You might know of Ancestry.com for recently linking President Barack Obama with investor Warren Buffet. It’s also in the spotlight, thanks to NBC’s “Who Do You Think You Are” program.
However, a decade ago, the company, which provides an online genealogy research and family publishing service, was looked at as just another dot-com and many thought it probably wouldn’t survive the Internet bubble. However, last year, the company launched a $100 million IPO.
How did this Internet company survive over the past 10 years in a volatile market? I recently caught up with Jerome Contro, COO and general partner with Crosslink Capital, to ask him about Ancestry and what lessons the Internet company has to offer us today.
Q: What first attracted you to Ancestry.com?
A: In 1999, I was working as a partner with a firm called Tango Partners. Tango made its first investment in Ancestry, and I joined the board.
By 2007, Spectrum Equity Investors bought out the majority of existing investors, including Tango. Coincidentally, Crosslink had invested in Ancestry in 2005, and now Spectrum and Crosslink were the major shareholders. At this time, I was in the process of transitioning from Tango to Crosslink. I resigned my board seat, but became more involved with the company as one of its two major shareholders.
In the beginning, I was particularly interested in Ancestry’s potential with community, which was the biggest selling point for me. At the time, investors were just figuring out online communities; no one really understood what types of online communities people would coalesce around. We felt Ancestry’s community had enormous potential.
Q: What were those early years like?
A: It was not an easy road, as 1999 marked the height of the glory days for dot-com companies. Like many others, Ancestry was caught in the frenzy. They had extremely high user metrics, or ‘eyeballs,’ as they were called at the time. They moved the company to San Francisco from Salt Lake City to be in the epicenter of the dot-com movement. Everything was moving forward at lightening speed.
Then, the bubble burst in 2000 and the next three years were a completely different story. Ancestry hit a wall and faced its most daunting challenges. The company took a step back, literally. They moved back to Salt Lake City, re-evaluated and determined a new direction for its business strategy and recapped the company.
Q: What’s your involvement with the company now?
A: While I’m no longer on the board, Crosslink and I have a solid relationship with Ancestry and CEO Tim Sullivan. We’re also a significant shareholder in the company.
Q: What was the biggest challenge you faced while supporting Ancestry?
A: The single biggest challenge was restructuring the Ancestry business model and recapping the company in 2003. Changing a business model is an enormous challenge, but changing a business model during a liquidity crisis is particularly difficult.
We re-evaluated its strengths in the genealogy business and realized the best way to monetize would be through a subscription model, rather than a commerce or advertising model.
Q: So many dot-com companies during that era failed, such as Pets.com and Webvan. What made Ancestry different from the others?
A: So many companies in the boom era were trying to do too much. Ancestry got caught up in that momentum, too. For example, at one point it developed and offered another site, myfamily.com, that focused on password protected family websites. This was an adapt-or-die scenario. The team realized diverting from the company’s roots in genealogy diluted the core offering and would not lead to long-term growth and success. So they re-focused back to its genealogy roots and went deeper there, developing the community that was truly interested in this niche.
Fortunately, this was and continues to be a large global community that has bought into and continues to buy into the subscription model. That put the company on solid footing for growth and its eventual IPO.