Ancestry.com is possible largely because of the Mormon church. There is a religious obligation in Mormonism to proxy baptize one's non-Mormon ancestors so they can get into heaven. To allow Mormons to identify these ancestors the LDS church has spent decades going around the world and making microfilm copies of birth, death and marriage records and the like. At one point when I was doing genealogy research on the East Coast I went to the local Mormon church's family history library and ordered a microfilmed copy of some birth records from the Russian Empire in Yiddish and Russian. I could then go through the microfilm and try to pick out the names I wanted.
Because much of the hard part (getting access to these archives and making copies of these records) has already been done, Ancestry just has to scan and OCR these records. My understanding is that Mormon volunteers do a lot of that work as well.
> There is a religious obligation in Mormonism to proxy baptize one's non-Mormon ancestors so they can get into heaven.
That bugs me. I'm afraid of it going down like this. I die, and the Valkyries select me for Valhalla. As I enjoy the afterlife there, knocking back flagons of mead and knocking up wenches, while trading tall tales of valor with the other chosen, there comes a knock at the door. A maiden answers, and then goes to Odin and whispers something.
Odin frowns, and whispers something back to her. Now all eyes are on the maiden as she walks back to the door, and invites in two Mormons. She leads them to Odin, and they hand him some paperwork.
Odin summons me, and tells me that they are from Mormon Heaven. He tells me that my half great great great great great grand niece has converted to Mormonism, found me in their ancestry records, and baptized me into the Mormon Church--and that I must leave Valhalla and move to Mormon Heaven. No more mead and wenches for me. :-(
Mormons may have done some of the work to help build out Ancestry.com's database, but they also have built a free competitor: FamilySearch.org
From a startup perspective, the base of records is important, but the 1.6 billion dollar purchase came from lots of paying customers who aren't Mormon (there just aren't enough Mormons who are devout to the point where they will pay for a genealogy resource when a free one built by their own faith exists). The Ancestry folks just took a relatively cheap/free pool of data, and did the work necessary to feed that data to customers willing to pay. I'd guess there are a lot more startups that can be built on readily available data sets like this. Congrats to the Ancestry.com team.
Edited to add how cool this whole business model is. Something that could be thought of as a "lifestyle business" ended up with a huge win by having the silly ideas of charging customers and building something people wanted.
That the microfilming was accomplished is invaluable - and I understand
that the typical offer to various records-keepers from the LDS family
history folks was: "We'll pay to microfilm your records, you get a copy
to keep, and the LDS gets a copy to use." Win-win.
The transcription of records for indexing is also valuable, but less so,
given that volunteers were working from projected microfilm copies of
(usually) hand-written records (some in beautiful but dated hands).
OCR in the 1980s was not adequate, but Soundex indexing helps a lot,
and if you need to search a small area exhaustively, you can see
many of the microfilm copies of records through a site like
ancestry.com or from the digital media available for use at
local LDS family history centers.
The LDS was also strong in producing the GEDCOM data standard,
which is widely (almost universally) used for family tree exchanges,
and the PAF software package (which now has many competitors.)
Note that research into ancestry has an interesting network effect -
while people have 2^N N-parents, once N gets over 4 or 5 it can
become challenging to trace individuals - but the chances that some
other active researcher shares some of those 2^N N-parents start to
increase - and ancestry.com has done well at providing links
to other researcher's public trees when they become available.
This pattern has the effect of encouraging subscribers who have
already found most of their ancestors out to level N, for whatever N,
to continue to subscribe in hopes of finding a new link from another
researcher, or perhaps a new clue in a newly digitized document set.
It will be interesting to see how the decreasing cost of genome
analysis affects family history research - perhaps helping find
distant cousins, or perhaps revealing surprising differences between
a presumed history and the biological record.
There is a religious obligation in Mormonism to proxy baptize one's non-Mormon ancestors so they can get into heaven
Not quite right. Proxy baptism simply allows an individual recipient the opportunity to accept or reject the teachings if they didn't get a chance to learn about them during their lifetime. There's nothing passive or automatic about it.
My father did some of his ancestry research with help from the LDS people at a centre in London. I was wary, expecting a bit of evangelising or conversion talk, but they didn't try any of that stuff.
It was interesting that at the time it was one of the best ways to get access to computers and cd rom drives for no cost.
The LDS Church has records that are donated to it by its members and others. It also has an extraordinary collection of microfilmed church records from little churches (of all denominations) from around the globe. These churches are often very sensitive about their records and how they will be used. These records are made available free to any individual who wants to do genealogical research through an LDS Family History Center, but they are NOT made available to commercial organizations such as Ancestry.com.
Ancestry.com, on the other hand, photographs public records such as census documents or licenses private records such as shipping manifests, indexes them, and sells access to the indexes and photos. They are free to resell their data and, by selling the company, that's what they'll be doing. They own the copyrights of the hi-rez photos of old census docs, even though the docs themselves are in the public domain.
Yeah, just OCR badly hand-written text. That's a hard problem! I've run across matches in the census data that I would consider illegible, but that somehow got matched with the right name.
Though Ancestry.com has some agreements to share resources with the Family History Department of the Church of Jesus Christ Latter-day Saints, it is a completely separate organization and a for profit company. It was founded by Mormons, many of the employees are Mormons, and lots of the customers are Mormons and driven by their religious interest; but it is distinct from the work you are discussing.
The efforts of the Church of Jesus Christ are all non-profit and publicly available at Family Search (http://familysearch.org).
Looks like a classic example of a huge market that young techies think isn't important. I don't know anyone my age who has an account on ancestry.com or who cares about their family tree, but I have lots of older (and richer) relatives who do.
Pet owners are another example. Apparently some of those "facebook for dogs" sites are doing pretty well, since the dog owners who use them tend to be middle-class and middle-aged - a huge market that most tech startups ignore. Think different!
I had the pleasure of being next to some of the engineers from Ancestry.com in the queue for the WWDC keynote this year - it was really interesting to hear about a business that you don't think is that big, but is actually massive. They said Europe was also a very big market for them (I know genealogy is quite popular in the UK at least - the TV show that the article cites, 'Who Do You Think You Are', was originally a BBC show first), so being acquired by a European private equity firm makes some sense.
Many young techies are accustomed to chasing one specific type of profit function: namely, massive quantity x low price.
Ancestry.com is a good example of the opposite, though potentially very lucrative function: small quantity x high price. The site has only a few million active users, but each of them pays a decent chunk of change per month. Those users also use the site very frequently, and for long periods at a time. (Again, contrast this with a service like Facebook: lots of users, each one presumably browsing or using in very quick and sporadic bursts).
People forget that a market involves both # of users -and- willingness to pay. There's more than one way to reach a large addressable market.
Some of the best kept "under wraps" business models are in these areas. A surprising amount of interesting/challenging problems exist, and they have real impacts on peoples' lives.
They are traditionally backed by large companies, but a talented/knowledgable/passionate group can shake things up in a big way (with stable/long term revenue streams).
Interesting to observe the "what is your passive income" type threads and realize just how many in this community are unaware/under-appreciate some of these amazing business models. Not shocking to see medium sized 1-man projects to have lifetime revenues over 1 million.
One of my first gigs was at one of these types of companies. While the engineering was deplorable (one reason I left), the insight into the business side of things has forever changed my path.
> I don't know anyone my age who has an account on ancestry.com or who cares about their family tree, but I have lots of older (and richer) relatives who do.
Not sure how old you are, but I'm 24 and have a premium Ancestry.com account. My family tree is really strange, so tracking through it is interesting to me.
So we seem to have a formula: something a lot of people use + dogs = popular thing. We have Facebook pet pages. We have dog/cat memes. So I've come up with the next multi-billion dollar project:
Anyone seen actual financials? FTA: To monetize all that information, the website has a subscription model that two million people pay into at $12.95 to $34.95 a month, according to the company.
So (say) $20/month = $200/year * 2 million = $400M/year run rate. In rough terms the buyout happened at 3-4x revenue.
I'd say it's not too rich a valuation, and given my wild-ass guess above, my error bars are big; But the bottom line: not an insane number.
>"The buyout group includes the private equity firm’s co-investors, members of Ancestry.com’s management team, including CEO Tim Sullivan and CFO Howard Hochhauser, and Spectrum Equity, which already owns about 30 percent of Ancestry.com."
"Ancestry.com has been acquired by European private-equity firm Permira for $1.6 billion, which is a little over 1.5 Instagrams"
Is "Instagram" the new word for a billion? I like it. It sounds like a unit of measurement.
It will be interesting to see how this grows. Some of my family members are very into family history and genealogy and want to get their DNA tested as well to see where we are from. If nothing, it's a good way to at least pique the curiosity of a large population, so I can see it going for as much as it did.
Funny when I read it I was wondering if it shouldn't be more like 2-3 Instagrams at current FB stock price but I guess it was never said how much was in cash.
"To monetize all that information, the website has a subscription model that two million people pay into at $12.95 to $34.95 a month, according to the company."
So even at a lower bound that's close to $26m/month in revenues or $312m a year. So it's only 5x revenues.
Wikipedia says that they had $13.67B in capital in May. A 12% bet that upper- and middle-class baby boomers will keep spending at that rate for at least the next 5 years? Somebody must be confident.
I see this as a larger play. As the internet generation gets older many more people will have almost their entire life online making the information Ancestry.com can provide much greater and more detailed family trees.
Subscription revenue model that offers a certainty premium for investors? check
Tap into a deep psychological Maslow-style need that potentially hundreds of millions if not billions have (aka the desire to know where we come from, who we are connected to)? check
Future plans to possibly pivot itself towards being a platform that other developers can build apps on that tap into its genealogical data? check
Looks like it could turn out to be be a bloody good deal!
I sometimes use it to check if people I meet are closely related to me. Pretty much any two Icelanders are relatively closely related. It's a small island with an even smaller population, mostly descended from the original settlers.
why wouldn't people sign up, look at their information, then cancel their subscription?
how do you know if they have anything relevent for you prior to you signing up?
seems like the same thing with Angie's list, living in flyover country, how do I know if there are any reviews worth paying attention to prior to signing up?
I know someone who uses Ancestry.com. You can add as many details about your relatives as you want, upload copies of wills, photographs, etc. A bit like facebook for the dead :-/
Any of your friends or relatives can (by invitation) also view the history of your family that you have generated, for free. They can also receive emails when you update, with links to the new information. If you are really investigating your family, you will have updates every few weeks to months (at least my relative does).
Discussing family is a very popular topic for many people. Extensive family histories might not work for many Americans, who often can only trace their history back a few generations. Many in Europe however can easily trace back to the 1600's or 1700's, when Church records started being kept. This of course varies by country, Ireland, for example has few records earlier than 1800.
Ancestry adds new data bases every day. All sorts of documents are triple-entered by hordes of cheap offshore labour. You never know when new stuff will include your ancestors: ship's manifests, regimental rolls, cemetery inventories, wills & probates from all corners of the World, etc.
It used to be that there were records websites and family tree websites / software. Combining them is a win/win: records access has more value so higher prices but no need to keep subscribing, while family tree sites emphasize longer subscriptions to keep your tree online. Both Ancestry and MyHeritage are now going to this model from opposite sides.
if you are interested: John Esser, Director Engineering at Ancestry.com, is participating in a webinar next week about how Ancestry.com implemented Agile and Continuous Delivery (disclaimer: yes, he will also talk about how they used ThoughtWorks Go in the process): http://www.thoughtworks-studios.com/content/go-user-group
I think Ancestry.com is worth the 1.6 Billion. I have ancestry in Poland and the Ukraine and doing research can be tricky. Ancestry.com was the go to source for me. Amazing resource.
However, the current pricing is prohibitive. A year's full access was almost $400, and that was nearly 10 years ago. I hope they lower their price. I'll sign up again if they do.
If you are looking to expand your research, I would suggest Family Tree DNA. It can test the paternal or maternal lines to get ancestry. I did the paternal tests since my dad was adopted and didn't know his ethnicity and it was really neat to find that his side is from the Balkans after migrating from East Africa (oh and that I might be an ethnic Jew as well).
[+] [-] GabrielF00|13 years ago|reply
Because much of the hard part (getting access to these archives and making copies of these records) has already been done, Ancestry just has to scan and OCR these records. My understanding is that Mormon volunteers do a lot of that work as well.
[+] [-] tzs|13 years ago|reply
That bugs me. I'm afraid of it going down like this. I die, and the Valkyries select me for Valhalla. As I enjoy the afterlife there, knocking back flagons of mead and knocking up wenches, while trading tall tales of valor with the other chosen, there comes a knock at the door. A maiden answers, and then goes to Odin and whispers something.
Odin frowns, and whispers something back to her. Now all eyes are on the maiden as she walks back to the door, and invites in two Mormons. She leads them to Odin, and they hand him some paperwork.
Odin summons me, and tells me that they are from Mormon Heaven. He tells me that my half great great great great great grand niece has converted to Mormonism, found me in their ancestry records, and baptized me into the Mormon Church--and that I must leave Valhalla and move to Mormon Heaven. No more mead and wenches for me. :-(
[+] [-] dabent|13 years ago|reply
From a startup perspective, the base of records is important, but the 1.6 billion dollar purchase came from lots of paying customers who aren't Mormon (there just aren't enough Mormons who are devout to the point where they will pay for a genealogy resource when a free one built by their own faith exists). The Ancestry folks just took a relatively cheap/free pool of data, and did the work necessary to feed that data to customers willing to pay. I'd guess there are a lot more startups that can be built on readily available data sets like this. Congrats to the Ancestry.com team.
Edited to add how cool this whole business model is. Something that could be thought of as a "lifestyle business" ended up with a huge win by having the silly ideas of charging customers and building something people wanted.
Disclosure: I'm a Mormon.
[+] [-] dmckeon|13 years ago|reply
The transcription of records for indexing is also valuable, but less so, given that volunteers were working from projected microfilm copies of (usually) hand-written records (some in beautiful but dated hands).
OCR in the 1980s was not adequate, but Soundex indexing helps a lot, and if you need to search a small area exhaustively, you can see many of the microfilm copies of records through a site like ancestry.com or from the digital media available for use at local LDS family history centers.
The LDS was also strong in producing the GEDCOM data standard, which is widely (almost universally) used for family tree exchanges, and the PAF software package (which now has many competitors.)
Note that research into ancestry has an interesting network effect - while people have 2^N N-parents, once N gets over 4 or 5 it can become challenging to trace individuals - but the chances that some other active researcher shares some of those 2^N N-parents start to increase - and ancestry.com has done well at providing links to other researcher's public trees when they become available.
This pattern has the effect of encouraging subscribers who have already found most of their ancestors out to level N, for whatever N, to continue to subscribe in hopes of finding a new link from another researcher, or perhaps a new clue in a newly digitized document set.
It will be interesting to see how the decreasing cost of genome analysis affects family history research - perhaps helping find distant cousins, or perhaps revealing surprising differences between a presumed history and the biological record.
[+] [-] shawnee_|13 years ago|reply
Not quite right. Proxy baptism simply allows an individual recipient the opportunity to accept or reject the teachings if they didn't get a chance to learn about them during their lifetime. There's nothing passive or automatic about it.
[+] [-] DanBC|13 years ago|reply
It was interesting that at the time it was one of the best ways to get access to computers and cd rom drives for no cost.
[+] [-] SiVal|13 years ago|reply
Ancestry.com, on the other hand, photographs public records such as census documents or licenses private records such as shipping manifests, indexes them, and sells access to the indexes and photos. They are free to resell their data and, by selling the company, that's what they'll be doing. They own the copyrights of the hi-rez photos of old census docs, even though the docs themselves are in the public domain.
[+] [-] smackfu|13 years ago|reply
Yeah, just OCR badly hand-written text. That's a hard problem! I've run across matches in the census data that I would consider illegible, but that somehow got matched with the right name.
[+] [-] resplin|13 years ago|reply
The efforts of the Church of Jesus Christ are all non-profit and publicly available at Family Search (http://familysearch.org).
[+] [-] lukeholder|13 years ago|reply
[+] [-] IsaacL|13 years ago|reply
Pet owners are another example. Apparently some of those "facebook for dogs" sites are doing pretty well, since the dog owners who use them tend to be middle-class and middle-aged - a huge market that most tech startups ignore. Think different!
[+] [-] objclxt|13 years ago|reply
[+] [-] jonnathanson|13 years ago|reply
Ancestry.com is a good example of the opposite, though potentially very lucrative function: small quantity x high price. The site has only a few million active users, but each of them pays a decent chunk of change per month. Those users also use the site very frequently, and for long periods at a time. (Again, contrast this with a service like Facebook: lots of users, each one presumably browsing or using in very quick and sporadic bursts).
People forget that a market involves both # of users -and- willingness to pay. There's more than one way to reach a large addressable market.
[+] [-] hashtree|13 years ago|reply
They are traditionally backed by large companies, but a talented/knowledgable/passionate group can shake things up in a big way (with stable/long term revenue streams).
Interesting to observe the "what is your passive income" type threads and realize just how many in this community are unaware/under-appreciate some of these amazing business models. Not shocking to see medium sized 1-man projects to have lifetime revenues over 1 million.
One of my first gigs was at one of these types of companies. While the engineering was deplorable (one reason I left), the insight into the business side of things has forever changed my path.
[+] [-] mikecolella|13 years ago|reply
[+] [-] daeken|13 years ago|reply
Not sure how old you are, but I'm 24 and have a premium Ancestry.com account. My family tree is really strange, so tracking through it is interesting to me.
[+] [-] just2n|13 years ago|reply
Ancestry.com for pets.
Gonna be HUGE.
[+] [-] thechut|13 years ago|reply
[+] [-] jpdoctor|13 years ago|reply
So (say) $20/month = $200/year * 2 million = $400M/year run rate. In rough terms the buyout happened at 3-4x revenue.
I'd say it's not too rich a valuation, and given my wild-ass guess above, my error bars are big; But the bottom line: not an insane number.
Kudos.
[+] [-] jcampbell1|13 years ago|reply
http://finance.yahoo.com/q/is?s=ACOM+Income+Statement&an...
$400M is very close to the actual audited number for last year.
I have zero idea why the author failed to mention that is a bid to take an already public company private.
[+] [-] taylorbuley|13 years ago|reply
This post is bad technology reporting, and terrible business reporting.
[+] [-] mikescar|13 years ago|reply
>"It does sound like the site has offers more than a lot of other Internet things these days."
Good god, this is the Atlantic. At least they could act like they're trying instead of just getting something out quickly for the pageviews.
Edit: a quick author search shows a ton of this half-assed blogging. Won't be going back to the Atlantic Wire any time soon. ( http://www.theatlanticwire.com/authors/rebecca-greenfield/ )
[+] [-] djloche|13 years ago|reply
http://descrier.co.uk/technology/2012/10/ancestry-com-acquir...
>"The buyout group includes the private equity firm’s co-investors, members of Ancestry.com’s management team, including CEO Tim Sullivan and CFO Howard Hochhauser, and Spectrum Equity, which already owns about 30 percent of Ancestry.com."
[+] [-] Xcelerate|13 years ago|reply
Is "Instagram" the new word for a billion? I like it. It sounds like a unit of measurement.
It will be interesting to see how this grows. Some of my family members are very into family history and genealogy and want to get their DNA tested as well to see where we are from. If nothing, it's a good way to at least pique the curiosity of a large population, so I can see it going for as much as it did.
[+] [-] Steko|13 years ago|reply
[+] [-] byefruit|13 years ago|reply
"To monetize all that information, the website has a subscription model that two million people pay into at $12.95 to $34.95 a month, according to the company."
So even at a lower bound that's close to $26m/month in revenues or $312m a year. So it's only 5x revenues.
[+] [-] AdamTReineke|13 years ago|reply
[+] [-] webwanderings|13 years ago|reply
[+] [-] thechut|13 years ago|reply
[+] [-] NikP|13 years ago|reply
[+] [-] charleshaanel|13 years ago|reply
Tap into a deep psychological Maslow-style need that potentially hundreds of millions if not billions have (aka the desire to know where we come from, who we are connected to)? check
Future plans to possibly pivot itself towards being a platform that other developers can build apps on that tap into its genealogical data? check
Looks like it could turn out to be be a bloody good deal!
[+] [-] haukur|13 years ago|reply
I sometimes use it to check if people I meet are closely related to me. Pretty much any two Icelanders are relatively closely related. It's a small island with an even smaller population, mostly descended from the original settlers.
[+] [-] pitt1980|13 years ago|reply
why wouldn't people sign up, look at their information, then cancel their subscription?
how do you know if they have anything relevent for you prior to you signing up?
seems like the same thing with Angie's list, living in flyover country, how do I know if there are any reviews worth paying attention to prior to signing up?
[+] [-] pcrh|13 years ago|reply
Any of your friends or relatives can (by invitation) also view the history of your family that you have generated, for free. They can also receive emails when you update, with links to the new information. If you are really investigating your family, you will have updates every few weeks to months (at least my relative does).
Discussing family is a very popular topic for many people. Extensive family histories might not work for many Americans, who often can only trace their history back a few generations. Many in Europe however can easily trace back to the 1600's or 1700's, when Church records started being kept. This of course varies by country, Ireland, for example has few records earlier than 1800.
[+] [-] GnarfGnarf|13 years ago|reply
Ancestry adds new data bases every day. All sorts of documents are triple-entered by hordes of cheap offshore labour. You never know when new stuff will include your ancestors: ship's manifests, regimental rolls, cemetery inventories, wills & probates from all corners of the World, etc.
[+] [-] smackfu|13 years ago|reply
[+] [-] ABS|13 years ago|reply
[+] [-] arbuge|13 years ago|reply
[+] [-] OldSchool|13 years ago|reply
[+] [-] kine|13 years ago|reply
[+] [-] drbillnye|13 years ago|reply
[+] [-] bravoyankee|13 years ago|reply
However, the current pricing is prohibitive. A year's full access was almost $400, and that was nearly 10 years ago. I hope they lower their price. I'll sign up again if they do.
[+] [-] jetti|13 years ago|reply