Though Bomis had struggled to make money, it provided Wales with the funding to pursue his greater passion, an online encyclopedia. While moderating an online discussion group devoted to the philosophy of Objectivism in the early 1990s, Wales had encountered Larry Sanger, a sceptic of the philosophy. The two had engaged in detailed debate on the subject on Wales' list and then on Sanger's, eventually meeting offline to continue the debate and becoming friends. Deciding to pursue his encyclopedia project years later, Wales invited Sanger—who at that time was a doctoral student in philosophy at Ohio State University—to be its editor-in-chief, and in March 2000, Nupedia ("the free encyclopedia"), a peer-reviewed, open-content encyclopedia, was launched. The intent behind Nupedia was to have expert-written entries on a variety of topics, and to sell advertising alongside the entries in order to make profit. The project was characterized by an extensive peer-review process designed to make its articles of a quality comparable to that of professional encyclopedias.
In January 2001, Sanger was introduced to the concept of a wiki by extreme programming enthusiast Ben Kovitz after explaining to Kovitz the slow pace of growth Nupedia endured as a result of its onerous submission process. Kovitz suggested that adopting the wiki model would allow editors to contribute simultaneously and incrementally throughout the project, thus breaking Nupedia's bottleneck. Sanger was excited about the idea, and after he proposed it to Wales, they created the first Nupedia wiki on January 10, 2001. The wiki was initially intended as a collaborative project for the public to write articles that would then be reviewed for publication by Nupedia's expert volunteers. The majority of Nupedia's experts, however, wanted nothing to do with this project, fearing that mixing amateur content with professionally researched and edited material would compromise the integrity of Nupedia's information and damage the credibility of the encyclopedia. Thus the wiki project, dubbed "Wikipedia" by Sanger, went live at a separate domain five days after its creation.

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Nupedia and the origins of Wikipedia