Sunday, December 21, 2008

Mahalo Answers Success Story User Pulls Support

Mahalo Answers user budgallant, who was used by TechCrunch and Mahalo CEO Jason Calacanis to publicize the success of Mahalo Answers, has backed off his support of the site.

In response to my article "Mahalo Launches New Money Making Scheme" Gallant originally came forth with glowing support of the site, going as far as saying he didn't mind the 25% surcharge stating he didn't mind pay for supporting the site. That support quickly faded as Gallant now writes, "it would seem my glowing reviews were colored very much by the lottery winnings I received...I'm afraid, it turns out many of your criticisms are valid, and there's a lot more."

Shortly after the launch of Mahalo Answers, TechCrunch and Calacanis essentially made Gallant their poster boy for the success of the new service when they ran the article "Mahalo Answers User Gets $100 Payday For Giving PR Tips To Strippers". With several sites reposting the success story, and almost 350 diggs, the article undoubtedly added a little fuel to the Mahalo fire.

That fire seems to be flaming out quickly as Gallant now tell us. "Over the last few days, I've grown disillusioned... both with the site and it's operation, and with the CEO. This is a guy who after I asked him two simple yes or no questions, refused to reply. Sure, I realize he owes me no reply, but one would like to think when TechCrunch, in association with Mahalo, uses your name in an article, you'd at the very least get a question answered without being ignored. Apparently not...It's a personal slight, and frankly, I don't appreciate it."

It really wouldn't be fair to judge Mahalo or Mahalo Answers simply on the distaste Jason leaves in ones mouth and anyone that has talked to him or seen any of his interviews knows he's a hard pill to swallow. My negative views of the service were based more on the extremely high surcharge incurred by Mahalo Answers users wishing to cash out. Taking 25% off the top of payments seemed to be a bit extreme to me.

Once Gallant posted his original response I looked at Mahalo Answers a little closer. I had noticed a few things that really didn't sit right with me.

For one, there seemed to be several questions posted by website owners. Most the them were questions that would basically drive traffic to their specific site. So it looked to me like some of the users found a way to "game" the system and get some cheap/free advertising. Secondly, was the volume of questions posted by the Mahalo staff. That wasn't unusual as obviously you want to support your own site and what better way than using in house dollars to drive more support? However according to Gallant it would appear as though they were doing a bit more than that.

In comments posted to our previous post Gallant writes:
These things, and things like these [referring to his disillusionment] , put me off Jason... completely, but it wouldn't be fair to let my growing dislike for his personality and profiteering, affect my view of Mahalo Answers. I'm sure I'm not completely objective, but this brings me to the most important reason I no longer support the platform.

Mahalo Answers is gameable. Completely gameable. I suspect it is so, because Jason himself and his staff are the primary ones gaming it. Where do the M$ come from? Well, if you are a user, you need to buy them at a 1-1 ratio with real money. If you are Mahalo, you simply create them out of thin air, and then "put them into the system". I read a claim that Jason had put hundreds of thousands into that system, on an msnbc news article, to promote tips. Is there a paper trail for all those M$, or are they just being created by the site? Good luck getting an answer on that. I strongly suspect it is the latter.

Regardless, the system is being gamed. Once M$ are in the system, the only way for them to cost Mahalo a penny is if they are converted to real money via paypal. The majority of this time, this does not occur. Instead what happens is this: Someone affiliated with Mahalo Answers who was given the M$ by the site (by their admission), posts a question offering a large tip $20-$100. Users believing they have a shot at it put in an amount of work, and that is what it is, based on the amount. MA gets around 20 good answers, for free, and then selects another MA-related user as the winner. The M$ go round and round, transfered through the Mahalo Answers affiliate botnet, and never reach an actual user who cashes them out (or do so only after multiple transfers, at best). It costs Mahalo nothing, to transfer the same M$100 from one affiliate to another, and each time they do this, they have essentially gamed the system, and saved the entire cost of that tip.

I have witnessed this occurring on the site, and the evidence of it remains. I first suspected this when I noticed users who are direct employees of MA, not disclosing it on their profiles. One of them Is Mary. I have an e-mail from her MA account with a link to her profile, to demonstrate it. Even after I raised this issue, her profile was not changed. Instead Jason claimed all employees disclose. That is a lie, and I suspect he knows it. Why Mary is notable is because she has been funneling hundreds of dollars through the system, and selecting "best answers" that indicate the system is rigged.

This would be no different than a business owner paying the $100 for M$100 and then asking a question that can be used to profit his business. After receiving all the answers, he selects a "best answer", and transfers that money to an employee or to an affiliate of his business. And the scam gets repeated ad infinitum. Mahalo Answers seems to be running the same scam, with the difference that the M$ do not even need to be purchased. They can simply be created.

Due to the above, I officially withdraw all support for Jason Calacanis and Mahalo Answers. While it is possible to believe these are simply "accidents" or "coincidences", it would be naive to think so.

Users have a right to know who the Mahalo employees are, and that they primarily select other employees to receive the tips. Users also have a right to know where the M$ used by these employees came from, and whether or not Mahalo actually payed for them, or just created them. In addition, and most importantly, users should know that the system in use can be gamed, and gamed easily, and nothing effective is being done to guard against this. I doubt that is negligence, but rather more profiteering, something which JC is a master at.

At this time I can not confirm the fact that Mahalo is "gaming" the system in any way. I'm not familiar with the current staff so its hard to say who is and who isn't on the payroll. I can say that I see numerous questions and answer posted by Mahalo staff members that I did know. I don't know if they still work their nor did I take the time to look through all the questions and answers to see which staff members received tips for their answers.

Mahalo's response to this so far:
Mahalo for the feedback. Couple of quick points:

1. If you click on the profiles of our staff you'll see they all disclose they work at Mahalo. If someone hasn't it's an oversight.

2. 25% is very reasonable since it costs a lot of money to build an maintain a system like this. Google AdSense takes 35-45%, so we're a much better deal than all the ad networks.

3. We have no interest in gaming the system to ask a question and answer it ourselves. That would be very short sighted. In fact, we don't have the TIME to answer questions nor do we need to since thre are so many folks answering them.

4. Also, since we're making 25% it's better for us to
sit back and collect that fee rather than waste time trying to answer our own questions!

5. If you have specific examples where you think something is fishy just ask me jason at or ask a question about it on Mahalo Answers. We'll look into it immediately.

Is Jason now comparing Mahalo Answers to AdSense? Answers is supposedly a Q&A site not an advertising network. Mahalo acting as the middle man would be more akin to comparing PayPal to eBay. All Mahalo does is provide the platform and transfer (via paypal btw) the payments. eBay and PayPal fees combined rarely top 10%, so my point is still valid. Taking 25% off the top is ludicrous!

As to the rest of the questions being raised, I'll let you come to your own conclusions and leave you with a few related links.

Jason has posted a "semi-official statement", which ironically confirms the statements made by both Bud Gallant and myself. In another twist of irony, Jason feels as though my sentiment that Mahalo takes too big a cut is somehow motivated by my past dealings with Mahalo.

Jason you might want to read my post before making such claims. I have nothing against the Q&A process. My issue has always been the fact that Mahalo is engaged in profiteering. If you are making money off of your advertising then why is there a need to make even more money off your users by charging a surcharge.

I've said it before and will say it again, Mahalo Answers is nothing more than a money making scheme for Mahalo. It is a fairly clear statement one that Jason even admits, "For the record, our business model is to make money off of a) the 25% fee and b) advertising on the site (the Google ads you see)."

One thing I found interesting was that Jason and Mahalo Q&A users wanted to address this posting, however there was no reference to Mr. Gallant or his postings. As mentioned I'm not a Mahalo member therefore I can't respond on site. But I'd think you would want to address the concerns of your disillusioned members before address your critics.

1 comment:

  1. Anonymous8:42 PM

    Just as a quick correction, when I stated "Mary", I was in error. I meant to say "Sara". I apologize for the mix-up. From what I have been told by a Mahalo insider, there is no Mary on staff, and I referenced one by mistake.


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