Stephen Foley: Bebo loads up its secret weapon
Saturday 17 July 2010
US Outlook: Bebo has a secret weapon in its effort to win teenagers back to the social networking site: Maxx Levin, 17-year-old brother of Bebo's new owner, the California entrepreneur Adam Levin. As you read this, Maxx is travelling the Far East wearing a Bebo cap and under instructions to tell everyone he meets to sign up.
It's an unconventional marketing effort, but then everything about Bebo's new owner is unconventional. Two questions immediately sprang to mind when Mr Levin's Criterion Capital Partners emerged as the buyer of the site that AOL had bought just two years earlier for $850m. Who? And, why?
Mr Levin is a 31-year-old serial dealmaker who says his first acquisition was a minor league hockey team when he was just 19. He is joined by a small gang of serial start-up executives who think that the simple act of stripping Bebo out of the AOL infrastructure will be enough to re-energise the company.
The why is simple: because they didn't have to pay very much, less than $10m. That looked to Criterion like a bargain, despite the collapse in Bebo's popularity, with 117 million signed-up users but only 13 million of them logging in regularly. The brothers Levin are both doing the rounds, talking up the prospects of a turnaround, Adam Levin via a series of media interviews this week.
At this point, you can count me among the sceptics, but I'm glad someone is trying. As Mr Levin points out, Bebo is a very different beast to Facebook, with a niche in the younger market which he expects to sell to kids as "the social network your parents aren't on".
LinkedIn, aimed at building business contacts, shows the potential for success of a niche social network, and the ease of well-targeted advertising means that niche sites seem intuitively more likely to make money than generalist ones. If Mr Levin does engineer a turnaround in activity on Bebo he'll be hailed a hero, and it might throw up some clues to solve the intractable problems at MySpace.
But even if he doesn't, he can still win plaudits if he manages to make Bebo profitable for the first time, something he claims is possible almost immediately, now that the site can source adverts from outside AOL's moribund sales network. It will be a fascinating case study.
The question is whether Mr Levin will hang around long enough to prove the point. The price he paid for Bebo was so low, he says, that he had offers to take it off his hands on Day One. He has resisted that quick a payday. How much better a story it will be if he creates some real economic value out of this little company, rather than becoming just another flipper of an unprofitable internet asset. Watch this space.
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