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, and 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?
ebooksA special investigation by Andy McSmith
Mia Freedman, editorial director of the Mamamia website, reads out a tweet she was sent.
Arts and Entertainment
The write stuff: masters of story-telling James Joyce, left, and Thomas Hardy
books...begging to differ, John Walsh can't even begin to number the ways
Jose Mourinho on Sky Sports
footballEXCLUSIVE COLUMN Paul Scholes: It was not a leg-breaking tackle, as the Chelsea manager had claimed
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

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

iJobs Job Widget
iJobs General

Recruitment Genius: Web Application Developer / Software Developer

£21000 - £23000 per annum: Recruitment Genius: This software development compa...

Recruitment Genius: Brand Manager

Negotiable: Recruitment Genius: Do you wish to be part of an exciting journey ...

Guru Careers: Talent Manager

£30-35k (P/T - Pro Rata) + Benefits: Guru Careers: We are seeking an experienc...

Anna Woodward: Invoicing Clerk

£21,500: Anna Woodward: The Accounts Payable team for this group is recruiting...

Day In a Page

HIV pill: Scientists hail discovery of 'game-changer' that cuts the risk of infection among gay men by 86%

Scientists hail daily pill that protects against HIV infection

Breakthrough in battle against global scourge – but will the NHS pay for it?
How we must adjust our lifestyles to nature: Welcome to the 'Anthropocene', the human epoch

Time to play God

Welcome to the 'Anthropocene', the human epoch where we may need to redefine nature itself
MacGyver returns, but with a difference: Handyman hero of classic 1980s TV series to be recast as a woman

MacGyver returns, but with a difference

Handyman hero of classic 1980s TV series to be recast as a woman
Tunnel renaissance: Why cities are hiding roads down in the ground

Tunnel renaissance

Why cities are hiding roads underground
'Backstreet Boys - Show 'Em What You're Made Of': An affectionate look at five middle-aged men

Boys to men

The Backstreet Boys might be middle-aged, married and have dodgy knees, but a heartfelt documentary reveals they’re not going gently into pop’s good night
Crufts 2015: Should foreign dogs be allowed to compete?

Crufts 2015

Should foreign dogs be allowed to compete?
10 best projectors

How to make your home cinema more cinematic: 10 best projectors

Want to recreate the big-screen experience in your sitting room? IndyBest sizes up gadgets to form your film-watching
Manchester City 1 Barcelona 2 player ratings: Luis Suarez? Lionel Messi? Joe Hart? Who was the star man?

Manchester City vs Barcelona player ratings

Luis Suarez? Lionel Messi? Joe Hart? Who was the star man at the Etihad?
Arsenal vs Monaco: Monaco - the making of Gunners' manager Arsene Wenger

Monaco: the making of Wenger

Jack Pitt-Brooke speaks to former players and learns the Frenchman’s man-management has always been one of his best skills
Cricket World Cup 2015: Chris Gayle - the West Indies' enigma lives up to his reputation

Chris Gayle: The West Indies' enigma

Some said the game's eternal rebel was washed up. As ever, he proved he writes the scripts by producing a blistering World Cup innings
In Ukraine a dark world of hybrid warfare and murky loyalties prevails

In Ukraine a dark world of hybrid warfare

This war in the shadows has been going on since the fall of Mr Yanukovych
'Birdman' and 'Bullets Over Broadway': Homage or plagiarism?

Homage or plagiarism?

'Birdman' shares much DNA with Woody Allen's 'Bullets Over Broadway'
Broadchurch ends as damp squib not even David Tennant can revive

A damp squib not even David Tennant can revive

Broadchurch, Series 2 finale, review
A Koi carp breeding pond, wall-mounted iPads and a bathroom with a 'wellness' shower: inside the mansion of Germany's 'Bishop of Bling'

Inside the mansion of Germany's 'Bishop of Bling'

A Koi carp breeding pond, wall-mounted iPads and a bathroom with a 'wellness' shower