Jason Calacanis: Sometimes you have to redefine your business to survive

Entrepreneur, blogger Jason Calacanis says entrepreneurs have to learn to pivot from one business to another when one plan isn’t working. Speaking at the Digital Life Design conference in Muich today, Calacanis said that he had to do just that with his current company, Mahalo.

Calacanis got the idea a few years ago to beat Google at the search game by coming up with human editors to edit search engine results — called human-powered search. He got funding from Sequoia Capital and started work on Mahalo. The engine launched in May, 2007, and by January 2008, it was getting 2 million visitors a month. Mahalo pages were curated, with results that had videos, pictures, and a page with attractive layout. But Google and Microsoft’s Bing started improving their search at the same time.

And then Mahalo’s growth flattened out.

“You have great success for a year or two and then it stops,” he said. “You want to kill yourself. Maybe the world doesn’t need what I’m doing. This is very hard to take. I was devastated. Why can’t I make this work?”

So, about a year ago, the company started listening to user suggestions and collected data. Calacanis said the company pivoted from the “human-powered search” mission to a site where you could “learn anything.” It took 55 experienced video editors and had them create tutorials on how to do things like play certain songs on a guitar. Mahalo uses 75 domain experts and the video editors shoot them. They uploaded a lot of video on the site, and the video viewership shot through the roof.

“It changed everything in the company,” Calacanis said. “Everybody loved coming to work again. The growth came back.”

Calacanis said some of the best tech companies have gone through similar pivots. His examples: Groupon pivoted from a group action platform to daily deals; Flickr shifted from a massively multiplayer online game to web photo sharing; Nintendo shifted from playing cards to video games; and Nokia shifted from making rubber boots to making mobile phones. Calacanis joked that Nokia might now go back to rubber boots. Calacanis says his pivot has paid off, moving Mahalo from what was once a top 400 site in the U.S. to a top 160 site and it is one of the top five partners with YouTube.

In a case of embarrassing bad timing, Calacanis also announced the launch of Mahalo 4.0 while on stage, but the site doesn’t appear to be working.