Jason Calacanis continues to do what he does best: Innovate.
When the original concept for Mahalo didn’t work as well as he thought it would, he did what all great entrepreneurs do: Try something different.
The second version of Mahalo, which is based on crowd-sourcing and revenue sharing, appears to be off to a great start.
Jason gave us a brief update:
Mahalo broke 6m uniqes in June, 8m uniques in July and we are on track to break 9m uniques in August.
— We are now the 220th largest site in the US according to Quantcast
*verified* (i.e. real numbers).
— We’re making well over $1M a year from AdSense alone and we’ve just
spun up our sales group with four f/t sales people.
— We have hundreds of members on track to make hundreds to thousands of dollar in revenue split after just 60 days of Mahalo 2.0. You can see the leaderboard here: (note: Lon, Camilia, Mike and SSMACD are our staffers–everyone else is the public).
— We will hit profitability in the next 6-12 months and still have four years of runway in the bank. We will not need to raise any more capital–two rounds of funding and we will easily make it over the finish line.
— Our new mission is to get into the top 100 sites in the next 12 months.
Why is it working?
Essentially the Mahalo 2.0 model, where we give revenue splits to the audience and virtual currency in Mahalo Tasks (our Mechanical Turk) has exploded. We have people building 300-500 pages for us for $1,000 in virtual currency every 2-5 days in Mahalo Tasks. This is going to ramp up to us building 1-2,000 pages a day in Mahalo Tasks by the end of the year, and 5k pages a day by the end of 2010. That will give us the ability to have more topic pages than the Wikipedia in three years.
1. Traffic is booming because we are making 20-30x the number of how to articles and topic pages thanks to the revenue split motivating hundreds of participants.
Our big learning: for two years we hired full-time staffers in our office for $40k a year, from home for $10 an hour and in Manila for $3-4 an hour and none of these solutions worked as well are revenue sharing has proven to be over the last 60 days.
2. Traffic is also booming because we added a “team tipping” feature to Mahalo Answers where multiple users can add to a tip… this is making multi-dollar tips for many questions a day. This results in more answers, which results in more people posting questions and the fly wheel spins and spins. See example attached.
Big picture: We are the first people in the world to put a virtual currency on top of a Q&A system and knowledge base–and its working. This all comes from my frequent trips to Korean and Japan studying and meeting with the top people from Yahoo, Naver, Daum.net, Softbank, Mixi, CyWorld, Gree, etc. These firms are making billions from virtual currency for casual games, virtual gifts and selling songs for people to put on their homepages. We took inspiration from them to layer this brand new, multi-billion dollar, revenue stream onto content.
We’ve created a vibrant economy inside of Mahalo that builds on the power of recognition and affiliation (which are key drivers also).
At Weblogs, inc. we learned that the factors the drive people are, in order:
People loved having their byline on Engadget and Autoblog and they loved being associated with the other bloggers on those sites. Getting paid to blog was the icing on the cake (at least back in those early
The Virtual currency makes compensation into a game, like Skeeball, where people get two rushes: the fun of seeing their score increase AND the ability to get a $100 to $2,000 in real money each month.
We will have 100 people making over $10,000 a year within four months thanks to revenue sharing and answering questions. We will have a couple of dozen people making over $20,000 a year if things continue
on this path. For every $1 they make we make ~$1.25, so we are more than happy to pay people a large sum of money for participating.
Essentially we’ve put an economy over Wikipedia, Yahoo Answers and Google search–in one product. It’s confusing and new, and sloppy at times, but it’s working and learning new stuff every day.
Key lesson for me: 1. travel and see what other people are doing for inspiration. 2. Innovate, innovate and innovate some more.
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