A Keynote Conversation with Danny Sullivan and Jason Calacanis

Jason Calacanis ruffles feathers for a living. And what a living it has become. After selling Weblogs, Inc. for an estimated $30 million, he hung around AOL long enough to be handed a plum assignment: turn Netscape.com into a social news site. (See the spike in news items about Calacanis in June 2006, courtesy Topix.net.) Now, he’s left that company to head up a top-secret research post as the Entrepreneur-in-Action at Sequoia Capital, a leading VC firm.

Calacanis’ enemies come in two flavors—general haters, and archenemies. It’s not clear what caused the feud between him and rival blog kingpin Denton (we’re guessing it’s something one or the other said, and/or something one or the other did).

At Search Engine Strategies Chicago’s keynote interview on December 5, conference chair Danny Sullivan asked online industry gadfly Jason Calacanis a series of questions, some provocative. Would Calacanis bite?

In hallway chatter, there had been anticipation that this “controversial character” would be a “wind him up and let him go” type speaker. Some let it be known that he’d probably pop off and be offensive.

Sullivan warmed the crowd by reminding us of Calacanis’ early start in the business with Silicon Alley Reporter in 1996, and the founding of Weblogs, Inc. (which boasts some winners like Engadget) in 2003.

As GM at Netscape, Calacanis had joked and boasted that he might stay if he got to rise to President in short order. The new assignment gave reporters and observers another excuse to attack. Why the furor over someone who only got a little bit rich? Wow, this guy must have rubbed just about everyone the wrong way.

Even compliments are festooned with digs, as in John Heilemann’s: “Apart from his outfit—a highly AOL-friendly ensemble of blue blazer, white dress shirt, and jeans—he looks little different (if perhaps marginally better-fed) than he did in the old days.” Better-fed? Keeping in mind, of course, that Heilemann’s book about Bill Gates was entitled Pride Before the Fall, and his forthcoming book, The Valley, is accused of having a 2009 release date.

Perhaps Calacanis attracts jeers as the embodiment of Web 2.0 “fluff”; as someone who couldn’t even capitalize on the first bubble, but managed to make a mint on the second with something most people don’t see value in; isn’t he proof that it’s all smoke and mirrors? So, he brags about his success, but can’t you see? It’s all going to come crashing down.

For pundits and haters, that’s what it must be. Calacanis is guilty of pride, to say nothing of ambition.

Already putting Netscape behind him, Calacanis told Sullivan and the SES crowd that he had moved onto the entrepreneur-in-action position at Sequoia. This meant he gets to “build a company.” It sounds, in essence, that he’s been given a founder stake in a new company he hasn’t even launched or fully mapped out yet. Cool experiment. I, for one, can’t wait to see how it pans out. (Other VC firms are nervously looking on, too, hoping their public pronunciations of dismay at Sequoia’s odd bet won’t come back on them looking silly.)

But what did he actually do at Netscape? That conversation alone would have been interesting, had it been extended for the full hour. Calacanis—like a select few others—got to get in the middle of an emerging tide of user-generated (or user-reviewed) content. As the face of news changes, as citizen media and peer sharing shape our consumption habits (if by “we”, we mean 15-year-olds, but it’s rubbing off on the rest of us, too), it allows the architects of services like Digg, Wikipedia, and the new Netscape to work/play at a grand experiment: understanding what makes volunteer content builders and social news creators and consumers tick. How to ensure quality editorial control? How to induce more participation without bias?

Calacanis painted a picture of the early days of the browsable web; surprisingly, it looks like he did this in order to place himself (at Netscape’s helm) as a chapter in Netscape’s rich history. “I remember Mosaic, when each browser feature would be like colossal,” he recalled. “Then came Firefox.” Calacanis is a concise storyteller, cutting right to the chase. “I’m then left with a portal that gets 1-2 million visitors a day. It’s generic, just average.”

In building the new Netscape, Calacanis stressed that they “didn’t seek to copy Digg” per se. After all, “Digg got it from del.ic.ious, which got it from Furl.” In working on the project he soon learned: “AOL is a big company. I couldn’t act like a startup guy.”

A key enemy of any social news site, Calacanis soon learned, is “SEO Blackhats” who will game systems to get their links to bubble to the top. Well, of course. These would be the same black hats who infiltrated, or tried to infiltrate, the Open Directory Project, also ironically an AOL acquisition. After enough of these rise-and-fall open content plays, you start to wonder if maybe that simplistic Heilemann pride-fall motif isn’t more or less all you need. If you build a content empire on underpaid-other-people’s work, it’s bound to be blown up by spammers… isn’t it?

Not necessarily so, as increasingly sophisticated developers of social media have discovered. More sophisticated inducements to policing quality (the wiki ethos, essentially) along with paid editorial controls and improving algorithmic methods, may well keep spam at bay in the future, and hopefully, provide incentives for the creators and raters of quality content.

In any case, the Netscape experiment reinforced Calacanis’ long-held belief that “SEO is bullshit.” Instead, “make a clean page, good content—that should be enough.” Sullivan gently tried to introduce concepts of indexing barriers and other needs for SEO professionals, some of which Calacanis conceded.

Sounding not unlike Seth Godin, Calacanis continued, referring to “splogs” (scraped nonsense blogs angling for placement in search indexes) as the worst case scenario: “Marketers are destroyers of a beautiful city.” In short, Calacanis surveys the tragedy of the commons exploding all around him, and vows to do better. Audience members whisper that he has contributed his share of junk.

Whatever he may have done to deserve the hypocrite tag, Calacanis draws a line in the sand at worst practices: “I feel like I have to say something when something like PayPerPost comes along. It’s like, if your city is Chicago and someone throws a piece of junk in the road, you say, ‘what the fuck are you doing?'”

Because he’d already alienated 70% of the audience with the “SEO is BS” comment, the line didn’t get laughs.

Moving onto a distinctive feature of the new Netscape—”I take credit for paying people to work”—Calacanis outlined his scheme whereby permanent editors (or “curators”) would be paid $1,000 or so to review 50 articles. Good idea, in my book. By making compensation explicit for the core reviewers, it’s possible that a level of continuity emerges such that quality improves and the permanent people are seen as credible guardians of the rules of the game. (Recall the unclear pyramid structure at the Open Directory, which promoted mid-level editors to powerful positions without pay, and then eventually began paying top “meta editors” as full-time staff, in a mysterious process that left users and site submitters suspicious.)

Consumer review startups like Yelp are now jumping all over this idea of paying people to rate stuff—given the lack of ratings that may result if users don’t spontaneously pitch in at first. It remains to be seen whether this, too, will create a backlash and accusations of bias. But personally, I’d rather see explicitly-induced (paid, disclosed) contributions mixed with community-oriented action, rather than a steady diet of mysterious under-the-table motivations.

And then there are copycat sites where the founder’s 30 friends review a thousand restaurants they’ve never been to, one by one, by hand… because they see local search and review sites being funded, and people like Jason Calacanis (who actually did real stuff, to be clear) getting rich. How sad. One step up from a splog, at best.

Sullivan really shouldn’t have, but he got Calacanis to play word association. The first few things that came out of his mouth were cautious and respectful, and you got the feeling he was laboring to be statesmanlike. Then the shit hit the fan. Here’s the transcript:

Digg: “Brilliant”
Google: “Brilliant and unstoppable and good.”
AOL: (long sigh, pregnant pause) “Transition.”
Techcrunch: “Brilliant, opinionated, more right than wrong.”
Spam: “Evil, die, die.”
Netscape: “The future.”
SEO: (shrug) “Keep it simple.”
Podcasting: “Addictive.”
AdSense: “I love you.” (makes kissy sounds)

“The day we got to $2,600 (ad revenue in a day, at Weblogs, Inc.) we said, hmm, I bet we could make $1,000,000 from this. Then Jensense did an interview with us the day we hit it,” he recalled.

Oh yes, the word association game’s coup de grâce:

Valleywag: “Liar, slime, evil, idiot, stupid.”

And finally:

Jason Calacanis: (thinking sounds—tshh tshh tshhh) (long pause) “I like to work, I’m always kinda striving to figure out the next thing.”

So what’s he up to at Sequioa? No one’s saying yet. But I did some digging (which isn’t hard when people send you stuff). Calacanis appears to be hiring, and planning to study some phenomena that could be applied not only to whatever company it is he’ll be starting up, but maybe to a number of Sequoia’s other portfolio companies as well.

The initiative is sure to be scientific, far-reaching, and profitable. But this cocky East Coast guy will surely crash and burn soon, won’t he? Don’t bet on it.

Andrew Goodman is the founder and principal of Page Zero Media and author of Winning Results with Google AdWords.

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