Kara Swisher

Recent Posts by Kara Swisher

Bebo Not Worth a Pail of Spit to AOL? This Comes as a Shock to Exactly–Hmm–No One.

Almost from the minute former AOL head Randy Falco handed over a giant bag of cash to Joanna Shields, the awfully clever chief money charmer of once darling social networking site Bebo, it was clear it was not going to end well.

Essentially, AOL (AOL)–then a unit of Time Warner (TWX)–had forked over $850 million to corner the market on teen girls in the United Kingdom.

Of course, all those girls are now using Facebook.

It was, sorry to say, the peak of the social networking lunacy of early Web 2.0, which is now being bookended by another series of wackadoodle fundings for start-ups by venture capitalists insecurely prompted not to miss the next big thing.

Not much changes. As I wrote about the Bebo deal two years ago in a post titled, “Bebo: By the (Not So Big) Numbers”:

What’s AOL getting for its $850 million in cash to purchase social-networking site, Bebo?

A very attractive social-networking service and a very experienced exec who has been running it.

But, perhaps more importantly for those who focus on pesky numbers, not a whole lot of revenue and negligible profits, judging financial information I got a gander at, courtesy of sources at several companies that looked at funding or buying Bebo.

And the rest of the overall outlook for Bebo? A small but growing business, with nice user engagement with strong page views and minutes spent per session, but little traction beyond Britain and Ireland, and too small a presence in the critical U.S. market.

That was the best AOL got from the deal, as it turned out, as the asset declined and Shields was shuffled out of AOL by new CEO Tim Armstrong (ironically, she’s now running a big chunk of international sales for winner-took-all Facebook).

Now comes the final shoe dropping, with AOL admitting in a filing the glaringly obvious–that it was evaluating strategic alternatives with respect to Bebo, which could include a sale or shutdown of Bebo in 2010.

In a message shared with employees today, the company noted:

The strategy we set in May 2009 leverages our core strengths and scale in quality content, premium advertising and consumer applications, positioning us for the next phase of growth of the Internet. As we evaluate our portfolio of brands against our strategy, it is clear that social networking is a space with heavy competition, and where scale defines success. Bebo, unfortunately, is a business that has been declining and, as a result, would require significant investment in order to compete in the competitive social networking space. AOL is not in a position at this time to further fund and support Bebo in pursuing a turnaround in social networking.

AOL is committed to working quickly to determine if there are any interested parties for Bebo and the company’s current expectation is to complete our strategic evaluation by the end of May 2010.

Quicker translation: Bebo is a dog and it bites.

But the experience is one that will soon be forgotten with the next careless gorging of VC funding.

Not be lost on anyone should be the sudden departure of Jay Adelson as CEO of Digg this past week from the social news site, yet another example of hot going cold in the eyes of Silicon Valley.

At one time Digg and Bebo could do no wrong. Now, no right.

In actuality, neither characterization is correct, but it matters little. In the warped tech perception game, Bebo is apparently dead and it’s time to bury the corpse and move on.


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Another gadget you don’t really need. Will not work once you get it home. New model out in 4 weeks. Battery life is too short to be of any use.

— From the fact sheet for a fake product entitled Useless Plasticbox 1.2 (an actual empty plastic box) placed in L.A.-area Best Buy stores by an artist called Plastic Jesus