Trying to chip away at Google Inc.'s Web search empire, a new Santa Monica company is pitting human against machine.
While Google has thousands of computers crunching complex algorithms to sift through the Web, Mahalo Inc. employs about 40 people to handcraft search results. The idea is to add a human touch to the highly automated process of helping people find what they're looking for online.
"Google indexes the world's information," Mahalo founder Jason Calacanis said. "We're curating the world's information."
Calacanis, an entrepreneur who has sold companies to AOL and Dow Jones & Co., knows that it's silly to try to unseat Google. Instead, he wants to siphon a small but lucrative part of the $6.8-billion U.S. search market that Google dominates by providing answers to only the most-popular queries, such as "Paris hotels" and "flat-panel TV."
Mahalo, named after the Hawaiian word for "thank you," has powerful financial backers, including News Corp., CBS Corp. and Sequoia Capital, a Silicon Valley venture firm that backed the likes of Google and Yahoo Inc. The company plans to make money through online ads.
Working out of a former factory on Colorado Avenue, Mahalo's "guides" have assembled pages for more than 4,000 search terms that they think people want most. They are aiming to complete 10,000 by the end of the year.
That's a far cry from Google, which indexes billions of Web pages to instantly return an almost-infinite number of results to queries as wide-ranging as "Norwegian wood instrument" and "wayward whales" -- terms that were not covered by Mahalo's guides as of Wednesday, when the firm launched an early version of its service. For results it doesn't offer, Mahalo links to the relevant answers on Google.
The reliance on people to organize the Web hearkens back to the early to mid-1990s, when Yahoo and others had employees sift through Web pages and assemble them into directories, said David Hallerman, analyst with EMarketer Inc. But the sheer size and constantly changing nature of the Web quickly made computers better suited for that task.
Ask.com, the search engine formerly known as Ask Jeeves, for years tried using hundreds of editors to compile results but abandoned the approach in favor of computer code.
"We moved away from that specifically because we couldn't be accurate enough and comprehensive enough," Ask.com Chief Executive Jim Lanzone said. "Running a search engine is a very humbling experience because you realize very quickly how hard it is to do well."
The propensity of some commercial websites to try to boost their rankings by outsmarting search engines has polluted some results, making them less useful, said James Lamberti, senior vice president of ComScore Inc. That creates an opportunity for companies that can promise a better experience.
Humans are harder to fool, said Danny Sullivan, editor of industry website SearchEngineLand.com.
Still, analysts said the human factor that Mahalo counted as its greatest asset might turn out to be its biggest limitation. "Will the human beings be able to keep up with everything?" Sullivan asked.
Calacanis, a New York native who lives in Brentwood, said Mahalo didn't have to keep up with everything -- just things that most interest people.
"It will take some time to complete, but when it's done, it will be glorious," he said. "Until then, we invite people to compare our results with any search engine out there. For results that we do have, they're going to be five to 10 times better because humans have thought about them."
Mahalo faces other challenges. With editors behind each search, there's the opportunity for bias, said Chris Winfield, president of 10e20, a New York search-marketing firm.
There's also Google, Yahoo, Microsoft Corp., IAC/InterActive Corp.'s Ask.com and Time Warner Inc.'s AOL, which operate the five biggest search engines. Last month, Google had a 50% share of U.S. searches, Yahoo had 27% and Microsoft had 10%, according to ComScore. Ask and AOL each had 5%.
On the other hand, Web surfers are fickle, said Charlene Li, analyst with Forrester Research. She said only a third of Google's users relied exclusively on that service -- most try a few search engines for the best results.
Some big names are betting on Calacanis by investing in Mahalo, including Dallas Mavericks owner Mark Cuban and PayPal co-founder Elon Musk. Calacanis won't say how much he has raised.
"You'll start to see Mahalo bring in revenue in a fairly significant way next year," when the site is scheduled to be officially launched, said Musk, CEO of SpaceX in El Segundo.
"Even if you're a relatively small player in search, that can still mean a company that's worth several billion dollars."
Begin text of infobox
Company: Mahalo.com Inc.
What: Human-powered search engine
Location: Santa Monica
Founder: Jason Calacanis, 36, who also co-founded Weblogs Inc. and Silicon Alley Reporter magazine.
Investors include: News Corp., CBS Corp., Elon Musk, Mark Cuban and Sequoia Capital, a Silicon Valley venture firm that also has funded Google Inc., Yahoo Inc. and YouTube.