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15 Dec 2013
man buys back a company he sold for $850 million to AOL at just $1 million five years latter
The internet entrepreneur who founded Bebo
has paid $1m (£660,000) to buy back the social
networking site five years after selling it to
AOL for $850m.
Michael Birch, who co-founded the site
with his wife, Xochi, in 2005, tweeted late on
Monday: "We just bought back Bebo for $1m.
Can we actually re-invent it? Who knows, but
will be fun trying …"
Once the darling of younger teenagers in
Britain, Bebo reached a peak of 40 million
monthly users in 2008 when it was bought by
AOL in a deal widely regarded even at the
time as significantly overpriced.
By 2010 a lack of strategic leadership on
the part of AOL and the rapid growth of
Facebook had crippled Bebo, and AOL in effect
closed it down, though users could still access
the site.
The investment consortium Criterion
Capital Partners bought Bebo's assets for
between $2.5m and $10m in June 2010, later
bringing Birch on board as strategic adviser.
Birch is now the sole owner after beating
two rival bids in a post-bankruptcy auction. A
team of designers and engineers at Birch's San
Francisco-based business Monkey Inferno are
now working on redesigning the site.
Shaan Puri, chief executive of Monkey
Inferno, said: "We're excited about the
ambitious challenge of bringing Bebo back, and
couldn't be happier to announce that the
product will be back in the hands of the
founders. We know the odds are stacked
against us but we love challenges and the
Bebo users deserve better that what they have
received in the past few years."
Puri added: "The $1m purchase covered all
of the assets of Bebo Inc (hardware, software,
intellectual property etc). In simple terms, we
now own the website clear of any other
shareholders.
"Needless to say, we are ecstatic to have
the site back in the hands of the founders! It
will be a huge challenge to reinvent Bebo, but
we're up for the challenge."
Birch faces a significant battle to
differentiate Bebo from Facebook, which
allows users to join from the age of 13. Bebo's
core user base was younger teenagers, a
notoriously fickle market as the rival MySpace
also discovered.
While MySpace has attempted a slick
redesign and refocus on music, teens have also
shifted towards apps including Snapchat,
which lets users share pictures that self-
destruct, and sharing tools such as Vine and
Instagram.
Bebo is re-entering a very competitive and
fast-moving market with only a fraction of its
peak userbase. The site had 420,000 unique
visitors in the UK in May this year, down from
626,000 in May 2012, according to comScore.
The Birches owned 70% of Bebo when it
was sold to AOL and were estimated to have
made $595m from the deal. Michael Birch has
subsequently been an active investor in other
startups, putting money and time into
citysocializer, the Smarta startup awards and
becoming a partner at PROfounders capital. He
also started The Battery, a private members'
club in San Francisco, as well as Monkey
Inferno. Birch joins an exclusive list of
executives who have returned to save their
companies, including the Dell founder Michael
Dell and Steve Jobs, who turned a floundering
Apple into the world's most valuable company.
source: the guardian
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