Geni: Earning That $100 million Valuation
Michael Arrington
46 comments »
When genealogy site Geni announced that it had raised a venture round from Charles River Ventures valuing the two month old startup at $100 million, more than a few eyebrows were raised. For the last couple of months, people have referred to “Pulling a Geni” when they try to raise money at a super-big valuation immediately after launch.
At launch, Geni appeared to be like many other “family tree” websites, just with a better looking and easier to use (Flash) interface. The site is extremely viral. When I first created my account I added my mother and father, along with their emails. They added more family members, who added yet others. Seven weeks after launch there were 126 people in my Geni family tree. Today, Today, after 15 weeks or so, there are 305 people in my family tree. All but three, myself included, were added by others.
Geni, The (Family) Social Network
Geni won’t be successful if all they can do is get people to add themselves and a couple of relatives and then rarely revisit the site. They want viral growth and the kind of big page view numbers that the large social networks see - up to 20 per day per visitor. To get there they’re adding a few proven features to the site. And by adding these features, they are essentially creating a social network with the family, as well as family friends, as the core. There’s a direct analogy to facebook - instead of colleges and universities, Geni is focusing on family units.
New features include:
- photo uploading and sharing
- map view of people in your tree by birthplace or current location
- calendar of upcoming birthdays, anniversaries and other family events
- Add family friends as “friends of your family tree”
- Gedcom export - export your tree in the standard genealogy file format
All of these features will incentivize users to use the site frequently, even daily. The photo sharing feature is modeled on Facebook - users can upload photos and they are then available to everyone in the family tree. Photos can also be tagged with the names of anyone in the tree or any family friends. Those pictures will then appear in the profile of those users. That means people’s profiles get built out even without their active participation.
Geni also has more features planned in the near future. These include Gedcom imports, family tree mergers, and an internal messaging system.
Geni will never have the sex appeal of MySpace of Facebook, but they may finally crack the older demographic and get them participating actively in social networking. If they can become the (or one of the) de facto ways that people share family experiences like weddings, funerals, anniversaries and birthdays, it could become an important part of people’s online life. If that happens, the $100 million valuation will look like a steal.
Our previous coverage of Geni is here.
In other words, learning from MySpace’s strategy by combining many related services into a Multi-featured Social Network - but in this case a Family Social Network.
Yeeeeaah … finally am de first to comment !!!!!
OOps !!! …thnk am rong
I love it– no way do I want my family connected to my MySpace life anyway.
Having the extended family at one spot is good to know / bring family bonding. I was thinking of this type of website sometime to keep in touch with all my relatives and good that its here now. http://www.suggestusability.com
two things… I can imagine this sort of websites could be very interesting for some governments and their missions.
Alexa doesn’t show any real growth besides few spikes… it seems just 10x-20x higher than my pipi website that makes me $12 a day in advertising..
what is someone adds you to a tree without you knowing about it and you don’t want to be listed there… is there some form you can submit to that you want to be removed?
ok that’s 3 things
Mike, you’ve only got 300 or so people added? Just to show how viral Geni really is, I’m the ‘computer guy’ for my family, and yet, only after adding a dozen or so people to my own family tree, we’ve got nearly 2000 people so far! We’re in the top 100 largest family trees, and I’ve also got a Geni t-shirt to boot
More on everything here: http://www.kinggary.com/archiv.....interwebs/
Geni is a pretty interesting service. I definitely like the visualization aspect… too bad more social networks aren’t innovative in that way.
Well, if it’s bragging rights we’re after - I added six people to my family tree when it launched - and now there are seven of us in there. My brother added himself right after I started it. There’s viral and there’s viral!
Comparing Geni’s prospective success to Facebook or Myspace is ludicrous. There’s a whole different dynamic at work: Your extended family and dead ancestors aren’t your active friends and aren’t going to be. Your Facebook/MySpace friends are, relatively, more important to your life going forward than any Geni pool is going to be. Geni is the rearview mirror, a Facebook is the windshield. Those “views” aren’t comparable - we look forward to move ahead in life. There’s also an implication here that family tribes are as important as social tribes. That’s just wrong. Most cousins are goofy.
The minimal value to Geni will be to better organize family parties of families who forget each other’s names and alert people to distant relatives death, so you can send an email of condolence.
How secure is this Geni site. Anyone looking at your family tree, could easily figure out your mother’s maiden name, and if a distant relative gets hold of your SSN somehow and gets your mother’s maiden name from Geni, then there is no way you could secure yourself. In a way, you are putting something secure out there openly..
Geni has got to sort out their performance. It takes ages to render a page and I only have 277 members in my tree. Adding photos is so slow I’ve given up!
Nice page, good layout and easy to navigate, but I agree with the security issue of the site. And I also must say that we use social networks site to meet people we dont know (at least the majority) which is therefore exciting and successful at the end. family network?hmm…
Social network fatigue. Period. There are very few family events per year and much less births and deaths that require announcements. But mostly, the idea behind the site is crappy, there’s really no compelling reason to keep coming back once you’ve built out your tree. I’ve been working with some companions on a similar service (before Geni launched) and try as we might, we just couldn’t see a massive upside. I doubt Geni will be a massive success or even a moderate one.
I read about this on Calacanis and checked out their site and signed up. I invited about 7 or 8 family members, including the Aunt that is a geneaology fanatic, and haven’t been back to the site yet. Nobody, even the Aunt, has added any other family members. Geni looks great and perfomed wonderfully, but why would I ever go back to the site? I’m not compelled to and for some reason even my family members that are very active with tracing our family geneaology are not either. Others say it is viral, I’m still waiting for them to say “psyche!”.
……. or “psych”.
More virulence: I added 16 people and 4 weeks later we have 1185.
Michael - your comments are constantly more foolish. Let’s reiterate, “If that happens, the $100 millioin valuation will look like a steal.”
First you spelled “million” incorrectly. We’ll forgive that.
Second, a $100 MM post-money Series B valuation for a Web 2.0 start-up which has just launched is never a steal. Let’s evaluate this from a financial standpoint (which I guess 99% of people on here don’t get):
The best way to evaluate an opportunity is to look at expected value. At a $10 MM investment for 10% of the company for a social network which is going to bleed cash, you have to figure at least 50% more dilution for CRV’s stake which brings it down to 6.66%.
A VC firm needs to make at least 5x cash-on-cash to make it a worthwhile investment given the time frame which means Geni has to sell for $750 MM. Let’s look at how many social networks *may* have a value above that:
- Myspace
- Facebook
- Bebo
- Orkut
- Mixi
How many social networks are out there? Probably 50,000+. So 1/10,000 have a value over $750 MM and that’s without accounting for survivor bias. Good luck CRV, you’ve just shot yourself in the foot.
I’m an ass and I know it, but your comments are blowing the bubble to the point it’s about to pop. Geni is DOA. We live in the USA where family represents a small percentage of most people’s social interactions. Your parents and siblings matter (as do your kids if you have them) but your cousins are there for once-a-year family reunions and great-aunts and uncles are best for Christmas parties. Your friends are much more likely to view your photos and interact with you on a daily basis. Furthermore, it’s very easy to compete with. Unlike Facebook or Myspace which is valuable because EVERYONE is on it, on this, you only care about your family. There could be 10 competing family sites which completely fragment the market if people even care about this stuff. Geni misses the point completely.
just to add more data: when Geni launched, i started invited family members. it did grow virally…for about 3 days. We got up to about 50 people. It hasn’t grown since the first two weeks and I don’t think a single person in our extended family has visited the site since. The valuation set for this financing should make everyone involved feel very embarrassed.
The average pageview per user is LOW. There’s nothing interesting about this site after you’ve added your relatives. It isn’t an app. No dating.. no IM…. it’s just a database….
Unless they have something up their sleeve this thing just isn’t going to pay off.
Personally, I heart Geni. I don’t know about the commenter above who seems to disdain his family, but I love that this was the first web app that my mom and dad really got into. They are having a ball and collaborating with their own cousins. And, they finally understand a small sliver of the world I work in.
That’s worth a gazillion dollars to me, I don’t care about anything else.
I get a kick out of people who say, “it didn’t work for me, so it ain’t worth anything.” LOL.
this is not new concept…it is been there from web 1.0 days…look at myfamily.com etc…
web 2.0 is all hype…by just adding ajax, flash compnies want billion dollar valuations…that is as ridiculous as it can get!!
Tara - unlike the two of us, the partners at Charles River Ventures have a responsibility to their Limited Partners (possibly including the pension fund that your parent’s very pension dollars rely on) to make wise investments.
I don’t have disdain for my family, I’m just making the point that for most of us, beyond our nuclear family, we don’t spend too much time interacting with the rest. We don’t need the n-th social network to help us stay in touch with the family members we are already close to. They can always join Myspace or Facebook if they want to.
Jay, I don’t know, me and my family (I’m practically the youngest in it!) are having a blast on Geni! We’re all getting to know each other a lot better, just like Tara is, apparently, so I love the site. If you ask me whether the site is worth $100 million or not, I’ll tell you point blank that I have no idea. But, I do know that the site is at least valuable to me.
Gary - understand the difference between a subject and an object?
Michael -
You are sounding like a moron now, and clearly someone who has never run a business. You might be able to say….”if they keep building this, someone might actually just pay $100mm for the functionality”, but you can’t say they will every actually be worth $100mm based on ad revenue. To get there, they would need to earn $10mm in Ebitda annually. Unless every family in the US uses them daily, or a bunch pay a subscription fee, this will not happen - or come close to happen. Ad supported businesses are very hard and only work with scale.
The only people sillier than you are the idiots at Charles River, who must have been smocking the crack pipe when they thought this was a good idea.
Devin
I find Tara and Jay’s juxtaposition funny because it kind of captures the point I made at my panel at Personal Democracy Forum (and which, btw, Tara attended).
My panel at Personal Democracy Forum was, ‘Is Cyberspace Colorblind?’ but I tweaked my focus to talk about how the cultural myopia of a lot of Web 2.0 companies is manifested in their design and user interfaces. Many of the web 2.0 companies launched here in the US believe their markets are somehow computer-bound, English only, white middle class males with endless time on their hands. I can’t think of any one outside of Six Apart who have used linguistic and cultural diversity as part of their core business model, and not just an after effect of success.
I agree with Jay when he says that most Americans wouldn’t use GENI because of the culture’s fetish for the nuclear family … but those ‘Americans’ may well not be included in the 100.7 million ‘majority of minorities’ accounted by the US census. Jay’s ‘Americans’ may well not account for the largest group of the ‘majority of minorities’ –the 44.3 million Latinos who make up now more than 12% of the US population.
GENI could be a bargain if it had the balls to think of itself as a global company, making it possible for families across language and territorial divides to come together online …. but guess what? It lacks cojones. Just look at it’s front page and pretend, for one minute, you speak a language other than English … yah.
Diversity cannot be a dirty word for web 2.0 companies. It has to be grabbed not only as a market opportunity but as a market necessity —look at what happened to Friendster and Orkut when the Brazilians took over. Does anybody ever remember when English-only Americans were displace at Photolog.net –and how ghastly unprepared they were to handle that?
GENI is overpriced for their lack of a ‘right off the bat and on the front page’ global strategy and vision. They need to at least incorporate all the languages that are least spoken in the United States to make their mission credible.
Or grow a culturally diverse pair.
Liza Sabater, Publisher
http://culturekitchen.com
There’s quite a few errors in my comments but this one needs to be cleaned up :
>>GENI is overpriced for their lack of a ‘right off the bat and on the front page’ global strategy and vision. They need to at least incorporate all the languages that are **AT** least spoken in the United States to make their mission credible.
Also, the PDF panel had some of the smartest people I know talking about the intersections of globalization and technology : Cheryl Contee, Anil Dash, Chris Rabb and our moderator, Ruby Sinreich.
http://pdf2007.confabb.com/con.....56/details
Liza Sabater, Publisher
http://culturekitchen.com
Liza your comments make sense but as you know social networks are dominant in different areas. Orkut is huge in Brazil and India while Bebo is very popular in the UK. TechCrunch has already featured numerous sites that are rip-offs of US sites that have garnered great success abroad. If Geni is indeed valuable, there will be a Latino knockoff called “MiFamilia.com” and an Indian one and a Chinese one and they will all destroy Geni.com
Hey Devin, valuation does not equal annual ebitda. A popular way to value companies is based on discounted cash flow (to take into account the fact that money later is worth less than money now). For a pre-revenue company like Geni, valuation is based on what people will pay for it, and CRV set that price at $100 m. Idiots they may be, but your comment illustrates a fundamental misunderstanding of how assets are valued by financial markets.
i continue to be astounded by the glib optimism people cast upon any dreck that floats its way on to techcrunch. geni is garbage. whoopee, i can draw a line between me and my dad and my fifth cousin. i don’t need a website to tell me my cousin is my cousin. everyone who is using a $100 million number here realizes it is absurd, they are just hoping to find some dumb money out there to fall for it
“Many of the web 2.0 companies launched here in the US believe their markets are somehow computer-bound, English only, white middle class males with endless time on their hands. ”
which is exactly correct. climb out over the santa cruz mountains and you will find the 80% of americans who do not know what a blog is or the otherwise massive groups of people who have never heard of myspace or flickr. none of the crap we call “web2″ resonates with ANYONE but the single white males of our four or five major metro areas, and not even all of them
I’m wondering in what way Geni is different from http://familyecho.com/, which already has photo upload and GEDCOM download and upload? Sure, the graphic design of Geni is better, but is that enough to justify a $100MM valuation?
It’ would be very interessting who really is the first mover… Check out this one… http://www.familyone.de/
“If they can become the (or one of the) de facto ways that people share family experiences like weddings, funerals, anniversaries and birthdays, it could become an important part of people’s online life. If that happens, the $100 million valuation will look like a steal.”
That’s a huge if. When investors start giving $100 million valuations, there should be a lot less “if” and a significant amount of validation. The idea that a two month old, pre-revenue startup has created anything that could reasonably be valued at $100 million is absurd.
Right now it looks like Geni has been successful in generating signups but much less successful in actually growing an active userbase. These new features might be the key to doing just that, but I’m still skeptical. At the end of the day, these features are standard on every other social network out there, and given the saturation of the social networking market in general, I doubt that any single player, or group of players, is going to become the de facto standard for the way families share their experiences. There are far too many existing destinations and I don’t see Geni defragmenting the market.
This doesn’t mean that Geni doesn’t have the potential to create a valuable business, but a $100 million valuation on the second round sets the bar about as high as it can go. I have to question whether the investors really believed that there’s a chance this will ever sell at a price that would get them a 3-5x return on their investment when they cut a check. The risk/reward proposition here seems to be awfully uncompelling.
According to network effect, the strength of a network is equal to the square of the network users number. Some PayPal guy said this.
It would be interesting to compute Geni valuation taking into account MySpace valuation (6 billions) and users number (140 millions). Roughly Geni to be worth $100 million should have over 18 million accounts.
@ Grzegorz - Interesting valuation formula and target for Geni. I don’t know if they have 18 Million accounts, but like Michael writes your initial network can grow fast if your dad (older generation) can easily use the site.
Full disclosure: They sent me some swag, and I am giving it away to anyone who has a dad,
in my unofficial Geni contest, where I am asking people to answer my straw poll, “would their dad use Geni?”
http://www.dkworldwide.com/tec.....trackback/
It’s good you provided a screenshot. The odd times I’ve tried to visit Geni, it’s been down.
Now is a particularly good one: it downloads a bunch of items then locks up IE or FF. Nothing renders. Maybe an out-of-control swf. Beta is fine. Don’t serve your pages if you don’t want. But please don’t crash my whole browser.
Hey Crashed, Again, sorry about this! Can you send an email to help@geni.com with any more details you can tell us. We’ve never seen this happen on any of our test machines and would like to find the problem. Thanks.
Geni’s family tree builder is really nice but MyFamily.com was the first to realize the market, Amigila.com was the first to build a Flash-based family tree tool. Famiva went limited beta with the viral family tree concept before Geni.
Famiva’s Java-applet based animated family network visualizer is also cool, plus it has many features designed to keep families stay current and keep coming back. MyHeritage and KinKafe are also worth a look. And then there’s the flashy Famundo. Geni is not alone in the Family 2.0 space. It does somehow grab most attention on the blogosphere. Kudos to Geni blog-comments-team for that!