Social networks connect friends, but what about family?

Ilya Nikolayev, co-founder of Familybuilder, came up with a solution last year when he created Family Tree, a social-networking application that brings together relatives across major platforms including

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MySpace, Facebook, Bebo, Hi5 and Orkut.

Familybuilder launched when Facebook opened up its application programming interface and quickly expanded to other major social networks. It now serves nearly 4.5 million users and projects 2008 revenue of half a million dollars. Nikolayev moved from Russia to the U.S. as communism fell in 1989.

"Many of my relatives died in the Second World War," says Nikolayev, "so I was always interested in tracing my family roots."

But unlike other genealogy Web sites like Ancestry.com, which focus on discovering deceased relatives, Familybuilder harvests the power of social networks to reconnect users with living family members and perhaps some forgotten or unknown distant relatives.

"Our theory was that you could build a very robust family-tree application with a minimal amount of effort because that information already exists within the social networks," says Nikolayev. "We realized that if we managed to launch applications across the social networks, we could build out a network of apps that allow you to find and connect to relatives within the hundreds of millions of profiles that exist."

Coding an application for Facebook is one thing, but being an entrepreneur and turning that free application into a business entails much more work. "We started as a small app and then grew to a fairly large app," says Nikolayev. "We found that the application began to slow down."

While scaling has been an issue, Nikolayev credits continued growth on being smart and running the business lean with the limited resources available. To date, Familybuilder has raised roughly $1.75 million through self-funding, angel investments and a so-called series A financing. To turn a profit, Familybuilder is working to diversify its revenue sources with plans for expansion. Andrew Merkatz founded the business with Nikolayev.

Currently, revenue comes from the free Family Tree application, which hosts sponsored ads. Beginning in mid-October, Familybuilder will begin offering DNA test kits for $59, which is much cheaper than most other genealogy Web sites. Also coming soon will be premium subscription-based services and targeted consumer goods.

"We have a lot of data in terms of anniversaries, birth dates, special occasions, et cetera," says Nikolayev. "So we intend to target

users with custom goods." For example, a sibling can put his brother's picture on a mug for his birthday.

Today's large social networks have been dubbed "walled gardens" because of their inability to play well with one another. Familybuilder eliminates those walls by letting users connect with others regardless of network. In addition, user information can be stored on Familybuilder to make new network profiles easier.

As the saying goes, "You can pick your friends, but you can't pick your family." At least now you can find them -- whether they use Facebook or MySpace.

Steve Cooper spent over six years at Entrepreneur magazine and Entrepreneur.com. He was most recently the managing editor of Entrepreneur.com and was previously the research editor for Entrepreneur magazine. He has a degree in journalism from San Francisco State University and runs his own business, Hitched Media, Inc.