This Week: Ancestry IPO, FamilyLink goes viral, Navigating Facebook Platform changes

This week is going to be amazing. Possibly, the most interesting week of my career. I’ll explain.

Ancestry.com is slated to go public on Wednesday. I always dreamed of being part of that IPO, but I’ve been out of the company (7 years) longer than I was in the company (6 years). But my excitement about watching a company I helped create trade on a public exchange is mounting. I cannot wait to see what happens when ACOM debuts on the NASDAQ this week.

I’m thinking about holding an IPO party at my house on Wednesday for the early Ancestry.com employees who are no longer with the company. It would be fun to reminisce a bit and see where everyone is now. If “public demand” for a party is high, I’m sure we’ll be able to pull it off on short notice. Between LinkedIn and Facebook, my blog and twitter, we should be able to get at least a dozen or two people to show up. If you’re interested already (and qualify as a “former Ancestry employee”), shoot me an email. (paul AT familylink.com) We’ll watch a couple of old company videos and hopefully some Tivo’d coverage of some of the business news about Ancestry from Wednesday.

This week is also exciting because FamilyLink.com is going viral. Our FamilyLink.com Quantcast chart shows that we’ve had more than 6 million unique visitors since we debuted last month and we are just getting started. We think our Flash-based family tree tool is the funnest online tree ever created, and it is getting tons of usage. We hope to be a top Facebook Connect site soon. In fact, Facebook’s Wiki shows FamilyLink as an example of how to create invites and requests using Facebook Connect. Facebook has been an incredible platform for our company to build on.

Even though Compete.com shows us as having more unique visitors than Ancestry.com, and even though we are classified by them as a genealogy site, we are actually a totally different creature. We are a family social site. Users of our Facebook applications (we have about 60MM users) can easily navigate to FamilyLink.com and enjoy an enhanced family experience there. We connect you to your living relatives. We help you share content and life experiences and memories with your immediate and extended family. Family trees are a fun part of our overall experience (because everyone loves to see how they fit into their family) but we are not currently a deep research site for ancestral records.

About 15% of our users consider themselves genealogists (which means 85% do not).  Many of them already subscribe to paid services like Ancestry.com or use free genealogy web sites for research. We believe that genealogy will likely be an important advertising category for us in the future, since we are attracting millions of families to our service and as the saying goes, “there’s a genealogist in every family.” But you can also say there is a photographer, event planner, scrapbooker, top chef, health nut, sports fanatic, vacationer and couponeer in every family. When we ask customers what additional features they want us to build into FamilyLink, we get everything from photo albums to recipe sharing to online chats and event planning tools. We will generate ad or product revenue from a  lot of categories as we try to meet the needs of millions of families worldwide.

This week is also intense and interesting because of all the upcoming changes Facebook announced for their Platform last week. Here are some links:

  • Video of Facebook’s platform changes. Ethan Beard, who heads up the Facebook Developers Network, describes the product roadmap in this nearly one hour video. Mark Zuckerberg introduced him.
  • Facebook’s developer policies have been condensed from 17 pages to 3 pages — all policies are now in one place
  • Nick O’Neill’s This Week in Facebook post shows how much is going on at Facebook right now. The pace of change is incredible, and it is hard to keep up with everything, but the pay off for being in the Facebook ecosystem can still be amazing.

More information has been coming out in the last few months about the best ways to monetize social web sites than I have ever seen before. The Social Ad Summit in NYC provided a lot of good information, especially about virtual currencies and virtual goods; PeanutLabs followed the Mike Arrington “Spam Facebook Like a Pro” blog post with some great survey data about how users prefer to pay for in-game virtual currency; and this article from VentureDig covers monetizing social networks with recommendations for 2010.

It’s a great time to be in social networking. Investor interest in social networking related companies seems really strong. For years the conventional wisdom was that social networks could not be monetized, but it turns out that for most of that time the fastest growing social networks (like Twitter today) weren’t even focused on monetization. They were sacrificing revenue or deferring even thinking about revenue to capitalize on the fact that millions of people would be joining social networks and that the network effect would lead to a few winners, with a winner-take-most outcome. That was a very good bet.

It is well known that Facebook has turned cash flow positive, Twitter raised money at a $1 billion valuation, and Zynga is generating a ton of revenue, some say about $250 million this year. But it is not so well known that teen social network myYearbook turned profitable this year (in Q1 according to CEO Geoff Cook) because of “Lunch Money” and virtual goods. There are other under-the-radar social networking companies and app/game developers that aren’t well known at the moment that will breakout in 2010 and become widely known.

Here’s to hoping that FamilyLink.com will be one of them.

It’s Scary That Yahoo Finance is Wrong

A couple days ago I blogged about Omniture’s (OMTR) market cap being half that of Web Side Story (WSSI). I based my blog post on Yahoo Finance. They put Omniture’s market cap at $102.7 million today. Fortunately, two of my readers have commented that Yahoo Finance was wrong. The number of outstanding shares is not 14 million, but 40-50 million. They point out that according to other finance sites (such as Marketwatch) Omniture’s market cap is $327 million, higher than Web Side Story like it ought to be, based on revenue and revenue growth.

I take responsibility for writing a blog post based on inaccurate data on Yahoo Finance. I’ve learned my lesson: don’t trust a single source for financial data, or more specifically, don’t rely on Yahoo Finance for financial data period. I remember Yahoo Finance being inaccurate some time ago for something else I was researching. So I think I’ll switch to Google Finance (their OMTR data is accurate), but I’ll try to remember to always check multiple sources before coming to any conclusion and especially before blogging.

To compound the error, my web site ranks #1 on google for the search “Omniture market cap” based on my earlier post. (Yahoo finance ranks #2 because of my link to them.) So for a couple of days, before my readers corrected the error, web users worldwide would have read my blog post, which was based on faulty data and therefore had a faulty premise–that Omniture’s value was lower than Web Side Story’s–or they could have gone to Yahoo Finance and found the same data that I found.

Thank goodness for blog readers and for the blogosphere in general which tends to be very self-correcting over time. And thank goodness for a semi-efficient market which values a great company higher than a good one.

Someone at Yahoo should comment here and explain why a company with their size and reach can possibly get away with having inaccurate data on a highly visible company that recently went public. There is no excuse for this. Unless they correct their problems, they ought to be slammed pretty hard by some mainstream journalist. Maybe I’ll email my friend at the SF Chronicle…

(Note: I still own shares in Omniture, as I said in my earlier blog post as well.)

Shutterfly Files for IPO

A few highlights from the Shutterfly S-1:

  • $83.9 million in revenue last year with net income of $28.9 million (But $24 million was from a one-time tax benefit recognized in Q4 2005. The revenue growth is strong year over year.
  • They have stored more than 900 million customer photos in their archives.
  • They have sold 300 million prints in 11 million customer orders.
  • 84% of their customers are female.
  • This is a bit surprising to me.

  • 98% of the revenue comes from the U.S. Even more surprising. Who is doing online print processing internationally?
  • 4.1 million unique visitors in May 2006

Since I tend to focus on marketing strategies, here is the text from the S-1 about Marketing, Advertising and Promotion:

We use a variety of advertising, direct marketing technologies, channels, methods and strategic alliances to attract and retain our customers. These methods include direct marketing over the Internet, e-mail marketing to prospects and existing customers, search engine marketing, and traditional direct marketing mailings such as postcards and seasonal catalogs. In addition, because many of our products are either shared via the Internet or given as gifts, the appearance of our brand on the products and packaging provides ongoing distribution as well as viral advertising.

We place advertisements that cater to women and families on websites and in publications, contract for targeted e-mail marketing services and contract for advertising placement on leading search engines. We also maintain an affiliate program under which we pay program participants for referral sales generated from hyperlinks to our website from the affiliate

Omniture IPO!

I’m so happy for everyone associated with Omniture for successfully completing its IPO today. The shares opened at $6.50 and ended the day up slightly at $6.53 per share. Visit Yahoo Finance for more. This high tech IPO is a big deal for Utah, which needs more IPOs. And Omniture now has a war chest to help it maintain its leadership position in the web analytics space. This is a great company with a great product that many of my companies (and many of the really big online companies) rely on for real-time decision making, and for optimizing revenues.

Full Disclosure: I am a shareholder in Omniture. Do bloggers have to disclose that when blogging about a publicly traded company? Somebody tell me the rules …

Most August IPOs (30) in Five Years

This morning I woke up with three ideas that I believe could be
developed and sold to one of the major search engines within the next
three years. I started wondering if the best exit strategy for an
internet based startup these days is to position yourself to be
acquired by Google, Yahoo, or Microsoft. And maybe even eBay. There is
so much capital in these companies and they all seem to be anxious to
do acquisitions. And the IPO market has seemed so sleepy for so long.

But then I came across this article from yesterday’s Business Week that says there were 30 IPOs in August,
the most for any August in five years. And it claims the market is just
heating up. Here are some of the tech companies that could go public in
the coming months:

They also mentioned Skype, but of course, this article was written before the announcement that eBay is buying Skype.

So in addition to being a great time to start a high-tech company (the best time in history,
in fact), it appears that it might once again become a great time to
harvest a high-tech company, with both M&A and the IPO market
looking quite promising.

Answers.com: Massive Traffic Growth

I’m always impressed when I see an Alexa traffic chart like Answers.com. Within a few months of launch, the site is generating several hundred thousands unique daily visitors. This site is kind of a combination of Wikipedia.org, Dictionary.com and Bartleby.com. But it also has downloadable software that allows you to access content on more than 1 million topics from any application. Very cool idea, well executed. With almost no trailing revenue, the company with headquarters in Israel debuted on the American Stock Exchange recently and now has a market cap of more than $100 million. This company will be extremely fun to watch. Will they be able to monetize their traffic from general reference content and grow into their market cap? I see this company as a potential distribution partner for worldhistory.com as our database grows into millions of dates.

Shopping.com IPO

Shopping.com has raised more than $124 million in its IPO, pricing shares at $18, after upping its range to $16-18. The Israel-based company is the 4th largest shopping destination online. It had $42 million in revenue and $3.8 million in net income during the first six months of 2004.

I read yesterday that all Internet IPOs this year are trading above their opening price. It’s definitely survival of the fittest.