By Jacqui Walker
Young entrepreneurs Michael and Xochi Birch, 37 and 35, founded one of the most popular social networking sites in the world, Bebo, in 2005. The site, pitched mainly to 13-to-24 year olds, now has 40 million registered members worldwide. In Australia, there are 2.8 million.
Michael and Xochi talk about how they did it, their new priorities and web trends for 2008.
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Jacqui Walker: Can you tell me how you came to start Bebo and how you met each other?
Xochi Birch: We met each other at a college bar. We were both university students in London and after meeting each other we then got married and we started working for an insurance company. We were both engineers.
What kind of engineers are you?
Michael Birch: Engineering as in software engineering, so we’re both developers, database and insurance systems.
It’s incredibly dull, and insurance just makes computers even more dull, but we actually found the computing side really interesting. And then the internet thing came along and we kind of jumped on that bandwagon in ’99, just before the bubble burst.
That was in England; we started developing websites and we developed about six different websites – Bebo being the most recent one. By the time we started Bebo we’d actually moved from London to San Francisco, where Xochi’s family is from. And so we started Bebo in ’05, which was kind of a late entry into the social networking space.
But by then we had done six different internet start ups, so although it was within a short period it felt like a long time.
And why did you get into social networking?
Because we thought it was really good fun. We first saw social networking in 2003.
I was totally addicted to the concept and we just wanted to build a social network and we actually did one in 2003 called lingo.com, and about 25% of the users at that time were actually Australian, interestingly enough.
It was more popular here than it was in the US and we did that for about six months and then sold it because we ran out of money.
It was growing too quickly for us to sustain, but having sold it we kind of regretted selling it and wanted to get back into social networking. So we went from being a very early entry into social networking to a very late one and we had to start from scratch and then build up this traffic again, which was no simple task to do, so luckily we managed to get back to where we were and well beyond it.
And even when we started social networking in 2003, what intrigued us about the whole concept is the sense of community which the site had and it really had a personality at the time. It was quite interesting how these different social networking sites start to have a personality in its own right, the community.
And how as Bebo changed since you started it?
It’s a lot more complicated than it used to be. Not from a user perspective but from an engineering perspective. It started out with just Xochi and me being the only developers for quite a long time and now to enter into social networking it takes a pretty large engineering team working on it for quite a long time. The entry of what is expected from a social network is far more advanced than it used to be.
So we now have about 25 engineers working full time with us. So it’s not a sort of one man show that it used to be so it’s much richer in functionality. I think we’re now on our fourth visual redesign, which we just finished about two weeks ago.
We’re not planning on redesigning it visually again. At least for a good few years hopefully. So it looks different but it’s just matured as a product and the community is very rich. There’s a huge amount of content. We get about three million photos a day uploaded to the site. That’s 40 million profiles so it’s very rich. It’s a huge amount of traffic, a lot of sustainability issues from a performance perspective.
You would both be very aware of the development issues having that background. How have you been successful in a Web 2.0 start-up. What about marketing skills, sales skills and admin and all the other skills that you need to do a successful start up, where have they come from?
Not from us for all of them.
Well when we started the site there was only five of us and now there’s 90 so we’re quite lucky to have very skilled people that we brought on board early on that helped us build the company to what it is today.
And did you share equity with them to attract them to the business or how did you get good people?
Yes, yes we did. We do have a share option scheme set in place for Bebo and also we look for people who enjoy the start up mentality and I think they enjoy working there as much as we appreciate all the effort they put in.
How are you marketing Bebo in Australia?
The short answer is we’re not really. I mean successful communities grow on their own. It’s very difficult to market a community in any real way. I mean we are doing a little bit of PR which is kind of relatively free marketing but we’re not spending money marketing in more traditional channels.
So it’s purely word of mouth and it grows from one network of friends to the next and it has done from the beginning and it’s continuing to do so today.
And so you wouldn’t have the number of visitors that MySpace has here and probably not Facebook either, and that’s certainly growing very very fast. How do you try to differentiate yourself and be better than the others?
It is important to be different. We’re not trying to be what MySpace or what Facebook are.
I mean for example something we’ve done recently a couple of weeks ago we announced the open media platform, open media strategy, which is allowing any media company to distribute its content within the Bebo network but they use their own player.
So unlike YouTube which is always the proprietary YouTube player, media companies can actually use their own players that they control and they actually control all the advertising on that player and then the media companies get to keep all the revenue that’s generated.
So we believe in a very open approach and we’re opening up the site further in December to allow application developers to come on and develop third party applications that work within the Bebo website, the Bebo platform.
Is that the open social Google?
Yes. The [initial thing] is not going to be open social but we are going to be open social compatible next year. This year we’re launching another platform in mid December, the details of which will be announced at the time so we’re opening up in a way that others have opened up.
The open media is opening up in a different way. We’re opening up the contact and allowing great content to be on the site so where Facebook is very utility driven and MySpace is media focused, we’re trying to provide a platform that the media can live within and disseminate and spread virally. And getting the great content from the copyright owners and then the copyright owners actually control that content and generate the revenue directly off it.
You have advertising on your site and there seems to be a trend towards advertising tagged to content. People refer to it in different ways, but somehow profiling your users and delivering advertising to them. What’s your attitude to that or what’s the approach that you’re taking to that?
It’s something that we do do in a.. I wouldn’t say particularly advanced way at the moment. It’s not been a focus for us to do that.
We’re actually using collaborative filtering technology to target content as opposed to advertising at the moment. So we identify that if you say you like these videos or this content, then we think you’ll also like this content.
So we’re trying to use the technology to make the user experience better and more relevant to the user rather than advertising as such.
It’s very early days for in this field. So we’re working on technologies but applying them in a different area that we do believe in.
But it does ultimately provide more relevant advertising and a better user experience to see advertising as opposed to something that you’re not interested in or don’t want to see.
I understand you’ve recently done a deal with Yahoo. Is that something to do with why you’re in Australia or what brings you here on this trip?
We’re obviously going to meet others and we did do an advertising partnership with Yahoo.
They’re selling a lot of the display advertising on Bebo in Australia and we did a similar partnership with TV NZ in New Zealand, but actually it’s our first time that we’ve ever been to Australia and Francisco (Cordero) heads up the office here.
We have one other employee in Australia. We wanted to come out and see the office, meet some of the partners and understand a little bit more about Australia and see what we can do to improve the Bebo experience here.
What are the most exciting web trends that you’re seeing emerging now?
That’s a big question. I think that the thing that we’re most excited about I think is the opening up of social networks.
Social networks have kind of become the central hub for people’s lives on the internet now. They are the ultimate portal that people dreamed about in the late ‘90s that never really became a reality and social networks are becoming that now.
And the opening up of those networks in applications and media and allowing third parties to develop and generate real businesses off the back of a social network.
I think is very exciting and it leads to a lot of innovation and it’s ultimately going to make social networks a lot better.
And more broadly, other trends that you see?
The merging of traditional media and new media content is exciting – trying to work out new models for that and new formats for shows.
I think the merging of technologies is exciting. I think again we’re in the very early days where the television and the computer are two separate devices that really don’t communicate very much together.
I think of them becoming kind of one appliance in the home is going to happen over the next few years and distribution of content will become far more heavily based on the internet, as opposed to broadcast.
The TV series like Kate Modern and Lonely Girl 15 that show on Bebo are an illustration of that I suppose. It’s like a TV soap but it’s online.
Yeah, for Kate Modern is made by the people who made Lonely Girl 15 and we co-produced it, and we distribute that through Bebo. That was primarily done in the UK but it’s available worldwide. We’re doing another show called the Gap Year with Endamol which is going live in February. And then a further one toward the end of the year called Xochi’s Diary which we’re doing with Sony pictures.
So that’s some of the exciting content that we’re trying to create. Not to become a media company ourselves. We don’t want to become content creative but what we do want to do is experiment and find out formats of content that really work on the web in a way that they may not work on television.
The way that you take television content and stick it on the web doesn’t always work. It does for some type of content but not other. So we’re just experimenting and having a very open mind and trying to have fun doing it and create some really cool content for the web.
And so what’s up for Bebo in the coming 12 months? What are your priorities?
The priorities are continuing to open up because we’ve been a relatively closed network up to date so far. We’ve conscientiously been closed because we wanted to open up in a way that really works.
Working out more about media distribution, we’ve learned with Kate Modern but as we mentioned we have at least two more shows next year. We want to evolve them and just make them better and better and focusing very heavily on the community.
We’re trying to build a community that love Bebo. People passionate about Bebo log in every day, which the users we have do, but we want to have more and more members doing that. And community is ultimately what it’s all about because if the community doesn’t love the site then the site’s not going to work.
And would you like to have more users than Facebook?
Of course. I mean every company wants more users than every other company so that’s a kind of natural ambition.
We definitely think – and I think as we see it in our demographic – we are fairly different to Facebook. I mean a lot of the conversations I have with the rest of the guys in Europe and the US, Facebook is seen more as a utility, as a telco company whereas Bebo is seen more as a more video TV-focused company, so I almost think that the experiences are complimentary rather than competitive.
Just also if I can add our age demographic is very different to Facebook. Bebo ages are pretty much 13 to 24 but Facebook is young professionals 25+. You can also see that on the usage of the site where our members are spending on average 38 minutes a day on Bebo which is really a place where they’re hanging out at the moment.
This is an edited transcript