In an article based on his Dorm Room Tycoon podcast, William Channer asks Bebo founder Michael Birch about failure, exits and engineering.
Over the few past years, the media has chronicled the rise and fall of Bebo, the social networking website that competed with Facebook and MySpace. The press has written extensive commentaries about Bebo, and examined the firm’s wild growth and valuations. And though an ancient company in start-up time, Bebo remains a relevant one. It serves as a clear reminder for the UK technology entrepreneur, mired in the trenches of uncertainty, that great things are possible in Europe.
Many don’t know that Michael Birch started off with many failures and that he – perhaps insanely – risked everything: his house, his wife, and family, to get going again.
In 1999 he told his wife: “If I’m not making money in three months I’ll get another job.” Three years later, he was still having the same conversation.
Much to his wife Xochi’s credit, as the breadwinner at the time she granted him the liberty to hack away on his projects. Despite being able to fabricate and re-live the student dorm room experience of having no adult responsibility, his first three start-ups failed, drastically.
How did he survive that? “We re-mortgaged our flat. Twice,” says Birch.
What made this man continue when failure was his only true companion? Birch, a physics graduate from Imperial College London, simply saw success as nothing but a numbers game.
“It was like waiting for a bus. You waited so long you thought there has got to be one coming soon.”
One of those buses was Bebo, which he founded with his wife in 2005 and sold to AOL in 2008 for $850 million.
Some entrepreneurs typically do start-ups with the view to an exit. They paint a picture of being able to live the life, relaxing on a beach. They consider the enjoyment to be at the end and not within the journey itself. When asked about what went on behind the scenes of the AOL deal, though, Birch is reserved. He even says that he had forgotten some aspects of the process.
“The exit for me was far from being the most entertaining and exciting part of the whole process, because I liked engaging with engineers, not lawyers.” Birch adds: “the fun bit of Bebo was when it was actually growing.”
But when asked what he had learnt from Bebo, he admits: “The thing we did not do well enough was product quality and design. We had the engineering talent to create stuff but I did not feel we had the full product team to really visualise the products in a way a developer could create them.”
“No sales, and no business development people!” is Birch’s emphatic reply when asked what he would do differently now.
Birch displays the classic mindset of an engineer: the salesman is at the bottom of the food chain. Whether Birch is correct to think so does not matter. We all agree that without the engineer, there is nothing to sell.
Birch now regrets the fact that the sales and business development team played such a central role within Bebo. It is something he vows not to repeat. He is now brutally rigid with his new venture, a private lab called Monkey Inferno. Much of his energy is channeled into creatively attracting the craftsman and ignoring the salesman.
Bebo rightly deserves a place in the UK start-up hall of fame. The question is: will it be Birch’s only entry? Today, most UK start-ups are fragile and sit silently in a dark corner, scared to fight or take on big markets.
Will it always be like this? Are we not capable of creating more Bebos?