Remember Fast Company? The print-magazine relic of the last boom is, surprisingly, still around, and still spilling ink monthly on the unlikeliest of subjects. Take, for example, its profile of Jason Calacanis, the serial entrepreneur and blog blowhard, and Mahalo, his bravado-powered search engine. The writer, Adam Penenberg, is relatively evenhanded in his coverage of the man, lauding his "transparency" while noting his "predatory" tendencies. But he falls short in his analysis of Calacanis's new company, which is trying to hand-build pages of search results for popular subjects. Even with help from Calacanis, Penenberg failed to ask any tough questions about Mahalo.
How many results can we do in this fashion? Can we monetize them? Can we keep them updated? So all those questions a venture capitalist would ask or a journalist might ask as to why Mahalo wouldn't work, we feel we're figuring out, learning what those answers are.
But Penenberg, the journalist in question, failed to answer, or even ask, any of these questions in his piece.
And he didn't even question some of Calacanis's more absurd assertions, like the entrepreneur's defense of his low-tech, human approach in a comparison with Google:
He calculates that it costs Google approximately $4,000 to operate each of its servers for a year. So for the price of a dozen machines, he can have one human (who not only receives a base salary and benefits, but costs him payroll taxes) who will write some 500 terms a year and keep them up-to-date. Multiply that by his target of 100 workers and Mahalo would be able to generate 50,000 terms a year. What's more, Google's staff is 100 times larger, and precious few of them take home as little as 35 grand. In other words, however machine-driven it may be, there's nothing cheap about running Google.
Really? Those dozen machines may have costs, but they are part of a large network generating thousands of result links per request for millions of searches made every second by millions of users around the world. Google is gushing cash, generating more than $300,000 of pure profit per employee.
And while Google doesn't disclose the number of servers it has, or the cost to operate them, it does include them in a category of its financial results called "other cost of revenues"; in the most recent quarter, this category accounted for a mere 11 percent of Google's revenues. Even a cursory analysis of Google's financials, in other words, would have told Penenberg that Calacanis's comparison is wholly fallacious.
Whatever it costs to run a server, Google's easily making that back and more. Hardly comparable to an unemployed writer producing ten brief result pages per week for a little-used, unprofitable site which is, for now, depending on Google to sell what little advertising it has.
And there are serious questions about Mahalo employees' rate of production. Can they actually keep results up to date? In the accompanying podcast, Calacanis makes the substantial admission that his fewer than 60 editors are now spending the bulk of their time approving submissions from the Mahalo Greenhouse program, where the unwashed masses create their own Mahalo results, Wikipedia-style. Which is fine, as far as it goes, but it means that they're also not writing their own results pages at the same time.
As a matter of fact, the entire company has moved from writing search results internally to accepting search results externally. So we had to basically take, the entire editorial team and say, hey, we're getting so much response from the public we have to shift our whole model to accepting search results.
Greenhouse results from the public are in greater numbers and cheaper than those produced by editors. Which isn't good news for the editors. Although Calacanis says they have accepted their changing roles, writers would naturally rather be "writing" monkeys than "rubber-stamping" monkeys. And even they must see the writing on the wall: If the public is more productive and cheaper than they are, with their paid salaries with benefits, how long can they last? Calacanis cannot claim his editors are providing a unique skill as an expert if an anonymous Internet user can do the same.
In a blog post, Rich Skrenta, the original founder of Dmoz, an early attempt at a user-created Web directory, claims that Mahalo's only future is through search engine optimization, or SEO. Which would be ironic, since Calacanis has railed against SEO in the past. Calacanis addressed the updating issue with this ideal scenario:
If we have a staff of 100 at Mahalo and those folk update 15 pages a day (i.e. 30 minutes per page) we can do 1,500 updates a day or update the entire 25,000 page index in ~20 days/one month. If we had the public (i.e. Greenhouse help) with the 1,000 folks in the Greenhouse we could update everything in 10-15 days. So, we can handle updating 25,000. 600,000 pages? No ... that would be a problem. :-)
Again, Calacanis is assuming that his people, and even his outside contributors, just work on one thing full time. How could Mahalo function if it spent a month just updating the index, with no new search results or approvals of search results? That sounds like a new problem, not the "handling" of one. If only there were some way to automate this process and get computers to do the work ...
Unfortunately, the Fast Company profile raises none of these issues. They would, after all, be inconsistent with a slavish profile of an entrepreneur — a genre the magazine perfected in the '90s and to which it now appears to be returning. Penenberg, who gained fame by exposing fraudster Stephen Glass, is, sadly, completely taken in by Calacanis's powers of persuasion. Just like Mahalo's investors. So we still don't know the answers to the questions "How many results can we do in this fashion? Can we monetize them? Can we keep them updated?" Fast Company ignored them. But we can't.