ideas.”
Says Nickell: “I am a web designer, but with Threadless, I found I had to make T-shirts. Initially, I didn’t know where to find a printer. So I just opened up a phone book and found a local printshop. I had to learn how to print T-shirts, process credit card orders, and so on.” The basic principle: if you don’t know how to do something, work it out.
“I became a web designer to showcase my print work, and everyone said, that’s a great website and nobody commented on the print work,” says Kalmikoff. “Part of me learning how to be a web designer was tackling O’Reilly and HTML books. I had no idea what I was doing. That was my Friday nights and Saturday nights: working. There was a period of time where it was important to me to just work it out. It was important to figure this out or go back to agency hell and I wasn’t going to do that.”
In January of 2004, the pair fired all of their clients. “We needed to do something because we were competing for our own time,” says Kalmikoff. “We’d had a bad experience with a client so we fired everyone. We gave the good ones to our friends who were starting small things and then went out on our own.”
“So we were asked to go to MIT to speak we were seeing a significant revenue stream coming in and realizing this is something we could actually do for the rest of our lives,” says Nickell.
“We were expected to give a presentation, which we didn’t know,” says Kalmikoff. “The MIT guy told everyone what we did, which was helpful, because we didn’t know what it was. We didn’t try and look for answers we fell into it. We were doing crowd-sourcing and applying these web 2.0 principles just because it made sense to us. We just rocked it and it happened to coincide with what was going on.”
Once “rocking it” started to coincide with major success, the pair were confronted with one of the toughest aspects of building out a successful start-up scaling their growth. “We were a real company and we were starting to grow faster than we could keep up with ourselves,” Nickell says. “We had a Christmas sale, and we sold so many t-shirts we were needing a month to fill orders. We said to ourselves: if our sale is this successful, we need to be set up to ship those orders. We didn’t want to just outsource everything.”
“Along the way we realized we had to peel off portions of our jobs that would fill other people’s full time jobs,” says Kalmikoff. “We weren’t answering customer service emails anymore, we were like, hey, let’s hire people to deal with that. So, basically at this point we had maybe twenty people, maybe a little bit less – things were getting busy but we did try to keep it simple.”
“We were always in this mindset of: we can do it, just figure it out. Our fulfilment software in our warehouse we wrote it ourselves, and we figured out ways to do things that are just not the way things are done,” says Nickell.
Their biggest hitch was in their initial phase, after they had fired their clients. “When we fired all our projects and clients,” explains Nickell, “we started up another bunch of websites – a music site, a drinks-recipe site – a bumper sticker company…”
“We thought we’d focus on Threadless full time but then we started sprouting up other companies we had too large ambitions.”
“We were in client mode,” Kalmikoff explains. “We couldn’t stop – we felt we couldn’t just focus on one project. We were saying, we’ve got all this great time on our hands, so hell, let’s crowdsource everything.”
The positive of that, Kalmikoff goes on, is that a couple of projects failed. “When you are working on your own projects, failure is awesome … you realize you got checkmated and you learn so much. Learning from failure is such an important thing. So don’t be afraid going out on a limb on certain projects.”
Ending off, Kalmikoff throws up a slide entitled “How we roll now.”
“In 2006, we took a minority investment because we were making a lot of money and weren’t able to keep the business going without crushing under our own weight,” he explains. “Our investors bought in to us and we benefited from all their expertise. There’s a lot of things we have done since. Our first CEO stepped down as CEO, which was a realistic decision. It made sense to bring in a CEO, VP of operations and marketingthe kind of people who belong in a company our size”
That said, says Nickell, Threadless is still a scrappy company. “We need to remember how we worked in 2004, 2002and remember how we got it done. So just figure out what you need to do and go ahead with it. Don’t debate. Figure out what is realistic to do, don’t overthink or overnegotiate, just do.”
Ending off with such a simple message shouldn’t obscure the point of this conference: the plain hard work that goes into making something new and innovative take off.
The Threadless guys’ success, for example, clearly required an obsessive-complusive personality; the willingness to work on weekends; an openness and flexibility to their customers; and that fearlessness that accompanies all successful entrepreneurs.
Milling around at lunch after the Threadless session has wrapped, it occurs to me this conference is kind of like paradise as envisioned by Richard Florida. I’m surrounded by a sea of artfully mussed moptop hair, fauxhawks, stapled-up tapered jeans, and suit-and-sneakers combos. It’s the creative class on steroids.
Though the variety is fun and refreshing, I can’t help but ask myself why every human ‘tribe’, no matter their focus, orientation, or, in this case, strong commitment to individual expression, eventually develops its own “rules” its own costumes and codes of conduct. Why does every graphic designer in Brooklyn have to wear skinny jeans and Converse sneakers?Second thought: figuring out how and why those codes happen, would probably make a great Malcolm-Gladwell-style anthropological business book.
Such thoughts aside, though, the overall tone is relaxed, open and friendly. And the speakers, to date, aren’t trying to be anything other than who they are: people who’ve decided they prefer working for themselves to working in an office, and have made a real success of it. As the cliche goes, they’re living their dream.
For those who have long wanted to bust out of the cube farm, but aren’t quite there yet, the formula is apparently pretty simple. (At least, if this group of speakers is to be believed.) Be true to yourself. Find a world and community whose codes and costumes work for you. Work like crazy. (Emphasis on the last point.) Eventually, you’ll hit on a way to make your head and your heart work in tandem. You’ll make some money.
And if you’re reallyobsessive compulsive, like the Threadless guys, you might even end up with a multi-million dollar company.