Jake Nickell and Jacob DeHart were fresh out of high school seven years ago when they had the idea that would make them millionaires. After entering an Internet T-shirt design competition, the two Chicagoans thought maybe that was the way all T-shirts should be made.
Most stores print a bunch of shirts and lose money on the ones people don’t like. Instead, they figured, why not let customers rank designs ahead of time and then print only the winners?
The idea grew into an online store called Threadless that struck a chord with Web-savvy designers in Chicago and beyond; last year Nickell and DeHart sold $16 million worth of T-shirts.
The key to their success? High profit margins — the shirts cost as little as $4 each to make and sell for $15 and up — and a business model built on the care and feeding of an online community.
To keep the enterprise humming, Nickell, DeHart, and creative director Jeffrey Kalmikoff lead a team of 28 employees who are focused on getting customers to come back again and again — and to bring their friends.
Threadless does it by working a simple formula. Every week, contestants upload T-shirt designs to the site, where about 700 compete to be among the six that get printed. Threadless visitors score designs on a scale of 0 to 5, and the staff selects winners from the most popular entrants.
The six lucky artists each get $2,000 in cash and merchandise, and the company gets a battle-tested design. Threadless sells out of every shirt it offers.