Most people don't know it, but online genealogy is big business
on the Internet. One of the leaders, Ancestry.com, has a market
cap approaching $2 billion. But the company in the space
everyone is scared of is Israel-based MyHeritage.
now has 57 million registered users, 18 million family trees,
800 million profiles, hundreds of millions of photos and adds
almost a million new profiles each day, Founder/CEO Gilad
Japhet told us in an interview.
company, which has close to a hundred employees, is profitable
and backed by blue-chip investors like Facebook-backerAccel
Ventures. For MyHeritage, the sky seems to be the limit.
wasn't always that way, however. For the first three years
when MyHeritage got started, no one would touch it. Here's
founder Gilad Japhet has been passionate about genealogy since
forever, he tells us. He was mapping his family's origins when
he was 13. He got his start in an unrelated field, however:
computer security. While studying computer science at
Technion, the hardcore Israeli engineering school, he worked
nights at antivirus company BRM. AfterSymantecbought
that company's technology, he joined another computer security
startup and worked in Silicon Valley for a couple years.
getting married, Japhet cashed in his stock options and took
six months off, in part to study his family's history. In a
classic entrepreneurial move, he started coding his own
genealogy software because he was frustrated with the existing
services, and then decided to build a company around it. He
named the company Inbaltech after his daughter Inbal.
was only one problem: this was 2002, the worst ever time to
raise money for a consumer internet company. Particularly in
Israel, no slouch when it comes to startup funding, but where
investors ran away from consumer internet after the dotcom
bust. Particularly for a genealogy company, which most people
didn't think is a big market. Particularly for a first-time
entrepreneur who'd never worked in genealogyorconsumer
were no social networks, not even blogs, and the world did not
recognize the power of genealogy and family history as the
bond that connects all people worldwide. Family is the most
natural social unit, but people did not realize yet how the
Internet will transform the social world and the importance
that families play in that," Japhet told us.
nevertheless soldiered on. He built a team of ten people and
bootstrapped the company. MyHeritage, which at first was
download software, grew very popular. One of the reasons it
was so popular was because it was free, which didn't exactly
warm potential investors to the company. When money began to
run out, Japhet stopped taking a paycheck. And then mortgaged
his house. And then his wife freaked out.
In 2005, Japhet was able to scrape by angel funding and keep the
lights on. MyHeritage, now a website on top of a piece of
software, was roaring. The service went from free to freemium,
with a basic free version and premium subscriptions.
tells us the free version of MyHeritage was better than all
the other (paid) services on the market at that time. But
beyond a great product, being global from day one helped as
well, he says: "The first version of the product in 2003 was
already available in 6 languages, then quickly up to 16, and
support for multiple languages and cultures was built into the
DNA of the company from day one. That allowed the company to
have a strong penetration globally and in many countries we
were (and in some cases still are) the only properly localized
the way, MyHeritage had to fend off a company whose birth
story is the antithesis of his own: Geni. Geni was founded in
Sacks, the former COO ofPayPal.
Sacks is part of the PayPal mafia of entrepreneurs who led the
payments company to a $1.5 sale toeBayand
now build and invest in some of the biggest companies in
Hoffmanis part of the PayPal mafia.
Facebook's first investorPeter
Thielis the "Godfather" of the PayPal
mafia. While Japhet had to scrape by for nearly three years
without funding, Geni launched right out of the gate with big
VC funding and a $100 million valuation.
failed to make a dent in MyHeritage's growth. Now Sacks has
moved on toYammer,
a very successful enterprise social network. Japhet calls
Sacks "excellent" and Geni "very high quality", but says it
didn't get very far because its founder didn't have his
consuming interest in genealogy. In particular, Geni doesn't
support existing family trees—you have to build or type in
your family tree from scratch instead of just being able to
upload your work like on MyHeritage. "People who've already
built their tree were not amused," Japhet says with
understatement. What's more, Geni wasn't global. "It took them
2-3 years from launch to add support for any language other
than English," Japhet says. That matters a lot when your
family tree may be spread over several countries and the site
with the most family tree data can build a network effect.
in all, MyHeritage's story is that impressive entrepreneurial
story: someone with a passion who just won't give up, and who
beat bigger and badder incumbents.