A May 10th, 2012 article by Julie Bort for Business Insider recounts how losing a contest led to a $100 million business.
Here's the story:
Because accurate recommendations increase Netflix’s appeal to its customers, the movie rental company started a contest in October 2006, offering $1 million to the first contestant that could improve their predictions by at least 10 percent.
After 3 years and nearly 50,000 entries, a team calling itself BellKor’s Pragmatic Chaos announced they had created a program that improved the accuracy of Netflix's predictions by 10.05 percent.
This left Arnab Gupta's company, Opera Solutions (which had been working diligently on the Netflix problem - and who submitted their equally effective solution shortly after BellKor’s Pragmatic Chaos), with no prize money.
End of story?
Instead of folding up his tent, Mr. Gupta asked the scientists he'd hired at Opera Solutions to work on the Netflix problem to work on other similar problems.
Today Opera Solutions - a loser in the Netflix contest - has revenue of close to $100 million dollars - employing 150 advanced-degree scientists and offering advanced technology for data analysis and management. Since 2009 Opera Solutions has successfully carved out a niche for itself, serving organizations in financial services, consumer goods, health care, manufacturing, media, and the public sector using Netflix-like algorithms for other businesses needs, such as "fraud detection, marketing, stock picking, risk management, procurement, etc."
The moral of the story?
According to Ms. Bort: "Opera's pivot shows that all you really need is to dream big, hire well, and don't let anyone tell you it can't be done."