Can Michael Birch bring Bebo back?

After selling the company he co-founded in 2008 for $850million, Michael Birch bought it back this year for just $1m - but is it too late to save Bebo?

In 2008 Michael Birch sold Bebo, the social networking site he founded with his wife, Xochi, to the digital media giant AOL for $850m. This July he bought it back for just $1m, promising to reinvent the failing brand. Birch says he never imagined he’d own Bebo again, but when the company he started from his San Francisco living room in 2005 seemed certain to fall into obscurity, he felt compelled to step in.

“It seemed like Bebo’s ultimate fate was that someone was going to buy it and use it as an email list or database to get people to join a completely different product,” he says, when we speak on the phone. “We thought we could give it a happier ending.”

Five years ago, Bebo was the third-largest social networking site, behind Facebook and MySpace, with 40 million users. AOL’s chief executive at the time, Randy Falco, described the acquisition as a “game-changer” for his firm. But by the late Noughties, users of social networking sites were defecting to Facebook in huge numbers.

In 2010, AOL offloaded Bebo for $10m to the private-equity firm Criterion Capital Partners, which couldn’t halt the site’s decline. In March 2013, Facebook had 1.11 billion monthly users while, Birch tells me, only a “couple of hundred thousand” sign into Bebo every month.

Birch, who is 43, was born in Hertfordshire and met Xochi while they were both studying at Imperial College London. He says he ended up in San Francisco only “by chance” because Xochi grew up there. Where social media stars such as Facebook’s founder, Mark Zuckerberg, and Twitter’s founder, Jack Dorsey, talk in lofty terms about how their inventions have changed the world, Birch has retained a stereotypically British irreverence. He has posted a spoof product video for Bebo’s relaunch, in which he explains over dramatic background music how Bebo empowered millions to share “potentially career-destroying photos” and how its online doodling feature turned the site into the “single biggest repository of illustrated cock-and-balls ever recorded”.

Birch believes that Bebo’s decline, far from confirming Facebook’s strength, has exposed its fundamental weakness. He learned that “you grow and become very large because of the networking effect, but it can also be your demise because when people start leaving, it tends to be the early adopters and the influencers who go first and they take their friends with them.” He says that Facebook, which floated in 2012, is “overvalued” and can’t maintain its market dominance. Expecting someone to stay on Facebook is like “saying someone is only going to go to one bar for the rest of their life”.

The new Bebo will be a mobile-only app and it won’t compete directly with Facebook. This is partly because Birch believes Facebook’s model is becoming outdated. Having studied his 14-year-old daughter’s online habits, he thinks people will increasingly sign up to several social media apps, and that they will go for more direct, personalised forms of online communication.

Running Bebo will be harder now he’s in his forties, Birch says. He has three children and has lost the “hunger” needed to work 80-hour weeks. As the young tech billionaires who made it big in the Noughties start to approach middle age, they share one common enemy.

“It doesn’t matter how successful or wealthy you are, the people you are most fearful of are the young, up-andcoming people,” he says. “If you ask Google who they are most fearful of, it’s probably the guy in his dorm room, not the big companies of the world.”

While Facebook had over 1.10 billion users in March 2013, Bebo is down to a "couple of hundred thousand". Photograph: AFP/Getty Images.

Sophie McBain is a freelance writer based in Cairo. She was previously an assistant editor at the New Statesman.

This article first appeared in the 17 October 2013 issue of the New Statesman, The Austerity Pope

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Commons Confidential: Fearing the Wigan warrior

An electoral clash, select committee elections as speed dating, and Ed Miliband’s political convalescence.

Members of Labour’s disconsolate majority, sitting in tight knots in the tearoom as the MP with the best maths skills calculates who will survive and who will die, based on the latest bad poll, observe that Jeremy Corbyn has never been so loyal to the party leadership. The past 13 months, one told me, have been the Islington rebel’s longest spell without voting against Labour. The MP was contradicted by a colleague who argued that, in voting against Trident renewal, Corbyn had defied party policy. There is Labour chatter that an early general election would be a mercy killing if it put the party out of its misery and removed Corbyn next year. In 2020, it is judged, defeat will be inevitable.

The next London mayoral contest is scheduled for the same date as a 2020 election: 7 May. Sadiq Khan’s people whisper that when they mentioned the clash to ministers, they were assured it won’t happen. They are uncertain whether this indicates that the mayoral contest will be moved, or that there will be an early general election. Intriguing.

An unguarded retort from the peer Jim O’Neill seems to confirm that a dispute over the so-called Northern Powerhouse triggered his walkout from the Treasury last month. O’Neill, a fanboy of George Osborne and a former Goldman Sachs chief economist, gave no reason when he quit Theresa May’s government and resigned the Tory whip in the Lords. He joined the dots publicly when the Resolution Foundation’s director, Torsten Bell, queried the northern project. “Are you related to the PM?” shot back the Mancunian O’Neill. It’s the way he tells ’em.

Talk has quietened in Westminster Labour ranks of a formal challenge to Corbyn since this year’s attempt backfired, but the Tories fear Lisa Nandy, should the leader fall under a solar-powered ecotruck selling recycled organic knitwear.

The Wigan warrior is enjoying favourable reviews for her forensic examination of the troubled inquiry into historic child sex abuse. After Nandy put May on the spot, the Tory three-piece suit Alec Shelbrooke was overheard muttering: “I hope she never runs for leader.” Anna Soubry and Nicky Morgan, the Thelma and Louise of Tory opposition to Mayhem, were observed nodding in agreement.

Select committee elections are like speed dating. “Who are you?” inquired Labour’s Kevan Jones (Granite Central)of a stranger seeking his vote. She explained that she was Victoria Borwick, the Tory MP for Kensington, but that didn’t help. “This is the first time you’ve spoken to me,” Jones continued, “so the answer’s no.” The aloof Borwick lost, by the way.

Ed Miliband is joining Labour’s relaunched Tribune Group of MPs to continue his political convalescence. Next stop: the shadow cabinet?

Kevin Maguire is Associate Editor (Politics) on the Daily Mirror and author of our Commons Confidential column on the high politics and low life in Westminster. An award-winning journalist, he is in frequent demand on television and radio and co-authored a book on great parliamentary scandals. He was formerly Chief Reporter on the Guardian and Labour Correspondent on the Daily Telegraph.

This article first appeared in the 27 October 2016 issue of the New Statesman, American Rage