Is Calacanis underpaying Mahalo workers — or overpaying them?
Jason Calacanis's Mahalo has a problem: its business model is a Catch-22. Mahalo differentiates itself from Web search engines by using the paid services of humans, which Calacanis argues is a cheaper strategy than buying servers. And yet Mahalo seems to have trouble paying the rates it set for its human laborers. A blogger who works for Mahalo as a "mentor" — a fancy title for someone who basically works as a QA tester, reviewing pages of search results created by others, is complaining that Mahalo is refusing to pay the full amount he is owed.
Mahalo's mentor program normally pays $10 per page reviewed. Earning this sum involves reviewing a search result's formatting and links and seeing if any top links from a Google search are missing. Not a difficult job — and one that could well be performed by a computer running a script, from the sound of it. Search IMDB for "Alvin and the Chipmunks", check link, search Rotten Tomatoes for "Alvin and the Chipmunks", etc. The complaining Web surfer was able to review 470 pages in a month, a rate Mahalo scoffed at. No wonder: At that rate, he'd be pulling down $56,400 a year for not much work. The actual labor involved is simply not worth it, even for a company that has just raised $20 million in venture capital.
And therein lies the problem: Computers never ask for a raise. Computers never try to game pay systems. And the cost of computers goes down every year, while the cost of labor rises. Mahalo has clearly miscalculated what it should pay testers. It could no doubt farm the work offshore and save some money. But wages in India have been rising, too. "We've already established what you are, ma'am; now we're just haggling over the price," goes the quote attributed to George Bernard Shaw. But no amount of pimping by Calacanis will save Mahalo's business model.
