Houston Business Journal - 2008-02-28
by Nicole Bradford Staff writer
Whoever said it is pointless to live in the past didn't try to build a business based on it.
The increasingly popular hobby of genealogy is now big business for Houston-based Family Tree DNA, which sells and processes mail-in test kits for people interested in tracing their ancestry.
Founded in 2000, the company rocketed to success, going from processing fewer than 200 DNA test kits a month in 2001 to more than 900 a month two years later.
Gross revenue of $2.6 million in 2004 jumped to more than $8.99 million in 2005 and $12.2 million in 2006. The company offers what many describe as a pioneer service -- generating detailed facts about customers' ancestry through a simple cheek-swab test carried out at home and mailed to its Houston lab.
For many who have spent hours chasing paper trails, the DNA test is an open door after a dead end. Test results provide information such as geographic and ethnic origins. The tests cost anywhere from $99 to $839.
The creation of Family Tree DNA was based on increasing interest in genetic research, a subject that even non-scientists were finding fascinating when its founding partners came up with the idea of starting a business in 1999.
"In addition to being a pioneer in this field, we felt that growth at that point was solid and the concept of genetic genealogy was being more accepted among genealogists -- amateurs and professionals," says Max Blankfeld, vice president of operations.
"People started becoming more and more interested in their deep ancestral origins. 'Where did my maternal or paternal line come from?' Not just in recent times, but much further back, beyond the genealogical time frame."
As the fledgling business began drawing in customers, it also was being mentioned in discussion groups regarding ancestry, and the word spread.
In November 2003, Family Tree was contacted by National Geographic.
"They explained to us their idea of creating a 'virtual migration map of the humankind' by analyzing the mutations in the DNA that allow us to recreate the migration path of our ancestors," Blankfeld says.
"This was a very exciting idea, and Spencer Wells -- who you may know from his famous documentary 'The Journey of Men' -- was behind it."
The project, which would take five years and involve collecting 100,000 samples from indigenous populations, would give the public the opportunity to participate by buying a DNA kit from Family Tree DNA with proceeds going to the Genographic Legacy Fund.
IBM supported the project while another organization, the Waitt Family Foundation, supported its field research. Eighteen months later, in April 2005, the Genographic Project was launched.
Less than three years into the project, almost 250,000 public participation kits had been sold, Blankfeld says, and orders for the test kits kept rolling in from those who heard about the company.
In addition to efforts such as the National Geographic project, Family Tree DNA garners potential customers through educational presentations to organizations such as the Houston Genealogical Society and Daughters of the American Revolution.
"I made a proposal to my cousins to try DNA for genealogy," says Katherine Borges, director of the International Society of Genetic Genealogy. "I think a lot of this company's growth has come through its reputation and by word-of-mouth from clients," she says.
"They do very little advertising; I've seen a few print ads in genealogy publications such as Family Tree magazine, but they don't advertise on TV or Yahoo! and I think this illustrates the quality and reputation of the company," Borges says.
In December 2007, the Family Tree DNA offices and lab moved into a larger facility at 1445 N. Loop West.
With larger offices and more customers, however, come challenges such as infrastructure to support more business and increasing competition from other companies.
Blankfeld describes competition as both "healthy" -- which makes the overall market grow -- and "opportunists that want to seize the moment to make money without really caring about delivering something serious."
The latter, he says, place a strain on the entire industry.
The best solution to building an infrastructure is to be proactive, Blankfeld says, in areas such as human resources, technology and research and development.
"We hired and keep hiring good people, whether for customer service or the lab; we invested in state-of-the-art equipment for the lab and we keep developing new tests that will respond to our customers' needs," he says.
Company president Bennett Greenspan, a native of Nebraska who graduated from The University of Texas and studied at Southern Methodist University's Caruth Institute of Entrepreneurship in Dallas, started Family Tree DNA with Blankfeld after selling a prior business in 1997.
A life-long genealogy enthusiast, Greenspan says his "entrepreneurial gene" led him to turn his hobby into a full-time business.
"Being an entrepreneur and having the opportunity to ride the genetic revolution has been the most gratifying and challenging business endeavor of my life," Greenspan says"While there's a lot of excitement to it, I can certainly understand the pains that pioneers go through."
The company's startup was plagued with its share of challenges. Jim Warren, a founding partner and head of the company's information technology, died suddenly of cancer in 2003.
"I'm sure if he were alive, he would have created an entire IT department much earlier than we did -- something that happened only last year," Blankfeld says,
"Looking back, of course we may find things that we could have done differently," he says, "but while, overall, we feel good, perhaps we could have put more weight on the IT side of the business, which is very strong, and gives to our customers a lot of interesting features.
"But then, sometimes things happen in a way that one cannot predict."
Family Tree DNA
Business: DNA testing for ancestry research
Founded: April 2000
Top executives: Bennett Greenspan, president; Max Blankfeld, chief operating officer
2004: $2.6 million
2005: $8.99 million
2006: $12.2 million
Web site: www.familytreedna.com
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