Posts Tagged ‘Techstars’

Genealogy: A $1B Market? Maybe

Monday, March 1st, 2010

one_billion_dollarsI’ve spent a sizeable fraction of my evenings the past few weeks working on applications to summer startup accelerator programs. Genlighten’s to the point where we could really benefit from the mentoring, community, focused intensity, and access to seed-stage funding that these programs offer. The ones we’re particularly aiming at are:

The application questions reflect each program’s unique personality, but they also share some predictable common elements (What will your startup do? Who are your competitors? How do you plan to make money?) Though none of them specifically ask for revenue estimates (they’re smarter than that), they all imply that they’re looking for startups that are attacking large potential markets.

The Challenge of Sizing the Genealogy Market

That’s a problem for us. Just how big is the genealogy market? This question has been addressed in numerous forms over the years, usually phrased as “Just how popular is genealogy anyway?” Dick Eastman has taken a serious crack at answering this question in the past and arrived at the answer (paraphrasing slightly) “probably not as popular as we think.”

When I tell people I meet at startup-related events that I’m working on a genealogy website, they usually say something like “Oh… that sounds like a nice little niche.” Their body language sends the message that they don’t think I’m going to be getting rich anytime soon. I’m tempted to offer a response like “It’s actually a pretty big market,” but  I just don’t have the numbers to back that claim up.

My Estimate and How I Arrived At It

For the applications I’ve submitted so far, I’ve basically tossed out a made-up genealogy market size number: $1 billion in annual revenue. How did I come up with that number? Here’s my back-of-the-envelope calculation (all figures annual):

  • Ancestry.com 2009 revenue: $225M
  • All other genealogy websites: $100M
  • All other genealogy software: $50M
  • Professional genealogy services: $100M
  • FHL microfilm orders: $10M
  • Government archive film/document orders (NARA, State, County): $100M
  • Vitalchek: $50M
  • Other genealogical record retrieval (libraries, historical societies): $25M
  • Genealogy societies (membership, conferences,  transcriptions): $15M
  • Other genealogy merchandise (books, accessories, etc.): $25M
  • Specifically genealogy-related travel: $300M

Feel free to check my math, but I get that to add up to $1B annually.

Probing My Assumptions

Of the figures I’ve listed, only the Ancestry revenue number is anything other than a wild guess. The travel number is particularly suspect. I’m thinking about “pilgrimages to ancestral homelands” like Ireland, Germany or Poland, so they’re probably pretty expensive, but how many people are actually making those kinds of trips in this economy? And what about professional genealogists? Are they really making $100m in annual revenue, or is the real number more like $50M?

I feel a little more confident about the web and software company revenue figures, though they’re also probably a bit generous. But very few genealogy-related firms are public, so it’s always going to be difficult to refine these numbers without direct input from the leadership of these firms.

Does It Matter?

To the majority of family history enthusiasts, the size of the genealogy market probably isn’t that important. But if we’re going to encourage entrepreneurs to build innovative genealogy-related companies, and if those companies are going to receive the funding they need to grow and succeed, someone’s going to have to come up with a better estimate than I have. Hopefully a much bigger one!

Exploring The “Long Tail” of Genealogical Records

Monday, January 18th, 2010

I’ve been working on Genlighten’s TechStars application this weekend. I’m enough of a realist to recognize that our chances of getting accepted are slim, but I’m also enough of an optimist to forge ahead anyway. Here’s one of the key questions on the application and part of my draft answer thus far:

What’s new, interesting, or different about what your company will do?

Most genealogy websites offer popular document collections like the 1930 US Census – the “hits” of the online genealogy market. But the majority of records genealogy enthusiasts need aren’t online at all… they constitute the “long tail” of genealogy sources. Genlighten makes those records accessible. Our site enlists local researchers in communities across the US, Canada and Europe to perform on-demand retrieval and digitization of these obscure but crucial “offline” genealogy documents.

I’m not super pleased with this yet (too wordy, as my early drafts always are) but I think I’m on the right track. I see our ability to bring offline genealogy documents online as one of our key points of difference. And I think the concept of The Long Tail does an excellent job of explaining the significance of this difference to the genealogy market.

What is “The Long Tail”?

longtail1

The Long Tail (Image taken from Andrew Hargadon's blog.)

Chris Anderson, the Chief Editor of Wired Magazine, popularized the term in an October 2004 essay. The primary examples he used to illustrate it were retail ones: Amazon and Netflix.

Booksellers have historically focused on delivering bestsellers to their customers. Movie theatres — no surprise — are desperate to book the blockbuster hits that will sell millions of movie tickets. But online retailers like Amazon and Netflix have changed the game. Sure, they still make tons of money off of bestsellers and hit movie rentals. But they also have made it possible for the average customer to discover obscure books and movies that they otherwise would never have encountered.

These titles — appealing as they do to only a tiny market niche — don’t seem like they’d even be worth having in inventory. Yet there’s so many of them, that even if each one sells or rents to very few people, Amazon and Netflix can still make money from them.

What’s this Got to Do with Genealogy?

That’s what I was just about to explain. I want you to try to think about genealogy documents for a moment as media products, like CDs, books or DVDs. What would you say are the “Billboard Top 10″ of genealogy records?

For my part, I’d go with the various collections of US Census Records: 1930, 1900, 1880, etc. If you’re from England maybe it’s the 1911 Census. These have an incredibly broad appeal to all types of genealogists. So maybe the 1900 Census is sort of like Elvis, while the 1911 Census is more like the Beatles. Or Coldplay. Whatever. These represent the “head” of the genealogy marketplace in the diagram above. So it’s no coincidence that Ancestry and Footnote feature these records prominently on their respective sites: they basically justify the price of a subscription.

What’s in the Genealogical Long Tail?

I’d argue that there’s a huge number of historical document collections that appeal strongly to a very small niche of genealogical consumers. Here are some examples of what I mean:

  • A transcription of the parish register from a German church in Redwood, Jefferson County, New York
  • A compilation of headstone inscriptions from a cemetery in Franklin County, Maine
  • Otoe County Nebraska obituaries from the Morton-James Public Library in Nebraska City

I’m sure you can think of your own examples. In fact, I’m betting that a few of your major brickwall breakthroughs came when you managed to come across exactly this type of obscure, long tail record.

These records might not make economic sense for the major for-profit websites to digitize anytime soon. They might not make it to the top of FamilySearch’s Record Pilot priority list for a while either.

So How Can I Find “Long Tail” Records?

At Genlighten, we think the answer lies in building a network of local researchers in towns large and small across the world, who have access to obscure records of genealogical importance and can digitize them on demand. There won’t always be professional genealogists in every tiny community, so we feel we need to recruit providers who don’t yet have a CG or an AG after their name, too. It hasn’t proven easy thus far, but we’re determined to make it happen.

We Could Use Your Help

First, I’d appreciate any critiques to my Techstars application answer. But more importantly, if you’d like to help make “long tail” offline genealogy records available online, we’d love to have you as one of our lookup providers. You can start by clicking that “Register Now” link on the upper right of this page. Thanks!