Friday, July 15, 2011

Using the crowd

Business is changing. Thomas Malone an MIT professor points out that “Kids who grew up with running water wouldn’t know how to work a hand-pump and in this new world we’re entering a lot of what’s familiar will go the way of the hand pump.” For example, companies that specialize in website design or graphic design may go the way of the hand pump. Why? Because as more and more digital natives come of age – designing websites will continue to get easier and easier. There will be more and more demand for the army of amateur website designers with no coding background, and less and less demand for the expensive website designers we know today. How do you harness the power of this big crowd? By organizing them and facilitating them.

Threadless is a  Chicago based t-shirt company founded in 2000 by Jake Nickell and Jacob Dehart. At threadless they’ve figured out the secret of the crowd and as Jake says, “we just think about how we can create an environment that is very conducive to social and sharing independently of what the current tools are.” Threadless enables the crowd to design and vote on t-shirts with the chance of earning some money. Other threadless users meet-up, talk and design stuff together. Threadless is cool and their members love being a part of the community.

Why is threadless so successful at crowdsourcing? Aside from two very passionate and altruistic founders they’ve picked the right model. They’ve chosen to create a crowd from people they knew on Dreamless (a forum where they first started). They then chose to allow people to vote on designs, which essentially sources the crowd to advertise for them. Lastly they use crowd-funding, the model of voting they use allows them to know which designs are winners and  how many people want them. The result – every t-shirt since the conception of threadless has sold out.

Check out my interview with Jake Nickell below.    

When you were in school, you were working full time and starting what is now threadless. How did you manage your time?

Yea, I was working full time, going to school part time and starting Threadless.  I actually spent a lot of my time at work actually working on Threadless... it was good and bad, sure my boss probably wasn't happy about it, but I learned how to program that way and then I started programming at work as well.  I'm a very fast worker so I was able to get my work done, manage school and still spend good chunks of time on Threadless.  I was young and it was fairly easy to code till 3am and still make it to class in the morning :)

When skinnycorp was created, you and Dehart decided to leverage Threadless to advertise your websites design and marketing business. Did skinnycorp’s marketing/ website design business start to fall on the backburner when you realized Threadless was going to be this monumental winner?

Unfortunately I think Threadless was actually what was on the back burner!  We set it up to basically run itself.  Eventually (2004) we realized we were spending 90% of our time on client work but Threadless was paying all the bills.  So we fired all our clients and gave Threadless our full attention!

How have you taken the term “user innovation” and applied it to threadless?

We learned about "user innovation" in the summer of '04 and thought it described Threadless very well.  But we haven't really done anything differently because of that.

What have you learned about taking on the right business partners like Insight Venture Partners?

In the case of VC partners, try to maintain as much control as you can and try to find people who can offer you more help than just money.  In our case, Insight helped us figure out a lot of our logistic issues like shipping and international and has also helped us with a few key hires.

Knowing what you know now about crowdsourcing and community involvement, how do you approach new business ventures?

I'm very interested in businesses that see talented, passionate communities of people and provide some sort of value to them to make those communities even more meaningful and productive.  I think that's a powerful place to be as a business because you become a part of something with a lot of built-in energy already.

Threadless was started before twitter and facebook – how have you used social media to build your business?

I see twitter and facebook as tools... "social" and sharing and all that has been around forever.  Threadless started on a forum, which was one of the main social tools of the time.  Psychologically, Threadless works very well socially ... if you are going to spend 6 hours as an artist, you are going to want to share what you created whether facebook and twitter exist or not.  So we just think about how we can create an environment that is very conducive to social and sharing independently of what the current tools are.  That said, there is minutia within the available tool sets that needs to be considered, so don't forget the details.  But start with having awesome content.

How do you facilitate organic growth among your community/customers?

The previous answer gets to that a lot ... the best thing you can do is simply have content or a product worth sharing.

What are you most curious about?

What motivates people and how I can help people get motivated to create cool things that they are proud of.

There’s a shifting economy of business towards user innovation and crowdsourcing. Threadless is just one example of many other businesses that are attempting to source the crowd. It’s hard, don’t over complicate it and make sure your attracting the people you want to your website. Know your crowd, and know that they have time constraints. Learn from threadless - where people can contribute six hours by creating a design or contribute 10 seconds by voting.

Got an example of crowdsourcing from other companies? Share it below.