Jason Calacanis’ Wikipedia-for-profit Mahalo laid off 11 of its 20-to-25 member editorial staff and two developers yesterday, says a former employee. The source tells us some of the positions will be rehired in the Philippines. (Jason says only 6-7 people were let go). About 10 Mahalo employees in administrative and executive positions remain based in Santa Monica.
Mahalo’s freelance contributors — the other humans who power Jason’s “human-powered” search engine — are “all getting nervous” and “looking for other stuff,” the former employee says.
Given the economy and Mahalo-investor Sequoia’s dramatic reaction to it, we’re not surprised to hear the news. Earlier this month, Jason told us Mahalo isn’t close to profitible despite a record 4.6 million uniques in August — because he wants the site’s traffic to hit 10 million to 15 million uniques before injecting ads. He also told us Mahalo’s funding — about $20 million — would last the company four years.
Update: Jason tells us Mahalo will retain 70 employees and “more folks” who are freelance. He also confirms the layoffs on his personal blog:
Although we’ve got a significant amount of cash on hand, and the business is ahead of schedule in terms of traffic (4m uniques a month, double where we thought we would be at this point), we’re fairly certain that the advertising climate for the next two years will be severely depressed. To ignore this obvious fact would be irresponsible. …
We’ve laid off a just under 10% of our full-time staff, cut our overhead by doing smart things like renting desks (we have six offices in Santa Monica fyi), and reorganized our editorial department to focus on freelance positions over in-house editors. The net result of the effort is we are giving Mahalo another year of “dry power” (or runway) to complete our mission. …
It’s my responsibility to make this hard decision and I don’t take it lightly. To the people impacted I’m very sorry that I wasn’t able to anticipate this better. It’s my fault and I’m sorry that you’ve got to bear the burden of my inability to better prepare.