It was late one night in November 2000 when 20-year-old Jake Nickell was sitting at a computer inside his 400-square-foot apartment in Chicago’s Uptown neighborhood. A student at the Illinois Institute of Art, Nickell spent every free moment on Dreamless.org (a now defunct forum), where digital artists conversed about personal works and entered design competitions.
Nickell found out that night that his design had won such a competition and would be printed on a t-shirt. Excited and inspired, he launched his own art-rating site within the hour. That site would one day turn into Threadless, now a 100-person company located in Chicago’s West Loop neighborhood.The site wasn’t a business at first, just a hobby for Nickell. He opened a fresh bank account, invested $500 and began asking artists to submit designs. Nickell and his business partner Jacob DeHart (who left the company in 2007) would then rate designs; choose the one they liked best and then print it on a t-shirt. They would sell artist-designed shirts, investing every sale back into the business.
Nickell quit school to focus on his new venture. For the first two years, he stored t-shirts in his apartment and would trek to a post office on his lunch breaks (he was working as a web developer at the time) to send product to customers. By 2002, he quit his web job and moved into a 1,000-square-foot office space in the city’s North Center neighborhood.
The early days were bumpy, mainly because Nickell lacked business experience.
One especially large hurdle came in 2004 when he realized a shipping company was charging his credit card for individual transactions when he thought the card was being charged only for large batches.
“My card only allowed 50 transactions per day, so at the 51st transaction the company would start declining orders and then charging a $5 decline fee each time,” he remembers.
It took three months for Nickell to realize the problem and by that point, Threadless was on the hook for more than $70,000 in decline fees. Nickell was able to reason with the company, but still had to pay around $15,000 to settle the bill.
Another difficulty: hiring friends. “I’ve hired a lot of my friends,” he says. “Several of the people I work with have known me since elementary school,”
Not all hires turned out well, which meant the end for several of Nickell’s friendships, an occupational hazard of sorts.
Success at Last
The business model at Threadless is simple: artists submit designs and viewers rate them. From there, Nickell and his team look at top-rated designs and choose which to print onto a t-shirt. Artists receive $2,000 every time their design is chosen and $500 for each reprint batch (Nickell says the company is moving to a straight royalty system in the future).
Business is going very well for Nickell and his team. So far, more than 200,000 artist designs have been accepted and printed and more than 400,000 designs are uploaded to the site each year. Although he is hesitant to give revenue numbers, he does say, “We sell millions and millions of t-shirts every year.”
Beyond it’s West Loop corporate office, Threadless also has a brick-and-mortar clothing store in Chicago’s Lakeview neighborhood.
What does the future look like?
“Our future is making more than just t-shirts,” says Nickell.
Budding entrepreneurs should pay attention to their hobbies, says Nickell, who adds that Threadless directly ties into his hobbies: he’s been developing websites since the age of 16 and working on art for even longer.
He adds, “If you are dedicating your life to an idea, it needs to be something you are interested in. Follow your passion.”
Photo courtesy of Threadless