Revered and reviled, online entrepreneur Jason Calacanis
is a straight-talker with a singular perspective on the Internet.

By Tom Dellner

Jason Calacanis is something of a polarizing personality. Controversy follows him. Blunt, brash and self-assured, Calacanis is a popular and prolific blogger and a coveted speaker. His blog postings and keynote addresses inspire or infuriate, depending on the audience's perspective. (He once famously proclaimed that "SEO is bullshit"--to a group of search professionals. More on that later.)

As for Calacanis's perspective, his is a point of view borne out of experience that makes him uniquely qualified to comment on all things Internet. He was sending digital messages across the globe while in college in the late '80s and early '90s--before many of us were familiar with fax machines. He's a serial Internet entrepreneur who has enjoyed wild successes and endured jarring disappointment. He's covered the industry as a print journalist and continues to publish via his blogs and streaming video. His latest venture--Mahalo.com--is a hugely ambitious effort in human-powered search.

Electronic Retailer recently conducted an exclusive interview with an engaging Calacanis, on topics ranging from the early days of e-commerce to today's "Internet environmental crisis."

Electronic Retailer: You've been involved with the Internet since its very infancy. What drew you to the industry before it was even established as a viable commercial space?

Jason Calacanis: I had always been into computers and was a network engineer, putting together networks back when ethernet was thick cables--not the computer cords we're used to now. I was the guy who'd crawl under your desk, crimp wires and create networks.

Then the Internet exploded. I knew the Internet, because we used to play around with it in college--sending messages to people halfway around the world. They used to take about 30 seconds to arrive; it was fascinating. Working at Sony, I started teaching people how to use this browser called Mosaic and then Netscape--even before it supported images; it was all text based. It was a matter of right place, right time for me, and I had incredible access to senior people in the industry.

I then founded Silicon Alley Reporter and went on to write about what my friends in New York were doing and it all took off from there in the mid-'90s.

ER: You've been on both sides of the fence, as an editor covering the industry and as a player in the industry regularly featured in the media. When you were on the media side in the mid-'90s, what were some of the hot-button topics of the day?

JC: Very early on, Prodigy, AOL, CompuServe--they weren't even giving users access to the Internet. I remember that was once a big issue facing AOL: whether or not they should grant access to the Internet.

The Internet was thought to be dangerous, insecure. Important data could be intercepted--people needed to be protected from this risk. And certain businesses wanted to protect themselves, as well. For example, AOL may have thought, why should we give people access? Now users could go directly to cocacola.com and then Coca-Cola wouldn't have to buy that keyword from us. AOL had a whole business built upon directing people around online. If you wanted your brand online, you had to pay AOL. With full access to the Internet, companies could just do their own thing. Sure, they'd have to pay a developer and set up a web server, and this was very expensive at the time--about $50,000. But it quickly got cheaper.

Another of the biggest issues early on was the commercialization of the web--whether it would or should actually evolve into a commercial medium and whether its users would trust it for e-commerce. The prevailing wisdom at the time was that it would not. No one was running the Internet--because no one was in charge, it would be chaos and no one would trust it for business transactions.

It was a very interesting moment in time. I remember going to different industry events at the time and a large community of people really thought the Internet wasn't going to work out. This includes journalists at The New York Times who wrote that people would never put their credit card information on the Internet. It's amazing that something so obvious to us now was anything but at the time. People couldn't imagine something like this, not owned by or under direct control of some huge corporation, succeeding. For a lot of people, the idea of a loose network of connected sites didn't make any sense--it just didn't seem commercially viable.

And, of course, the was another aspect to this: people who were the early users of the Internet--the first true believers in the web--were very wary of anyone who might try to do something commercial on the Internet. I remember people protesting when Hotwire put up a Zima ad. The first ads on the Internet really pissed people off, big time.

ER: If you were a journalist today, what stories would you be most interested in covering?

JC: That's a great question. Ironically, trust and the Internet is again a big issue. The same things that were once the Internet's greatest strengths, leading to so much innovation--that it was free, uncontrolled and unregulated--are now a weakness. For example, people wanting to game the systems can now search the Internet for any mention of a thousand really expensive keywords, scrape the content, register thousands of domains, re-assemble pages, get them hosted, put Google Adsense or Yahoo Publisher Network ads on them and then spam the hell out of everybody--and there's no one to stop them.

This sort of behavior is rampant now and it's emblematic of a weird side effect borne out of the openness of the Internet. It's an ethics system based on a sort-of technological entitlement: if I can technically achieve something, then it's OK and just. It's a real problem and has led to massive pollution on the web. We're facing an Internet environmental crisis.

We've set up a system where anyone can publish, and we live and die by it. Now, in many regards, we're dying by it because of all the people out there trying to game the system with some get-rich-quick scheme. Sixty percent of people don't trust search now--that's up 10 percent from just last year. Google did a study that showed that approximately 1.5 percent of their search results had malware on them. So you're pretty much assured that if you do numerous searches, you're going to be presented with malware or spyware.

ER: You see scammers and bad actors in any industry, but this upside-down ethics system seems to be somewhat unique to the Internet.

JC: Nobody's watching in our industry. Everything's done at a distance behind a computer screen and there's no one policing the web. Other industries are more mature and there are people or agencies to police them. Ours is less mature, less controlled by its very nature. I think if there were more controls, people would behave better. But if there were more controls, the Internet certainly wouldn't have grown as fast or be as ripe for opportunity and innovation as it is.

While I don't want controls, I certainly wish people would think more about what they're doing on the Internet. I recently spoke to a group of affiliate marketers, and I knew some of them engaged in the types of schemes I mentioned earlier. In the speech, I tried to sell them on the concept of, instead of working 12 hours a day to build a hundred sites and churning stuff out to game the system, slow down a little bit and invest in something on a longer-term scale. It's harder this way. It can take a long time to build a quality product and achieve profitability. Short-term thinking is like a fad diet that's not healthy for you and doesn't work anyway over the long haul. But it's behind all of the affiliate spam and black-hat SEO stuff that we see.

ER: What other trends or issues do you see today that are of particular interest to you?

JC: The globalization of the Internet. It has always been the case that U.S. Internet entrepreneurs would look out at the rest of the world and see all their good ideas basically stolen. Germany was notorious for this. eBay, Facebook, Digg, Weblogs, Inc.--they all were ripped off over there. People literally copied ideas. And it wasn't just Germany; it was throughout the world.

But very recently, something has switched. Sure, you still see blatant knock-offs of American products, but now we're starting to see innovation occur on the Internet outside the United States--that then becomes global in nature. This is a very new phenomenon. Skype is the first that comes to mind. Also, the idea for Yahoo Answers came from a Korean site. There are many other ideas that are out there, but haven't made it here yet--but they will.

ER: What led to this American dominance on the Internet?

JC: The lock on innovation that the U.S. had on the Internet lasted so long it was just unbelievable. I think it was the result of the outrageous spending during the dot-com bubble. People are critical of this overspending, but it led to many of the huge breakaway hits that became global brands. People saw the potential of the Internet and bet big. And for some companies, it worked out.

ER: What do you make of companies scrambling to take advantage of the marketing potential of social media?

JC: If it's authentic and interesting, it doesn't really feel like marketing to the user. Overemphasize the advertising dimension and people will find what you're doing really boring and tune out. You are as interesting as you make yourself, and if you're not interesting, then people will not follow what you're doing.

ER: You've caught some heat for a few rather controversial remarks. There's the infamous "SEO is bullshit" remark at SES Chicago in 2006 and your recent address at the Affiliate Summit West where you basically informed the audience that the rest of the industry saw them as the bottom of the food chain, wired only to make the quick buck.

JC: This was all said for effect. I certainly didn't mean to paint all SEO people or affiliate marketers with the same brush--there are admirable professionals in each industry. Basically, it comes down to providing value. An affiliate marketer may take an hour to publish a five-page website about the Amazon Kindle and then pay people to obtain a bunch of inbound links to the site. Now this weak site--because they've gamed the system by paying for links instead of earning them organically based on the site's quality--is going to rank higher than better sites. To me, this falls on the black hat side of the fence. There's no real value provided. Affiliate sites built for the sole purpose of enriching the marketer are clearly not adding value.

Then you have those semi-altruistic sites like Wikipedia, or a noteworthy blog where the blogger does lots of research and puts a lot of money, time and effort into it. These are clearly white hat.

But there's a big swath of gray.

ER: What are some other marketing techniques that bother you?

JC: Paid posting--at least if it's not disclosed--is not cool. Spam is another; obviously, e-mail is so FUBAR (if you'll pardon the expression) it's ridiculous. We're also starting to see some YouTube spam now. I suppose it's deception that gets me the most upset. There are agencies that do buzz or word-of-mouth marketing. Basically, you hire them and they go out into online communities and elsewhere and pretend they're really into your product. That's pretty cheesy.

ER: Tell us about your new venture, Mahalo.com, the human-powered search engine.

JC: It's basically a concise version of Google search results combined with a concise version of a Wikipedia page, on any topic. When you look at people's behavior on Wikipedia, they tend to read the first sentence and then scan the rest of the page for facts. So we build tight, fast-fact, bullet-point guide notes on each topic--it's not as intimidating as a 20-page Wikipedia entry. Then we have a list of links on each topic, organized by categories like news, history and background, educational resources, photos and video, blogs and forums, merchandise and the like. Being human filtered, the results list is spam free and better organized than those produced by a machine search. Put these human-filtered results and the concise guide notes together and something magical happens. You end up with the best starting place on the Internet for any topic.

ER: But having a staff actually build these pages--it seems like a daunting task. What sort of progress have you made?

JC: So far we've built out more than 45,000 pages. And we have four million people coming every month, which is pretty good considering we only launched in May of last year. We have a ways to go, but it looks like it's going to work, which is pretty exciting for all of us.

ER: Your career is that of a serial Internet entrepreneur. Do you have anything else that you're itching to do, or will you settle in at Mahalo for awhile?

JC: I think this is something for the long haul. I did OK on the last couple ventures and I'm ready to do one that's not for sale. We want to build this out to be a Google, Yahoo or Wikipedia peer. It's going to take at least five years to get there, but I think we've got a shot. If this ends up being the last project that I ever do, that will be fine with me.