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Deal Radar 2008: Mahalo

Posted on Monday, Sep 22nd 2008

Mahalo, which means thank you in Hawaiian, is a human-powered search engine founded by former Weblogs co-founder, Jason Calacanis. The site launched in public alpha in mid-2007 and public beta in October 2007. Mahalo focuses on handling requests that are filtered with the help of a team based in Santa Monica, California, to avoid the spam and other junk results that clog other search engines.

Expert guides determine the most relevant results for search terms. The primary results, which have been hand-picked by the guides, constitute the ‘The Mahalo Top Seven’ area at the top. The page also includes Guide Note, which includes additional information on the search term, and Fast Fact. Mahalo’s guides are constantly working to improve results and add more queries. The site also allows users to submit their own links for consideration; these links are then published if voted for. If the user searches for a term that is not in the database, Mahalo displays related pages and also allows the user to choose results from Google, Yahoo, Live Search, Wikipedia, etc.

In June 2007, the company launched Mahalo Greenhouse, which pays users (read freelancers who are effectively part-time guides for the company) for submissions. The program allows the ‘part-time guides’ to build search results for search terms that have not yet been included in Mahalo. If the user’s page is accepted, the company will pay $10 to $15 per search result. Towards the end of the year the site added social networking features like user profiles.

The company is well funded for an alternative search engine: Mahalo raised a $5 million Series A from Sequoia Capital and Mark Cuban in 2006 and a $16 million Series B from CBS, News Corporation, Sequoia Capital, Mark Cuban, Jonathan Miller, and Elon Musk in 2007.

In November 2007, VentureBeat reported that the company is looking to raise another $20 million in a third round of funding at a potential valuation at $175 million. Mahalo was also said to be open to an acquisition or a partnership for ‘opportunistic’ reasons.

The company hasn’t started selling advertising yet and plans to begin at the end of this year. In April 2008, ValleyWag reported that the site brings in $9,000 a month in revenues and needless to say, is not yet profitable. However, Jason Calacanis is not worried yet. Mahalo was valued at $100 million before the second round, and the round was raised to help see the company through the next four years without any revenue.

According to Compete, the site attracts 2,872,210 monthly unique visitors on 3,780,562 monthly visits. That’s a lot of visitors, although, all the searches I tried on Mahalo, came back saying, “We haven’t created a page for “XXX” yet.”

Related Readings:
*Web 3.0 & the Semantic Web
*Deal Radar 2008: Powerset
* Deal Radar 2008: Kosmix+Adify – Potential Google Challenger

This segment is a part in the series : Deal Radar 2008

. MyStrands is MyChoice
. Kayak Consolidates Travel
. Trulia Can Consolidate Real Estate
. Girls Like Stardoll
. LinkedIn Should Roll-Up Jobs
. Zillow
. TheFind
. Wize Ranks Products
. Retrevo
. Piczo Picture Perfect
. Xanga Losing Steam?
. hi5 Going Strong
. Bill Me Later - Blessed by Amazon
. Takkle Tackling Socially
. Amie Street and the Twenty First Century Renaissance
. eHarmony Replacing Yenta
. Zappos Wants to be Amazon When it Grows Up
. Figleaves and Specialty e-Tail
. Twitter Gaining Momentum
. Tagged In Exit Freeze Danger Zone?
. Digg - Packaging news
. Facebook Woes Coming?
. PlayFirst Plays Casual Games Well
. Kosmix+Adify - Potential Google Challenger
. Travel Ad Network Executing Flawlessly
. Trying to Tackle the Video Ad Problem
. Groople, Interesting Use of Context
. Lucidera
. InsideView's Clever Maneuvering
. Seeking Alpha
. Adify's Market Taking Time to Develop
. Glam Media's Fashion Forays
. Federated Media Needs to Focus
. GigaOM
. TechCrunch
. Yelp
. Slide
. Elance
. oDesk
. SKS Microfinance
. TutorVista
. Seventymm
. Cleartrip
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. MakeMyTrip
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. Jigsaw
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. Geni
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. Mimosa Systems
. Metaweb
. Brightcove
. Revver
. Cake Financial
. Mint
. Powerset
. UpTake
. PaidContent
. Mixpo
. Biz360
. Sabrix
. Coremetrics
. Revision3
. Appirio
. Metacafe
. Pandora
. Hulu
. Fabrik
. Flock
. Wetpaint
. ID Analytics
. Ning
. Telanetix
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. ON24
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. Realtime Worlds
. GirlSense
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. PrimeSense
. Verticals onDemand
. Gaia Interactive
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. Mahalo
. Akoha
. Sportgenic
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. Entrepreneur Journeys
. Aggregate Knowledge
. Fliqz
. Elastra
. Challenge Games
. PivotLink
. iForem
. Operational Memory LLC,Raleigh, North Calorina
. FeedRoom
. GameDuell
. Fotolia
. EchoSign
. Mevio
. Local Marketers
. Baynote
. BlogHer
. Passenger
. Mobixell
. Wigix
. ExpertCEO
. Zyrion
. Archer Technologies
. SunRun
. NewsGator
. PermissionTV
. Creative Water Solutions
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Is this a new story? Seems like it’s got a lot of old information from other stories on the web, and I don’t think you’ve contacted me about it. If you would like to sit down and get updated information ping me any time at jason at mahalo dot com.

all the best,


Jason Monday, September 22, 2008 at 11:57 AM PT

Hi Jason, You are perhaps not familiar with this site. I don’t do News reporting at all. I only write analysis based on research and my own personal expertise. I think the Compete numbers above are your most current reported numbers at the time of publication of this post, as is the empirical assessment based on my playing with your site, and my experience with your results. My main issue with Mahalo is that it is not a scalable model, and I also have concerns about the monetization challenges, although, given your traffic level, Google AdSense can monetize some of your traffic to some level. Happy to talk more offline.

Sramana Mitra Monday, September 22, 2008 at 1:37 PM PT

Well, the issue I have is that you’re writing a story with Mahalo based on second hand facts and without checking any of them. You could simply email me and have done a much better story. It’s fine if you want to skip the fact-checking process or giving your subjects the courtesy of an email… no one else does it anymore so why should you?

It’s just that I expect more from which is based on real journalism, not “write arounds.”

If you need to ever check your facts or make your story more than 80% correct ping me on email!

all the best, jason

ps – regarding scaling the system we’re actually figuring that out and have only exposed about 1/3rd of our product over our first year. There is a lot more to come. 🙂

Also, we’re as scalable as the NYT, WSJ, Dow Jones, AP, etc. , which is to say we could have 1-3,000 folks writing results/pages in five years. It’s not google, but it’s a real business.

Finally, we had a record month of 4.6m unique visitors in August and we’re well on our way to reaching profitability. In fact, we could stop investing in the product and get to break even today if we wanted to. However, we’re not going for a small business… we want to get to 10-20m uniques a month over the next two years.

Jason Monday, September 22, 2008 at 1:51 PM PT

Jason, why doesn’t your 4.6m unique visitors number reconcile with either Compete or Quantcast, independent sources that we use to benchmark against?

1-3,000 folks writing results/pages in 5 years – sounds like a pure manual solution. Are you going to do any kind of editorial value addition? Obviously, NYTimes, WSJ, and all the rest have plenty of that, which is at the heart of their business strategy. Yours?

I agree you have a small business in your investment thesis, but the valuation number for Series B seems totally out-of-whack to me. $100 million? Did we get it completely wrong? About $10 million is what I would have paid.

Sramana Mitra Monday, September 22, 2008 at 3:21 PM PT

Sramana: Compete only tracks US users, and it under counts smaller numbers. Read the manual. 🙂

RE: Valuations We don’t talk about those things in public obviously. Frankly, I wouldn’t worry about that so much. Everyone involved in Mahalo has bought into a five year ride. We’re just over a year into it and having 4.6m uniques in the slowest month of the year puts us in the top 1% of startups in terms of year one performance.

We funded up because we knew there would be a market crash, and we were exactly right. So, while other startups will be struggling over the next two or three years we will be building value.

Again, you should have emailed me instead of writing a story based on incorrect lifted facts… it would have been much more interesting.

Jason Tuesday, September 23, 2008 at 2:29 PM PT


On the Deal Radar series, we do worry about valuations. And your valuation number doesn’t compute.

As for funding up to sustain the crash, that makes sense.


Sramana Mitra Tuesday, September 23, 2008 at 7:49 PM PT