BNEI ATAROT- In case you don’t recognize it, that dateline is the name of a small village about forty-five minutes from Tel Aviv. Don’t worry, my concierge hadn’t heard of it either. It may actually have more roosters than people living there. But tucked away, in a hundred-year-old house built by German Templars is one of the most exciting Web companies in Israel: MyHeritage. It’s also completely outside of the Israeli Web “scene.” I’ve never seen founder Gilad Japhet at any of the Web mixers, and I’ve never gotten a pitch from his PR people. In fact, I had to do a bit of hounding to get a meeting.
But don’t be fooled by the low-profile: MyHeritage is boasting some of the best numbers of any Israeli Web startup. It’s got 31 million registered users, who have documented 330 million family members, some living and some dead. The company has been backed by blue chip investors Accel Partners and Index Ventures. And Japhet told me on Monday, the company is starting to bring in real revenue from premium services and eCommerce transactions. (Think: sending flowers and candy to your parents for their anniversary). Japhet admits the company should have focused on this earlier, but says the lean operation should be break-even by the end of the year.
After a tour, Japhet said, “How long do you have? Because when I get going, it’s hard to stop.” He’s not kidding. He also took the liberty of giving me a bigger notepad. I think I asked one question, but mostly nodded and ate the homey selection of apples, pears and bananas that was laid out for us. But I’m not sure there’s anyway to tell the story of MyHeritage quickly. It’s been a long road and little has come easily for this company. As a result, more than a few people have described Japhet as a little crazy. That’s ok. I like crazy entrepreneurs. Frequently, you have to be one to succeed.
After all, when he started MyHeritage no one was interested in a mainstream Web genealogy startup. He bootstrapped the company for years, mortgaging his house and begging a German company for free access to its facial recognition software. He was turned down for venture capital so many times, when he finally got a small round from prominent Israeli angels, he had to give up a lot of equity. “Have you ever heard this word ‘Chutzpah?’” he asked smiling.
It’s not that Japhet is modest: He clearly crowed over MyHeritage’s technology and other things he believes he’s done well. But he openly admits where he has struggled. One of the most pivotal events in his company’s history: The launch and monster $100 million valuation of competing site Geni.com. On one hand, it legitimized the space. But as his investor Simon Levene of Accel told him, “Be careful what happened to MetaCafe doesn’t happen to you.”
The story of MetaCafe is one you hear over-and-over again in Israel. The company is still alive, but the founders have left, traffic has stalled, and according to Arrington at least, acquisition attempts were thwarted. In case you aren’t familiar with MetaCafe, it was a lot like YouTube, only it launched earlier. It was growing nicely when, like an Israeli cabbie, YouTube came out of nowhere and sideswiped MetaCafe. (Yes, I’m trying to make Israeli driving jokes in every post about the country. I’m actually a big fan of the taxi drivers here. I’ve arrived at meetings in record speed over the last two weeks.)
If I’ve heard about the so-called MetaCafe curse at least two dozen times since I’ve arrived, no doubt Japhet has heard about it more. After six years of building this company, putting a strain on his family and having to give away most of his equity to keep it alive, Levene’s words were like a call to action. “He didn’t say we were going to lose,” Japhet says. “He said, ‘You’re going to work really, really hard to make sure you win.’” And as TechCrunch has reported, MyHeritage is killing Geni in traffic, and buzz-wise everyone seems more excited about Geni founder David Sacks’ newer company, Yammer. Japhet likes Yammer too. “David Sacks is a very talented guy and now I only have to compete with half of him,” he says.
I’ve always been a huge fan of Geni’s user interface, and it’s still better. But MyHeritage gives you more to do. While everyone in Israel has been in a lather about Face.com this week, MyHeritage has long had pretty impressive facial recognition software that could also tag photos on Facebook, Flickr and other sites. Again, Face.com is glitzier, but at least Japhet knows this is a weakness. This is the real reason he bought the UK’s Kindo recently. “They didn’t have a ton of assets, but they were good at UI,” he says.
It’s been a tough road for Japhet. Maybe he built the company too early. Maybe he should have focused more on the Web than a downloadable client. Maybe he should have focused more on revenues a few years ago. But there’s also an advantage when things don’t come easily for entrepreneurs: They take nothing for granted and are less likely to get sideswiped by an upstart.
hmm.. i used to be a big fan of metacafe and its desktop tool. Don’t remember the last time i used it. Interestingly untill i read this post, i didn’t realize it is still installed on my PC but didn’t open it since ages.
Encrypted titles. Post doesnt feel techcrunch. Hope Lacy will learn soon…
Huh, this post was awesome. It read like a story. Finally a post with some emotional elements and humor. Sarah raises the bar of TC.
I also liked the way this article was written. Good job, Sarah!
What I like the most is their intuitive interface. Even my mom found it easy to use – and she doesn’t know anything about technology. It shows that the founders paid attention to every detail. I’m still struggling to find all my family’s docs to finish my tree there. It was fun showing my family tree to my GF.
Sarah: It’s a pleasure reading your posts. That’s how tech journalism should be.
Great post!
So often we read and hear about companies that launched their product within a year of starting and then within a few weeks gained millions of users etc etc. It is encouraging to read about start-ups that went through difficult times but made it in the end with hard work and determination!
Japhet, you are a source of encouragement to the rest of us!
Metacafe is behind YouTube, but you can’t say it failed. It’s still a successful company. Many start ups would love to be in the “cursed” situation that Metacafe is in…
No….it is a successful “personal founders exit strategy” but burning over $40 million dollars to get where they are today is not a successful company….and your are right, may founders would like to make easy money creating nonsense but some real entrepreneurs want to create real companies in addition to playing lotto every week…
great post
Yep, looks like at MyHeritage they do the right decisions… http://alexa.co...+myheritage.com
Yeah, it’s a huge gap.
Here is also a comparison with Geni:
http://www.alex...ge.com+geni.com
If you want to see a really huge gap, compare it to Ancestry.com which is the real leader in the web genealogy space. They crush everyone else.
http://www.alex...om+ancestry.com
MyHeritage is way bigger than all of them Bigger than Ancestry.
Just combine all the disparate MyHeritage domains. eg. myheritage.co.il myheritager.fr etc.
Great post Sarah, keep them coming. I love to read about unheard startups. Should be more like these on Techcrunch.
@MyHeritage, nice website!
Does MyHeritage have its own face-recognition software?
I can point them out of where to get freely available APIs from the internet that do image decomposition (ie, dimensional reductions & feature extractions) , object recognition & pattern classifications.
hey, Falafulu , send me some of those links please
TimWeb,
Google Search on the algorithm called NNMF (non negative matrix factorisation), with tons of them on the internet that are available in many languages (Matlab, Java, C++, etc…). There are different variants of NNMF available and they differ only in their accuracy. Some are more accurate than others. I can’t list them all here, since the TechCrunch spam-filter will block any message that contains more than 3 links I think. NNMF is a dimensional reduction algorithm, ie, it reduces the massive original dataset into a smaller subsets, where classification are then applied to the smaller subsets. You can also use NNMF for text-search engine, which is popular in its application in search engine.
Once you get the NNMF from the internet, then look at the following papers which are freely downloadable (PDF) of how to apply them (NNMF algorithms) to image databases:
1)
Classifying Faces with Non-negative Matrix Factorization
2) Incremental Non-negative Matrix Factorization for Face Recognition
There are more papers on application of NNMF for face-recognition from different authors that are available from the internet, just Google for those. Remember, just drop a question to the authors of those papers I cited above, since their email addresses are available in their respective publications if you want to find out more about their papers and how NNMF is being used. Don’t hold back, they will help you out, even request their codes, where in my experience, researchers/authors are always genuine.
There are also more dimensional reductions that are available for use in face-recognition today such as ICA (independent component analysis), just Google for those free codes on the internet and also research papers on the use of ICA on face recognition.
Cheers.
Metacafe a failure? Using past tense to refer to it? Do you have any clue at all? It’s ranked #55 on quantcast, 6million unique/month, traffic up 66% this year.
Terrible post.
That struggle gives me a strong feeling of deja vu…
Metacafe is anything but failure. Sarah Lacy can you please post about other things other than Israel? All your posts have been Israeli and just shows how biased you are.
She’s in Israel this week visiting and posting from there….
So what?
2+2 … so she is covering the Israeli startup scene.
Slow?
She’s IN Israel. . . to focus on Israeli tech startups.
you alticle great
“The launch and monster $100 million valuation of competing site Geni.com. On one hand, it legitimized the space. ”
Legitimized the space… Hard to understand how an article talking about genealogy can NOT to mention the 800lb gorilla of the space– http://www.ancestry.com
They are miles ahead of both of these companies in terms of traffic and continue to grow nicely… and it is a subscription business.
Ancestry.com is really sort of in a different business.
Like saying that a post about MySpace vs. Facebook is ignoring Classmates.com…
Not really. MyHeritage, FamilyLink, Geni and Ancestry all focus on genealogy and family trees which are very intertwined. Ancestry (aka The Generations Group, just to add to their own mis-marketing confusion) just has a (bunched up) set of other stuff like MyFamily and other entities they don’t know how to integrate well.
I wish Ancestry would go away, seriously. This company has issues.
is this israel heritage month or something?
“hundred-year-old house built by German Templars”
… ummm, I think you mean a 1,000-year old house?
Well, she is right about 100 years but she is wrong about Templars. It was the Templers – http://en.wikip.../wiki/Templers_(religious_believers) .
The Templars were indeed crusaders so you have a point.
@Moshe – thanks for clarifying, makes sense.
I am on the same road of building something… it is inspiring to read about people like Mr. Japhet .. it helps in those days when you the thought of failure is very prevalent in your mind
Gilad is also a very possitive person. Every time i needed advice or help in our SU, he was happy to help.
Good Luck Gilad and the team
nice post – well-researched, well done.
Reading through the comments, I saw the one’s saying about http://www.ancestry.com, I have been a member of this web site in the past, and now I’m a member of My Heritage, and In my personal experience My Heritage is much more user friendly, I had most of my family tree on Genealogyj a freeware program, and it was so simple to upload my tree from this program onto My Heritage website, also I have other family member as part of my group so they can help, manage my tree.
It is brilliant to hear about a sucess story like this and I wish him all the best in his future.
with 46 million global uniques, 11 million in the US (comscore) and an alexa traffic ranking of 116, saying that Metacafe traffic has stalled is simply not true. Metacafe also continues to show growing revenue (something YouTube is still struggling with) Some of the founders, but not all of them have left.
And while Metacafe certainly lost the blessing to YouTube, a reporter comprising a catchy title and stating populist ‘facts’ based on Kinnernet gossip is simply irresponsible.
Kudos, MyHeritage!
Sarah
Forget about MetaCafe. I’ve got a better example for you.
http://www.Hevre.co.il was the very first university social networking site. It was before Friendster, before MySpace, before Facebook. It could have been Facebook. Tons of features, quite OK execution but zero understanding of the US/European markets.
That’s the story of many of the Israeli tech startups. Lots of innovation, sometimes they’re 2-3 years ahead, but when it comes to rolling it out globally they just suck.
That’s actually the story of the Israeli VCs. They’re simply not connected to the Valley. If I were an Israeli start-up, there’s no way I would choose and Israeli VC. But then you get the culture gap which means that Israeli start-ups can’t really get into UK/Valley VCs either. Quite a vicious circle I guess.
Hi, Michelle from Metacafe chiming in here to correct a few factual errors and offer an alternative perspective:
- Our founder, Eyal Hertzog, remains an active, engaged Metacafe employee – now serving as Chief Creative Officer, based in our Palo Alto headquarters.
- The Metacafe audience has actually grown quite significantly — 60% according to comScore, from January 2008 to January 2009, when the site attracted 46 million unique monthly viewers worldwide, 11 million of them in the U.S.
- This makes us the largest consumer web site — with traffic that is entirely organic — to ever come out of Israel… something we’re very proud of.
- This also makes us the world’s leading independent online video site. We’re actively defining and delivering a new entertainment experience through online video, and we’re enjoying success in making this a real media business supported by Fortune 1000 advertisers.
Great to see this success from a fellow “2006 Israel Web Tour” particpant — especially since he did it without the help of VCs – just his own vision, positivity, and sweat. Nice! Go Go Gilad!