Inside the mind of Jason Calacanis

By Adam L. Penenberg , written on January 30, 2014

From The News Desk

Not long after Jason Calacanis raised $20 million in venture capital for Mahalo, his startup that was initially predicated on human-powered search, I flew to Los Angeles to profile him for a magazine. I'm a native New Yorker who earlier in life had bicycled halfway around the world and hitchhiked the rest. When I finally settled in Manhattan's East Village in my late 20s, I didn't have much need for a car, which meant I didn't feel compelled to learn how to drive. Shortly before landing at LAX, though, I finally went through the machinations to receiving my license.

Needless to say, I was a terrible driver. So terrible, in fact, that when I pulled into Mahalo's parking lot and found only one small parking spot available, I decided to go for it, pulling my rental car in between a pickup truck and an SUV. I was feeling pretty good about myself until I realized I was squeezed in so tightly I couldn't open any doors. When I tried to pull out I saw the driver's side mirror had wrapped around the pickup truck's, and my left front wheel was lodged in its right front wheel.

Not wanting to make a bad situation worse, I crawled out of the hatchback, and wandered inside Mahalo's offices, where I tracked down Calacanis. Skipping any pleasantries I asked, "Are you a good driver?"

"I'm a great driver!" he chirped.

"Follow me," I said.

When he saw the situation he laughed so hard he doubled over. "What the fuck did you do?"

I handed him the keys, and Calacanis slithered through the hatchback and into the front seat. He revved the engine, rolled down the window, torqued the steering wheel, and slowly backed out while simultaneously untangling the mirrors -- and he did it without causing damage to any of the cars. Punctuating his success, he floored it, and, tires squealing, shot into another parking space.

You see, that's the thing about Jason Calacanis, a sometime Pando contributor. He may be full of bluster. He can't stop talking (often about himself). He's arrogant, overbearing, at times grating, maybe even a smidge crazy. His former online foil, Nick Denton of Gawker fame, once described him as "brash," "ballsy," "publicity-hungry," and "the Web's answer to Donald Trump," all in the same paragraph.

But Calacanis is also smart, savvy, driven, adept at many things, passionate, and persuasive. Underestimate him at your peril.

It’s funny that a guy who talks so much and at such length has founded a news service based on brevity.

This leads me to his latest venture, Inside, a mobile news curation app. His plan is to offer users hundreds of news updates every day, which his staff of writers compile into 300-character shorts, about the length of two tweets. It's funny that a guy who talks so much and at such length has founded a news service based on brevity. Editors identify the top 25 stories each day and users can tune into topics of interest. By year's end, Calacanis wants his staff to create 10,000 topics.

Actually, Inside is just Mahalo 2.0 (or 3.0 or even 4.0, if you count the number of times it pivoted). Both have human curation in their DNA. With Mahalo, Calcanis hired a team of people to write prefabricated results to the 15,000 most popular search terms. He got the idea from his fiancee, who, when planning their wedding in Hawaii, compiled an email to guests with links to places to stay and things to do. Why, Calacanis wondered, couldn't search engines do that?

He strode into a meeting with Michael Moritz of Sequoia, the Menlo Park VC firm, carrying printouts for "iPod" and "Kauai vacation" he'd gleaned from various search engines, taped them to a wall, where some unfurled for 16 pages or more. Next to them, he put his own single sheet of handmade results. "Which ones are the best?" he asked. He mentioned that a 1-percent marketshare in search would translate into a billion dollar business. Then he repeated this for other investors such as Mark Cuban, Elon Musk, and Fred Wilson of Union Square Ventures. It took him all of 10 days to close a $20 million round.

In launching both companies, Calacanis appears to be drawing from the same playbook. In each instance he has identified enemies to fight. With Mahalo it was search engine optimizers (or in Calacanis's parlance "slime buckets," "snake-oil salesmen" and "low-class idiots") responsible for "polluting" the Web with "spam" sites that Google inadvertently pushed high in its search results -- so when you search for vacations in Madrid you ended up hijacked to a site hawking Viagra. With Inside, Calacanis points the finger at Buzzfeed and Business Insider, which he accuses of deceptive practices like link-baiting and misleading headlines.

Perhaps Calacanis's need for an enemy to spar with can be traced to his roots in Brooklyn, NY, where he was raised. Not today's hipster-saturated, artisanal pickle and mayonnaise, fast-gentrifying Brooklyn, the setting for HBO's "Girls" -- a locale that has suddenly become hip and expensive. Calacanis hails from the working class Bay Ridge, Brooklyn of decades of yore. As a kid, he studied Tae Kwon Do, earning a black belt. He mopped blood off the floor of his father's bar then his mother, an emergency-room nurse, would stitch up the combatants at a local hospital. A real family affair.

In the mid 1990s and fresh out of college, he noticed the emergence of a tech community in New York and decided to start his own newsletter. The first few issues he wrote entirely himself, typos, malapropisms, and grammatical errors and all, photocopied them and went around to newsstands where he concealed the glossy magazines with his grimy, 16-page publication. He called his brainchild Silicon Alley Reporter. Its growth mirrored that of the community it covered, and in 1999 he was offered $25 million for the magazine and its highly profitable conference business. He turned it down and the dot com bubble popped. Soon after, Silicon Alley Reporter was in trouble, and Calacanis was forced to lay off staff. He did everything he could to ride out the storm, but eventually it went bankrupt.

The ensuing months were a low point for Calacanis. He was broke, and when he travelled he crashed on friends' couches. Then he noticed that blogging was taking off and came up with an ingenious idea for a media startup. Instead of starting his own blog, cultivating an audience, and hoping that it would eventually grow into a sizable business, he launched an empire made up of dozens, and eventually hundreds, of one- or two-man publications. All he needed was for each one to be a little profitable, thereby distributing the risk. If 100 blogs each made an average of $100,000 a year, he'd have himself a $10 million business. And Weblogs, Inc. was born. Its most famous title, Engadget, joined blogs covering everything from cars to video games. Within a year and a half, Calacanis unloaded the company to AOL for upwards of $25 million.

He had learned from his mistake, and that's why I think it would be foolish to bet against his latest venture, Inside. In some ways, the preceding one, Mahalo, may have been aberration. Calacanis was tempted beyond his core area of expertise -- media. After it became clear he couldn't compete with Google, even for a sliver of the search market, he pivoted and Mahalo became a content farm, racing to compete with such lusterless media companies as Associated Content and Demand Media, which all lived and died by how well they could juice their search rankings. "It was a race to the bottom," Calacanis told me. Then Google changed its algorithms, and media plays like these saw their traffic decline dramatically.

While it hurt for Calacanis to admit it, he also knew that Mahalo had it coming. A round of layoffs ensued and he shifted strategies once again, turning Mahalo into a high-quality educational app maker. While the company had successes -- a guitar app that has been lauded for its quality of instruction, for instance -- Mahalo would never become the mega-company he dreamed of.

He’s the kind of guy who can debate four sides of an issue and win all four.

Now he's back in the media saddle again after paying $60,000 for the domain -- a bargain. Compare that to the $600,000 Jason Goldman paid for, a domain that was appraised at $1 million. There are a lot of reasons why Inside might not work. As my colleague David Holmes, pointed out, curated news apps is already a crowded field, with Circa, Flipboard, Prismatic, and Zite. On the Web side, Newser offers bite-sized chunks of news, with mixed success. While they were popular a few years ago, the percentage of tablet users accessing curated news apps dropped between 2011 and 2012, according to Pew Research, which has not released figures for 2013. To me, Inside looks like a better-organized and curated Twitter stream.

It's not something I want or need. I get why those in the financial industry need up-to-the-minute news, the shorter and more to the point, the better. But why do the rest of us?

Still, Calacanis can be persuasive. He's the kind of guy who can debate four sides of an issue and win all four. He's had one big winner -- Weblogs, inc. -- and is due for another. He spends much of his time involved with his Launch Festival. He knows what ideas are out there and has shown he can build a successful media business from scratch.

Plus, he once got my car out of a tight spot.

So, like I said, I wouldn't bet against him.

[illustration by Brad Jonas for Pando]