THE TIMES TECH PODCAST
Episode: The Bebo Billions Part Two
Date: September 24, 2024
Hosts: Danny Fortson & Katie Prescott
Episode Overview
In this engaging, in-depth episode of The Times Tech Podcast, journalist Danny Fortson unpacks the rise and fall—then temporary rise again—of Bebo, the once-iconic social network founded by Michael and Xochi Birch. With insights from founding team members, investors, and industry observers, the podcast traces the roller-coaster journey that led Bebo from humble beginnings, through wild success and an $850 million acquisition, to rapid decline, all against the backdrop of the social media boom. Themes include startup grit, viral growth hacks, the culture clash between Silicon Valley inventiveness and corporate bureaucracy, and the outsized role of timing and luck in tech fortunes.
Key Discussion Points & Insights
1. Bebo’s Innovative Content and Early Social Media Landscape
- Original Programming as a Differentiator
Bebo was one of the first social networks to produce its own TV-style series, Kate Modern, paving the way for today’s content-heavy platforms.
- [01:20] Danny Fortson: “Kate Modern... was kind of like Friends, but with a dark underbelly.”
- [02:08] Joanna Shields: “We showed them what we had and said this is the medium that you guys are familiar with... And that changed everything.”
- Wild Early Growth and Platform Focus
Bebo’s reach exploded, even momentarily surpassing Google in the UK.
- [02:39] Michael Birch: “We overtook Google in the UK as the largest website. I thought, this is amazing... No one gave a shit.”
2. Learning from Failures: Friendster Lessons & the Address Book Pivot
- Cautionary Tales from Early Social Networks
Friendster’s technical issues drove users away and offered critical lessons to future founders.
- [04:58] Jim Scheinman: “I went and had lunch with [Zuckerberg]... He said, 'We're going to connect the world. Why would I sell it to Friendster?'”
- Iterating Towards Virality
The Birches repeatedly adapted, launching Bebo after earlier projects fizzled, willing to try different “gimmicks” and features in pursuit of true engagement.
- [05:37] Michael Birch: “The challenge was going back to our very first viral idea and then applying all the knowledge we'd gathered since then.”
3. Bebo’s Early Days: Scrappy Silicon Valley Startup
- Humble Operations and Quirky Culture
Their HQ was literally a garage in San Francisco’s Mission District, with tech fumes and creative energy.
- [07:57] Jim Scheinman: “One day we had paint fumes, the other day it'd be the pot dispensary on the other side... We were by far the most creative.”
- Competition Strategy: Focus Away from the US, Target High Schoolers
Bebo intentionally avoided the US, focusing instead on the UK, Ireland, and high school demographics that Facebook and Friendster weren’t targeting.
- [12:11] Jim Scheinman: “We were going after high school. By the way, no one had done that before.”
4. Viral Growth Hacks, Feature Rollouts, and Unconventional Success
- Gamification and Viral Quizzes
“How well do you know me?” quizzes and other interactive features led to millions of new sign-ups.
- [10:02] Jim Scheinman: “We built a quiz... That would bring in millions of people.”
- Relentless Experimentation
The team rapidly iterated on features—photo sharing, profiles, comments—creating a full social network.
- [10:33] Michael Birch: “Then we added photo sharing, which people did start using.”
5. The Big Venture Capital Break & Bebo’s Meteoric Valuation
- Securing European VC and the Importance of User Love
US VCs were dismissive; European investor Barry Maloney’s personal experience with his daughters’ Bebo obsession convinced him to back the company.
- [15:07] Michael Birch: “He said that he'd never had such a negative reaction from any of his children... So he was like, I really need to invest in this social network.”
- Strength from Profitability
With revenue streams from previous ventures like Birthday Alarm, the Birches had unusual leverage in VC negotiations.
- [16:33] Michael Birch: “It allowed us to go a long way, and then when we did raise a round, we did on our terms.”
6. Trouble on the Horizon: Facebook’s Global Ambitions and Bebo’s Sale
- The Facebook Juggernaut
Bebo executives saw the social tide turning as Facebook opened to the world.
- [17:36] Michael Birch: “I could sort of see the juggernaut of Facebook coming behind us.”
- AOL’s Winning Bid—and Regret
Despite internal doubts, AOL purchases Bebo for $850 million, beating Yahoo and walking away with a deal many consider overpriced.
- [20:49] Danny Fortson: “AOL's bid... $850 million cash for a company that its own founder admitted... was living on borrowed time.”
- [21:01] Michael Birch: “I think we spoke for about two hours just in a meeting room... it was a stock deal for nothing.”
7. The Aftermath: Acquisition Chaos, Financial Crisis, and Decline
- Integration Fails, Market Meltdowns
The acquisition was quickly soured by corporate culture clashes at AOL and the 2008 financial collapse.
- [24:50] Joanna Shields: “Meetings were all about metrics. It was metrics to the minutest detail.”
- [24:58] Joanna Shields: “AOL was the place where startups went to die.”
- Bebo Quickly Becomes a Billion-Dollar Blunder
In under two years, AOL sells Bebo again, likely for a single dollar.
- [26:52] Michael Birch: “I think it might be a dollar... I would obviously paid more than a dollar for it. Obviously $2.”
- Legal Battles and a Final Revival
After legal disputes and a stint as minority investors, the Birches buy Bebo's assets back and relaunch, but the world has moved on.
- [28:44] Michael Birch: “...arguably the single biggest repository of illustrated cock and balls ever recorded. I'm not going to take the moral high ground. I can't. I drew a couple myself.”
8. Final Reflections: The Real Prize of Silicon Valley
- Luck, Timing, and Escape
The Birches wind up rich, free from corporate shackles, and reflect that not being Mark Zuckerberg might be the real win.
- [30:41] Xochi Birch: “I'm so glad I'm not part of that world anymore.”
- [30:47] Michael Birch: “I'm sort of also glad to be out of it in many ways. I think it would be pretty stressful.”
- Eternal Lessons
Silicon Valley’s tech booms are as much about timing, luck, and the right exit as they are about technical brilliance.
Notable Quotes & Memorable Moments
- [02:39] Michael Birch: “For one month we overtook Google in the UK as the largest website. And I thought, this is amazing... No one gave a shit.”
- [04:58] Jim Scheinman (on Zuckerberg): “We have a much bigger vision. We're going to connect the world. Why would I sell it to Friendster? I'm going to put you guys out of business.”
- [15:07] Michael Birch: “He said that he’d never had such a negative reaction from any of his children. Like it was literally like her world had imploded, that she wasn't going to be able to use the thing.”
- [24:58] Joanna Shields: “AOL was the place where startups went to die.”
- [28:44] Michael Birch (on Bebo’s relaunch): “...arguably the single biggest repository of illustrated cock and balls ever recorded. I'm not going to take the moral high ground. I can't. I drew a couple myself.”
- [30:41] Xochi Birch: “I'm so glad I'm not part of that world anymore.”
Timestamps: Important Segments
| Time | Segment |
|-------------|------------------------------------------------------------------------------------------|
| 01:20–02:28 | Bebo’s early video innovation and the impact of ‘Kate Modern’ |
| 04:58–05:26 | Zuckerberg’s vision for Facebook, Friendster’s fatal flaws |
| 07:42–08:19 | Garage startup days, vibrant startup culture |
| 10:02–10:30 | Viral quiz mechanics and Michael Birch’s “wizard of viral marketing” abilities |
| 12:11–12:18 | Strategic choice to target high schoolers |
| 15:07–15:33 | VC Barry Maloney’s epiphany: investing thanks to his daughter’s protest |
| 17:36–18:07 | Facebook’s global expansion and strategic threat to Bebo |
| 20:49–21:22 | AOL’s extravagant acquisition and Zuckerberg’s lowball offer |
| 24:50–25:32 | Integration pains at AOL and the startup death spiral |
| 26:52–27:21 | Bebo’s $1 resale and Michael Birch's quip: “I would obviously paid more than a dollar...” |
| 28:44–29:26 | The whiteboard, Bebo’s relaunch, and “biggest repository of illustrated cock and balls” |
| 30:41–30:47 | Final reflections—leaving the social media world behind |
Conclusions and Takeaways
- Bebo’s journey is emblematic of the first social networking age: rapid growth, bold experimentation, and the dangers of corporate mismatches.
- Ironically, often the founders who cash out early, like the Birches, escape the headaches and scrutiny faced by bigger winners like Facebook’s Mark Zuckerberg.
- Success in Silicon Valley often boils down to timing, market focus, culture—and the good fortune to exit at the right time.
This episode is essential listening for anyone interested in tech history, startup culture, and the unpredictable rise and fall of online empires.