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Startups Learn to Roll With the Punches Penchina Tells Entrepreneurs

February 2008

STANFORD GRADUATE SCHOOL OF BUSINESS — Making mistakes doesn’t scare Gil Penchina, chief executive officer of Wikia. Nor does being criticized. His company, which develops ‘wikis,’ or collaborative websites, has made plenty of missteps, and is prepared to make more.

After all, that’s how companies ultimately attain success Penchina told attendees at the 2008 Conference on Entrepreneurship, held at the Business School on February 27 in conjunction with Stanford University’s Entrepreneurship Week.

Penchina, who was an angel investor in Wikia and became the company’s top executive in June 2006, said he always keeps in mind a quote from Winston Churchill. “He said that success consists of going from failure to failure without loss of enthusiasm,” Penchina said. “We have failed a lot. And we just pick ourselves up and go on to the next failure.”

There are often gripes about the unattractiveness of Wikia’s spare-looking home page. But, Penchina says, keep the barbs coming. “The last thing I want is to have silence. Silence is apathy and means no one cares. Anger means they’re involved,” said Penchina, who came to Wikia from an executive post at eBay. “I love negative feedback because it means people are excited, it tells me they’re going to tell me what to build so I don’t have to figure it out for myself.”

For-profit Wikia was launched in 2004 by American internet entrepreneur Jimmy Wales, founder of the free online nonprofit encyclopedia Wikipedia. But Wikia enables groups to share news, opinions, and information on topics falling outside an encyclopedia’s scope. Wikia is a gateway to a host of user-developed websites for enthusiasts of 6,000 topics ranging from solar cooking, product reviews, pet care, and baby names to the television series Lost.

In January 2008 Wikia launched Wikia Search, an open-source search engine written and edited by everyday people which also enables users to do social networking activities based on their interests.

Wikia, which now employs 50 and has information in 70 languages, carries content fueled by a combination of paid employees and volunteers. Penchina says they operate under what Wales calls “the Wiki Way”—collaboration, rather than the confrontational style he says many bloggers employ to draw readers to their sites.

Risk taking is part of Wikia’s culture as well. “We don’t review most of our contracts with lawyers who are expensive,” Penchina said. “And we tend to agree to most things the big companies want because getting it changed is too hard.”

As an executive at a startup, Penchina said he’s free to make other snap decisions about where the business should go. For example, he recalled offering to buy another company after only a one-hour conversation with its skittish owner, who had evaded Penchina’s emails for weeks before agreeing to sit down in person and talk. “He says, ‘Well, I’m not sure I am ready to sell.’ I’m thinking: I’d like to buy it right now and I happen to have a one-page acquisition document, which is great, because I haven’t told my board or any of my fellow employees.”

Six hours of negotiations later, Penchina walked into his office at Wikia. When annoyed co-workers asked just where he’d been, Penchina announced, “Oh, I just doubled the size of the company. We gave them about 1 percent of our market cap.”

Wikia’s employees have to be prepared for frequent rough seas. During job interviews, to weed out people not up for the grind, Penchina tells candidates that “most of your days are really going to stink. It’s tough work. You need to find people who believe in the vision, and who are inspired by what you are trying to do.”

While acknowledging the company’s shortcomings, Penchina says success also matters. He distributes a weekly staff note about corporate bright spots, no matter how small. “With all the negative feedback you get in the early days, somebody’s got to be out there talking about success. It might be that we just hired a new person, or that we just launched some new thing. You need to hear that constant feeling of momentum and progress, that’s what helps you through those tougher days.”

The company’s potential keeps him inspired, says Penchina. “In a lot of ways, we are trying to replicate what Andrew Carnegie did in the last century—to build the 21st century library with free information for everyone in every language.”

Before coming to Wikia, Penchina worked at eBay, where he was vice president and general manager, international. He has also been manufacturing manager at General Electric, worked as a consultant at Bain, and has an MBA from the Kellogg School of Business.

 

—Michele Chandler