Bebo founder buys his baby back for $1m

The founder of social networking site Bebo, who sold out for $850m five years ago, has announced that he is buying back in for a mere $1m. Meanwhile, the Winklevoss twins have another trick up their sleeve...

by Michael Northcott
Last Updated: 19 Aug 2013

It’s a dream scenario  – you start a website, sell it to some numpties who still think websites can have residual value for the best part of a billion dollars, and then regain control of it a few years later for a mere million. That’s exactly what Michael Birch, the founder of Bebo has done.

He originally sold the social networking site to AOL for $850m back in 2008 (although as we remember it, the site was already dead in the water thanks to Facebook), but AOL knew what was good for them pretty quickly. They set about dumping the site at a loss just a year later. Now the site is a shadow of its former self, and Birch has reared his head once again.

In a tweet, Birch said: ‘We just bought Bebo back for $1m. Can we actually re-invent it? Who knows, but it will be fun trying…’. 

Tech blogs such as TechCrunch are suggesting that, since there is no desperation to make it work from near-billionaire Birch, this will be an experiment in finding out whether the alchemy of reviving dead dotcom phenomena can be achieved. Oh, to have a spare $1m for 'experiments' like that...

At the moment, Bebo's in a weird state. Just seven weeks ago, it filed for Chapter 11 voluntary bankruptcy protection: Burke Capital Corporation has arranged an auction of its assets so debtors can be paid. The confusing bit is that before the bankruptcy filing, the company seems to have been jointly owned by PE firm Criterion Capital and a consortium of shareholders thought to include Birch and his wife (who co-founded the site).

The rumour is that Criterion were not happy with this co-ownership deal for some reason – so the question is, has Birch been trying to encourage a sale so that he can get his mitts back on the steering wheel? We’ll have to wait and see what happens next with Bebo – if Friends Reunited is anything to go by, it’s a damp squib.

To be fair, there's precedent: since Justin Timberlake invested in MySpace, that site has enjoyed a significant resurgence. It re-launched two weeks ago after a $20m marketing campaign and attracted 31 million unique users in just two weeks, with a million downloads of its iPhone app. Maybe there is hope for Bebo, yet…

Elsewhere in the internet entrepreneurship sphere, the Winklevoss twins, a pair of former Olympians who claim Facebook CEO Mark Zuckerberg stole their idea for a social networking site, have come up with another wheeze. They claim to have the single largest pool of Bitcoins (you’ll have to read MT’s previous coverage to learn about them), worth $11m, which they have put in the Winklevoss Bitcoin Trust. They plan to float this trust making $20m worth of shares available to investors.

The value of Bitcoins is incredibly volatile, and in January this year their value surged from $15 for each Bitcoin, to a high of $260 on 10 April before crashing again, now trading at about $90 each. The aim is that investors will be able to sell shares short, meaning they can speculate that the value of a Bitcoin will fall. This will also open up the possibility of Bitcoin derivatives, futures, and spread betting, none of which are currently available for the mysterious new currency.

Who knows whether the Winklevosses know what they’re doing. They’d just better make sure Zuckerberg hasn’t already set someone to work with a Facebook-branded trading platform…

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