Bebo man: Founder of one-time rival to Facebook is still in start-up mode

Michael Birch and his wife, Xochi, sold Bebo for $850m. Now their latest platform, Blab, is beginning to take off

"It's suicide to try and be a better Facebook, " Michael Birch says. And he should know. Along with his wife Xochi, he co-founded social networking site Bebo in 2005.

Sitting in the trendy surroundings of Monkey Inferno, his latest venture in San Francisco, he smiles at the fact Bebo outdid both Facebook and Google in Britain and Ireland, albeit for a short while only.

The couple sold the social networking site for $850 million to AOL in March 2008 and bought it back five years later for $1 million. The BBC later described the AOL purchase as “one of the worst deals ever made in the dotcom era”. And it probably was – for AOL.

For Birch and his wife, it was among the best deals they ever did. The couple netted $600 million from the sale – though they bought Bebo back for more than they had anticipated on spending.

Following Bebo’s bankruptcy, they thought about buying the site back, mainly for reasons of nostalgia and sentimentality. They figured it would only cost $200,000. Then dating site match.com came along and an auction followed. They ultimately spent $1,000,010 on the deal.

But how did Bebo, the site that gave most Irish people their first introduction to social media, come about? Accidentally, according to Birch. He had left his job in Zurich Insurance Group to pursue start-up life, mainly because his father was an entrepreneur.

“If you work in insurance, there’s great motivation to leave. My father was an entrepreneur so I got the entrepreneur bug off him,” he says.

Birch told Xochi he would spend no more than three months in the start-up world, and if he hadn’t made any money, he would go and find a job. Three years later he was still working on the start-up, and hadn’t made a penny.

His first idea was a self-updating address book, something which was great in theory, but failed to take off. He also started a babysitting network, which also failed, as it was very difficult to overcome the mistrust and concerns of parents.

The couple then set up online greeting card service BirthdayAlarm, with which they had a breakthrough with in 2004, following the decision to charge for cards.

“We made an income of $10,000 a month from advertising on BirthdayAlarm. We started charging for cards in 2004 and made $10,000 the first day, and $300,000 that month. We brought in $3.5 million that year. It was transformative for us.”

Head start

Bebo wasn’t their first social network. That was Ringo, which they sold three months after founding it in 2003, for the nice sum of $2 million. The couple started Bebo a year after Facebook, but had a head start in Britain and Ireland, as the Mark Zuckerberg-founded social media giant was slower to get moving in

Europe

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The head start was good, as Bebo was, for a short time, the largest social media network in Ireland and Britain.

“We started a year after Facebook but had a fraction of their funding and a fraction of their engineers. We were playing catch-up with them always, but somehow managed to overtake them in the UK and Ireland,” says Birch. “We even overtook Google for a while in Ireland and for one month in the UK. We were the most popular website, but no press covered that.”

At its height, Bebo had more than 40 million users worldwide including more than one million Irish users. Facebook ultimately won the social networking battle, and the couple decided to sell Bebo.

“We could see chitchat about Facebook on Bebo and noticed a shift happening. We were the best buyable social network for AOL. They couldn’t afford Facebook as it had gotten so big.

"People ask me, 'Are you pleased you sold it?' I would have rather gone on and been really successful with it. I nearly regret selling it in a way. It was the right thing to do, though, especially because the Lehman Brothers collapse happened two months after we closed the deal."

Michael and Xochi began looking for other projects following the sale, and bought a building in San Francisco in 2009 to convert into a private members’ club. Over the next five years, the couple transformed the 58,000sq ft industrial building into The Battery. The club has a restaurant, gym, 16-person hot tub, games room, wine cellar, board room, games room, event spaces, a koi pond, and a chandelier of taxidermied seagulls in full flight in the library.

“The Battery is a real-world social network. A private club is to a city what the local pub is to a village,” Birch says.

The club has approximately 3,600 members from the worlds of tech, art and medicine among others, though people who “wear business suits to work every day” are less welcome.

In 2011, the Birches launched start-up incubator Monkey Inferno.

“It’s an ideas lab, a playground to test out and develop ideas we or the team come up with. BirthdayAlarm received no love for the four years we were doing Bebo, so we hired people to work on BirthdayAlarm and other ideas.”

This same team relaunched Bebo as a messaging service in December 2014, but, while it got a lot of users, it didn’t take off.

“We had 500,000 people using it very quickly, but didn’t feel we were getting the traction we needed. There is still a Bebo app in the app store but we’ve effectively parked it.”

Live streaming platform

What is taking off, though, is Blab, a live streaming platform that enables public video chat. The platform has high retention rates with the average user spending 64 minutes a day watching livestreams.

“It’s an online chat show that anyone can create, and where viewers can partake, either by joining the video chat or commenting on the side of the live stream.”

The next step will be to monetise the site, a necessary step, though that’s not a word Birch likes.

“At some point this has to make money. Otherwise we’ll run out of money. But it will become less fun when we get a sales team.”