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

12/16/11Follow @wroush

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accomplished a lot. You’ve met other people with similar interests and you’ve shared that interest with a gazillion people.”

If cognitive surplus is one fuel feeding wikiHow, another is AdSense. Google’s pay-per-click, keyword-based advertising program is a godsend for high-traffic sites like Herrick’s. “It allows us to run our business without really worrying about anything else,” he confesses. It’s an amazing luxury, when you think about it—has there ever been another time in history when a single company’s invention provided a livelihood for so many others?

Of course, if you really wanted to build a big business, you probably wouldn’t want to depend solely on the ads Google sends your way. Instructables, for example, has a sales staff that works with big brands to set up sponsored campaigns and contests. But fortunately, Herrick doesn’t want to build a really big business. “I certainly want wikiHow to be a nice, profitable, healthy business, but squeezing every last dollar out of it has not been on my priority list,” he says. WikiHow even lets registered users opt out of seeing the AdSense ads. (And registration is free.)

The hidden benefit of being a lifestyle business, in Herrick’s view, is that it actually gives wikiHow a much longer runway to accomplish its goals. “The thing with us is that it’s going to take us decades to do what we want to do,” he says. “Our mission is laughably ambitious. The idea that 12 people could attempt such a thing is pretty ludicrous. If there is any chance of us being able to pull it off, it will be because we can take our own sweet time,” rather than operating within the 7-to-10-year time horizon of a venture fund.

And Herrick thinks there’s plenty of work left to do. It takes only a few minutes of browsing the site to discover that there are many subjects nobody has written about. There’s an embarrassing shortage of content in all non-English languages. There isn’t much video or other multimedia content. And the quality of most text articles “is good, but not as good as it could be,” Herrick says. “I can imagine much better.”

Herrick says he worries that wikiHow will eventually have to start paying people to round out the unfilled corners of the site, and that AdSense won’t generate enough revenue to fund freelance contributions plus the development work that will be required to keep the site up to date in a world of mobile devices and HTML5.

But so far, he hasn’t been tempted to go out fundraising—or to consider acquisition offers. “One data point I have never told anyone outside the company is that we actually did get an attractive offer from a big, public Internet company,” Herrick says. “We turned it down. I thought about it a lot, and did a lot of soul searching, and I think I made the right choice. But it wasn’t easy.”

What made the decision a little easier than it might have been, Herrick says, is that selling eHow was “a very nice deal.” Exactly how nice, he didn’t say. But because he’s had past successes, “I don’t have to get to that first piece of liquidity,” he says. “So it’s not like there’s any massive hurry to do anything. I just think we can make [wikiHow] better, and I want to keep trying.” Which sounds like a pretty worthy lifestyle to me.

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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