A catch phrase will go here soon.

Tough times, hard decisions.

10/22/2008

Given the challenging economic environment, we’ve decided to cut costs at Mahalo.

Although we’ve got a significant amount of cash on hand, and the business is ahead of schedule in terms of traffic (4m uniques a month, double where we thought we would be at this point), we’re fairly certain that the advertising climate for the next two years will be severely depressed. To ignore this obvious fact would be irresponsible.

We’ve laid off a just under 10% of our full-time staff, cut our overhead by doing smart things like renting desks (we have six offices in Santa Monica fyi), and reorganized our editorial department to focus on freelance positions over in-house editors. The net result of the effort is we are giving Mahalo another year of “dry power” (or runway) to complete our mission.

We can now operate past 2012 even if we never make any advertising revenue, and truth be told building advertising-based companies is my specialty (the last two, Silicon Alley Reporter and Weblogs, Inc. each broke 10m a year revenue between their third and forth years). Perhaps we’re being too conservative, but I’ve rarely heard of companies that went out of business because they made cuts too early, and I’ve heard of many who have reported the opposite.

As the CEO of the company, the responsibility for these cuts are mine and mine alone. Obviously, I did anticipate that the market would correct and that is why we raised $20 million over two rounds of funding before we launched. That move ensures that Mahalo will be able to get to profitability and ride through what is sure to be a very deep and painful recession.

While I anticipated and prepared for the ‘internet winter’ we’re now facing (you’ve read my posts and e-mails about the startup depression I’m sure), I failed to realize how bad the situation would get. It’s much worse than I thought it would be, and ignoring market conditions today would only mean deeper cuts down the road.

It’s my responsibility to make this hard decision and I don’t take it lightly. To the people impacted I’m very sorry that I wasn’t able to anticipate this better. It’s my fault and I’m sorry that you’ve got to bear the burden of my inability to better prepare.

  • John Jacobs

    Does this mean you will be more modest about bragging on your own personal wealth? I can’t count the times you’ve shot your mouth off about high-dollar sports cars and opulent dinners. Will firing some of the people who have helped create your wealth make you a bit more moderate in your posturing?

  • http://www.freebirthdaytreatsblog.com Julie N

    This is never an easy decision and this economy is forcing so many to do just as you are. It’s smar thinking to act early – proactive vs. reactive. I wish all all the best in this troubling time.

  • http://www.mjgproductions.com Michael G.

    You should also mention that Mahalo’s daily video show, “Mahalo
    Daily” will be going from five days a week to three. It’s unfortunate
    but that’s the way the cookie crumbles.

  • http://whitespider1066.com Whitespider1066

    Wow, I wish the MD at my last place when he made half of our
    dev and support departments redundant (including me) was that
    honest and sincere when he told us of the cuts.

  • http://www.octechnophile.com david amodt

    sorry to hear about this. 10% of a co is a decent sized layoff.

  • http://whitespider1066.com Whitespider1066

    I should add a week after telling us they were advertising for
    staff in the BK office, which apparently was totally inconnected.
    Lose 100 staff in UK, employ 100 in BK to do job cheaper.

  • Jerry Moore

    Very well put Jason – it’s a smart move.

    But OMG!! Does this mean you won’t be buying the 2nd Tesla.

  • http://nicefishfilms.com/blog Michael Sean Wright

    My thoughts are with your staff today. You have attracted an
    amazing group of talent at Mahalo. Doing the tough things in
    a tight economy is never easy.

  • http://www.techcrunch.com/2008/10/22/internet-winter-hits-mahalo-cuts-10-of-staff/ Internet Winter Hits Mahalo; Cuts 10% Of Staff

    [...] a post on his blog, Mahalo CEO Jason Calacanis has announced that his human powered search engine has laid [...]

  • http://www.designspike.ca Cody

    Cutting people is never fun, but this is a great example of being proactive instead of reactive

  • http://www.andrewmager.com Andrew Mager

    Don’t cut This Week in YouTube please :)

  • http://watchmojo.com/web/blog/index.php/2008/10/22/mahalo-in-english-suddenly-its-2001/ HipMojo.com » Mahalo in English: Suddenly, it’s 2001

    [...] Jason Calacanis’ website: We’ve laid off a just under 10% of our full-time staff, cut our overhead by doing smart things [...]

  • http://masan.wordpress.com/ masan

    This post must have been very tough to write. I admire your
    transparency and honesty. My thoughts are with the talented people
    you are laying off, opportunities tend to pop in the middle of
    the storms, let us hope their talent lead them to a safe harbor.

  • rob

    it’s “dry powder”, not “dry power”.

  • http://www.rxdxt.com Richard Titus

    As always – a class act. I think it will be much worse, though simultaneously I think there is nothing but opportunity now… I’m hearing a lot of things about wind, shelter and windmills these days.

  • http://mixergy.com Andrew Warner

    I’m sorry to hear that. You have good people in your company. Couldn’t have been easy to let any of them go.

  • Dan

    Nice to see you take personal responsibility. Unfortunate that it has to happen, but well done.

  • http://tinycomb.com/2008/10/22/calacanis-fires-10-mahalo-wants-to-outsource-editorial-to-free-capital/ Calacanis Fires 10% @ Mahalo, Wants To Outsource Editorial To Free Capital : tinyComb

    [...] Calacanis Blog October 22, 2008 | jason | tinyComb  [...]

  • http://www.web2.0fuckedcompany.com/2008/10/mahalo-means-hello-or-goodbye-in-hawiian-today-it-means-your-laidoff/ Web 2.0 Fucked Company » Blog Archive » Mahalo means hello or goodbye in Hawiian – Today it means your Laidoff!

    [...] Could Mahalo, his so-called “human-powered search engine,” be one of them? He has laid off 13 of the humans who power Mahalo, with plans to rehire some of them offshore in the Philippines. [...]

  • http://www.jroller.com/shareme Fred Grott

    Although yes web ads will be depressed for 18 months I did find a
    service infrastructure play directly related to web 2.0..

    AND I GOT MY FIRST CLIENT..:)

    While ads will be down..
    Overall outlook is not extremely bad or
    extremely bleak.

    But I had to make some hard choices
    as well.. no full time hiring for awhile and etc.

    I hope Taurus is well after eye surgery and take care Jason.
    yes still pushing to be a Tech Crunch50-2009 applicant.

  • http://charlesju.com Charles Ju

    hey Jason,

    can you elaborate on how you made over $10 M in revenue based on advertising alone?

  • TJ

    What a difference between Jason’s letter and Jerry’s letter.

  • http://fluidinfo.com/terry Terry Jones

    This doesn’t add up – at least to this uninformed outsider.

    It’s almost 2009. You added a year of runway, through 2012, which means you had 3 years and now have 4 years. I.e., you made a 10% cut in staff, plus some other cuts, but you reaped a 33% gain in runway.

    That’s a pretty big discrepancy. It could be explained if you’d cut people with disproportionately high salaries, or you made really big cuts elsewhere. But you also say you’ve hired (or are hiring) freelancers and their salaries are presumably part of your runway calculation.

    Of course there’s no need to explain, but the high-level numbers you’ve given don’t make sense.

  • http://www.inquisitr.com/5988/mahalo-cuts-10-of-workforce/ Mahalo cuts 10% of workforce

    [...] CEO Jason Calacanis blogged (ironically given that he publicly quit blogging) that the decision was due to the economic crisis [...]

  • http://startupalpha.com/chatter/2008/10/22/first-round-capital-startupalphacom-silicon-alley-entrepreneurs-bullish/ Startup Chatter by Donna Bogatin » VENTURING FOR EXTRAORDINARY GAINS » First Round Capital @ StartupAlpha.com: Silicon Alley Entrepreneurs Bullish!

    [...] Hey Jason, maybe you shouldn’t have changed coast allegiances! [...]

  • http://venturebeat.com/2008/10/22/startup-depression-brings-job-cuts-to-mahalo/ Startup depression brings job cuts to Mahalo » VentureBeat

    [...] Tech entrepreneur Jason Calacanis announced today that his “people-powerd search engine” Mahalo has laid off slightly less than 10 percent its staff. [...]

  • http://www.techsnake.com/2008/10/22/tech-industry-starting-to-feel-the-pinch/ Technology News with Tech Snake » Tech Industry Starting To Feel The Pinch

    [...] on the back of this, Jason Calacanis broke the news that Mahalo culled just under 10% of it’s staff too – saying that although there is plenty of [...]

  • http://www.techaddress.com/2008/10/22/mahalo-fires-staff-bad-economy-or-bad-business-model-at-fault/ Mahalo Fires Staff; Bad Economy or Bad Business Model at Fault?  »TechAddress

    [...] back from a business trip to Europe and Asia, Mahalo CEO Jason Calacanis has decided to make some cuts, firing nearly 10% of the staff and has started to rent out space to other startups. From what we [...]

  • http://www.techaddress.com/2008/10/22/rackspace-acquires-slicehost-and-jungle-disk-launches-cloud-computing-strategy/ Rackspace Acquires Slicehost and Jungle Disk; Launches Cloud Computing Strategy  »TechAddress

    [...] back from a business trip to Europe and Asia, Mahalo CEO Jason Calacanis has decided to make some cuts, firing nearly 10% of the staff and has started to rent out space to other startups. From what we [...]

  • Durbin

    what happened to not blogging anymore?

  • http://www.ilovesubstance.com Rob

    Who is the contact person for renting out desks?

  • zx

    $3000 coffee machine..(ahhh… life at Mahalo)

    http://calacanis.com/2007/08/16/life-at-mahalo/

  • http://spanish.martinvarsavsky.net/general/techcrunch-cuantifica-los-despidos.html Techcrunch cuantifica los despidos

    [...] viene otro invierno de Internet como lo llama Jason Calacanis. Y está siendo cuantificado en Techcrunch. Por ahora los dos grandes que despidieron gente fueron [...]

  • http://chrometa.com Brett Owens

    Sorry to hear also – classy to own up to it – keep up the great work.

  • http://www.mathewingram.com/work/2008/10/22/mahalo-now-means-goodbye/ Mahalo now means “goodbye” — mathewingram.com/work

    [...] Mahalo, his “people-powered search” startup — and took the extraordinary step of returning to blogging momentarily to announce the news, after having made a big show of turning his back on it. In [...]

  • http://MarkTend.com Michael Kassing

    Jason,

    Hard choice, only one that could be made. Thank you for being a man and taking it.

    Michael Kassing
    MarkTend.com

  • http://www.blackweb20.com Markus

    I think it’s smart to start battening down the hatches,
    I think we’re all preparing for a long cold winter. Have you all
    already noticed a drop in ad revenue?

  • whateves

    Not gonna tell you Great job or sorry that this is happening to you as this seems reactionary, almost a knee jerk response.
    Whatever you do, don’t even think about trying to make things work just cut the fat. Your employees
    families won’t mind. Wonder who gets cut in the 2nd round? Hopefully you told them yourself. Mahalo=epic fail

  • http://galaxyspectrum.com/ AD PR NY

    Some of those laid off can still be used as freelancers.

    The relationship does not have to be completely severed

    for qualified personnel

  • http://alanhoskins.com/2008/10/22/jason-calacanis-threatens-techcrunch-with-dmca-letter/ Jason Calacanis Threatens TechCrunch with DMCA Letter | Alan Hoskins

    [...] evening Jason Calacanis sent out an email to the people subscribed explaining Mahalo’s layoffs. Erick Schonfeld from TechCrunch decided to republish the email even though it states not to twice [...]

  • http://beingaceo.com/writings/articles/how-to-handle-layoffs-by-jason-calacanis/ How To Handle Layoffs by Jason Calacanis | Being a CEO

    [...] Calacanis wrote today about Tough times, hard decisions. He expanded the subject on his mailing list and was republished by TechCrunch. This entry was [...]

  • http://newtechstuff.com Jody Weissler

    Mahalo is looking great!! You mentioned 6 offices in Santa Monica. Why are things decntralized?

  • http://www.swissstartups.com/blog/2008/10/start-up-marathon-3-entlassungen/ SwissStartups.com – » Start-up Marathon #3: Entlassungen!

    [...] Leider darf man es nicht auf dem Web veröffentlichen, aber ich werde es gerne forwarden, wenn ihr mir an info(ät)SwissStartups.com schreibt. Ein kleine Zusammenfassung könnt ihr auch hier lesen. [...]

  • http://geekcast.fm/archives/geekcast-41-my-2-year-old-son-has-an-iphone/ GeekCast 41: My 2 Year Old Son Has an iPhone : GeekCast.fm

    [...] Jason Calacanis is upfront about tough times at Mahalo [...]

  • http://news.buzzgain.com/?p=130 BuzzGain » Top 5 techniques to adapt your interview process during the downturn

    [...] a tough market land a job, and most companies are starting to layoff people. That said there are opportunities still available and many open positions. This post is about [...]

  • http://www.seanpercival.com/blog/2008/10/23/so-long-and-mahalo-for-all-the-fish/ “So Long and Mahalo for All the Fish” | Sean Percival’s Blog

    [...] Jason’s Blog [...]

  • http://kara.allthingsd.com/20081023/mahalos-jason-calacanis-in-better-days/ Mahalo’s Jason Calacanis in Better Days | Kara Swisher | BoomTown | AllThingsD

    [...] Wrote Calacanis, in part: Although we’ve got a significant amount of cash on hand, and the business is ahead of schedule in terms of traffic (4m uniques a month, double where we thought we would be at this point), we’re fairly certain that the advertising climate for the next two years will be severely depressed. To ignore this obvious fact would be irresponsible…While I anticipated and prepared for the ‘internet winter’ we’re now facing (you’ve read my posts and e-mails about the startup depression I’m sure), I failed to realize how bad the situation would get. It’s much worse than I thought it would be, and ignoring market conditions today would only mean deeper cuts down the road.” [...]

  • http://www.theinquirer.es/2008/10/23/despidos-en-mahalo.html The Inquirer ES : Despidos en Mahalo

    [...] Calacanis.com // [...]

  • KT

    You guys obviously don’t pay attention to the roller coaster ride of antics and lying that surrounds Jason. It’s to bad about the people that had to be let go, but Jason is a tool and these people are better off not working for him.

  • http://startup.wirememe.com/mahalo-lays-off-10-staff-due-to-bad-economy-and-no-earnings/ Mahalo Lays Off 10% Staff Due to Bad Economy and No Earnings | Startup Wire

    [...] founded startup, has laid off 10% of its staff according to a blog post made by Calacanis on his once abandoned blog. Jason has said that:We’ve laid off a just under 10% of our full-time staff, cut our overhead by [...]

  • http://startupmeme.com/mahalo-makes-cuts-in-view-of-economic-crisis/ Mahalo makes cuts, in view of economic crisis | Startup Meme

    [...] 10% of their staff. Mahalo’s CEO, Jason Calcanis, previous co-founder of Weblogs, Inc., made a blog about this move. He defended that the company has sufficient amount of funding and is ahead of its [...]

  • http://blog.affiliatetip.com/archives/geekcast-41-my-2-year-old-son-has-an-iphone/ GeekCast 41: My 2 Year Old Son Has an iPhone | Affiliate Marketing Blog by Shawn Collins

    [...] Jason Calacanis is upfront about tough times at Mahalo [...]

  • http://www.kidmercuryblog.com kid mercury

    jdawg,

    may i suggest the notion that inflation, not deflation, is
    the real concern. this means currency devaluation is the
    story. i know it is not what we have seen thus far, but i do
    believe strongly inflation is coming, just like we have seen
    it up until 2008, next wave will be even more painful.
    check the book “crash proof” by peter schiff.

    more importantly, don’t forget that 9/11 was an inside job.
    the real “lesson” of this downturn is that you can’t live
    in a society where stuff like that happens and think that
    you will be safe if you don’t say anything about it. as
    we are in the midst of learning and will continue the learn,
    the safer thing to resist tyranny, not submit to it.

  • http://www.techcrunch.com/2008/10/22/email-from-jason-calacanis-how-to-handle-layoffs/ Email From Jason Calacanis: How To Handle Layoffs

    [...] to go through a layoff of 10 percent of his staff earlier today. After repeating the text of his blog post announcing the layoffs, he offers some advice for other entrepreneurs on how to do it right. The [...]

  • Ryan

    Saying that a rapidly growing industry will suddenly become “severely depressed” for two years is one thing, but to call it “an obvious fact” is just entirely baseless and laughable.

  • http://www.jimkukral.com/follow-up-the-a-list-is-still-dead/ Follow Up: The A-List Is Still Dead

    [...] and Arrington are up to their old tricks. Summary: Jason publishes blog post announcing layoffs at Mahalo. (I thought he wasn’t blogging anymore)? Techcrunch (Arrington) [...]

  • http://get-blogging.com/web20-news/mahalo-feels-economic-pressure-lays-off-10-percent-of-staff-3 Mahalo feels economic pressure, lays off 10 percent of staff | Blogging | Business Blogging | Make Money Blogging |

    [...] Calacanis, CEO of Mahalo, a human-powered search engine, announced today that he was forced to layoff 10 percent of his staff (about five or six people) amid a [...]

  • http://www.kikabink.com/news/510/mahalo-lays-off-10-percent-of-workforce/ Mahalo Lays Off 10 Percent of Workforce

    [...] Jason Calacanis, “Tough times, hard decisions”, Calacanis.com, October 22, 2008, Nicholas Carlson, “Jason Calacanis’ Mahalo Fires People”, Silicon Alley Insider, [...]

  • brianbro

    I don’t get it. Shouldn’t companies invest in online advertisi in the g m
    more because it’s cheaper? Do they expect to stop selling in the next two years?

  • http://doughaslam.com/2008/10/24/social-media-top-5-the-scarlet-letter-b/ Doug Haslam » Blog Archive » Social Media Top 5: The Scarlet Letter B

    [...] the material is fair game, and besides, it’s a news item, not to mention Calacanis publicly posted a much shorter version of the story on his [...]

  • Ron

    The hard decision in this case
    for you as the CEO is to stand in front of your investors and
    to say we will not cut 10%, we will reduce salaries by 5%.
    Why, as you wrote in the header “tough time”, in tough times
    managers needs to be more human (you wrote
    “we’ve got a significant amount of cash on hand,”)
    and to try to help other workers to X the ocean.
    I’m not saying not to cut workforce, but in this case
    a small company with enough cash, company that operates like
    a small unit/family, you have the option to cut salaries
    instead. this is the hard decision.

  • http://www.billsims3.com Bill

    Jason, I respect your candor, concern for your colleagues,
    your honesty. It’s refreshing. Don’t see that much anymore

  • http://www.pandia.com/sew/902-the-financial-crisis-google-and-yahoo.html » The financial crisis, Google and Yahoo!

    [...] In a blog post Jason Calacanis, the CEO of Mahalo, writes: Although we’ve got a significant amount of cash on hand, and the business is ahead of schedule in terms of traffic (4m uniques a month, double where we thought we would be at this point), we’re fairly certain that the advertising climate for the next two years will be severely depressed. To ignore this obvious fact would be irresponsible. [...]

  • http://postin.pl/wp/index.php/2008/10/the-financial-crisis-google-and-yahoo/ The financial crisis, Google and Yahoo! | Wiadomości seo

    [...] In a blog post Jason Calacanis, the CEO of Mahalo, writes: Although we’ve got a significant amount of cash on hand, and the business is ahead of schedule in terms of traffic (4m uniques a month, double where we thought we would be at this point), we’re fairly certain that the advertising climate for the next two years will be severely depressed. To ignore this obvious fact would be irresponsible. [...]

  • http://masan.wordpress.com/2008/10/27/no-for-an-answer/ Awkward office moments that shall not be: When you get NO for an answer « Rebels innovate

    [...] Reading Tough times, hard decisions [...]

  • http://jonathandavies.org.uk/2008/10/27/revision3-%e2%80%93-the-truth-hitting-home/ Revision3 – The Truth Hitting Home | Jonathan Davies

    [...] me this really shows the global economic crisis has reached the tech industry. I’m aware the Mahalo had to a couple of weeks ago, but for me – it’s only just hit home. We’ve had a number of great successes here at [...]

  • http://www.taggle.org/2008/10/776-jason-calacanis-il-ny-aura-pas-de-rebond-a-court-ou-moyen-terme/ Jason Calacanis : il n’y aura pas de rebond à court ou moyen terme | taggle.org

    [...] Il y a un mois, Jason Calacanis (Mahalo, entre autres), envoyait un long mail sur les raisons du licenciement en cours chez Mahalo. Le billet avait fait quelques échos, mais le ton de Calacanis restait mesuré. (version raccourcie du mail sur son blog) [...]

  • http://www.traffic-internet.net/moteursderecherche/jason-calacanis-il-n%e2%80%99y-aura-pas-de-rebond-a-court-ou-moyen-terme_1807.html Jason Calacanis : il n’y aura pas de rebond à court ou moyen terme | traffic-internet.net

    [...] Il y a un mois, Jason Calacanis (Mahalo, entre autres), envoyait un long mail sur les raisons du licenciement en cours chez Mahalo. Le billet avait fait quelques échos, mais le ton de Calacanis restait mesuré. (version raccourcie du mail sur son blog) [...]

  • http://dannybrown.me/2008/11/14/why-jason-calacanis-is-the-ultimate-twitter-fail-whale/ Jason Calacanis and the Twitter Fail Whale | danny BROWN

    [...] the time, Calacanis stated, “It’s my responsibility to make this hard decision and I don’t take it [...]

  • http://jobmatchbox.com/wordpress/archives/186 Layoff Roundup : JOBMATCHBOX

    [...] ‘Tough times, hard decisions’ (Jason Calcanis) [...]

  • http://ciaran.ie/a-bad-day-for-start-ups/ A bad day for start-ups? | Ciaran’s Blog

    [...] Meanwhile Reevoo has put 7 of its 31 staff on notice. While no-one has been laid off yet, I fear they are not far away. Already this year high profile start-ups like Loic Le Meur’s Seesmic had to let go 7 staff and Jason Calacanis’s Mahalo let go 10% of their staff. [...]

  • http://metue.com/12-04-2008/pink-slip-watch-layoffs-att-viacom-more/ Under economic pressure and timed to take fiscal year 2008 write offs, layoffs are piling up. Viacom and AT&T latest to join growing list. » Metue

    [...] (from News and Observer) •Mahalo – “just under” 10% of staff.  (more from Calcanis.com) •Palm – after poor results an unspecified number of jobs, expected to be large, are [...]

  • http://www.qualitynonsense.com/1287/layoff-talent-com/ Introducing LayoffTalent.com

    [...] be a fine place to shop for the kind of top notch geek talent that has lost jobs at eBay, Google, Mahalo, Real Networks, CareerBuilder.com (oh, the [...]

  • http://freetracking.org/tech-layoffs-the-scorecard.html Freetracking.org » Tech layoffs: The scorecard

    [...] Calacanis.com: Tough times, hard decisions [...]

  • http://link Barbara22

    Good to know Huston was popular. ,

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English Bulldog

Hello, my name is Jason. Welcome to my blog on the interwebs. You can reach me on twitter @jason and by email at jason@inside.com. My Skype is jasoncalacanis, and my mobile phone is 310-456-4900.

I only pick up numbers I recognize, and in terms of emailing me, the best strategy is to write short, blunt and to the point requests. I can quickly respond to short messages, and many times I simply don't have the time to read five page pitches. In terms of taking meetings, I only do that after reviewing an actual product (not a business plan). So, the best time to ping me is when you have mockups or an alpha site. I don't read business plans, and I've never written one.

Other twitter accounts you can follow: Inside.com, Ticker, This Week in Startups and LAUNCH Festival

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