Mahalo cuts workforce by 10% after Google algorithm change drops traffic, report says

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Mahalo, a Santa Monica-based education website, has reportedly cut 10% of its employees.

In a recent e-mail to employees, company founder and CEO Jason Calacanis and Mahalo President Jason Rapp said the start-up trimmed a tenth of its workforce due to a reduction in traffic caused by Google’s change to its search algorithm, according to the blog CenterNetworks.

The Google changes were meant to push down low-quality sites in search results, but some unexpected websites such as Mahalo lost their ranking as well, the report said. With less traffic visiting Mahalo, revenue took a hit, the e-mail said, according to CenterNetworks.

Google officials were unavailable to comment on the report on Wednesday.

‘It’s hard not to be disappointed since we’ve been spending millions of dollars on producing highly professional content,’ Calacanis and Rapp wrote in the e-mail, according to the report. ‘In addition, we are re-evaluating our freelance content production, pausing it in the near term and determining how to best produce the high-quality educational material we aspire to in the long run. We are not, however, diminishing our video production efforts.’

The e-mail also said despite the cuts Google’s YouTube has encouraged Mahalo to keep producing videos that they post on the video website.

The YouTube videos are a key part of Mahalo’s tutorials on how to learn different tasks such as cooking, job skills, languages or how to play an instrument.

In late January, Mahalo shifted its focus toward online education from its previous focus as a human-powered search engine. The one carryover was a community-based question and answer function that is now a part of Mahalo’s lesson plans.

Mahalo’s move to cut 10% of its employees is dramatic. In January, the company planned to add about 100 new workers by the end of 2011, Calacanis told the Technology Blog in January.

During the second half of 2010, Mahalo’s employee count grew from 40 to 104, he said in January.

When contacted by telephone Wednesday, Calacanis declined to comment on the reported job cuts. But he confirmed the cuts on his Twitter feed.

On Wednesday morning, in response to a question from a fellow Twitter user named Toby Howell as to whether or not the Mahalo layoffs were Calacanis’ fault, the CEO responded:

Later in the day, Calacanis tweeted at Charlie Sheen, an actor who has had some public troubles of his own the last week, writing:

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-- Nathan Olivarez-Giles

twitter.com/nateog

This afternoon Jason and Mahalo president Jason Rapp sent out a mass email noting that, based on the Google changes, they will be reducing Mahalo staff headcount immediately by 10%. Here are a few key points directly from Jason and Jason:

• (re: the google change) Despite those efforts, unfortunately, the Google changes have led to a
  significant dip in our traffic and revenue. It’s hard not to be disappointed since we’ve been spending millions of
  dollars on producing highly professional content.
• Today we have eliminated a handful of positions in the company (about 10%), and we’ve cut a number of non-essential services we provide internally. In addition, we are re-evaluating our freelance content
  production, pausing it in the near term and determining how to best produce the high-quality educational material we aspire to in the long run. We are not, however, diminishing our video production efforts.
• Interestingly, while the search side of Google has impacted us negatively, Google’s video unit (YouTube) continues to be our strong partner, encouraging us to ramp up our video production and publish even more of our expert video lessons with them.

Read more: http://www.centernetworks.com/mahalo-reduces-headcount-google-algo-change#ixzz1FUqosKfn