2010-02-05 MyHeritage growing through Acquisitions

growth strategy

Social Genealogy shake-out

When you look over the large list of Social Genealogy Sites, it is obvious that a shakeout through disappearances, mergers and acquisitions is inevitable. That is not a risky prediction. It is not even a prediction. The shake out is an ongoing process that started years ago already.

Late in 2006, MyHeritage bought Pearl Street Software, which included GenCircles. In 2008, FamilyLink bought the My Family app and MyHeritage bought competitor Kindo. In 2007, Brightsolid (Scotland Online) acquired FindMyPast, and in 2009, Brightsolid announced its intent to buy Friends Reunited, which includes Genes Reunited, pending clearance by competition authorities. And just now MyHeritage bought The OSN Group (Verwandt.de, DynasTree).

MyZooof

The OSN Group is billed as MyHeritage’s third acquisition already - but it apparently made a fourth as of yet unannounced acquisition: Zooof.
Rob van Drie’s blog post MyHeritage koopt Verwandt: wat merken wij in Nederland daarvan? about MyHeritage’s acquisition of Verwandt notes that MyHeritage does not only show a family he originally entered on Verwant.nl (the Dutch Verwandt site), but also shows a family he originally entered on Zooof.nl. You don’t need to understand Dutch or even use Google Translate to make sense of this discovery; his MyHeritage webshot tells it all.
Update: Rob van Drie’s Zooof Scoop has been confirmed. Zooof is indeed MyHeritage’s fourth acquisition.

TechCrunch

There are an official press release and MyHeritage blog post about the acquisition of OSN now, but MyHeritage did not break the acquisition news through a press release. The news broke through an exclusive TechCrunch blog post many hours before MyHeritage issued a press release. The blog mentions the news and continues with an almost adulatory profile of MyHeritage CEO Gilad Japhet.

MyAcquisitions

MyHeritage is profiling itself as a company that grows by acquisitions. So far, it has issued press releases about acquiring Pearl Street Software, Kindo and The OSN Group. It appears to have acquired Zooof as well, but has not made any announcement about that yet.

Pearl Street Software

On 2007 August 22, MyHeritage announced that they had bought Pearl Street Software. The actual deal actually took place in December of 2006, but the announcement was postponed until the integration was complete.

Pearl Street Software offered several products and services. It offered Family Tree Legends (FTL) desktop software for Windows, ran the GenCircles family tree site and sold the FTL Records collection on CD.

At the time, the company had officially been for sale since March of 2006, but the company founders had not been smart about it. They did not keep the company running smoothly while looking for a buyer. Pearl Street Software had unceremoniously abandoned their paying Family Tree Legends customers. Their product was no longer being updated. Their web sites were longer being maintained and there was no one to answer the phone.

Last year, MyHeritage managed to win the GeneAward for Worst Genealogy Organisation of 2009, but Pearl Street software received one of the very first GeneAwards for being the Most Disappointing Company 2006.

By damaging their own reputation, the Pearl Street founders seriously affected the price they could expect to fetch for their company and MyHeritage apparently did not pay very much for it, as its founders were later spotted creating websites for FamilyLink.

Pearl Street portfolio

MyHeritage bought Pearl Street software for several good reasons. The FTL Records collection contained more than 400 million public records, the GenCircles website contained roughly 160 million profiles and Family Tree Legends contained interesting technology.

SmartMatching

Pearl Street Software had developed a family tree matching technology called SmartMatching. Anyone who has visited GenCircles has seen this in action; as you browse one family tree, it highlights the same individual occurring in another family tree.
SmartMatching was integrated into both the GenCircles sites and the Family Tree Legends software. Family Tree Legends additionally included code to publish a family tree to GenCircles from within the program.

Family Tree Builder 2.0

After the acquisition, MyHeritage hurried to integrate SmartMatching into its own site and its own family tree software, MyHeritage Family Tree Builder (FTB). Their announcement of Family Tree Builder 2.0 raved on about its SmartMatching support, even claimed that MyHeritage had improved upon it, but it seems closer to the truth that they had messed it up; the review of Family Tree Builder 2.0 found that it could not even perform the simplest DumbMatch.
In fact, there was so much wrong with Family Tree Builder, that it received the verdict scarily defective. It would have gone on to win the Worst Genealogy Product of 2007 award if Ancestry.com had not bothered to trump it with the utterly disastrous Family Tree Maker 2008.

buy versus build

It is not very hard to develop tree matching technology. Many desktop genealogy applications include duplicate search and many websites show matches in other trees. However, developing matching technology that is both accurate and fast is not something everybody is capable of.
MyHeritage may have tried to develop it themselves, but when the opportunity to Pearl Street presented itself, it probably were the investors who insisted that they should stop trying, and simply snap up a proven well-working product instead. That was a smart decision.

best versus own

Apparently, MyHeritage did not learn from Ancestry.com’s mistakes. Over the years, Ancestry.com has bought several desktop genealogy applications that were arguably better than Family Tree Maker Classic. Ancestry.com never took advantage of these acquisitions in any way, but simply discontinued each one in favour of their own Family Tree Maker software.
By design or not, Ancestry.com was effectively following an if you can’t beat them, buy them out of the market strategy. That helped to establish Family Tree Maker as the sales leader, but did not nothing to improve the quality of the Family Tree Maker product. Au contraire, it removed the competition that could have driven their own development team to do better.

When MyHeritage bought Pearl Street Software, Family Tree Legends was one of the best-liked and highest-rated genealogy applications for Windows. It would have made sense for MyHeritage to continue to build on the success of that product and adapt it to work with MyHeritage.com instead of (or addition to) GenCircles. Alas, the MyHeritage programmers decided to try and refit SmartMatching into their own less than impressive Family Tree Builder application. That wasn’t a smart decision.

Kindo

Kindo languages
Afrikaans
Arabic
Chinese
Danish
English
French
German
Hindi
Italian
Norwegian
Polish
Portuguese
Russian
Spanish
Swedish
Taiwanese
Turkish

On 2008 Sep 22, MyHeritage bought the social genealogy site Kindo. The official statements stress a shared vision, but acquisitions are about market, technology and money.

Kindo was acquired for an undisclosed sum of money. This got MyHeritage a bunch of international sites (mostly European, but all over the globe, see table), including markets it did not have a presence yet.

It got MyHeritage a bunch of users and profiles to expand its database with. Perhaps most importantly, it got a competitor off the market, one that, according to MyHeritage CEO Gilad Japhet in his blog post about the acquisition, offered an online family tree tool that was better than anything else previously available on the Internet. What he appears to be saying there is that Kindo could have grown to eclipse MyHeritage. In other words: because he was afraid that MyHeritage wouldn’t be able to compete with Kindo, he decided to buy it instead.

Mario F. Ruckh, originally a Kindo employee, became MyHeritage director of marketing and last year managed to embarrass the company by faking an award for its Family Tree Builder 3. That Mario was not fired after the MyHeritage wins Award? exposé of his deception makes it reasonable to think that his action had management approval.

Verwandt (OSN Group)

MyHeritage just bought bought the OSN Group. The OSN Group is the German company behind Verwandt.de and its many international sites, including DynasTree, originally known as It’s Our Tree.

website	language
verwandt.de	German
moikrewni.pl	Polish
dynastree.co.uk	English
dynastree.com	Amglish
miparentela.com	Spanish
meusparentes.com.br	Brazilian Portuguese
meusparentes.com.pt	Portuguese
parentistretti.it	Italian
verwant.nl	Dutch
familleunie.fr	French
akrabaonline.com	Turkish
semyaonline.com	Russian

Home Edition

Verwandt (the name the OSN Group is colloquially known by) does not only run an international collection of sites, but also offers desktop genealogy software for Windows under the name Dynastree Home Edition.
This software was originally known as It’s Our Tree Home Edition (IOTHE). The name was changed to DynasTree Home Edition when the name of the English site changed from It’s Our Tree to DynasTree.

re-branded

Although their own Family Tree Builder software isn’t very good, MyHeritage definitely did not buy Verwandt for its DynasTree Home Edition software. DynasTree Home Edition may not be much better, but that is only because it is a deliberately crippled edition. The more fundamental point is that although the software carries the DynasTree brand, it is not theirs.

The review of It’s Our Tree Home Edition 1.0 noticed that DynasTree Home Edition is really a crippled and re-branded edition of Dirk Böttcher’s free Ahnenblatt application. MyHeritage may lust after the Unicode-based Ahnenblatt to replace its Family Tree Builder with, but Verwandt has no desktop genealogy software to sell; Ahnenblatt is still owned by Dirk Böttcher; if MyHeritage wants Ahnenblatt, they’ll have to strike a deal with him.
Now that Verwandt been bought by MyHeritage, the DynasTree Home Edition software is likely to become a historical curiosity (download it while you can).

sizeable acquisition

MyHeritage obviously bought Verwandt for its international presence, and for its 102 million profiles, 4 million family trees and 10 million photos. Those are authoritive numbers, and you read them here first. Neither MyHeritage nor Verwandt bothered to publish those numbers.

Both the MyHeritage press release and their blog post stress the new combined size, but neither mentions the size of the acquisition.
The press release boasts of (combined) 47 M active users, but that is a somewhat fuzzy and easily misleading metric, especially when web sites merge. The combined 13 M family trees is a more concrete measure.

Perhaps more interesting than the number of active users is their distribution. The small world maps show the distribution of MyHeritage users, OSN Group users and the combination. These maps show how the acquisition makes MyHeritage a more global company.

Map MyHeritage 2010

Map OSN Group 2010

Map MyHeritage + OSN Group 2010

Verwandt Difference

date	profiles	family trees	photos
2010-02-02	434 M	9 M	64 M
2010-02-03	536 M	13 M	74 M
Verwandt Difference	102 M	4 M	10 M
percentile growth	24 %	44 %	16 %

The different number of profiles claimed in the press release and the blog post are both wrong. The press release claims 540 M profiles, the blog claims 530 M profiles, the actual number is 536 M profiles.

How do I know? Easy, from MyHeritage’s own home page. MyHeritage’s home page shows the current number of profiles, family trees and photos in their database. Compare the numbers before and after the integration of the Verwandt data on 2010 Feb 3, and the difference between them is the Verwandt Difference, the size of Verwandt at the time of the merger.

average tree size

MyHeritage’s average tree size has been steadily declining since it decided to squeeze its users by lowering the limit for free use, first from 1000 to 500, then from 500 to 250. Limited Genealogy argued that such limits do not only affect quantity, but quality and thus reputation as well, but those thoughts seem to have been lost on MyHeritage’s management.

Just before the merger, MyHeritage’s average tree size had already dropped to about 48 individuals. With this merger, the average size takes a steep dive towards just 41 individuals, because Verwandt’s average is just 25½. That low average sure puts Verwandt’s growth into perspective.

Verwandt versus Geni

When Verwandt was introduced back in 2007 it was hard not to notice how much it looked like Geni.com and today, their respective home pages are still similar in design.

Geni.com 2010

Verwandt.de 2010

What’s interesting is that although Verwandt.de was introduced more than five months later than Geni.com, Verwandt soon was considerably more successful. Today, the Geni.com home page boasts that Geni has more than 70 million profiles, while Verwandt.de has more than 100 million profiles.
Verwandt grew faster for two reasons; it is available in multiple languages, and it supported GEDCOM import from the start.

MyHeritage did not just buy the profiles, family trees and photos, it bought a company that was growing faster than its competition. It once again bought a company that was becoming larger than MyHeritage before it happened.

global growth

Since the integration of the Verwandt data, MyHeritage boasts 536 M profiles, 13 M family trees and 74 M photos, but it is still the same old MyHeritage.
MyHeritage is not using Verwandt technology and did not put the Verwandt management team in charge. MyHeritage has only grown bigger and more international, but neither change is unimportant. A bigger database attracts more users, and more users help the site grow bigger yet. This network effect is what fuels the growth of social genealogy sites, and support for many languages allows MyHeritage to grow globally.

updates

2010-02-05 instant update: user distribution maps

Added user distribution maps from the press release.

2010-02-08: more Verwandt blogging

Verwandt has a blog on each site. Links to recent entries about the acquisition by MyHeritage have been added below. Note that the Brazilian site has two question & answers post. Google Translate does a reasonable job on these.
Among other things, these Q&A posts admit that not all Verwandt trees and photos were transferred correctly. The Verwandt sites are read-only now, but will remain running for at half a year, to help fix any transfer issues.

2010-02-08: user complaints

The comment sections on the Verwandt blog posts make interesting reading.
Users complain that their data was transferred to MyHeritage without either notifying the users or asking their permission, in violation of Verwandt’s own terms.
Users complain that MyHeritage’s 250 individual limit makes it impossible to keep working with all their Verwandt data - while Verwandt promised that the free features of dynastree will remain free forever.
Several users express a desire for Verwandt’s simplicity.

2010-02-08: more bidders

In an interview with Deutsche Startups, Verwandt’s Daniel Grözinger remarks that MyHeritage was not the only bidder.

2010-02-08: Zooof buy confirmed

A Zooof press release confirms Rob van Drie’s Zooof Scoop and MyHeritage’s strategy of growth through acquisitions.

2010-02-08: DynasTree Free Tree Promise

DynasTree Free Tree Promise examines the status of Verwandt’s promise that tree building will always be free.

2010-02-09: It’s Our Tree

It’s Our Tree points out that the transfer of data from Verwandt to MyHeritage does not seem in accordance with the site’s own terms and conditions.

2010-02-10: MyZooof

MyZooof provides some details about Zooof . Again, the take-over by MyHeritage does not seem in accordance with the site’s own terms and conditions.

2010-05-27 Verwandt Smart Matches

Several months after the initial, unauthorised transfer of user's data to the MyHeritage servers, the MyHeritage blog announces that they are finally enabling Smart Matching with the Verwandt data.

2011-06-07 Bliscy.pl

MyHeritage has bought Polish genealogy site Bliscy.pl.

2011-09-20 BackupMyTree

MyHeritage has bought BackupMyTree, a tiny, one-year genealogy backup site without a business model.

2012-11-30 Geni.com

MyHeritage has bought Geni.com, see MyHeritage gobbles Geni.