This Israeli startup has more profiles than Facebook (and no bots among them): the MyHeritage story
The Tel Aviv startup scene was recently named the number 2 tech hub in the world in a report by Startup Genome and Telefonica. It also counts as a rare success story of government intervention to kickstart a tech scene in Josh Lerner’s classic about the subject: ‘Boulevard of Broken Dreams. Why Public Efforts to Boost Entrepreneurship and Venture Capital Have Failed’.
The first public fund that the Israeli government set up in 1992 (Yozma Venture Capital) was started expressly with the goal of attracting foreign investors and even “actively discouraged Israeli financiers from participating in its programs.”
It is precisely because it succeeded in attracting all that foreign know how that the Yozma Venture Capital fund became a success beyond anyone’s wildest dreams, Lerner writes:
“One assessment concluded that fully 60 percent of the entrepreneurs in prior programs had been successful in meeting their technical goals but nonetheless failed because the entrepreneurs were unable to market their products or raise capital for further development. Foreign expertise was seen as key to overcoming this problem.” (p. 156)
Today, when you visit Tel Aviv, you can see construction sites everywhere, building huge towers on the seaside looking out over Tel Aviv’s surf beach (photo: Israel dream, Flickr), but even more so to the east and the north of Tel Aviv – Israel’s Silicon Valley.
I recently met Eldad Ben Tora of BlueSnap, who introduced me to a few interesting people in Tel Aviv to talk about their experiences building a company. One of the more intriguing stories he sold me on was the story of a startup with more profiles than Facebook (1.6 billion, to be precise), called MyHeritage.
The catch is that most of those profiles are for dead people, and not active users. On the other hand, they probably have less of a bot problem than Facebook, since those long dead ancestors can’t exactly exchange IM’s.
So that’s why I found myself on a windy afternoon on a road heading west from Tel Aviv, on a rented Vespa, hoping that when they said “fifteen minutes from the city center” was, you know, actually fifteen minutes from the center. (It was 25). I was greeted at the offices of MyHeritage by Ori Soen, the CMO of the company, who showed me the huge roof terrace that overlooks the landing strip of Tel Aviv airport. “We saw Air Force One land here a few weeks ago.”
MyHeritage was founded by an avid genealogist called Gilad Japhet. He had been working on his family tree since he was 13. Growing up and pursuing a career in tech, he grew frustrated with the lack of decent tools for genealogy, so he started building a tool himself – and quit his job for it.
There are, says Soen, two kinds of genealogy software. The two kinds of software reflect the two main tasks that genealogists have to perform: the first is to maintain the family tree, the second to confirm that your tree is factually correct.
“You have one kind of software for the hardcore genealogists, who spend days in libraries, sifting through stacks of photos and thumbing old records. The other type are the online “libraries” of records where you can simply order records or photos and have copies e-mailed to you, like Ancestry.com.”
When it started in 2005, MyHeritage was a piece of desktop software more geared towards the hardcore set – download, install, start building your “tree” with ancestors. You could also link records and photos to your tree and create an online backup. The leap came when MyHeritage shifted its focus online and allowed people to upload their tree to the web and share it with family and other relatives.
97 percent accurarcy
“What we did was bring a deep tech angle to all this,” says Soen. “Once you grow a tree, we have technology not only to search other trees (called Smart Matches), but also to find matches in records. My last name is SOEN, but we know that sometimes, especially in Eastern Europe, that name was spelled as SEON. I’m not going to be able to find that out for myself, but our software knows, and checks that name automatically for me. The system not only goes through known permutations of last names in different languages, but also compares your tree to other people’s trees to allow you to discover relatives. This way, thousands of people have found relatives they didn’t even know existed.”
“We currently provide 20 million smart matches every month – with a 97 per cent accuracy. It’s very rare that we tell you that we found a relative and it turns out that we’re wrong. We’re very, very proud of that. That’s our core value, and it requires some serious semantic tech to make that happen.”
At the same time, teams of MyHeritage documentalists are roaming Europe and the US, trying to add as much information to the system as possible. It’s a gargantuan undertaking, like the Google Books for dead people. “We have country managers in Brazil, Chile, Spain, Holland, Poland, Sweden, the US and the UK – all trying to find more records, but also working with the community. We now have all the US census data from 1790 to 1940 – we can’t go any later because the records are only opened after 70 years for privacy reasons. We also have UK census records, records from grave sites, immigration records. We’re always trying to add more.”
At this moment, MyHeritage has 4 billion records, making MyHeritage a real big data player. “It’s terrabytes of data each month,” says Soen.
He smiles: “It always excites people when we find a record of someone they know. My father worked for the Israeli government back in the day. His job was to convince movie producers to stage Middle Eastern movies here. Through MyHeritage, we found an article in a Kansas City newspaper from decades ago, with a quote from him about a movie that was produced here in Israel.”
What I want to know, though, is when the music will stop. There’s a very finite number of population records in the world. The race kind of ends when you hit the late middle ages, no?
“Well, we actually have one person who traced his ancestors back all the way to Adam and Eve,” chuckles Soen. “And if you’re from a noble European family somehow, there are records going all the way back to the twelve hundreds. But of course, if you’re American, your tree will reach a dead end in the seventeen hundreds. For other continents, there’s even less available.”
So the question is: how do you keep it fun? If MyHeritage is doing the heavy lifting – finding and scanning all the old records – isn’t there a point where simply every known name is indexed and matched?
Soen: “I think the fun comes from the dynamic of it. You enter info in the tree. Then we search our records and start to offer matches. We’ll tell you that we found a match for you, let you take a look, allow you to contact the other person who is building that tree. Then you can connect the other person’s tree to yours. And so on. It’s not Facebook – you don’t get ten messages a day, but we keep discovering new information. We’re not only adding new records all the time, but also new people get added to the system every day – a million every day.”
“And if you really hit that brick wall, we have a team of genealogists who will really try to help you, by reaching out to the community. It’s a pretty special community – we have 75 million users now, and they’re incredibly dedicated. They’re a unique group, with associations, conferences, the works.”
MyHeritage raised $ 49 million in total, according to CrunchBase. Soen says it makes revenue in the “tens of millions” today. Not as much as Ancestry.com, which was sold to private equity players in 2012 for 1,5 billion euros, and which reported 480 million in revenues in 2012.
Soen: “In revenue we’re not close to where they are, but we’re growing a lot quicker. Their model is based on selling records. Our strength is in the family trees. There’s a network effect that comes into play: with more trees, and more engagement, and with our strong search tech, we hope to overtake them at some point. Our focus is also a lot more global than theirs. In some places we’re actually bigger than they are now.”
Soen doesn’t think that MyHeritage will do any other rounds anytime soon. “We’re profitable now, we have a big war chest. I don’t think we’ll do more funding rounds. An IPO is not on the cards soon either, although obviously we’re considering that as a future option. We want to build a big company that will be here in Israel.”
Along the road, MyHeritage has acquired some of its competitors. In 2010, it bought OSN, which owns Verwandt.de, giving the company a strong presence in Germany and Poland. “Before that, we were mainly present in the US. The acquisition gave us a strong presence in Europe too. In 2011, it acquired Familylink, which was operated by Mormons. “They really are expert genealogists,” says Soen. “They lead the charge to find more records for us.”
In 2012, it did a major acquisition with Geni.com – also known as “David Sacks’ first company”. “Geni was modeled after Wikipedia. Everybody could edit everybody’s trees, with editors and checks and balances, much like on Wikipedia. Yammer was actually a spinoff of Geni. It was developed as an internal communications tool for the Geni team. Geni hit a rough spot, and was sold to us eventually. With that, we also had David Sacks on our board, which is obviously a nice thing.”
Soen worked in Silicon Valley for a few years, so I have to ask about Tel Aviv versus Silicon Valley. What are the major differences, for him? “I think Americans are just so much better at marketing. We keep having this vacuum when it comes to marketing our products well. What I do think we have in Israel is lots of good tech, and very good entrepreneurs. Think of things like Onavo and Waze, those are obviously very strong tech companies.”
“I always think it has to do with our military service. When I was in the service and we did manoeuvres with the US army, they always had the greatest equipment, you know? The best of the best. Israeli soldiers never had all that fancy equipment, we had to make do with what we had. We always had to improvise a bit. I think that’s a good training for life as an entrepreneur. You need that agility as an entrepreneur.”[Photo: Flickr, Lilachd]
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