Internet Winter Hits Mahalo; Cuts 10% Of Staff

In a post on his blog, Mahalo CEO Jason Calacanis has announced that his human powered search engine has laid off 10% of its staff. Along with the layoffs Calacanis writes that the company will be doing some “smart things” to help cut costs, including outsourcing much of its editorial department to freelancers instead of in-house staff. Calacanis pegs the number of full-time staff cut at around 5 or 6, but that number could change depending on how well the freelancers work out for the company.

From his blog post:

While I anticipated and prepared for the ‘internet winter’ we’re now facing (you’ve read my posts and e-mails about the startup depression I’m sure), I failed to realize how bad the situation would get. It’s much worse than I thought it would be, and ignoring market conditions today would only mean deeper cuts down the road.

It’s my responsibility to make this hard decision and I don’t take it lightly. To the people impacted I’m very sorry that I wasn’t able to anticipate this better. It’s my fault and I’m sorry that you’ve got to bear the burden of my inability to better prepare.

The news isn’t surprising given the waves of layoffs we’ve been seeing in the current economic climate, especially given the fact that Mahalo investor Sequoia Capital recently presented the CEOs of its portfolio companies with a PowerPoint Presentation of Doom emphasizing the need to cut costs.

Aside from the grim tone about the economy, Calacanis does show optimism for the future of Mahalo. The cost-saving measures will give the company an extra year of “runway”, allowing Mahalo to stay afloat until 2012 without making any revenue, he says (which should hopefully be more than enough time to weather the storm).

Disclosure: Jason Calacanis and Mahalo are partners of ours in putting on the TechCrunch50 conference.