British couple net £300million as Time Warner's AOL buys social networking site Bebo
Londoner Michael Birch and his wife Xochi today made £300 million after selling their social networking site Bebo.
The couple, who met in a university bar while at Imperial College, started Bebo in 2005 with £8,000. Today, they agreed to sell the company to internet giant AOL for £425 million in cash.
Although they now live in San Franciso with their two children and a pet tiger cub, Mr Birch describes himself as "a true as the Queen of England Englishman". His brother Paul, who still lives in London, is also thought to be a founder investor in the company.
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Bebo founders Michael and Xochi Birch can look forward to being multi-millionaires following the historic deal
Bebo, which launched in 2005, is second only to Facebook in its popularity with more than 40 million users worldwide, mostly teenagers.
It was the most popular networking site in Britain until the end of last year when it was overtaken by Facebook.
As well as running the company, Mr Birch, 37, still writes part of the computer code that powers Bebo.
"When he's not moaning about how cold the beer is in the US Michael can be found cranking away at the code and trying to work out what a CEO is meant to do," his official biography says.
"It's easier to be really English when you're not in England," he recently claimed.
Mr Birch claims he moved to California expecting glorious sunshine and says he felt cheated when he found that San Francisco has "more fog than a Dickens novel". He sold just over 15 per cent of the company to Balderton Capital for $15 million (£7.5 million) in May 2006.
Buying Bebo is seen as a bid by AOL to take on Facebook's dominance in the social networking market.
Sold: AOL has bought networking site Bebo
AOL, whose websites attract about 112 million visitors each month, has struggled to develop a strategy for selling adverts both on its own and other sites, and today said the addition of Bebo would greatly expand the number of users to which it could deliver ads.
Big technology companies such as AOL and Microsoft have been desperate for a stake in social networking sites because of their popularity with teenagers and students. US analyst firm eMarketer predicts that by 2011, $4.1 billion will be spent worldwide for social network advertising - just $480 million was spent in 2006.
Joanna Shields, the current boss of Bebo, will remain in charge after the takeover. "It was a natural progression for Bebo to join AOL," she said.
Social networking sites have rocketed in value. Last year Microsoft paid £120 million for a 1.6 per cent stake in Facebook, valuing the company at £ 7.5billion, and Rupert Murdoch's News Corporation owns the world's most popular networking site, MySpace, which he bought for a bargain price of £290 million in 2005.
AOL's purchase of Bebo suggests that £7.5 billion valuation of Facebook is too high. Analysts also warn that teenage users are often fickle and will jump between different sites.
