Q+A: Five questions with Threadless CEO Tom Ryan

Threadless CEO Tom Ryan is pictured in this undated handout photo.

CHICAGO (Reuters) - Threadless is a thriving online retailer of t-shirts built around a collaborative business model that depends on a longstanding virtual community of followers for design and feedback. CEO Tom Ryan, who is celebrating the Chicago-based company's 10-year anniversary, weighs in on how Threadless became the poster child for successful crowdsourcing.

**********************************************

Q: How does the business model work?

A: Each day we get hundreds of submissions to the Threadless.com www.threadless.com ongoing call for design submissions. People will submit a design for a t-shirt on any topic. Someone on our team filters each design. It's voted on by the community - 0 to 5 stars - we take that data and determine which design we want. While our community is extremely helpful to us, the ultimate decision for what we choose to print resides internally. Our merchandising decisions inform what we pick; on top of that we have a lot of institutional knowledge. Sometimes we can tell something is going to be big.

Q: You don't disclose financials, but it's no secret Threadless has seen tremendous growth in recent years. Are there other selling opportunities besides your online store?

A: We have two Threadless retail stores in Chicago. We believe there's tremendous opportunity to grow further on the Web as well as to pursue other avenues for distributing our products. We're looking to find new retail outlets - particularly if they're interested in telling the Threadless story and the artists' stories. We have some trials going on right now with some department stores and we have been attending a variety of trade shows around the world to try to get distributors and stores to carry Threadless products. As we increase the number of people selling Threadless, we can increase the number of designs that we say yes to.

Q: What compensation do you provide for the artists?

A; Once we've decided to print a design, we pay the artist $2,500 - that's $2,000 in cash and a $500 Threadless credit. If they don't want the credit we give them an additional $200. We take rights for apparel. The artist is free to use the artwork for other products. As we print, and something sells, we give additional reprint fees, $500 per reprint. We pay well above the market. People really participate in Threadless because they're excited about participating in an active community of visual artists. There's some glory to willing the challenge and the cash is an important component of it. But a Threadless win is actually a portfolio piece in an artist's portfolio.

Q: Do you worry about copycats?

A: We've got an authentic community that's built up over a decade. If we had to create it from scratch, I don't know if we could. The critical mass of the community we've built up over time is definitely an advantage. I wouldn't say our market is a winner takes all market, but it's definitely a winner takes most. It's difficult to break in. I don't want to eat my words - for the moment there are no competitors that are anywhere near our size.

Q: Just how much influence does the community have over your decisions?

A: In our definition of crowdsourcing, not pure mob rule, we take their input very, very seriously; we have a debate about it and then we make a decision. It's a community-based company. It's online. We have meet-ups and we speak to our customers. One of the problems of being in a community-based business, if you're not just constantly trying to get information back from the community, and just being transparent and open about what's coming in, and realistic, sometimes you can start living in fear of what the community will do, and fear of your decisions. Sometimes you'll make an unpopular decision and it's just part of running the business.

(Compiled by Deborah L. Cohen)