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Hey there freedom fighters, my name is Andrew Warner, I’m the founder of Mixergy.com, home of the ambitious upstart. The place where proven entrepreneurs come to tell you the stories behind how they did it. The big question for this interview is, “How does an unfunded entrepreneur build a profitable site with 30 million unique monthly visitors?” Jack Herrick is the founder of WikiHow, a wiki-based how-to manual that is edited and written by users like you. Previously he built and sold eHow, a similar site whose content is created by freelancers. I invited him here to tell the stories behind those two great companies. Jack, welcome.
Jack: Thanks Andrew, delighted to be here. I love helping out other entrepreneurs.
Andrew: Thanks. So, you’ve done really well with these two sites. You already sold one of them to Demand Media, you sold e-How, you’re living on a successful product right here. You’ve got a successful product in WikiHow. Why not sell at this point, buy yourself a flashy car and live a relaxed, comfortable lifestyle? Why are you coming into the office every day?
Jack: You know, I have the best job in the world. I wake up every day and I look at a site that a community of thousands of volunteers is helping to build, and it touches a million people every day. And I get letters from people whose lives we’ve changed, people I know who are better off because they read WikiHow, and…Why would I change that? Why would I trade that in? I actually had an opportunity a couple years ago.
There was a large, publicly-traded Internet company that wanted to buy us at a very attractive price. I thought about it, my wife and I talked about it a bunch and did some soul-searching, and decided there’s plenty of opportunities to make lots of money in the world, but there’s very few opportunities to make meaning. And I have something that I really enjoy, and I think something that’s more important than just sort-of selling out. So, I’m happy with it.
Andrew: You and I talked before about some of the people whose lives your site has impacted, and I want to ask you about those. But first, I’ve got to ask you about this. My pre-interviewer told me that…you said you lived out of your truck, and did you eat garbage? Or what did you… Tell me about this. Did you really live out of your truck?
Jack: Well, 15 years ago, I did live out of my truck for two-and-a-half years. I was a full-time rock climber. And the pay of being an amateur rock climber is not very good, so I was basically trying to live off savings. Which was… I sort-of budgeted around $10 a day to make it through. So yeah, I was living out of my truck. I wouldn’t necessarily eat out of garbage cans, I had a different technique which I thought was more effective. I’d hang out in pizza restaurants in Yosemite, and I’d wait for people who were sort-of…You know, they’ve eaten a lot of pizza, they’d ordered a really large pizza and they’ve eaten their fill and they’re kind-of about to head to the trash can with it and I’d say, “Hi! I’m a rock climber here. And you know, times are tough in rock climbing and maybe, if you’re just going to put that in the trash, you can just give it to me.” And I made a good living that way, so it worked out just fine.
Andrew: How many years ago was this?
Jack: This was ’95 to ’98.
Andrew: OK, so this is way before you got into the how-to business. This is…
Jack: Oh yeah.
Andrew: All right, this is early on.
Jack: Yeah.
Andrew: All right, I want to find out how you went from there to where you are here, because I have a feeling that most people in my audience aren’t living off $10 a day out of their trucks. And if you were worse than them and you got to here, then whoever they are could lead to at least this kind of success. First, let’s go beyond the money and the clicks and just understand the kind of impact that the site has had. Do you have one story that illustrates the kind of impact that WikiHow has on people?
Jack: Sure. Yeah, I get letters all the time from people we’ve impacted. Two of my favorites; we actually delivered two babies on WikiHow. Now, no one plans to delivery a baby with WikiHow. I wouldn’t recommend it. However, occasionally people get stuck without access to a hospital. The baby comes too quickly, and it happened once during the flights in Minnesota. A guy could not get to the hospital. He opened WikiHow and step one is, ‘Don’t panic.’ And he followed Step Two through ten. And it worked out just fine. Unfortunately he did not name his baby after us, though.
Andrew: I was going to say, who would do such a thing. Then I thought, I would do such a thing. The first place I turn for anything is the Internet. If I go to my parents they’re going to have some kind of whacked out old fashioned idea about how I should solve something. But if I go to the Internet, I feel much more comfortable about it–much more comfortable with the results I get, even though a lot of it is anonymous.
Jack: Right.
Andrew: Let’s go back and figure out where this idea came from. What were you doing just before you had the idea for WikiHow?
Jack: Well, so my entrepreneur career started– multiple starts before WikiHow. Would you prefer I talk about those, or?
Andrew: Yeah, give me a little bit of back story and then we’ll find out where the idea came from and how you built up.
Jack: Sure. My first startup I started in 1999, and that’s a site called BigTray.com. It’s online. We’re Sequoia funded, and we got $6 million from Sequoia and $4 million from [ComDisco], which was a [??] company at that time. And it was one of these ideas that sounded so good that only in retrospect was it clearly a bad idea. Because, selling an ecommerce restaurant supplies, whether it’s pots and pans, refrigerators, everything a restaurant would need, and the idea worked. We had $6 million in revenue right away, in our first year. The problem was we started two years too late. That’s why the idea was bad. By the time we got funded, we were two years too late, and we needed to raise in the .com downturn of 2001, and we couldn’t do it. So we ended up selling the company in 2001, despite the fact that, if you look back, like, companies that stuck with it ended up doing just great. Zappos had similar numbers to us, and Amazon in the first year had similar numbers to us. So, I left the company in 2001. But, man, I got $10 million bucks of executive education, courtesy of Sequoia Capital on that one.
Andrew: You leave. I remember the guys who were living at that point who had a lot of funding had businesses that were growing, were on top of the world. It was like every little dream that you had of yourself as a kid of how great you could be realized. And so you start to think, I am that great. And then it all comes shattering down. How did you feel when that happened to you? Did you have that high? What happened?
Jack: I felt terrible. I felt absolutely terrible. It was really disappointing. First of all, the team I had to let go of, as we started trying to survive as the funding was dwindling, we realized it was going to take us longer to raise money than we thought. We had to shrink the team down and let some really good people go. That was the first disappointment. The second disappointment was realizing that we’re not going to be able to get the investors’ money back, and we ended up selling the assets for a lot less than it was worth. Yeah, it was really hard to take. After that I sort of disappeared and went to a hole for nine months. My wife and I decided to leave the U.S. and we traveled to South East Asia and sort of, didn’t really live in a truck again, but rented a camper van and lived in one of those in New Zealand for a little while. It was a tough time.
Andrew: And so, how do you get yourself back out of that hole? How do you get your confidence back in yourself?
Jack: For me, I thought the best thing I could do was start another company. And if anything, the mistake I made was starting a company too soon after our return from my nine-month sabbatical. The reason why is I ended up starting Semiconductor Lithography Company, which is not anything near my core interests. It’s not something I’m innately passionate about. And it turned out to be the wrong company for me to start.
Now that said, the company I started, Luminescent Technologies has done very well. We raised over $30 million venture capital, and it’s still in business here in Palo Alto and employees around 50 people, and is doing really well. I haven’t been part of it for many years, but when I was working there for four years as a founder, of the four companies I’ve started; it was my least enjoyable one to work at, just because I couldn’t really be an innovator at that company. I’m not a physicist. I’m not a mathematician. To be an innovator in a semiconductor company, you really have to be a scientist and I couldn’t innovate there, which made it a lot less fun for me.
Andrew: So where did you fit in? What was your role?
Jack: I became the business guy. At first it was myself and three scientists and I was a jack-of-all-trades business guy. As the company grew, we hired a CEO from the semiconductor industry. I became CFO and that was my role for several years.
Andrew: The business guy. How did you get involved in this business that you’re now passionate about, that you don’t have the scientific chops for and become the business guy?
Jack: Well, I think the first thing was a desire to get back in the game after selling BigTray for a lot less than I knew it was worth. The way I did it was, this one was kind of a lucky break. A buddy of mine who I went to Stanford with had this idea. He had teamed up with two professors from UCLA who had some really great science to put in the semiconductor industry and he knew I knew nothing about semiconductors. He knew that I probably wasn’t the perfect guy for the job but I think he was smart enough to realize that I’d still be a great guy on that team and it ended up working. We were able to build the company and to do quite well with it. I was able to move on, I think, at the right time for the company.
Andrew: All right. You get in this business. You start building it up and then somehow this new opportunity comes to you.
Jack: Yeah.
Andrew: Can you tell people what that is?
Jack: Sure, yeah. The original idea for a how-to site on-line got going back when I lived in a truck so I’ll start back there, back in the ’95 era. Back when I was living in the truck, my most valuable possession in that truck was something I called, “the knowledge box”, which, basically, was this little box of books that I kept in the front of the truck and all the time I’d be reading these books and trying to teach myself how to climb, learn knots and things and it was so powerful to read these instructional manuals and then go and practice these things around life and, “Wow! This is so great!” Then, the first year in the truck I didn’t have a laptop.
The second year I got a laptop and I figured out [inaudible] plug into the Internet and there was a site this guy built which had some instructions on rock-climbing, basically, instructions on how to climb various large mountains in Yosemite like El Capitan and Half Dome, (?). I’d read these things and it would just give me the recipe to go do these things. I basically became a much better climber after reading that. I was able to get up El Capitan and Half Dome and all these things and I realized, “Wow! When you take this model of instructional information and you put it on-line, you really empower people.”
So that was something I had in the back of my head for years and I really thought that was a powerful thing that the Internet could provide to people. I had been tracking this site that had been started in 1999, called “eHow”, and eHow had raised, not with me being involved at all, eHow had raised $30 million from venture capitalists, hedge fund, bankrupt in 2001, had gotten bought out by another venture-funded company who had $15 million or something and applied the wrong business model in eHow.
They had, sort of, kind of a pay to get information model in it. It wasn’t working at all. I had been tracking it all these years from ’99 through 2003 and I really loved that idea, really loved the idea of the how-to manual. I saw in late 2003 that the site was basically in the process of dying. So I called the guy up. I said, “Hey, your site is circling the bowl right now. Can I rescue it?” And he was like, “Yeah, whatever, I’m dying to get rid of this thing. It’s lost money since I bought it. It has very little traffic. Yeah, sure, take it.”
It was kind of a lucky break that I happened to buy a site that turned out to be a great site. But it was also some luck based on lots of thinking over several years to get there. A buddy and I, Josh Hannah, who also had a full-time job at the time, we bought it. It cost us $100,000. We turned it around the next week and we were both working. We hired an engineer named Travis (?) who worked with me at my first company, BigTray, and slowly we brought the traffic back. When we bought it, it had almost no traffic, 40,000 visitors a month and we brought it up to 5.5 million unique visitors and really started turning the site around. So that’s basically how it got started in how-to.
Andrew: Let me break down what you said. First of all, I’ve got to tell you that I’ve had a similar experience myself as a guy who loves reading. When I first discovered books and I realized that there’s a recipe out there for anything I want to do, whether it’s how to start a conversation with a stranger or how to do my books, it just made me feel a sense of control over my life, in the sense of possibilities that were literally within reach. If I could reach a book, then I could reach the possibility that I had in mind.
Last year, when we were trying to think of what do we do with Mixergy, how do we add another level here beyond the interviews, I said I’m going to experiment with all kinds of ideas, and the one that grabbed me is something similar to what you’re talking about: courses where entrepreneurs teach how they do things. Call it Mixergy Premium, and the idea of just having these entrepreneurs create a recipe to give other entrepreneurs just felt so exciting, so effective that that’s what we focused on.
So, I completely dig it. I get the passion and the impact that it had on you. Let me understand then, these guys who owned eHow before, they must have realized some of this, too, but it didn’t work for them. You said that you saw that they did something wrong. Specifically, the company that owned it before you, the previous owners, what did they do wrong, before we get into what you did right?
Jack: Sure. The main mistake they were making was putting limits on commission. So, their original business plan was to charge people money for the content. That didn’t work. By the time I bought it, they had transitioned from doing that to require you to register to see the company information. So, you’d register, they’d have all of these co-registration offers like, hey, sign up for this weight loss class, or hey, give us your email and get a free mortgage applications, things like that. You didn’t want it all, you just wanted to learn how to boil an egg.
Andrew: In order to get to learn how to boil an egg, you had these co-reg opportunities?
Jack: Right.
Andrew: It wasn’t just: here’s how to boil an egg, and if you want more give us your email address. You’re saying that they put that wall up and in order to . . .
Jack: Oh, yeah.
Andrew: Oh, wow. OK.
Jack: As we talk about this in 2012, it’s obviously a bad idea. But if you go back to where the Internet was, keep in mind Internet advertising went from $12 CPMs in the year 2000 down to $0.12 CPMs in the year 2003. So, publishers were desperate to do anything to pay for their server bills. These guys were trying anything to make it work.
Andrew: I made a similar mistake back then. We had these co-reg boxes that were bringing in $1.50 per email. So, if someone hit that box, we’d earn $1.50. And then, suddenly the revenue we were getting from them went down to pennies, I mean, under $0.10. And we had to still maintain some of our revenue, so what did I do? I made a big mistake. Sounds like the same mistake they did. So, let’s add more co-regs because it’s not reducing our conversion, and it is increasing our revenue. And I didn’t have the foresight to think long term and say, “Wait. This is ruining our credibility, and it’s ruining our product.’
So, I can’t judge. I can see from the outside how they got here, but I can also learn from your perspective. Clearly, it’s the wrong thing to do. What else did they do that you saw that was wrong?
Jack: They weren’t growing the site. They weren’t investing in it. The site was running an old Oracle database. They hadn’t updated it in years. They just hadn’t put a lot of love into the site. These guys were really smart in that in 2001 they bought a lot of these properties that were going bankrupt, and they had the vision to see, hey, the Internet’s not dead. It’s going to take a nap for a couple years, but they just didn’t have the ability to execute and wait through the nap and when the Internet woke up again, be ready for it. They gave up hope a little too early.
Andrew: All right. Then, you also said that you got up to 5.5 million uniques a month within months, right?
Jack: Oh, no. That took a couple of years.
Andrew: Oh.
Jack: It took us a few years to get there.
Andrew: All right. I’ll ask you how you got there, but first how much did you buy the business for?
Jack: We bought it for 100 grand, which at the time seemed like a lot of money for us. Obviously, it was the best deal I’ve ever made. It’s one of the more talked about stores in Silicon Valley. That said, at the time it wasn’t an obvious deal. I remember having a conversation with my wife. We had been saving money for a down payment for a house here in Palo Alto, and I said, “Hey, honey, I’m going to take that down payment money, and we’re going to do something else with it. It wasn’t like, “Oh, yeah, that sounds great. Let’s do that.” It was a long conversation. “Well, should we take less? Should we let Josh buy 75% and we only get 25%? Should we do all of these other things? Maybe, should we not do it at all?” It was a tough decision.
I also remember talking to venture capitalists at the time, a venture capital buddy of mind, and he was saying, “C’mon, what are you smoking? This idea is not going to work. Content websites are not coming back. You’re going to be stuck with this white elephant that didn’t work for the last two owners. Why is it going to work for you?
Andrew: Right.
Jack: Obviously, now at Hunter Granford you have a screaming hot deal but not at the time.
Andrew: OK. And one of the reasons why it’s a hot deal is because you added so much value to it. What was the first thing that you did to improve the site and how did you get it to 5.5?
Jack: Well the first thing we did was get the technical house in order. We got it off of Oracle. We got it off of all these ancient, ancient servers. We moved it to a really simple LAMP setup. Then we started focusing, once we had servers that could handle what we thought was going to be a big load, we started improving the user experience. We got rid of the (?), which was hard to say goodbye to. It was earning great money, as you point out, but we knew that wasn’t the direction that we wanted to go so got rid of that. We exchanged it with very simple Google Ads Sense ads and we started investing in content again, producing small amounts of content with [inaudible] can pay themselves back. It worked and the site came back.
Andrew: You had a theory when you bought the company, hypothesis, as you told our pre-interviewer, what was it? What did you tell Jeremy?
Jack: Well, I thought the Internet had changed. Josh and I had been playing around with lots of different, before we bought eHow we were playing around, sort of building little websites for fun to see what would happen and we noticed between . . . In 2003 the Internet really started to change. The invention of Ad Sense really made it possible for a website like eHow or wikiHow or one of these other sites that basically covers tons and tons of different types of content to have an advertising model that worked and actually be able to fund the site with advertising if you keep your costs low enough. Ad Sense was only made public in 2003, so that was basically new technology which (?). Content sites like we had were being reborn. We thought that the old owners weren’t aware of that and hadn’t given it a try and we would be the first to give it a try.
Andrew: How did you know it? This is about a year after Ad Sense was made available. How did you know that it was going to work?
Jack: Oh, because we were experimenting with it on our own. We’ve always had little websites we ran and we found that you could put up ads and earn enough money to run a site like eHow.
Andrew: Oh, OK. So you already backed into an understanding that you can generate revenue. How did you do that math? What websites did you have and what did the spreadsheet look like?
Jack: Geez, the websites are so bad I’m embarrassed to talk about it.
Andrew: Oh, good. Then do it.
Jack: They were really experimental little websites that we made.
Andrew: It’s OK. I think that gives us an insight into, you know, sometimes when we create these little experiments that we’re wasting our time, that we’re not doing anything serious, that we should be focusing on the one big idea and what I’m finding in these interviews is that those sites give us an understanding that leads to the big ideas. That even those blog posts that some entrepreneurs who have done interviews here have told me about, that seemed at the time that like they were just tiny blog posts without much significance, gave them an understanding of how to write and how to communicate on-line, which helped them market when they did have their big idea. So, what was it?
Jack: I think that’s right. I mean, in general, I’m always experimenting with different stuff, either on WikiHow or other ideas. We’re trying to learn about new technologies because that’s what the web is all about. It’s seeing what’s new and seeing what you can apply to your idea.
Andrew: So what was it? Can you tell us about one of them at least, Jack? Open up. I can’t be just another Internet interviewer. I’ve got to be . . .
Jack: I don’t think any of them are on-line anymore.
Andrew: Good.
Jack: There were some various ones. The whole time I was buying eHow, I was also in the process of my wife and I were having a baby so I was researching cord blood banking and there’s a ton of misinformation on-line about cord blood banking. It turns out I made a stupid little site about cord blood banking and it turns out that that’s a very high CPM term and I was about buy traffic at cord blood banking website and so I put Ad Sense on top of it and I was like, “Wow! It’s working pretty well.” What I was essentially doing when I would buy traffic, give it to my cord blood site is I was basically arbitraging traffic, right?
Andrew: Yep.
Jack: And there was a period in the Internet where traffic arbitrage was really profitable. Josh and I talked about that. We’re like, “Geez, any arbitrage goes away. We could just build arbitrage sites all day long, making sick money,” and there were some people who did. But, you know, there were several reasons why we didn’t stick with that idea. One was the arbitrage go away. Two is building stupid little websites and basically just arbitraging traffic isn’t something that’s very interesting long term to us. We wanted to build something bigger; something more meaningful, which is why we decided, hey, instead of building these arbitrage sites let’s go buy something that we can build content over long periods of time, and sort of be on the left side of Google instead of on the right side of Google.
Andrew: I see. That makes sense. And so, I’ve got a sense now of how you could put together a spreadsheet that’ll tell you how profitable the business could be. When did you estimate that you would make a profit with the business, based on your understanding of ads and what it costs to get traffic?
Jack: You know, we didn’t have an exact model on how we back that $100,000. We thought we were pretty sure we’d get it back over a period of years. We didn’t know that it was going to grow much faster than that. And it turned out that it worked better than we thought, and we were making it back much faster. But at the time we bought it, it really wasn’t a sure-fire hit that we were going to have.
Andrew: OK. So can you tell me beyond what you removed, what did you do to get more traffic back? I understand that getting rid of checkboxes is going to bring more people. What else did you do to get more people to come over?
Jack: Well, the beauty of eHow was that it was the site that had in one of the top sites on the Internet from 1999 to 2000. The idea of a big how-to manual is one of the best ideas on the Internet. And it wasn’t my idea. It was the original founders. That site had links from all over the web. And eHow had been on Oprah. It had been in the top fifty sites of the web. It had all sorts of great [??] links that were basically hidden, because the previous owners had blocked spiders from viewing traffic. So one of the main things of value that we did was basically just turn on, release the latent value of the links that were already there.
Andrew: Why did they turn off spiders?
Jack: They didn’t know how it worked, because [??] now search engine optimization is an important thing. But in 2003 it wasn’t. The insight of, hey, we should try and get some traffic from search engines that want to send us traffic was one of the main value adds we had.
Andrew: I see. Maybe what they thought was, why do we allow Google and other search engines to crawl our site and just play our results if it means that people are going to go to Google whenever they want answers instead of coming to our site. And maybe sometimes when they go to Google they’ll get answers that lead to our site, but maybe they sometimes won’t. We don’t want to take that risk.
Jack: I think it was a little bit of that. But I think also the pages would show up on Google, but they’d be shortened with the, hey, come register. So people were dropping off immediately. And Google would see on there, and hey, we’re sending users who say they’re having a lousy experience, because they’re back on Google in half a second. Let’s not send users there anymore. Once we stopped treating users like that Google started treating us much more nicely.
Andrew: And then you had somewhere around 2005 the idea to create WikiHow. Right? So you were running eHow that you bought, and you cleaned it up and you grew it. Where did the idea for WikiHow, the company that you’re currently running, come from?
Jack: Yeah, the idea came out of the frustration with what I was doing with eHow. So as I mentioned earlier, my goals was to build the world greatest how-to manual, every topic, highest quality page on the web to get started on that topic, and in multiple languages. [??] The way we were producing content on eHow, we’re not getting there. So the way we use content on eHow is we paid people $15 to write an article, freelance writers. And for $15 it was surprising, you got a $15 article. And it can be pretty good. It’s not always terrible, but it certainly not the best-on-the-web sort of quality.
And we realized it’s not what’s going to win long term. The best-on-the-web is going to win long term; the high quality stuff is going to win. So, how do I build that? And I looked around and if we’d had tons of money we probably would have figured out a way, like pay people more money. We didn’t have tons of money. The reason we were paying people $15 is ‘cuz that’s what would pay back. So, like, geez, what else can we do, here? And I found Wikipedia; and Wikipedia in 2004, when I was looking, I was like certainly the best, if not already the best encyclopedia was on the path to being the best encyclopedia. And I was like, geez, they have figured out the quality model that covers multiple languages, multiple topics, and something that maybe might work in [??].
So, the idea really came from inspiration from Wikipedia, and born out of the frustration of what eHow was doing. And so, starting late 2004 we started building it behind the scenes, launched it, and as soon as I launched it I realized that’s the product I was in love with. I really fell out of love with eHow and my heart went into WikiHow from then on.
Andrew: How did you get people, and by the way, you were trying to launch it, I think, on Wikipedia’s birthday. Do I have that right?
Jack: That’s right. Yeah, we had been sort of building the thing starting in the fall of 2004. I worked my tail off over Christmas holiday while I was on vacation with my wife in Hawaii. She was very understanding about the whole thing. And our goal was to launch it on Wikipedia’s birthday, 2005. We wanted to do that to honor that site as being the inspiration for our site.
Andrew: Also it’s a good way to tie your story to a fast-moving, growing story.
Jack: Sure.
Andrew: What did that first version look like? What did you build it on?
Jack: Oh, it was pretty bad. It was very simple. We built it on Media [??], which is the same [??] that Wikipedia uses as its token source. We made it specifically [??]
Andrew: Sorry. Specifically what?
Jack: We made it look very different from Wikipedia. We didn’t want to you sort of land and okay, I’m in Wikipedia. So it had its own UI. It was not very pretty UI. We had it look like the eHow UI at the time, which was really ugly. It was very simple. There was almost nothing to it. It had this ugly drop-down menu where you press a button and you could sort of do various actions on the page–hard to use. It’s amazing that it worked at all.
Andrew: So, how did you get people to, the site wasn’t beautiful yet? It didn’t work perfectly. How did you get people to come in and create your articles? I remember asking Jimmy Wales about this, and he said that people entered information into Wikipedia because he tied it into the open source community. And because he and his team were part of that community, people just got it, and they wanted to be a part of this open source encyclopedia. You didn’t have that same kind of connection. How did you get people to come and write the how-to manual?
Jack: It took us much longer to [??] what Wikipedia did. The Wikipedia product had hundreds of people entering in the first month, because they had been building open source encyclopedia for a while with the failed [??] project. We had probably five people a day in the first month, and I was one of them, and Josh was another, Travis was a third, so, maybe two people who weren’t one of us. It just took us a lot longer.
The one gift we had is that we did have [eHave], which had significant traffic. And so we put up a tab or notices on eHow, ‘Hey, come visit WikiHow.’ It didn’t draw much traffic; the first month we had it up we only got 2,000 visitors to WikiHow. And very few of them, as I mentioned, actually converted to writing [??]. Unfortunately, a month after that it was maybe 5,000, and maybe ten editors. It didn’t grow and [??] great content. That brings more traffic; that brings more editors, which then improved the content, which brings in more readers, and it brings in more editors. So there was a virtual cycle that worked, and it just took a really long time to have it work. We’ve been going now for seven years.
Andrew: Why didn’t you convert eHow into a Wiki?
Jack: That was my actual plan. There were a couple of things I wanted to have done before I flipped the switch on. One is when I still controlled both, I ended up selling eHow in May of 2006, and WikiHow wasn’t ready yet. WikiHow was still too immature. We didn’t have enough editors to maintain that much content that eHow had. You really need a lot of volunteer editors to maintain a high-traffic site. We didn’t have that at the time when I sold eHow. But if I’d kept eHow, my plan was to sort of flip that content over to Wiki content and have it expand from there.
Andrew: Why not copy all the content that on eHow and launch WikiHow with all the existing content already, plus an edit meet button or add-your-own how-to article button?
Jack: I think that wouldn’t have worked. How do I put this; there’s a natural sort of scale of things that have to do that. You have to learn a lot before you can run. You have to learn to crawl before you can walk. WikiHow as a community had to learn how to crawl. We had to sort of get out of the mud before we could handle controlling that much content. It would have swamped the community. We needed a long time to sort out what our [processes] were going to be, how we were going to edit pages, how we were going to control vandalism, things like that. It took us years to develop.
Andrew: Wikis seem great; they seem like great models, because everyone looks at Jimmy Wales [sp] model and your model and says, ‘Boy, they have the world creating articles for them. They don’t have to hire any writers. They just slap some ads on there,’ in your case, ‘life is golden. We should do it, too.’ And you see people create these wikis and they go nowhere. In your experience, what are they doing wrong that you discovered and did right?
Jack: I think there’s probably a list of ten things you have to do right on Wiki; and probably a million things you can do wrong. One of the most common mistakes I see, and the reason there has been very few venture funded wiki companies that have succeeded, is because you really need to be patient. Wikis take time to develop. In my previous venture companies they were all about let’s get big fast. How can we scale this? And when you’re running a wiki, you can’t do that. You have to be patient. You have to wait before you have a community of people who are ready to sort of move to the next level with you. And I think it’s difficult to build that.
The other reason I think you don’t see a lot of wikis succeeding is there’s a huge element of luck here. I think, listing the things you can do right, and listing the things you can do wrong, that list is well known at this point. What you have to get right is the first ten people you get on your site editing have to be magical. We just got lucky that the first ten people who started writing on WikiHow just turned out to be great people. And they attracted more great volunteers, who attracted more great volunteers.
Andrew: Couldn’t you just hire ten great writers and say, you’re going to write and connect with audience here every day. You’re going to be our employees and we’re going to build this thing out together. But we’re going to hire you to make sure that we have the ten great people.
Jack: I don’t think you can do it, because I think people will sort sniff out that–it’s inauthentic. Those people won’t be there for the same reasons that the volunteers are there. They won’t share motivations; they won’t have the same [??]. And people understand that. People feel that on the site. So, I don’t think it works.
Andrew: How long did it take for it . . . sorry. What else? What else goes into making a good wiki?
Jack: Well, one of the things I did in the very beginning, which I think was crucial to our success, was the very first year I looked at every single edit. I welcomed every contributor who made anything helpful at all. I welcomed them and got to know them. It was a very high-touch experience. Now we’ve grown to the size I can’t do that anymore. I still know a lot of the contributors very well, but not all of them anymore. I wish I could know more of them. But I think there’s not any entrepreneur, especially a venture-funded sort of world that would be willing to spend so much of their time getting to know their contributors, because it has to be that high-touch experience, especially in the beginning to make the thing work. People don’t trust the person running the wiki is a person they want to be investing their spare time with, and so why should they be contributing.
Andrew: What else? How about one more thing. I think this is really useful.
Jack: Let’s see.
Andrew: If I ever create a wiki I want to know I can come back to this section of the transcript of our interview and pull out some things that will get me there.
Jack: Sure. Well, how about this. There’s a common misunderstanding that you shouldn’t have ads or you shouldn’t have a business model that makes money that wiki volunteers are going to run. The only reason Wikipedia worked is because it’s a non-profit. And I think there are elements of truth in it. Wikipedia would probably not be as successful if it was a for-profit ad-driven site like WikiHow.
However, I think if you’re honest with your contributors and you tell them, ‘Hey, we’re a business. We need to make money. We’re not going to try to make it off donations.’ The quid pro quos were never asking you to send money into WikiHow. People will accept that. Some people may not work on this wiki, but that’s a small minority. I think most people would say, hey, these guys goals is to build a free how-to manual. I share that goal. I’m willing to work on a site, even if they have a business that makes money if the site’s successful.
Andrew: I was wondering how long it took? You launched the site 2005. How long did it take for you to feel like this is really working?
Jack: Oh, geez. I mean, there was…the first couple of years, I would say, the first year especially, was depressing. The content was poor, there was often people vandalizing the home page, you know, putting pictures of their junk on the home page, you know, stuff that wasn’t acceptable and not a large enough community to revert quickly. It was tough. The thing that gave me hope is I could see the numbers were getting better, like, if I dug under the skin I could see, “Hey, we we’re getting more [??] every month” or “Hey, like the content, look at this page, it was really lousy six months ago but now it’s pretty good.”
And I remember one page that I read called, “How to Survive in Federal Prison?” written by collaboration of former federal prisoners. And it was amazing, you know, I have [??] reading a page,” [??] you’re going to spend time in the joint.” It’s got great tips and the sort of thing about it, you can only build on a wiki. I couldn’t have paid a freelance writer to write that. No one could have written in a voice that authentic, with that much insight and it’s the sort of thing that can only happen on wiki. When I saw things like that, I’m like, “Wow, the site’s going to work.”
Andrew: You could have sold it early on. To who and why didn’t you do it?
Jack: I think on the “who,” I’m still blocked by NDA[SP].
Andrew: I’m sorry?
Jack: On the “who” I could have sold it to, I’m still blocked by NDA [SP].
Andrew: OK.
Jack: There’s been multiple people who [??] purchased over the years. And, you know, some I mentioned there was one time who went as far as getting the written offer. I enjoy what I do. It’s…, and I think, there’s a lot of work left to be done on wikiHow. Our mission is to build the world’s greatest how-to manual[??]. Having every topic and having every page being the single best place to go to learn how to do something. We are laughably far from [??]. You know, I look at wikiHow and there’s some stuff that’s great. And there’s stuff that, I’m like, “You know, it’s just got to get better.”
And I think everyone on wiki [??] thinks the same thing. They look at wikiHow and they’re really proud of some things and less proud of others, and they know we’ve got a lot of work to do. I just want to make sure that, you know, I’m helping toward[??] our mission and that’s going to be years to come. And if I sold…if I ended up selling it, particularly to this one company that I was in discussions with, I’m pretty sure we wouldn’t have gotten there. We wouldn’t be where we are today, and we’re certainly not going to be where we’re going to be in five years if I had sold it. So it was probably the wrong acquirer[SP] and it was wrong for the community at the time, and I think it was wrong for me personally, in terms of, taking me out of a job that I think I still have a lot to contribute to.
Andrew: Why did you sell eHow to Demand Media?
Jack: eHow was a different thing. I was delighted to sell eHow.
Andrew: Wow.
Jack: It was…that deal worked for all the right reasons. Selling…as I mentioned earlier, once wikiHow started working, I fell in love with wikiHow and sort of lost my love for eHow. And I thought wikiHow was the future of the how-to manual[??] I want to build and eHow was the [??] so I was delighted to find someone who thought eHow was the winning asset and wikiHow was the loser asset. So the reason I sold it was a couple of reasons. One, it was a great deal. It gave us…it gave my family the financial security to do a lot of things with. Two, it funded wikiHow. You know, wikiHow was always sort of living off the profits from eHow.
Now we have a much bigger bankroll to fund wikiHow for the years it was going to take to get profitable on its own. Three, like, you know, I found a deal that allowed me to keep wikiHow and spin-off eHow which was exactly what I wanted to do and start to focus on the thing that mattered [??]. And let someone else run eHow and, you know, it’s turned out and it’s a great deal for Josh and I.
And it’s turned out to be a great deal for the acquirer. Demand Media has done obviously very well with eHow. They’ve…Demand Media has raised a half a billion dollars and equity and debt and they put it to work. You know, spent a lot of money on eHow building it up. I’ve never would have done that. It’s not the same sort of thing I would have done. So, you know, Dave pushed it, you know, and expanded what we took, 100 fold. And, you know, it’s been a great business for them too. So it’s one of these rare deals that was great for the acquirer and great for the seller.
Andrew: Is wikiHow not profitable yet?
Jack: No, wikiHow’s profitable.
Andrew: But at the time it wasn’t?
Jack: At the time it was not.
Andrew: So you were, again, taking a risk on a asset that wasn’t proven, and you were giving up an asset that was, well, for money obviously, but you were taking a risk still.
Jack: Yes. Oh, yeah it was definitely a risk. At the time wikiHow had, I think, a little less than a million visitors. The content was not very good. It was sufficiently poor and non-promising and unprofitable and money losing, that Demand Media when they bought eHow, was able to look at wikiHow and say, “Hey, this is not a threat. We can let this wacky entrepreneur, who lives in a truck and likes this weird open source thing, keep this business because it’s not going to be a threat to us,” and so far they’ve been right, so far.
Andrew: It’s totally a different model. They’re still on…in fact, their whole model for content creation is just freelancers. They’ve got, from what I understand talking to some of their employees, they have this whole system of farming out work, of getting writing in, and putting it on a site and evaluating the value of it. What else do I want to know? Focus — focus has been an issue for you.
Jack: Yes.
Andrew: How? You seem very focused. Always on the how-to business, very clear about the kind of content that you want, how?
Jack: Well, I think there’s, you know, I’m here in downtown Palo Alto, which is the center of Silicon Valley and part of my job is to sort of look at emerging technologies and see which of them can be useful to wikiHow and expand [SP] our mission. On the other hand, like, there are so many shiny, new nifty things happening in Silicon Valley all the time that you can…somebody who loves technology like me, can kind of get sucked into the wrong…get sucked into a technology just for technology sake.
Andrew: For example.
Jack: Oh, geez. OK, well, we could have gone very deep into social. We could have gone very deep into video. Video is actually a case where we really wish we could go deep. And video is a great use for how-to, right? Sometimes you really just need to see…and if someone is describing a magic trick, reading some text and some images about it, like you might find on wikiHow, isn’t as good as watching a video. So one of the things we did early on is when You Tube launched their API, we’re actually their launch partner, if you go back to their blog, their we are on there. And our idea was, “Hey, like, our contributors are going to upload videos and it’s going to be great.”
It turns out that the video didn’t work so well for the wiki. And what would happened is, you know, I should describe it going first to the text realm [SP]. WikiHow works because…only because of the wiki method. Ninety percent of the content we get on our front door, sucks. Either it’s grammatically poor or it doesn’t make any sense or it’s written by somebody that doesn’t know what they’re talking about. There’s all sort of problems with our new articles.
And it’s only through the process of wiki editing, that this trash gets turned into treasure. So a lot of people upload videos. We got the same [??] ratio but you couldn’t edit them so instead of being able to edit them we were left with this kind of dig-like[SP] [??] like, “Hey, thumbs up, that was a good video, we’re going to keep it” or “Thumbs down, your video sucked, it’s out of wikiHow,” which is very counter to the wiki culture. The wiki culture is, “Hey, we’re all in this together, you know, this very lousy article you wrote is a good start and we’re going to all make it better.” When we had this video it’s kind of more of this binary system of either it is in or it’s out. It was kind of counter cultural to what we had built so we had to get rid of that.
Now that said, video is so important for how-to that we ended up keeping it. We built a totally different model, and it’s called video curation. And now what we do is, instead of encouraging contributors to create videos, we encourage them to go all around the Web, find the single best video on that topic. For a new magic trick there’s 50 videos on it, find the single best one, and put that in the article. And that way our readers get the best text, the best step-by-step images, and the best video all in one place.
Andrew: And you don’t have to create it? You don’t have to…
Jack: Don’t have to create it, right.
Andrew: At what point did you leave your job at Luminescent Technologies?
Jack: So over time as eHow started ranking up, I started ramping down my time at Luminescent. I know I was originally, you know, doing entrepreneur 100-hour weeks, you know, and I’m actually messing with that number [??]. [??] doing sort of entrepreneur weeks down to a 40 hour week, down to the 20-hour week, down to the 10. You know, I think, finally when I…it took me four years to leave, I think, I was down to, like, the five-hour week. We get the business; we run the business very conservatively. Our goal is to invest as much as we can in the How-to Manual, and as we grow, we’ll add more hardware folks to like build more stuff, always building more features, doing cool stuff for our volunteers. But we always want to maintain a healthy margin.
This business is cyclical, things go up and down in the ad market, things go up and down in our traffic. We have to be ready for downtimes. So we put a healthy margin in there and keep that money in the bank. That’s for lean times. And that’s really come out to help us. A couple of months ago there were some big changes in Google, and all these how-to sites had dramatic changes in their traffic. All of my competitors started basically quitting. eHow laid off tens of thousands of freelancers, [??]. We did the opposite. We hired people, and we’re doubling down. We think when other people are sort of leaving this industry; it’s a great time for us to push our mission harder. Always having gas in the tank has been a really important strategy for us, and we’ve been willing to do that with basically [??], not with any venture financing. I look at venture financing as [??]
Andrew: Basically for what; I’m sorry?
Jack: It’s a recipe for 18 months of cash.
Andrew: Yes. So, one of the unique things of WikiHow is we haven’t taken any venture money. And it’s not because we haven’t been offered it. We have been offered venture money. I just don’t think it’s the right thing for us. We’re in this for the long haul and venture money is about 5 or 7 year returns. We’ve already been around for 7 years. I would have had to sell the business already if I’d taken venture money at this point. We think there’s a better way. Having some margins which keep you going in good times and when good times are lean, and sort of always running your business model in a way that you can do your missions sustainably.
Google isn’t sending you as much traffic as it did before the [penned] update. What do you do now to recover traffic?
Jack: You know, we think doing the same game plan all along, and we think in time Google will be sending us more traffic than they did before the [penned] update. We have changed a little bit, our tactics a little bit after [??]. The reason we think, if you look at the average WikiHow page there are always better than our competitors. If you look at it, we’re just WAY better than our competitors. That said, our [stub] pages are pages, like I mentioned earlier, 90% of the stuff on WikiHow starts trashy and turns into treasure. That junk is probably something Google doesn’t like. So we are doing things to hide that junk from the search engine.
Andrew: I see.
Jack: And I guess over time it’ll eventually work for us.
Andrew: I see. Being a contrarian, and doubling down when everyone else is leaving. There’s one last question that I had here about Wikipedia. Do you think they should take ads? I had a sense that you were feeling that instead of asking their users for payment if they ran ads they might have a better life.
Jack: You know, I’ve been in favor of Wikipedia taking ads for a long time, and I’ve been public about it. It would be better for them. I think also they are such a huge site they would make money to fund a lot of other non-profits, which would be fantastic if they could remain non-profit and use that money like Mozilla does. It could create a ton of good. That said, I’ve been advocating that for several years and now I don’t think Wikipedia would be as successful as they have been with their fundraiser.
Over several years, year over year, they’ve increased their fundraiser. I thought at some point people would tire of giving Wikipedia $20; but people aren’t. I’m probably wrong. Wikipedia’s doing very well with that fundraiser. They’re building a great team at the Wikipedia foundation. They have maybe close to 100 employees at this point. They’re building a team. They are actually being able to build an engineering team, as well. And if there’s anything I wish they would do is build like a 200-person engineering team and really innovate on Wiki software. I think that’s what the world needs.
Andrew: Are you still using the same Wiki software they are?
Jack: We are; but we’ve modified it so deeply, it’s almost not recognizable in many respects at this point.
Andrew: Why do you think, as long as we’re talking about big topics, why do you Jason [??] his Mahalo when it went Wiki and opened it up to anyone, it didn’t workout . Why do you think it didn’t work out for him?
Jack: I think it didn’t strike users or contributors as authentic, maybe? Jason is very well known for his sort of occasionally abrasive…
Andrew: I think he owns that.
Jack: Yeah, yeah. I think he would be right on that and that’s kind of not the Wiki style. The Wiki style is a little more collaborative. I think it would be tough, the personality there would have been a tough one to make Wiki work, and maybe it would have worked. I think Jason is brilliant and [??] very quickly technologies that are always coming up, and he loves them. He really wants to adopt them [??].
Andrew: And what, I’m sorry.
Jack: [??]
Andrew: Oh, you’re saying he would have stuck with it over time?
Jack: Yeah.
Andrew: It would have done what it did [??].
Jack: [??] I can’t rule that out [??], because he kept [??] new technology, he hasn’t had the time to actually find out what might actually succeed.
Andrew: I see. OK. Right. He has moved a lot. This is Mahalo. I should actually say Mahalo, the Wiki-based search engine that he was creating for awhile there. It’s no longer that. It’s a professionally created how to site with professional videos. I see, so you’re saying a little more collaborative personality would have helped him. Waiting some time and letting it develop might have helped him. Not shifting from technology to technology might have helped him, and also maybe the issue that you brought up before is relevant which is, he had a very ‘I’m raising a bunch of money and I’m going big. This is not going to be a small site. It’s not going to grow slowly, it’s going to go huge,’ and maybe that’s not the way to work it with Wiki’s.
Jack: Yeah. I think that’s right. He had $20, $30 million bucks so, you know, when you have a hammer, everything looks like a nail.
Andrew: I see.
Jack: And when you have $100 grand, nothing looks like you’re going to solve it with money, right. I’m never trying to solve anything with money. I’m like ‘hey, we have a problem here,’ like this contents not what we wanted to have it be. How to we invent a solution to make this content better? In fact, that’s always been our approach and that’s served us really well. If I $20 to $30 million bucks like Mahalo, I don’t think we would have had the same innovations here. We would have very different innovations, which might be better works.
Andrew: Just different. I think the guy’s really hungry and I’m looking forward to seeing what he’s doing with it. I’ve had him on in the past. I’m going to go, actually do interviews like this at his launch conference in San Francisco, and I hope to find out a little bit more about what he is up to when I’m there.
Jack: Yeah. He’s a very smart guy. I have no doubt that he’s going to find success.
Andrew: But I like this evaluation. I like to hear your feedback on what he did and I should do more of these in the future, have entrepreneurs on to talk about similar sites and get their feedback, but only do it in retrospect because if you do it at the time that their competitors, it can’t be open.
Jack: Right.
Andrew: All right. How can people connect with you if they want to find out about a little bit more about you? I know they know how to go to Wiki How and by now, I’m sure they’ve been on Wiki How many, many times in their lives, but if they want to get to know Jack a little better, where’s a good website to send them?
Jack: Oh jeez, I’m on Twitter, I’m on Google Plus [??].
Andrew: Yeah, if they do a search for your name, they might find what we did which is all the edits you’ve made on Wiki How, which is kind of interesting. All right, well, Jack, thank you for doing this interview. I really appreciate hearing your story. I’ve admired it from a distance and I’m glad I got to learn it directly from you.
Jack: Great, and [??]. I hope I helped with their [??] current entrepreneurs out there listening and I wish the best [??] success out there.
Andrew: Thank you, and thank you all for watching.
