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"I want to build the next Yahoo or Wikipedia"

"The solution is to have humans look at the pages and rank them. The algorithm will get you to, let's say, 80 per cent complete and then humans should do the final 20 per cent. An algorithm can only take you so far. You might trust an algorithm to tell you the address of a sushi bar or which one is closest to you but you might not ask it which one has the best sushi. You wouldn't expect an algorithm to know what's great sushi but you would expect a human to be able to tell you that. It's common sense."

The death of blogging?

Before Jason launched Mahalo, he was in the blogging business. He co-founded Weblogs, Inc, the portfolio of which includes dozens of blogs such as Engadget, Joystiq and Download Squad. In 2005 he sold the network to AOL for a reported $25million (he now says he'd give AOL a 'B' average for what they've done with Weblogs in the last few years) and, having become increasingly disillusioned, Jason recently quit blogging altogether.

"It feels like blogging is different to when it started," he explains. "When it started, it was a very authentic conversation and I think it's now more about marketing, promotion and link-baiting. In general, blogging has devolved. There are still great blogs and I still read them but the majority of blogging is not about authentic conversations any more. The blogosphere is at a crossroads. They'll either find a way to deal with all the noise or it'll collapse on itself. Just like Usenet collapsed on itself. There are no good conversations on Usenet."

Private mailing

As an alternative, Jason has started a private mailing list, writing essays on various topics such as 'how to demo your start-up' and 'how to be a good CEO'. Initially, Jason meant to cap the list at 750 subscribers, then it got so popular that he didn't have a choice but to allow more people to join. Within six weeks almost 6,000 people signed up.

"When I'd post on my blog I'd get 10-30 comments and most of them were bad comments from weird, anonymous people," Jason says. "When I moved to the email I started getting 200 or 300 comments – all from incredibly talented people – that were 10 paragraphs long. And they were just to me. On a personal, selfish basis I'm getting more out of this email and these 6,000 people than having 30,000 people read my blog."

In a recent newsletter called '(The) Start-up Depression', Jason predicted that 50-80 per cent of start-ups would fail "or go on life-support (ie three to four folks working on them) within the next 18 months". Today, Jason is a bit more optimistic:

"What's the loss? People have three, five or 10 employees, so if the company doesn't work out they can make it a company of two or three people working from home and five people get laid off and go to another company. It's not like the old days when you had people raising $100million or $200million, thousands of employees and then the company goes out and thousands lose their job. If there's a shakedown, you might have hundreds of people that'll lose their jobs and then get hired by Google and Yahoo and other companies. It's not going to result in thousands of people suddenly being out of work and not being able to get a job."

To survive, Jason recommends you either raise a lot of money and invest in the down market or cut all your costs and break even. Mahalo, which itself has just laid off 10 per cent of its staff, should be fine because with five years worth of funding in the bank the company isn't in any rush. And, as Jason points out, "The down market is good for us because we can take market share and it'll be easier to get people to join the team."

At the moment, Mahalo isn't even trying to make any money. Most pages have Google AdSense at the bottom but Mahalo won't sell any proper advertising for another half a year or so. The focus now is on reaching 10 million uniques. Jason is also planning to figure out how people can use the site more and increase the value they get out of the service. A redesign is on the horizon and there'll be plenty more pages.

Jason reckons that in 2009 most people will 'get' human powered search and for the time being he's got no plans to sell up and move to yet another market. "I want to try to build the next Yahoo or the next Wikipedia," he says, raising the bar high. "I don't want to sell it too early. I'd rather have it become its own business."

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First published in .net magazine, Issue 183

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