Jason Calacanis started a human search-powered company called Mahalo. He says it achieved a level of respectable success with 15 million unique visitors a month and $500,000 in monthly revenue, becoming the 150th most popular site in the U.S. But all of that work and success came crashing down when Google released its Panda update in 2011, which prevented content farms from building any influence. The update resulted in traffic being cut in half. Calacanis realized he was falling into a marginalized business. He could quit, tough it out, sell or pivot. Too proud to quit, he decided to pivot. But to do that, he’d have to decide what were the biggest market trends and what did he ultimately want to do.
From Quantity to Quality
In 2011, Calacanis saw intense market trends in mobile, social and video. While he wanted to stay in the content business, an industry he knew very well, he realized that content-farming had no future. Thanks to alpha users reviewing content, apps, and products on such places on Yelp, iTunes and Amazon a business in high quality content could be very viable. Thus came Calacanis’s “pivot” from a search-powered company to a content-app company with offerings on topics like learning to play guitar. To keep the business viable, he needed to get 4- or 5-star ratings in the app stores, an image he refers to as the “gun” histogram. When many people see the “gun” ratings, they instantly purchase the app. If you see the inverse, they instantly leave the page. Anything other than the “gun” histogram, and you lose. “Insta-buy if a gun and insta-pass if it’s the mirror,” says Calacanis.
The Age of Excellence
To succeed in a world where alpha consumers anoint winners, a business must be built on providing high value in both product and design, Calacanis says. Rating systems which highly affect purchase decisions cause an enormous divide between the winners and losers. “Winners will win bigger and losers will lose bigger,” explains Calacanis. And it all happens much faster than it ever did before. To deliver an excellent product, Calacanis had to build in a process to review its quality. This required honest, brutal and uncomfortable debate about content. But this yielded a better product. Calacanis discovered that his best teams had brutal product fights and not only still work together, but work better, too. Debate is critical to success. “Most teams fail not because of fighting, but because of a desire to keep the peace,” he says. As Calacanis continues to build his business, he continues to focus on reviews such as achieving a high Net Promoter Score, or NPS, and “gun”-style ratings in the app stores.