Mahalolics Anonymous

I'm starting a new support group for you poor afflicted Mahalolics out there, who are drunk on hope and envy.  Instead of trying to bash me for 1 M$ that Jason hasn't even payed for (yet), come join me on twitter, and I can be your personal Mahalo guru. Who better to coach you to recovery than the user who has still, to this date, made more M$ than anyone else?

We'll laugh, we'll cry, and we'll build my very own personal empire, just like some of those users suggested. I'll change my initials to correspond with a popular messiah's, and we can start our own CEO cult-of-personality. Promotions for everyone! And not those misleading ABC news promotions, no... the kind of promotions you will only get if you're a bot or a groupie back on MA.

I'm willing to work with you, and give you an opportunity to slave away at your pc for pennies an hour just like the other guys. More than that, I will build a fair system for you to follow blindly... something with lots of flashing lights to dull the senses... it'll be awesome! 

I know you guys don't like to face the reality that only a fraction of the money that goes into the system is going to ever come out, and the meantime Jason will keep your hopes up that you can make hundreds a month just by answering a few questions. You could listen to him, and ignore what myself, and even (ex)employees are saying about Mahalo. You could dismiss the fact that Mahalo is motivated soley to keep that money in the system, and that every dollar they put into in themselves has no cost to them until a user cashes out. You can keep drinking those Mahalolic beverages that Jason is charging to serve you, and stumble around looking to finally "score".

You could...  but eventually you'll sober up a little, and when you do, I'll be waiting...  We can build something great! I'm looking for a few angel investors and a whole legion of groupies! Together we will show that web 2.0 crowd who is boss. Me.... uh... I mean, us! Yeah, that's right... we're all in this together.

Jason 404s Himself?

EDIT: The page was restored some time after this entry was posted. You can view it here.

Earlier this evening, Jason Calacanis posted a question to Mahalo Answers asking for users opinions on the allegations against the site, and offering a cash incentive to provide it. Talk about an unfair platform… Still, I welcomed the opportunity to clarify my position.

Many of the repsonses were by staff and freelancers, and predictably tried to cloud the issue, and spin the allegation that Mahalo is running a rigged system.

After writing a lengthy reply, outlining specifically what my issues were, more freelancers replied attempting to misdirect the other users relating to how Mahalo generates it’s M$.

The points I made were many, and I am not able to duplicate them, as I assumed since Jason had moved the issue to an open forum, he was welcoming public debate on the matter. Apparently not.

In a surprisingly turn of events, after I posted the following response, the page was quickly 404d, and all content lost:

“In fact, it is not true I have given out only $3. I have actually spent $20. For some reason the stats are skewed. You can confirm this by looking at my “tips given” tab. I have my suspicions for why the “tips given” are being reported incorrectly on profiles, as well. Certainly makes it harder to see from the staffs profiles that the same M$ are more or less going round and round, isn’t it? 

No conspiracy per se. Just smart, if somewhat deceptive business practice. When cost is only incurred upon cash out, Mahalo has every motivation to take steps to limit the amount cashed out. This is a policy as evidenced by the $40 limit. I contend, based on monitoring staff activity, that it goes beyond that. Mahalo can increase the perception of transparency quite easily. Stop charging users for putting M$ in, and charge them only when those M$ come out. That’s the racket Mahalo is running, and trying to convince us that it is on equal footing.”

In addition to the above, I countered staff arguments that the system was running fairly, and took Jason up on his challenge to provide a “solution”. The soultion, per my post, was for Mahalo to either buy the M$ it uses, like everyone else, rather than only incur a cost when a user cashes them out, or to allow users the same option. I stated that if Mahalo was so certain it’s users would be enriched by this platform, than it should allow users to only pay for their M$ when a user removes them from the system, just as Mahalo is doing. I also stated the reason Mahalo will not do this is because they know only a mere fraction of those M$ will ever be “cashed out”.

In addition, I restated my claim that Mahalo staff are gaming the system by shuffling around the $M from one to another, and referenced the evidence previously provided of this.

I guess Jason decided a public debate was not in his interest, afterall… The page was removed and there has been no further repsonse from Mahalo on the issue.

Mahalo Confirms No Real Money Put Into The System By Mahalo

In a long-winded promotional piece for Mahalo.com, ABC news stated "... it (Mahalo) will jump start the economy by dishing out several hundred thousand dollars among current Mahalo members and beta testers." You can read the entire article here.

A reasonable reader might take from this, the notion that Mahalo is, in fact, putting a huge amount of dollars into the system, in exchange for M$. This is, however not the case. Jason Calacanis, CEO of Mahalo, pointed to the M$5 redemption code sent to users recently to back this claim up, when asked if he stands by the statement in ABC News. There are a few problems with this. By his own admission, rather than "several hundred thousand dollars", Mahalo predicts it will pay out "$10,000", though this does not take into account the 25% fee, so cost predictions are actually $7500 (and lower, as we will see later). That's a far cry from the original claim of "several hundred thousand". Mahalo also mentioned it's $100 questions, as source of inputting money into the system. It seems as though it will take several years, at this rate, for Mahalo to get anywhere near the amount it claimed would be used initially to "jump start" the system.

What is perhaps, more troubling than the inflated figures given to ABC News to promote the site, is the fact that, in actuality, Mahalo has not put any real money into the system at all. Whereas those outside the company, are required to transfer real money into the system in exchange for Mahalo's virtual currency, in order to offer M$ as tips, Mahalo suffers from no such limitation. It was confirmed by a company insider that Mahalo simply generates the M$ without valuing them by converting them from cash. While Jason Calacanis engaged in quite a lot of spin on this issue, he did not dispute this, but he avoided directly acknowledging it, as well.  That will come as no surprise to the growing number of users who suspect not everything is as it appears to be, on Mahalo Answers.

In response to my assertion that Mahalo not putting up any real money to utilize the M$ like anyone else is required to, puts ordinary users at a disadvantage, Jason had this to say, "Not sure what you mean here. Are you saying we have an advantage in that we can buy dollars at a 25% discount? That is true, but we still have to pay out the cash." While I agree that Mahalo "can" buy the dollars at a 25% discount, the reality is Mahalo does not buy them at all.  It offers nothing in exchange for the M$ and pays nothing unless they are turned into real money.

Why is this relevant? Because, in this system, Mahalo incurs no cost at all in utilizing M$, only in cashing them out. When a regular user buys M$ which are immediately devalued 25%, in the hopes of having a question answered, they have no vested interest in what someone does with those dollars. The reason for this is, quite simply, they've already paid for them. They buy the M$ with the motive of exchanging them for information. Mahalo, on the other hand, suffers no penalty from offering M$, because the company does not "buy" them at all. Mahalo then, has every motive in keeping those M$ in the system.  The longer they do, the more use they get out of something that literally cost nothing to obtain.

Mahalo staff have been quick to claim Mahalo itself has no motivation to game the system. Given that Mahalo incurs no cost at all for it's use of M$, unless a user cashes them out, some may argue they have more reason to game than anyone else. In fact, Mahalo has made no secret that it's system is designed to keep those M$ passing around, and not being converted to cash. There is a M$40 requirement to be met before a user is able to take that money out of the system at all. Most regular users will NEVER reach $40, or will do so only by expending hours upon hours of work researching answers. Mahalo is well aware that the majority of the M$ it is flooding the system with, will end up in dormant user accounts before the M$40 mark. This enables not just a "25% discount", but ensures only a fraction of those M$ will ever need to be purchased by the company itself, which does not pay until they are cashed out.

In addition to this, Jason Calacanis posted upon the site, that in the future Mahalo is likely to require a minimum tip amount to ask a question at all.  Isn't it nice to see that Mahalo does not play by it's own rules, and that it's CEO feigns incomprehension to those who believe the system is "rigged" in Mahalo's favor. As if this platform was not already tipped in Mahalo's favor enough, having stealth employees funneling those unpaid for M$ round to other employees, demonstrates what lengths Mahalo is willing to go to, to get it's user content at bargain basement prices, while other users pay for the privilege. I've recently learned that Mahalo employees are not permitted to exchange their M$ for money. If this is the case, it only exonerates any suspicious activity on their part, while pointing the finger clearly at Mahalo itself.

Geek News Covers Mahalo Answers Scandal

Geek News was the first alternative news source to cover the developing scandal at Mahalo Answers.

Richard writes, "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..."

You can read the full article here:

http://geek-news.net/2008/12/mahalo-answers-success-story-user-pulls.html

Responding To A Mahalo Employee

This was sent in response to an e-mail I received from a Mahalo employee regarding my previous statements. I am not reproducing their e-mail, as I have not notified them or asked their permission to do so, and consider it a private correspondence, at this time.

Hi, (name removed). You are quite right. I meant to say "Sara" not "Mary". I have posted a correction.

You are correct, moving M$ around from user to user would make no money. It would, however, also cost no money, either, and yield free information, as well as generate site activity. For example, a Mahalo freelancer can post a question needed to finish a guide they are paid $175 for by Mahalo. They post a question asking for detailed information (that they will then sell through Green House), offering a $20 tip. 10 users post, all providing valuable information. A final user posts and copy/pastes elements from the above users answers. That user is then selected as best answer. That user is also a freelancer, or a dummy account run by the OP. $20 was now saved, and the information that was posted came free, plus generated more revenue after being used in a guide, which was then sold. The process then repeats itself.

This is just a single example of how the system can be gamed. As you can see, there is in fact a benefit to this behavior for those who engage in it. I think you and I both know, questions of this type are in fact being asked, and copy/paste answers from previous answers are being selected for tips. It's not too difficult to figure out why.

Let me give you another example, I run a website. I want to drive traffic. I offer a $1000 tip for some bogus question, in which I can promote my website. I reap the rewards of the answers and the traffic, and the publicity for such a high tip. I choose the best answer, and the person I choose is the next link in the chain. Subsequently, Mahalo Answers gets huge publicity in articles mentioning such a big payout, and my site's traffic goes through the roof, as blogs and media pick up the story. My $1000 is well-spent, especially since it will be broken up and transfered around in a similar manner among my multiple accounts, yielding me even more freebies, until I eventually cash it out myself by proxy. Total cost to me. $250. And that's assuming, I decide I want the money back, and don't just keep traveling it for free information and site promos. This is how someone outside Mahalo's infrastructure would game the system.

I believe you probably are completely genuine when you say you are not aware of any deception or gaming by staff. As an outside user, though, when I see staff posting questions with $M provided by Mahalo (which I suspect they generated out of nothingness), questions which coincidently are related to their freelance projects, and then awarding best answer to other staff, it creates an appearance of impropriety.

The facts are this:

1. User disclosure of Mahalo employee status is voluntary unless it is made compulsory, and verified. Some employees are disclosing on profiles, and others are not.

2. Employees are both asking questions and answering them on a regular basis, with no official oversight. This is, in fact, encouraged by Mahalo, and M$ were given to these users to promote this.

3. Employees are awarding other employees with "best answer".

4. Tips are traveling from one employee of Mahalo to another on a regular basis, and indicate a sort of network, whether or not that is the intent.

The bottom line is, Mahalo has allowed a system to run in which employees can game the system for free, and anyone can game the system for 25% of the amount an honest user would pay. The question you have to ask yourself is "why?". Given the ambiguity surrounding who works for Mahalo, and in what capacity, and who doesn't, as well the trend for Mahalo employees to favor other employees, a very clear impression is created.

Gaming the system, in fact does benefit Mahalo. It's only the exposure that would be a negative. Creating a system with these loopholes works very well for those exploiting them, and as long as those who feed the real money into the system, either participate in the gaming themselves, or are not aware of it, there is no backlash, and Mahalo profits. In the meantime, real users who are submitted real information for free, and doing so in a rigged system are the ones who lose out.  

The solution is rather clear, Mahalo employees should be restricted from answering questions, altogether. The M$ they were given should be removed from the system, unless someone actually used real money to purchase them to begin with. Still waiting for Jason to answer that charge... It seems he's forgotten in his haste to make vague denials of knowledge in point form.

Mahalo employees should be enabled to ask questions, but the answer should be selected only by vote (despite the fact Mahalo could easily rig the vote results). The questions asked by Mahalo employees should be color coded differently, so users know it's a Mahalo question, being asked as a Mahalo strategy while on the clock.

I'm not opposed to Mahalo employees having a separate personal account, so long as there is no interaction between the two, and it does not reference employee status directly or indirectly, at any time, and no questions or answer are provided on anything relating to Mahalo.

Additionally, the M$ should be tracked to ensure they are not being transfered around to clones, fake accounts, or a network of users engaged in gaming the system. I realize this will not be easy to do, but it is essential for Mahalo to be able to ensure it's users that no gaming is taking place. Presently, there is nothing at all to back that assurance up, even if it were given, which it has not been.

Freelancers, who do not work at Mahalo itself, are a different matter. While they should not be restricted in the manner of employees working at a Mahalo office, I think there should be a set of protocols to follow for their participation. One of them should be not using the user submissions for content they are gathering to sell to Mahalo. This may seem unfair, but I think it is necessary. The source for content Mahalo is purchasing from it's freelancers, should not be Mahalo users, who are being utilized as a resource on the sites own infrastructure. To allow this creates a real incentive for freelancers to game the system.

In the interest of full disclosure, Mahalo Answers should post a full list of all employee accounts. I would also like to see an average for tips received from Mahalo employees vs non-Mahalo employees, and an explanation where the M$ that were given to "jump start" the system came form, and if they were ever purchased, or just created by the company out of thin air.

Sincerely, Bud.

Correction on "Mary"

In my original post, highlighting how Mahalo can be gamed, I referenced a Mahalo user named "Mary". This was a mistake. The correct name is "Sara". I have been told there is no Mary on staff, at all, which I am thankful for. I apologize for this error.

It should also be mentioned that the "tips given" counts on the profiles are not at all accurate.

As an example, my own states $3, when, in fact, I have given out $20. I am not sure if this is an oversight, or something deliberate.  It certainly makes it less difficult for users to see the gaming going on, as the stats for received tips are correct, but given are skewed.  I invite those who are skeptical to look into the matter for themselves and see where the large tips are actually going. Compare the reported "tips given" when your own count per the user list, and note the result. Then follow the money trail.  My purpose in exposing the potential for gaming, and dmeonstrating a result is only to begin the discussion on how the system is being abused. Those users who feel cheated, need to make up their own minds, and do their own research.

Profiteering At Mahalo

Jason's mantra seems to be "show me the money". Whether it's twitter for profit, or turning his Answer site into a advertising venture by plugging products himself in the form of a question.  Is it any wonder that Mahalo is running a system that is being called a "money making scheme" by some.