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Reality Check: Blodget’s Latest Calacanis Infomercial

Henry Blodget just wrote another piece praising Jason Calacanis: Mahalo 2.0 Is Kicking Ass. This shouldn’t be confused with the piece he wrote two years ago, Mahalo 2.0: Calacanis Adapts. The 2007 piece was one of three where Blodget ridiculed those that criticized Blodget’s wildly inaccurate pseudo-analysis Calacanis’s Mahalo Off to Solid Start. Blodget’s other two pieces in that series were Calacanis’s Mahalo Doing Quite Well, Actually and Hey, Mahalo / Calacanis Haters: Analyze This!. Both pieces implausibly (and inaccurately, as it turned out) argued that Mahalo was succeeding.

As a good citizen, I edited some of Blodget’s piece to make it accurate:

Jason Calacanis continues to do what he does best: Innovate self-promote with help from his friends.

When the original concept for Mahalo didn’t work as well as he thought it would continued I kept pretending it was, he did what all great entrepreneurs do: Try something different.

Jason gave us a brief update: …

– We are now the 220th largest site in the US according to Quantcast
*verified* (i.e. real numbers because we put their tag on our site they rank us higher than sites with less traffic)

But the part that really goes over the top is here:

– We have nearly hundreds of members on track to make hundreds to thousands of almost a dollar in revenue split after just 60 days of Mahalo 2.0. You can see the leaderboard here:

That’s right. To make that sentence factual I had to replace “hundreds to thousands of dollars” with “almost a dollar” and I had to add the word “nearly.” BTW, how did you read their dollar number in that sentence? I think they wrote it that way for people to read “hundreds of thousands” but actually they wrote “hundreds to thousands.” So their claim is only of hundreds of people on track to make hundreds of dollars. Which isn’t very impressive. And even that isn’t true. That would imply at least 200 people on track to make at least $200. I clicked through to their leaderboard. Number 200′s pages earned two dollars and nine cents last month. And Mahalo keeps 62.5 percent of that, by taking 50% off the top, and then taking 25% of what’s left when the user tries to convert Mahalo dollars to real dollars. So #200 is down to seventy eight cents for last month

And finally

“We will have 100 people making over $10,000 $25 a year”

The hundredth person on the list made thirty seven and a half percent of $5.63 last month. Which puts him or her on pace to make about $25 this year. Presumably Calacanis / Blodget are projecting a 40-fold increase somehow. The magic of making insane projections and ridiculing people who call you on them is that you can say whatever you want. And that’s clearly what Blodget and Calacanis have been doing.

Quick comment on bloggers’ integrity. I think it’s fine for journalists / bloggers to build up their friends a bit. Something like “Hey, my pal just put up a great pets site and you should really follow her on Twitter.” But there has to be:

  1. Some disclaimer that this is your buddy
  2. Some vague connection to reality.

I’d further say that the Editor in Chief of a large site has to hold to a higher standard than your average blogger. But even the least read blog (like mine, for example) needs to achieve a higher standard of integrity than Blodget’s Calacanis pieces. I’d be happy to read Blodget / Calacanis corrections to this post. If I got something wrong, please show me. Thanks in advance.

Update (Jan. 20, 2010): AFAICT from Mahalo’s Leaderboard, in the 7+ months since Mahalo 2.0 launched, their 100th highest earner has made about $30 (after Mahalo takes its cut). So that “We will have 100 people making over $10,000 a year within four months” statement was off by more than two orders of magnitude.

Update (Feb. 20, 2010): Jason has just launched the same revenue sharing program on Mahalo Answers. Thankfully this time his promises are quite a bit more realistic, as he just Tweeted “Top users on Mahalo Answers will make M$1k+ year I think!!” Also nice that Blodget seems to be sitting this one out.

Update (June 30, 2010): Holy cow. Jason announced that his revenue share system “failed in practice” and that he was removing the rev share. Writers will now get nothing unless they create at least 25 new pages, spend 12 hours updating, and do 10 or more questions or answers every week! If they do all that, they’ll get either $1,000 or $1,300 a month, for what’s already approaching a full time job. Yeah, and it gets worse. Some more details from the articles linked below:

  • The change is retroactive, so if you already created pages that are making money, Mahalo has unilaterally decided to stop sharing revenue on these pages with you.
  • If you have less than $150 in your account, Mahalo decided that they’re keeping it.

More details here:

  • http://twitter.com/mikerhoads Mike Rhoads

    I am a former employee. His claim also takes into account the money earned via the task system (http://www.mahalo.com/tasks). Money earned via tasks is not included on that leaderboard. I don't know if they have a public leaderboard for that yet, but here's a list of the payouts I made in October: http://www.mahalo.com/answers/mahalo-answers-co…. These totals include revenue from all sources (Answers, tasks and rev share)

  • http://managinggreatness.com Gil Reich

    Thanks for the feedback and the data, Mike. Can you tell me which of those are employees? Is there any more recent data? It's hard to extrapolate too much from those numbers, but what still seems clear is that statements like “We will have 100 people making over $10,000 a year within four months” were off by about two orders of magnitude. The “best answer' on the page you pointed me to is Jason's “It's fairly clear from insider our organization that there will be 100+ people making $50,000+ a year in a short period of time.” It's now 5 months later, how are we doing on that? If you or anybody else has more data on how much Mahalo paid non-employees since then, I'd love to hear it. On a related note, do you agree that somebody that makes such dramatic predictions should follow up periodically to show that he was right or apologize for being wrong? Otherwise he develops a reputation as a champion self-promoter who shouldn't be trusted.

  • http://jhoard.com/ Jeff

    Right, the list Mike provided was from October and none of those users are employees, those are all real remote writers and researchers for Mahalo. Now here is the list for last month's payouts, you can see how the numbers are steadily improving.

    I am also a former full-time -paid-by-the-hour employee, but moved myself to the rev-share system because it allows for a greater opportunity to grow my earnings, in fact in my first month on rev-share I earned more as an employee.

  • http://managinggreatness.com Gil Reich

    Thanks Jeff. You write that none of those are employees, but the highest earner on that list (SSMACD) was identified by Jason and Henry Blodget as an employee in Blodget's August post. Even these numbers indicate that Jason's “We will have 100 people making $10,000 a year within 4 months” is off by at least an order of magnitude, no?

  • http://jhoard.com/ Jeff

    Ssmacd, like myself, is a former employee who moved to rev-share.

    Yes, Jason tends to exaggerate his numbers as most of us already know, I think he was simply being enthusiastic about the idea, which I don't think is a major scandal. Regardless, we have over a dozen of us making that much and many more writers are moving up in the ranks. I know a lot of people don't like Jason and Mahalo, but I've been working remotely with them now since 2007 and have no complaints, I have always got paid and the in-house staff works real hard to keep Mahalo growing.

  • http://managinggreatness.com Gil Reich

    Fair enough. Thanx Jeff.

  • http://twitter.com/mikerhoads Mike Rhoads

    They try to make a habit of posting a report for each payout so there are probably some more up to date ones floating around. I have heard that the earnings numbers have gone up since I left at the end of November. As Jeff mentioned, none of those listed were employees when the payout was made. I'd say that specific earnings claim at the time was a realistic estimate.

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