Interesting off hand comment by AOL CEO Tim Armstrong at the Fortune event this morning. Bebo, the social network AOL paid $850 million for in 2008, wasn’t mentioned on the list of AOL’s core product goals going forward. Late in the interview, though, Armstrong was asked where Bebo fits into that strategy. His answer, roughly quoted “Bebo may be better off under AOL Ventures, with it’s own P&L.”
Translation – AOL is looking to spin Bebo off into an independent company, and they’ll retain an equity interest via AOL Ventures.
This is pretty much in line with what he told Erick during an interview last week. During that interview he distanced himself from the acquisition: “I was not here during the acquisition of Bebo. Social networking was an unclaimed category, and growing quickly.” The reason he placed it in AOL Ventures is so that it can “focus on improving the consumer product,” he said. Armstrong added that one of the purposes of AOL Ventures is “to keep things on track that have not been on track. ”
But he noted that there is another purpose for AOL Ventures as well. In areas where product synergies “have not been realized, it gives us an opportunity to take it out of AOL, to make it groomed, and maybe attract outside investment.” It was pretty clear he was talking about Bebo.
AOL acquired Bebo in early 2008 for $850 million. But the property has languished since then and it has not been integrated much at all into AOL proper. Bebo had 8.7 million unique visitors in the U.S. in June, 2009, 20 percent down from its peak in March, 2009 (comScore). Globally, it is holding up better, with 24.2 million uniques in May, 2009 down 12 percent since March, 2009. But if Facebook is worth $6 billion to $10 billion, Bebo might still be able to get a decent valuation if it can hold onto its users.
The only happy ones are the Bebo founders and investors. They did their job
, now Bebo is somebody else’s problem (AOL)…
Interesting of all the spin-offs. Could it be, we may have another techno push in the stock market?
I don’t know how people can figure Bebo out. The interface is so confusing. AOL should work more on their lifestreaming products, that’s good stuff.
I wonder what will be the impact of this on a platform like SocialThing that AOL acquired last year to compete with the FriendFeed alike. It just speaks that mammoth are even more struggling to adapt in the web 2.0 world.
big f**cking deal
it’s just depressing to see big companies throw money, resources and opportunities out the window. What is that! Did the Bebo guys really deserve 850 mil if it’s basically worthless to AOL. Hell no. Plenty of sites that are maybe not as social networkey have as many registered users and move monthly uniques. So why aren’t they worth the sum of their visitors? Or, why isn’t the sum of their visitors valued something similar to Bebo? …Well, because of Bebo’s amazing social networking features. That’s the reason–the features. Their features suck. Every big site has become a social network of their own, and Bebo was just lucky to be wrapped in that package of the top social networking sites with Myspace, Facebook, Friendster, Orkut and Hi5. Now everyone has those features. Tons of news sites that get about the same traffic are now social networks–and with an even more targeted audience.
Conclusion: Bebo got $850 mil for generic community features. And I’ll never look up to anyone ever again and resolve to figuring it out on my own–they usually know less than they act like they know. take that however you want.
Spin it off so it can die a lonely death maybe?
Hoping they sincerely see a nice ROI on their social networking venture
add them to the deadpool alongside geocities and braodcast.com
Geocities and Broadcast.com were Yahoo sites, not AOL.
can’t believe big companies can’t monetise social networks.
Two possible strategies:
1 – Facebook: they have become the social web platform and keep growing; forget advertising, this is not where the real money is; they should charge a very small fee for every that takes place on the system; users buyng stuf whether it’s a cool app, a virtual piece of crap or a service; there is probably space for only one player in the market and if FB doesn’t fuck it up, it’s already there; let’s call this strategy ”the tools and the platform”;
2 – MySpace: there may be more players here and it’s all about content (i.e. the content strategy); people will pay directly and indirectly (e.g. advertising) to consume content, videos, music, news, etc.; MySpace has a good music audience, if it can execute well it can succeed; but, there is plenty of other types of content; these social networks can be the answer to the collapse of the newspapers and especially the specialist publications who will be next to die;
I have never even checked Bebo and have no clue what’s the target market, but I am sure that there are a few millions users who will be happy to get some relevant content delivered to them and will pay (also indirectly) to get it.
In 10 years the two strategies will converge so it’s now the time for the big publishers to figure this out.
bebo is extremely popular in young teens. they should definately spin off the company and let it live. I run a big apps on bebo, and know that, for once, the kids on bebo largely do not want to use any other social network.
go bebo!
Think mySpace and then go to a user profile on Bebo. It’s a much better version of that – don’t compare it to facebook.
Hmm… Doubt it for the next 12 months. Why would AOL try to sell bebo now? They need to bolster the investment before anyone is going to pay half that. AOL can’t really sell bebo at this point – unless it was an intentional write-off, but even thats crazy. The new management knows that the old management blew it with the price tag for bebo, but they are not about to throw out the baby with the bath water.
AOL Ventures was setup to farm (pre-armstrong) AOL-acquired startups that don’t fit with AOL’s product or technical integration and streamlining – or more importantly – the corporate cultural.
AOL Ventures is the best news Bebo has seen.
Old AOL created “People Networks” as an umbrella for Bebo, ICQ, AIM, YEDDA and SocialThing. The hot old-blood/new-blood love affair really commenced with AIM and SOCIALTHING getting it on, but bebo was left standing at the altar with a bunch of unwanted in-laws. Meanwhile AIM and SOCIALTHING are off to cancun on their new LifeStream honeymoon. Moral of the story? AOL should have just purchased SocialThing.
AOL Ventures is a haven for companies like bebo that can’t wait 6 months for hardware, refuse to use AOL corporate mail or the rest of AOL’s lame corporate infrastructure. Its a fertile zone for startups to grow inside the harsh acidic stomach of AOL, where delightful little startups are often quickly digested and absorbed without even being tasted.
Armstrong is not an idiot, but he must deal with the decisions of idiots before him (looking at you
Smithers and Burns). He knows the bloated beast he is dealing with. He’s doing the right thing by creating a structural buffer between “start-up culture” and “you’ve got baggage culture”, where a startup can grow naturally, set its own goals, hire the people it needs to, pay its people what they are worth etc. These companies need independent leadership and they need a strong bottom-up approach to innovation. It’s just not possible inside of regular AOL.
Bebo has been stagnating for a year since AOL, going through the stale motions of failed integration. Now that Tim Armstrong has pruned the old Bebo management and dissolved People Networks, bebo finally has a chance to innovate again. Hopefully they still have enough Engineers to meet the challenge.
MAYBE in a year, if the PnL looks good, AOL will once again consider integrating bebo with its communications or content platforms or spinning off Bebo all together. By that time, the bigger news will probably be the AOL/TW split and following events, acquisitions. If the AOL Ventures move works, AOL might want to keep bebo after all to boost its overall numbers for a MS or YAHOO sale.
Never heard of Bebo
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