Peter Kafka

Recent Posts by Peter Kafka

Jason Calacanis Rolls Out the New Mahalo: Yahoo Answers-Killer

In October, Mahalo.com founder Jason Calacanis laid off staff at his human-powered search engine. Then he announced he was hiring engineers for a mysterious new “Project A.”

Today he’s unveiling it: An “answers” service designed to compete with one of Yahoo’s most successful sites.

Like Yahoo Answers, Mahalo’s new product relies on users to answer other users’ questions. Unlike Yahoo’s (YHOO) site, Calacanis promises to give his most prolific answer-givers a chance to make money, via a virtual currency they can earn by answering questions.

The proposition: Users can ask questions for free. But they can also buy “Mahalo Dollars” using real money and reward people who answer their queries. Users can eventually cash out the Mahalo currency they earn for real dollars, with Calacanis taking a 25 percent cut.

This aligns him with a growing number of Internet execs who think they can make money via virtual goods and currencies. That’s worked well for Asian companies and a handful of Western videogames, like Activision Blizzard’s (ATVI) World of Warcraft. But the market for virtual stuff has yet to appear at most U.S.-based Web sites.

Still, Calacanis thinks he’s got a better shot of making it work next year than his original plan for 2009: Selling ads on his site besides the ones he runs from Google’s (GOOG) AdSense. “I think it’s going to be very hard to make money selling ads,” he said. “The market needs this more than it needs us out there trying to sell inventory.”

All of this supposes that people are actually willing to pay for advice they get over the Internet. I’m dubious, but then again I had no idea Yahoo Answers was as successful as it was until Calacanis walked me through the user stats in his demo*: 24 million unique users in the U.S., according to Quantcast.

I did try it out myself, and found that Calacanis’s beta users (who are presumably incented to answer as many questions as they can) did a decent job of answering my query about moving my Palm data to my BlackBerry via my MacBook–and much better than the people at Yahoo Answers and Answers.com, who didn’t even try.

But it’s still not good enough. Looks like if I want to get this done I’m going to have to pay someone real cash.

*A note for anyone who ever has to demo a product: Find some way to watch Calacanis go through his paces live if you can. You can get a sense of the experience by reading his tutorial, or by watching video of him in action. But it’s another thing to get it in real time, and watch him simultaneously hype and soft-sell. Really effective stuff.

[Image Credit: Joi Ito]


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