The MyHeritage Story

TechAviv, Feb 5 2013

Gilad JaphetFounder & CEO

About

Coded in Z80 assembly for ZX-Spectrum computer in 1988 by Gilad (“The

Nightman”)

The MyHeritage team

What is genealogy

Bring family history to the masses

Vision

The MyHeritage platform

Family Tree Builder

Research& Matching

Family Sites

Smart Matches

See all matches from the same user and contact him/her

Compare the two trees side by side

A green icon appears on the tree when you get a match

Founding MyHeritage:the difficult start• How it started in 2003• Working from home, bootstrap years 2003-

2004• Terrible experience outsourcing to India• Repeated fundraising failure• Taking a loan and mortgaging all my property• Seed round in Q1 2005

Celebrity: accidental bonanza• Licensing the technology for family history and

tagging• Inventing celebrity matching by luck and

accident• Viral wave, 2005 onwards• Learning from MetaCafe• Doppelganger 2010• Doppelganger 2013

Founding MyHeritage:growth years

• VCs get interested• Benchmark mentoring• Pearl Street Software acquisition• Accel in 2006 and 2007• Index in 2008• Bessemer in 2012• Strong expansion in 2013

MyHeritage in numbers

The 4 key ingredients of success

• Passion• Execution• Hard work• Pure luck

Raising money: few tips• Fundraising is the CEO’s #1 task• Don’t neglect to due diligence the investor • “No” could be the best thing that happened

to you• Biggest problem with VCs: “slow No”• Raise more than you think you need• Do not accept warrants• Raise money when graphs look good, get

some traction, investors will see the $

Phases in an Internet company• Phase 1: Dream• Phase 2: Revenues• Phase 3: Dream revenues

The power of M&A

Seal global leadership in family trees

Expand from family trees into historical records

250M+ family tree profiles; Technology for family tree backup

Seal market leadership in Poland

Base of high quality users in the Netherlands

Market leadership status in Germany; ~90 million family tree profiles

Family tree social network in UK

Smart Matching technology; Large US user base; 100M family tree profiles

Utah-based FamilyLink.com, Inc. acquired in Nov 2011

Main assets:• Two historical records websites with subscriptions• 4 billion historical records• Talent and expertise

Outcome:• Grew subscriptions 80%

in just 8 months• Grew team from 12 to 20• Hired world class content experts• Entered new category• All thanks to pure luck• Unique negotiation model

M&A case study: FamilyLink

Freemium• Great model• Free -> traction• Know when to start revenues• Choose which features to charge

for• Early monetization can be a

mistake

Subscriptions• Excellent model• Predictable revenue flow• If new acquisition exceeds churn,

revenues will keep growing• Key terms: CAC, LTV, Churn• If LTV >> CAC and churn is low,

business is unstoppable• Not right for every business,

but Freemium + subscriptions is highly recommended(also the model of Wix.com)

Go global• The world is the big opportunity• Beat your US competitors• Translations + cultural adaptations• Do it from day one, not “later”• Create the infrastructure• Utilize volunteer users and

professionals• Global PPC

Dealing with customers• As CEO, stay very close to customers• Communicate daily with customers• Make yourself accessible• Convert negative passion to positivity• Reduce barriers from customers who want to contact the

company• Cultivate power users / evangelists

Dealing with negativity• There will always be haters• http://moz.com/rand/what-i-wish-i-knew-before-i-started-my-com

pany/ Rand Fishkin: “If you don’t have haters, you’re doing something wrong, or, you’re doing something that doesn’t matter. ”

• Maintain positive attitude. Your positive karma is your #1 asset.• Fight poison with honey

Some mistakes to avoid• Outsourcing key areas of the product• Taking over user’s browser as business model• Converting previously free functionality into paid• Hiring “snakes”• Keeping mediocre people too long• Starting small in Israel, expanding to other

markets “later”

Some good things to do• Hire the best people• Obsess about metrics. Measure everything• A/b test everything, from design to pricing• Support coupons, discounts, bundles• Try to make the product viral• Incentivize every employee with options• Maintain your values• Build a company or product

that do good in the world• Bring pride to Israel

Good luck!

gilad@myheritage.com