I’m not going to say that we told you so, but we told you so.
AOL has acquired social networking site Bebo for $850 million in cash. AOL CEO Randy Falco (left in picture) sent an email to all AOL employees this morning. Allen Stern’s press call notes are here.
This is an acquisition we called last month (when I’m told they first signed a term sheet), although frankly the leads dried up on who was acquiring them in the last couple of weeks (it turns out the two companies were furiously negotiating, even until this morning). AOL and Bebo have been in talks since September 2007.
Investment bank Allen & Co. has been shopping Bebo for some time. A number of potential buyers passed on the company, including News Corp., Microsoft and Google, our sources say. Yahoo may have also taken a long look, but recent woes probably prohibit it from doing any large transactions.
AOL’s intention, they told press in a briefing call this morning, is to marry AIM and ICQ with a proper social network. At a high level, AOL is saying they are basing much of their go forward social networking strategy around AIM. Layering in Bebo, they say, lets people communicate both synchronously and asynchronously. The goal is to allow people to both express themselves and extend existing relationships. AIM users have 100 buddies on average. Bebo’s platform allows those users to share and distribute media as well.
AOL’s also talking about their Platform A advertising platform which can blend big brand advertising along with performance. Bebo’s page views will be enticing to those brands to the extent they can track how those ads do.
Current President Joanna Shields (middle in picture) will continue to run Bebo and will report to AOL President Ron Grant (right in picture). Founders Michael Birch and Xochi Birch will shortly be leaving the startup, apparently. Rumor has it, though, that Shields has effectively run the company for some time. Bebo was originally launched in 2005.
Bebo is the second largest social network in the U.K. (its largest market) after Facebook. Recent Comscore data says Bebo has 22 million unique visitors and 11 billion page views; AOL said Bebo users spend an average of 40 minutes a day on the site in a press briefing. The company claims 40 million users.
The deal must clear U.S. and EU antitrust hurdles before it closes. Bebo had raised just a single $15 million round of capital from Balderton Capital (formerly Benchmark Capital Europe) in May 2006.
As an aside, and despite rumors of their possible sale, AOL is clearly putting a massive effort into transforming the company from a dial up broadband provider into a company that has the competitive fire. The opening of AIM, mentioned above, is just one indication. The company has been releasing genuinely innovative new products and has also made a number of smaller strategic acquisitions over the last year or so. And there are lots more to come, apparently.
That’s quite a valuation, though less then it’s expected..
= $18.75 per user; makes facebook worth $1.2 billion on the same valuation….
great article, but for how much, there seems to be a 100 million going awol between the headline and the article.
Now that came as bolt from blue..btw the title reads $750 million and article $850 million
Will WishDone have the same valuation 2 years from now?or more…
Wow. I would have never thought Bebo could have commanded that type of valuation… and certainly not from the likes of AOL.
Why does the title say $750 and the article say $850?
Now the question is how will the use it with their current projects? Will the lock access? Does Bebo lose it’s value now that it’s owned by AOL? What’s the next social network to get purchased?
figure is actually $850 million (source AOL press release)….that makes $21.25 per user and facebook at $1.4 billion
wow….WTF!!
I think this wasn’t on anyones immediate radar!!
AOL are certainly buying a lot of companies recently.
I think this acquisition is good for their UK and Irish user numbers, but again - its not a straight fit into the AOL model. I guess they are going to combine it with AIM to launch it in the US where it is pretty small I think.
Puts pressure on Yahoo and MSN, lets face it 360 and Spaces are dead ducks as far as social networks go.
oh..and by the way @5. The answer is no. )))
expected a purchase but …. 850m in cash … wow.. power to aol
Good buy, congrats to AOL and, Bebo!
BBC has corrected its story to reflect the AOL press-release (http://corp.aol.com/press_releases/2008/03/aol-acquire-global-social-media-network-bebo) deal price of USD 850M.
Anyway, now people has some idea of the social network user’s value.
I’ve only used bebo becuase I have an app on there, but I think it’s kinda crappy. It seems like the way myspace used to be. Lots of errors, shitty layout, etc.
Seems like a pretty good deal for AOL seeing as though Microsoft paid $240 million for a 1.6% stake in FaceBook.
So when is AOL shopping in Asia?
Hi Michael,
This is completely MENTAL.
AOL, a social network (as was) where people used to graze, that opened itself up to catch up with the open Internet in 90’s, is buying a closed platform environment that tries to keep its users in its sand-box -completely MentaL!!!
More analytically, it looks like Aol is trying to catch a wave, with a younger hipper demographic, already established in western europe, with quick growth potential in america, etc.
Also, Is Time-Warner fattening up Aol (ergo not caring as much about costs) to spin-off/in (ipo or partner)?
If Aol/TW knew what synergy was, so much could be achieved (inc. with this acquisition) with the further development of the Internet, and aol/tw driving it, rather than what has been frittered away.
Yours kindly,
Shakir Razak
Quite a valuation, given that the everything points to a major correction in company valuations a la ‘internet bubble of 2000′.
This could turn out to be the broadcast.com purchase of the year.
definitely not a good price for all Facebook fanboys.
Congratulations to Bebo team…quite a pull
http://www.LimeAll.com
ok, I have a Facebook account that I’ve never used. But I’m sure it’s included in the total number of Facebook accounts, that they claim is higher than 60 mln. Is 60+ million erroneous? It is - because it includes dormant accounts. Plus, there are users who have more than one account…
Maybe dividing the 850M by the number of uniques (22M) would be a more accurate estimation of $/unique user, which is almost $39?
BTW - has anyone questioned the 40 million user base statement?
40 million profiles or 40 million active users?
I think Bebo has about 7 million active users - this puts the price per active user way way up…over 100 USD per user - and with a revenue of less than 20 cents per month per user (my guess by the way) and a life expectancy on the network of about 6 months to 1 year (max) then this is a del harking back to the bubble days.
@#5 … no
So this means that by default AOL is into Open Social, too . . . who’s next?
What does this do for the valuation of the other 2nd-tier social networks, like hi5 et al (as seen previously on TC: http://www.techcrunch.com/2008.....and-imeem/)?
Has anyone seen any good analysis elsewhere on the Internet? I’m rather interested.
@9, @22: All users aren’t created equal, right? US college segment is perhaps more attractive than UK market user for user?
>So this means that by default AOL is into Open Social, too . . . who’s next?
Yahoo!
Or, mightbe I’ve to correct myself that it’s Hi5, sooner than Yahoo!, per this mention
That said, Hi5 has been involved with OpenSocial since pre-day1 of OpenSocial..
Do they realise how little 850m $ is worth in pounds…
Yet another example of cynical execs overpaying for a set of misunderstood buzzwords and undeliverable, distant promises, all to keep them in their chairs for another few bonus periods.
anyone have 1 millon for me?
ha…if they waited 6 months they could have saved a lot of money
Congratulations on getting this one right, and early. TechCrunch tends to call deals/potential deals/rumored deals early (well placed sources?), so separating fact from spin, fiction and fluid and changing marketplaces no easy task by any means.
The AOl-Bebo value transfer equation
http://www.broadstuff.com/arch.....ation.html
If they plan to marry Bebo and AIM, they’re going to have a hard time. AIM is not very popular at all in the UK, where as Bebo is hugely popular. You could argue that they could use it to either push Bebo to the Americans, or AIM to the UK. But neither is a great plan, far better would of been MS buying Bebo and using Windows Live Messenger in conjunction with it, oh well.
wow — yeah, I thought there was a correction in the prices companies were going for and this confirms it —- that is quite a cheap price for Bebo, if they really have that many registered users.
Told you so? Ya, you ’speculated’ that it was google… spin that erroneous prediction.
spin it - i secretly knew it was AOL but had to protect a source. Yeah. that’s it.
Another one bites the dust.
Michael,
just curious, do you know why they do not publish daily active users? facebook uses this on apps, but not on themselves? doesn’t sound too fair.
“AOL CEO Randy Falco: “Bebo is the perfect complement to AOL’s personal communications network and puts us in a leading position in social media. What drew us to Bebo was its substantial and fast-growing worldwide user-base, its vision of a truly social web, and the monetization opportunities that leverage Platform-A (AOL’s ad system) across our combined global audience. This positions us to offer advertisers even greater reach and marketers significant insights into the desires and needs of consumers”
Wake up Randy and AOL, great move BUT have you forgotten you can own the audience, you can have advertisers, but if you don’t own the technology that allows you to customize the ads to the end users based on the behavioral data you have, then you have nothing, nada, zip! Have you forgotten about the patent infringement suit against you guys by Modavox for your acquisition of Tacoda for this exact reason?
The irony of todays acquisition is that without further infringing on Modavox’s patented technology, they can’t effectively monetize Bebo’s audience or any audience for that matter.
AOL’s platform A’s business model is now very clear. They have now paid a combined $1.125 BILLION for just two companies, one has the audience (Bebo) and one provides the behavioral targeting for that audience (Tacoda).
With over a BILLION spent, they still are missing the most important piece to the puzzle. They don’t own the patented technology which allows for the customization of content based on behaviorally procurred data, Modavox owns it! Without it, they simply can’t effectively execute their now clear business strategy. Modavox and others know this, hence the patent infringement suit. It’s probably why Modavox engaged bankers recently because maybe someone was sniffing around, who knows. I think it’s only a matter of time before somebody figures it out.
There is big risk here for AOL. If one of their competitiors acquires Modavox knowing that their patented IP is a key integral piece to AOL’s strategy, you can surely expect them to leverage it against them.
Sometimes companies are acquired for not only what they can do for the acquirer but for what they can prevent a competitor from doing. I expect Google, Yahoo or someone else to soon make a play for Modavox seeking to throw a big wrench right into AOL’s Platform A strategy.
Better wake up Randy…..
One thing I’m surprised that appears to be missing is the question of how well AOL can integrate the Bebo acquisition. It seems that they have any number of missteps on acquisitions dating back to the mid-90’s. The AOL executive management knows how to get deals done, but what really is their track record on realizing substantial value from these deals?
congrats to Mike & Erick on the projected scoop / rumor / acquisition / prediction / whatEVr. whether kara agrees or not, i’m giving you guys at least 51% credit. (same for YouTube
congrats to Michael & Xochi & Joanna.
(Jim / Jessica: as noted previously, you’re picking up the tab next time
Mebo, AIM, its got a video search engine too. wow AOL!
btw, Hi5 is now the prettiest unwed girl on the dance floor… guessing someone will snap that up before end of the year.
This is the patent that AOL is possibly infringing on.
News for ‘MDVX’ - (Second Patent Affirms Modavox’s Leading-Edge Role in Web Processes Such as User-Based Customization of Online Content Patent No. 7,269,636 Ratifies Scope of Claims and Further Defines Modavox Breakthrough Inventions)
PHOENIX, Sep 11, 2007 (BUSINESS WIRE) — Modavox, Inc. (OTCBB:MDVX), an
Internet broadcasting pioneer in the production and distribution of online audio
and video, announced that the U.S. Patent Office today issued U.S. Patent No.
7,269,636. The patent refines the legal definition of Modavox inventions with
claims that accurately reflect how the concepts taught by the foundational U.S.
Patent No. 6,594,691 “Method and System for Adding Function to a Web Page” are
implemented in state-of-the-art delivery infrastructure and delivery practices
seen in the marketplace today.
The new patent leads to a modified complaint filed today asserting the new
patent in the infringement case against Tacoda, Inc., pending in the Southern
District of New York (Case No. 07-CV-7088).
Modavox CEO, David J. Ide stated, “We’ve achieved another key identified
milestone in the establishment of validity in our patents and the importance of
our proprietary technology in our industry. We are pleased with the issuance by
the U.S.P.T.O. today of our new patent. Our work for our customers continues to
fuel new innovations as we strive as an organization to exceed expectations.
Each day, we press forward to capitalize on the opportunities that our
technology and position in the market have created and our new patent is just
one manifestation of that sizable effort.”
“The new patent provides a clearer picture of how state-of-the-art
implementations are executed such as the behavioral marketing implementation of
Tacoda,” said Nathaniel Bradley, Chief Technology & Product officer for Modavox.
“Products built upon this patented infrastructure are under constant development
and deployment here, and are continually enriched with new innovations. For this
reason, we are confident that this, given the required time, will yield even
more patents and intellectual property for Modavox. It is important to note the
significance of this latest issuance as it is the cornerstone of our patent
enforcement strategy and the reason we’ve begun to take our first actions.”
Andy Burgess, Modavox Intellectual Property Consultant, stated, “The 7,269,636
patent delineates an unambiguous threshold for web technologies that allows
Modavox to pursue current and future infringement studies unhindered. In
addition to Tacoda, we believe additional operations in the behavioral marketing
space are infringing and action is being taken through comprehensive
infringement analysis and third party verification practices that will provide
conclusive actionable data for us moving forward. The 7,269,636 patent also
gives an unbiased view as to the ownership of the online vertical market
currently occupied by Modavox.”
Dr. Daniel F. Coughlin of Fox Rothschild LLP, who is acting as Modavox’s lead
counsel in the company’s intellectual property enforcement and licensing
program, stated, “We are all justifiably encouraged by the validation of
Modavox’s core technology that this patent represents. It is clear that the U.S.
Patent Office has recognized the unique importance of Modavox’s technology not
only in the time frame of its original development, but also in the context of
the emerging markets that these patents enable. Modavox’s expanding intellectual
property places us in an ideal position to seek and gain the industry
recognition that the company deserves. More specifically, we are today filing an
Amended Complaint asserting the ‘636 patent in our case recently filed against
Tacoda, Inc., pending in the Southern District of New York (Case No.
07-CV-7088). As Tacoda and the rest of the industry will realize, it will not be
possible to ignore Modavox’s position astride this technology.”
A great exit for the Bebo folks. And I (think I) get why AOL instant messaging might be potentially interesting. Not sure it tells us much about Facebook’s valuation though… they’re aiming a lot higher.
For anyone that’s interested my analysis, “AOL Buys Bebo As Interest In Social Networking Declines”, is @
http://www.psynixis.com/blog/2.....-declines/
Mike,
That’s it but they are also in the process of having another one issued shortly is what I hear. It’s not just one patent they have but a nice portfolio.
I definately think they are the next small guy to be in play. On Friday they announced they have over 5 million current unique visitors and already over 2 million uniques on their patented add platform. Their internet radio assets would fit perfectly into AOL radio in my opinion. At the current valuation it has to be one of the more compelling value acquisitions in the entire space. The key to their value is what I said above. Still can’t believe Falco and AOL just haven’t scooped them up. Longer they wait, more likely someone else does and uses them against them.
Thanks
Social networks declining? No chance.
not just AIM that they can integrate BTW - AOL also own ICQ - very big in eastern europe and germany.