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What Happened to the Internet’s Favorite T-Shirt Company?

Threadless made millions by selling out huge runs of crowdsourced T-shirts; now they’re printing almost everything one by one.

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Threadless, the internet-born design shop known for screen-printed graphic T-shirts, was once heralded as the best example of how to actually make money on the internet (back when it seemed impossible to do). Recent news that Threadless has acquired shoe design start-up Bucketfeet shows that the originator of the crowdsourced T-shirt trend is still taking in considerable money. But as Threadless has introduced new printing technology and more favorable terms for artists in the last five years, its momentum on social media, search volume, and reputation for coolness and quality have fallen.

The company’s founding idea was that anyone could submit a design, all designs would receive scores from registered users, and, after review by Threadless staff, the winning designs would receive the honor of being printed and sold. The idea — and the community of designers and registered users supporting it — earned Threadless millions of dollars.

Photo: Threadless

From 2005 to about 2011, Threadless was repeatedly crowned the model student in the newly emergent class of online crowdsourcing businesses. Jeff Howe, who defined the concept of crowdsourcing in 2006, called it “an almost pure expression of the [crowdsourcing] model.” Threadless sold “60,000 T-shirts a month that year, ha[d] a profit margin of 35 percent and [wa]s on track to gross $18 million” while employing fewer than 20 people. In the same year, Threadless received 150 design submissions a day and had over 400,000 registered users who voted on which shirts would get made. In 2007, Entrepreneur noted, “every design printed has sold out” since the site launched, and the company opened a Chicago retail store. Forbes reported that Threadless had hit 1 million users in 2009. Threadless’s 10th anniversary in 2010 resulted in a retrospective book and Fast Company noting: “the T-shirt company has capitalized on a buzz that never seems to fade.”

At the core of the Threadless business model is a community of artists that submit to design contests, participate in the brand’s social network, and promote the company to their friends and relatives. CEO and co-founder Jake Nickell told Racked via email, “[w]hen an artist submits a design, they tell everyone they know to go vote on it, and then those people join the community and it snowballs.” Just a few designs are printed each week. Nickell told Racked that Threadless prints “one design for every 1,000 submitted,” just 0.1 percent of submissions.

Artist Ben Sears submitted a design about 10 years ago. “I didn't get accepted, but the designs that they were putting out at the time always made me want to go make my own,” Sears told Racked via email.

Standout designs helped make Threadless huge — but that didn’t necessarily make the artists submitting them rich. Artist Tom Burns told Racked via email, “the cash prize was... $750 cash and $250 in free tshirts from the site” when he submitted the Communist Party design that shows leaders including Mao and Lenin celebrating with red cups in 2006. A Threadless spokesperson confirmed to Racked that it’s the best-selling design ever on the site. By mid-2007, Threadless’s prize for winning the design contest rose to $2,500 in cash and merchandise. But according to the terms of Threadless’s contest, artists at that point (until 2014) turned over the copyright to their designs upon winning (today artists retain their copyright and earn profits beyond base cost on all printed items). Despite this, Burns wrote, “I have a soft spot for Threadless... it is kind of nice to feel like you helped something cool like that grow, since at that time, they were the first best game in town.”

It was thanks to the loyal community that Threadless made it through the growing pains of its first decade. Nickell characterized the early days as “[p]retty much total chaos,” admitting that the company “didn't know how to print T-shirts, charge credit cards, [or] ship orders.” Crushing demand led to some “embarrassing holidays in the early years where we were not able to ship everything in time for Christmas,” wrote Nickell. In the second half of the 2000s, Threadless’s parent company started side ventures — such as cocktail recipe and song-scoring websites that later failed. At the same time, other shirt-printing companies popped up copying Threadless’s business model. Sites such as laFraise, Allmightys, and Teetonic (all defunct) ran similar T-shirt voting competitions, no doubt siphoning off some of Threadless’s designers, voters, customers, and shine. According to longtime users, even the emergence of Facebook, Twitter, and Instagram as popular social networks impacted Threadless, since its voting and submissions run alongside a once-staggeringly successful blog network/forum.

Then things changed. In January 2014, Threadless laid off more than one-quarter of its staff, cutting 23 of 84 jobs, and closed its Lakeview retail store. Search trends for Threadless, with the exception of December spikes for holiday shopping, have pointed down since 2011. Since 2014, Threadless has actually lost Twitter followers, falling from 2.2 million to 2.13. The less tangible cultural significance Threadless once had has dissipated in the last five years.

In the wake of the shift, Threadless experimented with different ways to compensate designers. Under the royalties and rights terms introduced in 2014, the weekly design competition no longer awarded a $2,500 prize (these days the general competition prize is a $250 gift code), but artists retain all rights to their work and receive royalties on each sale. A short-lived plan to crowdfund shirt designs launched in 2014, but ended up producing few winners.

Slice. Slice. Baby. "Sweet Dreams are Made of Cheese" by @arkzai #NationalCheesePizzaDay

A post shared by Threadless (@threadless) on

More successful is a program to help artists sell their own designs without winning a contest. Threadless announced Artist Shops in 2015 and rolled them out to Threadless’s general community in early 2016. Artist Shops, still in existence, allow designers to sell items printed with any design (allowed by Threadless’s terms and conditions) directly to customers and receive royalties on each sale. More than 100,000 white-label Artist Shops have opened since 2015, and Threadless launched a program called Accelerator in early November that will distribute $100,000 in promotional funding to four of them.

The shift to a more equitable royalties and rights model removed the gamification elements of Threadless that made the site so addictive to some designers and users. While per-shirt royalties from the start would have massively benefitted the most successful artists, such as Burns, many designers said that the windfall $2,500 prize for winning the weekly design competition was preferable to them and they lost the motivation to submit designs due to the change. Designer sonmi wrote on the Threadless forum that the changes to how artists would be paid “makes it feel less like a community. Less special.”

Designers felt that initiatives such as the Artist Shops made it no longer a mark of distinction to be printed by Threadless. (One should note that with few exceptions, designs initially offered for sale via Artist Shops do not appear on the main Threadless shopping page mixed in among contest winners.) When Threadless community members tried to understand why the social side of the site was no longer as active in 2015, designer biotwist wrote, “because threadless isn't a good T-shirt contest site anymore.”

Threadless fans report that the shirts now appear in UK T.K. Maxx stores (owned by the same parent company as US T.J. Maxx) due to wholesale agreements confirmed by Threadless staff in July 2017 (a company spokesperson did not confirm the agreements to Racked). The revelation prompted designer Farnell to entreat, “[t]here was a mystery around Threadless,” telling the company, “don't forget why you were once special, the pinnacle of unique T-shirt design, always one step ahead and never following the crowd.” The company that once turned down offers from Target and Urban Outfitters in order to work with smaller vendors, then negotiated limited, careful distribution deals with Nordstrom, Target, Gap, and Bed Bath & Beyond has gone mass in a vastly less cool way than users sneering about Urban Outfitters in the 2000s could have imagined.

Oh duck! "Save Ducky" by Steve Ash

A post shared by Threadless (@threadless) on

Meanwhile, Threadless has moved almost entirely to printing everything sold on demand. “On-demand digital printing has gotten to the point where the quality can match or exceed a screen print,” Nickell says, but Threadless artists and customers aren’t totally sold on it yet. Sears told Racked via email, “I prefer to have control over as much of the production as possible,” since if a designer is “willing to go through a printer, maintain the inventory, and ship everything, most of the money goes back to” them.

Concerns about controlling quality make sense given that artists on Threadless’s forum complain that they’re unable to promote their work because the print quality has dropped to the point that designs flake off after a few washes. Reviewers say the sizing, feel, and weight of Threadless’s shirts is inconsistent and getting worse over time, with some customers reporting that shirts bought five to 10 years ago are still holding up better than those purchased this year. Longtime customers complain of direct-to-garment (DTG) printed shirts smelling like “bad fish” or an “embalmed corpse” on arrival. A Threadless spokesperson advises that any printing odors go away with washing and customers are able to get items they’re unhappy with reprinted or receive a credit for the price of the item.

Longtime customers sometimes gather on Threadless’s own forums to check in with their old friends and talk about the changes to the company. For some, it’s natural to pull away from something they associate with their youth, a place they consider home. For others, such as the designer Farnell, there’s an attempt to rally fellow community members and the company itself back to the glory days. Burns doesn’t participate as much in the Threadless community now, but he tells Racked, “I think they are on the right track, probably the only track.”

Although Threadless has lost the buzz it once had and faces competition and technology challenges, it has shown resilience over the course of 17 years and benefits from a back catalog rich in great art as well as a community of supporters. Threadless isn’t the madcap, brilliant ride it once was, but it has matured in ways the early days didn’t predict, morphing into something stable and lasting. Unlike so many others, Threadless is an internet business that has made it to adulthood.


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