Briton banks a fortune from his $850m Bebo sale

For one of the leading social networking entrepreneurs, Michael Birch's introduction to his future wife, Xochi, happened in an endearingly old-fashioned physical way, in the bar of Imperial College in London.

Today, the 37-year-old Briton, whose networking site Bebo is a digital hub for millions of young people around the world, is reflecting on another real world connection that will change his life: the acquisition of a fortune. He and Xochi have agreed to sell Bebo for $850m (£423m) to the internet pioneer AOL, part of the world's biggest entertainment company, Time Warner, owner of HBO and Warner Bros.

The Birches, who live in San Francisco and have a substantial undisclosed stake in the company, are reported to be "very happy" at their new-found but undisclosed wealth.

Why are they suddenly so rich? Bebo is one of the biggest players in the goldrush of social media websites, exerting a strong hold on the lives of 40 million people. These web-savvy young people are prized assets to companies eager to garner social network advertising, which is growing by 75 per cent annually.

One by one, media conglomerates have been buying part or all of virtual communities – Rupert Murdoch's News Corp bought MySpace for $580m and Microsoft paid $240m for a 1.6 per cent stake in Facebook.

Like those sites, Bebo allows users to email friends, store photos, draw pictures, watch videos and TV, and make free phone calls.

Only Bebo operates on a school or college basis, resembling a trendier Friends Reunited, and has successfully swept younger audiences into its orbit.

According to the internet traffic monitor Hitwise, Bebo – which stands for "Blog early, blog often" – is the second most popular social networking site in the UK.

Two million members log on for half an hour a day, watching the online drama Kate Modern among other dedicated videos from bands and TV companies. In the US, Bebo boasts a far smaller market share but even more members, 4.4 million.

Bebo was the website linked to the recent spate of suicides in Bridgend, south Wales, which were rumoured to have been prompted by a desire to be remembered on its memorial pages.

Under the management of Joanna Shields, who will remain while Mr Birch and his wife depart, the company is about to expand into France, Germany, Italy, Spain and the Netherlands. In an email to staff, AOL's chief executive, Randy Falco, described its acquisition as "game changing" for the one-time dial-up internet pioneer, which has been transforming itself into an online advertising powerhouse. He said social networking sites were "growing at a fantastic rate".

Analysts had expected the sale, which has been rumoured for several weeks and been negotiated for months. "It comes as no great surprise to see another traditional publisher buying in to the power of the social networking phenomenon," remarked Alex Burmaster, of Nielsen Online.

"Microsoft did it with Facebook, News Corp did it with MySpace so Bebo was the next logical target."

Mike Butcher, editor of TechCrunch UK, said: "For $850m to be dangled in front of the founders, who started it only three years ago, it must have seemed a good deal."

Mr Birch, a computer programmer who founded two companies, BirthdayAlarm.com and Ringo.com before Bebo, kept a low profile yesterday, though he may wish to indulge his entrepreneurial streak again. According to the Bebo's corporate website, Mr Birch admires the Channel Tunnel and his "biggest dream is to raise enough money to build an Atlantic tunnel".

The profile on the website then jokes: "Donations gratefully accepted."

Suggested Topics
Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Recruitment Genius: Games Developer - HTML5

£28000 - £45000 per annum: Recruitment Genius: With extensive experience and a...

Recruitment Genius: Personal Tax Senior

£26000 - £34000 per annum: Recruitment Genius: This is an opportunity to join ...

Recruitment Genius: Assistant Product Manager

Negotiable: Recruitment Genius: Due to on-going expansion, this leading provid...

Recruitment Genius: Shift Leaders - Front of House Staff - Full Time and Part Time

£6 - £8 per hour: Recruitment Genius: This is an opportunity to join a family ...

Day In a Page

Mullah Omar, creator of the Taliban, is dead... for the fourth time

Mullah Omar, creator of the Taliban, is dead... again

I was once told that intelligence services declare their enemies dead to provoke them into popping up their heads and revealing their location, says Robert Fisk
Margaret Attwood on climate change: 'Time is running out for our fragile, Goldilocks planet'

Margaret Atwood on climate change

The author looks back on what she wrote about oil in 2009, and reflects on how the conversation has changed in a mere six years
New Dr Seuss manuscript discovered: What Pet Should I Get? goes on sale this week

New Dr Seuss manuscript discovered

What Pet Should I Get? goes on sale this week
Oculus Rift and the lonely cartoon hedgehog who could become the first ever virtual reality movie star

The cartoon hedgehog leading the way into a whole new reality

Virtual reality is the 'next chapter' of entertainment. Tim Walker gives it a try
Ants have unique ability to switch between individual and collective action, says study

Secrets of ants' teamwork revealed

The insects have an almost unique ability to switch between individual and collective action
Donovan interview: The singer is releasing a greatest hits album to mark his 50th year in folk

Donovan marks his 50th year in folk

The singer tells Nick Duerden about receiving death threats, why the world is 'mentally ill', and how he can write a song about anything, from ecology to crumpets
Let's Race simulator: Ultra-realistic technology recreates thrill of the Formula One circuit

Simulator recreates thrill of F1 circuit

Rory Buckeridge gets behind the wheel and explains how it works
Twitter accused of 'Facebookisation' over plans to overhaul reverse-chronological timeline

Twitter accused of 'Facebookisation'

Facebook exasperates its users by deciding which posts they can and can’t see. So why has Twitter announced plans to do the same?
Jane Birkin asks Hermès to rename bag - but what else could the fashion house call it?

Jane Birkin asks Hermès to rename bag

The star was shocked by a Peta investigation into the exotic skins trade
10 best waterproof mascaras

Whatever the weather: 10 best waterproof mascaras

We found lash-enhancing beauties that won’t budge no matter what you throw at them
Diego Costa biography: Chelsea striker's route to the top - from those who shared his journey

Diego Costa: I go to war. You come with me...

Chelsea's rampaging striker had to fight his way from a poor city in Brazil to life at the top of the Premier League. A new book speaks to those who shared his journey
Ashes 2015: England show the mettle to strike back hard in third Test

England show the mettle to strike back hard in third Test

The biggest problem facing them in Birmingham was the recovery of the zeitgeist that drained so quickly under the weight of Australian runs at Lord's, says Kevin Garside
Women's Open 2015: Charley Hull - 'I know I'm a good golfer but I'm also just a person'

Charley Hull: 'I know I'm a good golfer but I'm also just a person'

British teen keeps her feet on ground ahead of Women's Open
Turkey's conflict with Kurdish guerrillas in Iraq can benefit Isis in Syria

Turkey's conflict with Kurdish guerrillas in Iraq can benefit Isis in Syria

Turkish President Erdogan could benefit politically from the targeting of the PKK, says Patrick Cockburn
Yvette Cooper: Our choice is years of Tory rule under Jeremy Corbyn or a return to a Labour government

Our choice is years of Tory rule under Corbyn or a return to a Labour government

Yvette Cooper urged Labour members to 'get serious' about the next general election rather than become 'a protest movement'