How To Build a "Lifestyle Business" with 30 Million Visitors Per Month: The wikiHow Story

12/16/11Follow @wroush

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talking about old sites from the dot-com era that were looking dead or almost dead. EHow was at the top of the list. I knew the original founder, Courtney Rosen, and I really liked the idea of a how-to manual. I think one of the best things you can do is learn new skills. Reading those books in my knowledge box had changed my life. EHow was an early attempt to do that online.”

Hannah and Herrick did some poking around, discovered that eHow was on its last legs, and bought it for a mere $100,000. They hired a former Big Tray engineer named Travis Derouin to rewrite the site’s code, took down the pay wall, and started adding new articles. “It was like a microcap turnaround,” says Herrick.

But the company immediately ran into problems with quality control. “We were paying people to write articles, but the economics are such that you have to pay a very small amount to make the math work,” Herrick says. “It was hard to get the quality we wanted for $15 per article.” Meanwhile, Wikipedia was on the rise, and was paying its contributors and editors nothing. “I though, ‘Geez, I should try that.’ We wanted eHow to be the single best resources for getting started on every topic, and I realized that with the eHow method I wasn’t going to get there. So I launched wikiHow and said ‘Let’s see if this wiki method can work.”

At the same time he was building up wikiHow, Herrick kept buying content for eHow; wikiHow was like its crowdsourced, underground cousin, using the same open-source wiki software that powered Wikipedia. At first, Herrick says, the project was “an obvious failure. Almost no one was writing. The home page was vandalized every day. The content was junk. But you could see, despite all those problems, that the wiki method was working. You could come back to an article over months and see the improvement process happening. It wasn’t much, but it was going in the right direction. And I fell in love with the wiki method.”

We’re now in 2006—a time when investors were starting to regain interest in Web content companies. Old-media companies were realizing they needed to have a new-media play, and “we started to get lots of offers to buy eHow,” Herrick says. But he didn’t want to sell unless he could keep wikiHow for himself—and most suitors, naturally, balked at that idea. “Most people said, ‘No way, I’m not going to let you compete with eHow after I just paid lots of money for it.’”

The first potential buyer willing to bow to Herrick’s terms was Demand Media, which didn’t mind spinning off wikiHow, since they didn’t see it as much of a threat. “I think they looked at it and said, ‘This is junk anyway. There’s no way this one guy and this one engineer are going to be able to beat us,’” says Herrick. “And it was true—I haven’t beat them. But it’s not the same game.”

The game at wikiHow is really about community. When Herrick says he fell in love with “the wiki method,” he really means that he was falling in love with wikiHow’s contributors—he just didn’t realize it until later. “What I know now is that the treasure is the community of people who gather around to work on this,” he says. “Wikis turn out to be all about people.”

The WikiHow archive is growing at a rate of around 50 percent per year; it passed the 100,000-articles mark last March. And the secret to that growth is that it’s a high-touch operation. Herrick says he made a point early on of reaching out to all of the site’s contributors, even after they multiplied into the thousands. “For the first two years I looked at every single edit on the site,” he says. “If it was even halfway decent I sent a note saying ‘Thank you for your edit.’ I got to know the people. It’s now gone way beyond the point where I could greet everyone who comes in the door, but I personally know the major contributors.”

But why does crowdsourcing work at all, considering that nobody who writes for wikis gets paid? One theory, proposed by NYU’s Clay Shirky, is that productivity increases have left the general population with a cognitive surplus. Herrick thinks that writing and editing for sites like wikiHow provide a more fulfilling way to invest that surplus than, say, playing Farmville or World of Warcraft.

“How rewarding is it to plant virtual strawberries?” he asks. “Killing orcs is great, but at the end of the day, what have you accomplished? With wikiHow and Wikipedia, at the end of the day you have … Next Page »

Wade Roush is a contributing editor at Xconomy. Follow @wroush

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  • Scott

    Dear fellow entrepreneur,

    There is a huge ecosystem out there that does nothing but move entrepreneurs away from building business that can grow and flourish to crafting empty shells that can be inflated and sold. The big law firms have their “entrepreneur universities” to teach you how to get your company ready for funding. Business plan competitions, local economic development agencies and angle groups all do the same. This entire infrastructure is all aimed at getting you ready to sell (out) your company to VCs. By the time you have twisted and bent your company so many ways you will have changed from focusing on your old customer (the one with the pain that you have an unique solution for) to your new customer (the VC). It is the job of VCs to buy and sell companies, not to build them. And certainly not to solve customer’s problems. That is the reason why VCs have a 90 failure rate (by their standards). Think very carefully about that. If they fail to fund over 90% of business plans that they see and 90% of the businesses fail then why on earth should you bend yourself to their needs. Sure, if they do take the company public then you might get rich, if they haven’t kicked you out and the stock doesn’t tank before you call sell your shares. If getting rich gets you out of bed in the morning then go work for wall street, do not kill yourself building a product into a company.

    There is a radical solution out there. Find a customer with a problem, create a solution you can build with your resources, sell it to the customer at a profit and build a profitable business. That may mean cutting down on the scope of your first product to what you can deliver. Say you want to build an electric car company. That would take billions in VC money. Before you get past your first round of angle funding what ever brilliant insight that you may have had will be crushed by the twisted needs of the VC. Do not go there. If your idea to too large, find a piece of it that you can build and sell with your resources, then make and sell that product to start and build your company from there. That might only be new type of suspension rod in the car example, but if you can make it and sell it for a profit then you build from there.

    You say you are an early stage entrepreneur and not interested in the long haul? No worries. There is always someone there to buy a profitable small business. Rinse and repeat on a larger scale. That is what the whole lean start-up thing is really all about.

    Yes, I guarantee you that the VC infrastructure will laugh at you, but what is wrong with solving problems and creating jobs? Does this sound more like your father’s company or your grand father’s company? I hope so. They built companies that employed our neighbors, paid the taxes that build our infrastructure and educated us. It is time we stand-up and do the same. “Occupy Sand Hill Road” would be a silly exercise. Ignoring distractions is always the best course. What we really need is to occupy main street. Occupy main street not in protest, but in progress.

    Find a problem, create a solution, build the product from your existing resource, sell at a profit and build the company! Only take money from those who love you – friends, family and founders. Listen to your customers and then listen again and then listen some more to your real customers. Take pride not in how many share you have, but in how many people you employ. Be proud, be VC free, be a real entrepreneur.

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