I was talking to Russel E. Perry , CEO of 123people , a successful Austrian-based start-up firm in the online people search market, about several topics: the advertising model, Internet and social network markets and technology as an asset. 123people has gone a long way in its short life. What is perhaps more impressive is this: they are making money out of searches and advertising. The business pitch of this company is that the emergence of social networks have made one out of three online searches people based. This is a video that explains their product . This is good for a starting point but when most of social networks are struggling to talk revenues, it makes sense to me to learn a bit about the how-to.
“Our competitors in the US raised more than 10mln USD in total, but could not prove the business case yet. The business there is strongly driven by ideas and Venture Capital. At this other side of the Atlantic, people and a strong business case are what matters”, Russell told me. He gave the example of 123people and how they reached positive cash flow in six months after foundation in 2008. Though the firm is offering it’s service in US and Canada, it´s Europe where they´re making their bigger footprint. According to Russell, more than 40 million unique visitors use their page per month. This figure aggregates the statistics of its 12 local markets across Europe where 123people is present (Poland was the last market they´ve added).
The initial funding was led by Austrian VC Gamma Capital Partners under the hospice of the business incubator i5Invest.
An interesting fact about the growth of 123people is the focus on the local markets. To Russell, “technology (like our search engine) provides the instant outreach to internationalization”, but “our company reflects the markets and to us that means thinking of product and services”.
Russell is also very much focused on the audience. I´ve being hearing too many arguments on how valuable social networks are (and still see little money) that Russell explained how they see it. First, they attract people outside the teen-sites. Most of their users are over 20 years old, have high education and income and a strong online purchasing affinity. Secondly, they work with global, but also local partners on innovative display advertising.
I believe this firm has something in common with Yahoo who have motioned to a growth by local flavours in the last years. Although, the Yahoo story has its ups and downs. At least for 123people the outcome has been very positive. Last March 2010 the French Yellow Pages, PagesJaunes, made their acquisition. Being part of an established corporation will give Russell and their team financial muscle so that they can continue focusing on their plans for growth. Where is the pressure on now? Russell told me about the new rollouts of new features for their search engine and the extension of their freemium services for partners. I have the impression the advertising model is far from dead to them.
Finally I went on to talk on the privacy issue. I was surprised to hear 123people understands how the privacy issue is important for the whole internet industry. He told me other companies in the people search market use profiles, but they work with information which is already available through other networks. Not to mislead users is important especially when more of that information is being made public.
So, this is just the first episode for search technology as it will get more personalised and accurate in the future. We all have to be prepared for the new reality where control and managing our digital footprint will be key.