Category: Business Insights & Advices

Wikipedia’s Initial Idea and How it Evolved

Category: Business Insights & Advices, Startups

Wikipedia as we know it today, with more than 3.7 million articles for english version alone, had a different idea and business model altogether in the beginning that many people may not know it now.

As the story goes.. In 1999, Jimmy Wales had an idea, he wanted to create a free encyclopedia to be written by experts and PhD holders, it was called Nupedia. He reasoned, only scholars, academics and experts in a particular field would be able to write such articles. It made sense, as scholarly articles needed a lot of referential data and research, not everyone would be able to write such articles. However, in its first year, his team of “experts” were able to write only a dozen articles. They were simply too slow. This was due to many reasons, most of the academics were too busy, it was difficult to convince them to write for Nupedia, research normally took few years..etc.

So, Jimmy Wales saw that it was not working, something had to be done. He came out with a new idea. He suggested to his team, why not make it in a way that anybody can create an article, others can edit it, etc… basically early years of crowdsourcing. But the editors of Nupedia and Advisory Board were not very supportive of the idea. For them it was the opposite of what they were doing at the moment. Non-academics, and uncontrolled editing and creation of articles, they thought, would jeopardize the credibility of the articles and company as a whole. They reasoned, there would be too much error in the articles, which would render the articles useless for any scholarly reference or research.

This new idea ended up separated into different project and was called “Wikipedia” (wiki – hawaiian for quick). Within a year, there were more than 20,000 articles in it. Clearly it was a success and it was working. As for the margin of error, it was 3.86% per article, compared to 2.92% for Encyclopedia Britannica according to 2005 research by journal Nature, which is acceptable. And usually these errors get corrected over time.

Eventually, Nupedia was shutdown in 2003, and it had only 23 articles at the time of closing. And as they say, the rest is a history…

Lesson to Startups and Entrepreneurs..

Sometimes the initial idea for your startup may not work out, and you might end up doing something totally different for your startup and its direction. And this phenomenon is actually very common in startups. As Jawed Karim of YouTube said in SVC2M event in Kuala Lumpur, their initial idea for youtube was “a dating site with videos“.

So, if your first version of your product (MVP) didn’t take off, don’t despair. Find out why it didn’t take off, get feedback from your potential customers/users on what they want, after that iterate and try again!

Note: If you want to read more about wikipedia story, check this Business Week article here

Please feel free to comment about your own experiences or of any companies that you know which changed their business model, direction, idea drastically from the original one.

Invest in R&D, it’s vital for your business’ survival

Category: Business Insights & Advices

If your business is running smoothly and if you have some great products that sell like hot cakes, should you stop investing in R&D? Maybe reduce the investment in R&D and reap the profits that is generated from your cashcow products? The answer is “No”. You should keep investing in R&D, you should keep coming up with great innovative products. Because success lies in continuous innovation, not in one-time innovation.

If Xerox stopped investing in Research & Development, it would be earning 60% less revenue:

More than 2/3rd of Xerox’s revenue comes from products launched in the past two years. source

Some companies like Sony believe in innovation so much, that, they would introduce new products even if those new products are going to kill its own current (cashcow) products. Because, Sony believes in creating “new markets” and not creating products for the existing markets.

Between 1950 and 1982 Sony successfully built 12 different new-market, disruptive-growth businesses. These included the original battery-powered pocket transistor radio, launched in 1955, and the first portable solid-state black-and-white television, in 1960. Plus: videocassette players, portable video recorders, the now-ubiquitous Walkman and 3.5-inch floppy disk drives, launched in 1980. source

So, as you can see, continuous investment in R&D is very important. Unfortunately, many small-to-medium businesses and some startups are usually stuck with few products. After developing few successful products they simply stop investing in R&D and stop coming up with new products. Rather, they resort to fixing and polishing the existing products. In some cases, years would past and the company would be still working on the existing products. What a sad situation that is.

If you start your own company don’t make this grave mistake of not investing in R&D!