An excerpt from Upstarts: How GenY Entrepreneurs Are Rocking the World of Business and 8 Ways You Can Profit from Their Success by Donna Fenn
Myspace and Facebook dominate the world of social networking in terms of number of members and Web traffic, and their staggering success has helped to create a new industry and pave the way for other entrants. Niche social networks seem to proliferate like wire hangers in a closet, but one of the fastest growing and most successful is myYearbook.com. Founded by the Cook siblings, Catherine, age 19, Dave, age 21, and their older brother, Geoff, age 31, the site is essentially Facebook for younger high school students. Catherine and Dave started it in 2005, when they found themselves, at 15 and 16, trying to make friends at a new school in Skillman, NJ. Back then, Facebook membership sill was limited to college students, and the Cooks thought that MySpace was "a little creepy." A social networking site geared toward high schoolers would help them to make new friends, but also, the younger Cooks predicted that it also might be a pretty good idea for a business. Like many of their Upstart peers, the Cooks founded a business that was largely a reaction to an established company that wasn't quite meeting their needs.
Their enthusiasm was fueled by their big brother, Geoff, who had started a highly successful college essay editing company when his younger siblings were just eight and nine years old. "We watched him build the company, and we visited him in his really cool office in California," says Catherine. Geoff sold his company, CollegeGate, to Thompson & Peterson's, a test prep and book company, in 2002 and walked away with a very fat wallet. And so, when his younger siblings pitched their business idea to him at the dinner table one night, he did what any devoted, wealthy, and savvy older brother would do. "He wrote us a check for $250,000 right there at the table," recalls Catherine, who became copresident of myYearbook.com with her brother Dave.
With help from programmers hired in Mumbai, India, Catherine and Dave launched myYearbook.com in April 2005 with 300 members from their high school. "We wore really cool T-shirts to launch it," says Catherine. "On the front, they said 'myYearbook.com,' and on the back was 'Who are your friends and are they hot?'" Five months later, they expanded to other high schools and were adding 3,000 new members a day.
The Cooks attribute their success to listening to their users' suggestions, such as allowing members to link to others with the same interests and making it easy to customize pages. They also made the decision to differentiate themselves from Face book by creating their own applications rather than allowing outside developers access to their platform. "Instead of having thousands of applications, our goal is to have 200 incredibly good ones," says Catherine, who reports that revenues, earned from advertisers, are "in the eight figures."
As for brother Geoff, it was hands off his investment until his two younger sibs decided they needed outside financing to grow the company. "We were nervous about going in and saying, 'Hey, we're 16 and 17, do you want to throw a few million our way,'" recalls Catherine. So they brought Geoff on as CEO and landed $4.1 million in venture capital in late 2006 from U.S.Venture Partners and First Round Capital. less than two years later, in July 2008, they raised an additional $13 million from Norwest Venture Partners with participation from the original investors.
myYearbook.com now adds 20,000 new users a day, has more than 11 million members, and is the third largest and the fastest-growing social networking site on the Web. It's still dwarfed by Facebook and MySpace, each of which attracts well over 100 million unique monthly visitors at this writing, compared with myYearbook.com's 12 million. By my Yearbook.com's tiny market share is increasing exponentially (384 percent from May 2007 to July 2008). It's a great example of a young upstart taking on the 800-pound gorillas in the industry by offering a very specific segment of the market (teens aged 13 to 19) a service that's better suited to their needs. Cook notes that her members spend an average of 30 minutes per visit, compared with Facebook's 20 minutes. Advertisers love that kind of attention span from an audience that's affluent and impressionable but not particularly well known for its ability to focus. And unlike Facebook, which not attracts a huge number of foreign users, myYearbook.com's constituency is largely U.S.-based, which makes the site a more targeted buy for advertisers.
But the Cook siblings are not content to rest on their laurels. Catherine is now a junior at Georgetown University, where she juggles school with approximately 40 hours a week on the myYearbook.com website. Typically, she heads home on the weekends to put in more time at the office. It's a full plate, but she has big plans. "Our long-term goal is still to be the largest social media site on the Web, and monetize it," she says.