Steven McArthur, President Of Classmates Online, Inc. Interview
SNW INTERVIEW -- Oct 18 -- Classmates predates Facebook. In internet years, it was created around
the time Abe Lincoln was in office. I wonder which site will lead the
student and alumni category in another 14 years? Classmates has a few
tricks up its sleeve. Business is good at Classmates.com. The site has
50 million members, and grew its paid subscriber based by 41% in the
past year. I talked with the President of Classmates, Steven McArthur. - Mark Brooks
What is Classmates founding story?
Classmates
was founded about 14 years ago by Randy Conrads, a Boeing engineer who
as a child had grown up in a military family that moved around a lot.
When he got to the stage of his life that he was contemplating high
school and college reunions, he discovered that there was no easy way
to reconnect and network with friends from various educational
establishments around the world. So in the early 90’s, he started
Classmates as a sideline to his day job at Boeing. As it got momentum,
he left Boeing, founded the company and created the first online social
network. He grew the business to serve millions of members. Classmates
was acquired by United Online in 2004.
Do you
regard it as a social network? How is it a social network and how is it
a little bit different from other social networks?
Our
members interact like on many other social networks. Classmates Media
has a significant membership base of about 50 million people. Those
people have affiliations that are really about keeping them in touch
with the people and the institutions they value from their past from
kindergarten through high school to college, work, the military and
even neighborhoods they lived in 10 or 15 years ago. It’s really a
classic social network where the folks are communicating with people
that they very much value keeping in touch with.
We’re really the only place that folks can reliably find a large network of people to reconnect with. There is no one else out there that has the scale of information and the scale of community we have from 10, 15 or 20 years ago. What we offer is almost like your personal history channel where the richness that people have enjoyed across those relationships over time can be recaptured and reconnected.
That’s
an interesting point because you’re really helping people connect in
the real world as well and have quite a strong events section. Can you
tell us more about the event section?
Classmates’ Events
& Reunions section grew out of being the premiere place for people
to organize reunions, whether those were reunions for school or college
or even for families and workplaces. We get a significant number of
people who use the tools that we built, such as invitations and
photographic records of the reunion.
Has the rise of the likes of Facebook and other social networks affected your business? If so, how?
Classmates
has enjoyed record growth in our user base, both free and paid, over
the same time as you’ve seen Facebook and MySpace enjoy substantial
growth. Any time that there are multiple players promoting the merits
of a category, in this case social networking, it benefits all the
major players in the space. We certainly do our bit in promoting the
merits of social networking to our key audience and others like
Facebook do a fine job of promoting and making people aware of the
merits to their audience.
Can you tell us what you charge for the site and beyond advertising what makes money for you?
Classmates
Media has a very healthy advertising and media business that has been
growing. In addition to that we do sell subscriptions. More than 3.8
million of our 50 million active members are paid subscribers. The
folks that are paid members get access to a portfolio of services that
are primarily based around communicating with other people in the
network. We’ve seen our number of paid accounts grow by 41 percent in
the past year, from June 30, 2007 to June 30, 2008.
How are you promoting Classmates in different markets?
What
we find market to market is very consistent with what we find here in
the U.S. If you look at that audience versus some of the competitors
you named earlier, we are actually substantially larger in that segment
of the market than others. It’s the same in other markets where we
play. We find that the older demographic has very different behavior
patterns, has a lot of interest in real names, real people, and are
really wanting to reach out in a reliable way to reconnect with folks
that they have had treasured relationships with in the past.
There are companies in other markets doing very similar things. For example, we acquired a company in Germany a few years ago, called StayFriends, which has been a very successful acquisition for us. We also acquired businesses in Sweden (www.stayfriends.se) and in France (www.trombi.com). And we recently organically entered the Austrian (www.stayfriends.at) market.
What we find is, when you segment the market there is a very rich, very large segment of the market in their mid 30’s and older that are very under served by some of the more mainline players. We found a great deal of success in executing our business model in those countries using local brands that are understood and well respected by that segment of the market in those countries.
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