Creating a Platform for Costless Personalization in Clothing

Innovation and Economic Growth, Networks, the Internet, and Cloud Computing, Internet and Media and Content

Article Snapshot

Author(s)

Shane Greenstein

Source

Frontiers in Research Metrics and Analytics, September 6, 2022

Summary

A case study of Threadless reveals the importance of co-inventions combining understanding of technology with business processes. Threadless creates digital dark matter, benefits that cannot easily by measured.

Policy Relevance

The value of platforms often comes from co-inventions.

Main Points

  • “Co-invention” occurs when a new business process is developed to complement and commercialize a new technology.
     
  • Print-on-demand clothing technology (PODC) lets buyers choose any design to personalize clothing for little additional cost, irrespective of scale.
     
    • Historically, textile innovations enabled sellers to operate on a larger scale at lower cost, but color quality and artistry were reduced.
       
    • PODC changed that trend, supporting high-quality imagery.
       
  • Threadless began as a crowd-sourcing platform that allowed consumers to vote on T-shirt designs; recognizing that improved PODC could disrupt the textile business, Threadless began to offer new services as a defensive strategy, ultimately becoming a new type of platform.
     
  • Threadless’ three-sided business platform supports graphic artists, consumers, and manufacturers; Threadless’ key nonobvious co-invention enables the platform to match users effectively on a large scale.
     
  • New platforms face a chicken-egg problem, that is, success depends on large scale, but scale cannot be achieved without success; Threadless solved this problem with a sequence of co-inventions.
     
    • Threadless recognized the needs of key partners and graphic artists, offering “Artists Shops” to give them their own branded stores alongside other services valued by artists.
       
    • A new platform was established to match buyers and sellers.
       
    • The platform was scaled up to offer more items and support more artists.
       
    • Later co-inventions allowed cost savings.
       
  • Some innovations solely enable "business stealing," increasing sales at a new firm but decreasing sales at older firms; however, PODC offers more, as it makes platforms and users better off in ways that will not be measured in Gross Domestic Product.
     
  • PODC creates “digital dark matter,” digital goods and services that have zero cost, are effectively limitless, and serve as inputs in production; the benefits of digital dark matter are not captured by conventional cost accounting.
     
  • Much of the value of platforms arises from business process co-inventions.
     

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