Calacanis's Mahalo Off to Solid Start


Alley alum Jason Calacanis’s new human-powered search engine, Mahalo, appears to be off to a solid start.  According to Jason, the site is currently serving about 50,000 pageviews a day (1mm a month).

Mahalo also recently launched a new “Greenhouse” program that addresses the primary business concern about the company–namely that the cost of hand-building SERPs will be so high that Mahalo will never survive.  The Greenhouse program allows the public to apply for part-time paid work building Mahalo search-results pages (SERPs).  According to Jason, Greenhouse received 800 applications in two weeks.  The company has hired 150 people as Part-Time-Guides (PTGs) so far and hopes to have 500 by year end. 

Greenhouse PTGs create SERPs based on the company’s “Most Wanted” list, and Mahalo’s full-time editors then accept or reject them.  Mahalo is giving the first 100 PTGs to hit 100 accepted SERPs an iPhone. 

The Greenhouse program is currently producing 10-20 SERPs per day, at a cost to the company of approximately $10-$15 each. The company expects its PTGs to be producing 100 SERPs a day by the end of the year.

For most search queries, a human-edited SERP will be superior to one generated solely by an algorithm.  Here, Mahalo’s ability to prioritise SERP-building is the key to success.  If the company had to compete with Google on speed or breadth, it would fail.  Assuming search requests follow standard distribution laws, however (e.g., 20% of terms account for 80% of searches), Mahalo ought to be able to invest its resources in building only the most popular and profitable SERPs, with links to Google for the rest. 

Assuming Revenue Per Search (RPS) of, say, $0.05 to $0.10, Mahalo would have to generate 100-300 queries per SERP to generate a positive gross margin.  It’s not clear how long a shelf-life each individual SERP has (presumably minutes for some and years for others), but given the traffic the site is already generating, this doesn’t seem a high hurdle.   

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