An article in Fast Company recently waxed on about mahalo.com and Jason Calacanis as if they were the greatest thing since sliced bread.
We live in an amazing world. Where else but on the web could you create a half baked product, launch it, and get someone else to pay you to provide the functionality necessary to provide a complete product to the market.
This is what mahalo.com has done. Mahalo’s employees are hard at work building out search results by hand, cherry-picking the most common search terms on the web. That is their product, similar to the old days of the Yahoo! directory, before algorithmic search engines like AltaVista and then Google came along. Mahalo is not a search engine, but an FAQ of sorts, and the beauty is that Google pays them 35% of PPC revenue generated by visitors to Mahalo who click on Google ads for the privilege of filling all the holes and turning Mahalo into a search engine.
Mahalo is useful for people looking for very mainstream things, and they provide very nice pages on the topics that they choose to tackle. Much more useful than either Microsoft, Google, Yahoo!, or Ask. The reason I’m writing about them is because they are in the search engine business, but they didn’t build a search engine. Taken to the physical world this would be like Ikea only making the bolts and getting someone else to pay them for the privilege of providing all the wood slabs to make a bookcase.
The problem they face is that they don’t have anything inherently unique to create a sustainable business upon. Even the Mechanical Turk element they have where they pay $10 to anyone who creates an acceptable page of results, could be easily copied. Mahalo’s best chance of survival is actually to stay small. If they carve out a nice little business for themselves and manage to maintain it at a small enough size, they could still do quite well for themselves. But, if their model proves too successful then Microsoft, Yahoo!, Google, and Ask will quickly copy them, destroying their differentiated position, and possibly refusing to provide them with the search results they need to remain viable.
So, the challenge I lay down is for you to think about opportunities in your business where you could actually convince someone to pay you for the privilege of providing part of your core product functionality. I didn’t say it would be easy.
Kudos to Mahalo!
Braden Kelley is a Social Business Architect and the author of Stoking Your Innovation Bonfire from John Wiley & Sons. Braden is also a popular innovation speaker and trainer, and advises companies on embedding innovation across the organization and how to attract and engage customers, partners, and employees.