AOL Buys Bebo For $850 Million
AOL has acquired social networking site Bebo for $850 million in cash. AOL CEO Randy Falco (left in picture) sent an email to all AOL employees this morning. Allen Stern's press call notes are here.
This is an acquisition we called last month (when I'm told they first signed a term sheet), although frankly the leads dried up on who was acquiring them in the last couple of weeks (it turns out the two companies were furiously negotiating, even until this morning). AOL and Bebo have been in talks since September 2007.
Investment bank Allen & Co. has been shopping Bebo for some time. A number of potential buyers passed on the company, including News Corp., Microsoft and Google, our sources say. Yahoo may have also taken a long look, but recent woes probably prohibit it from doing any large transactions.
AOL's intention, they told press in a briefing call this morning, is to marry AIM and ICQ with a proper social network. At a high level, AOL is saying they are basing much of their go forward social networking strategy around AIM. Layering in Bebo, they say, lets people communicate both synchronously and asynchronously. The goal is to allow people to both express themselves and extend existing relationships. AIM users have 100 buddies on average. Bebo`s platform allows those users to share and distribute media as well.
AOL's also talking about their Platform A advertising platform which can blend big brand advertising along with performance. Bebo`s page views will be enticing to those brands to the extent they can track how those ads do. Current President Joanna Shields (middle in picture) will continue to run Bebo and will report to AOL President Ron Grant (right in picture). Founders Michael Birch and Xochi Birch will shortly be leaving the startup, apparently. Rumor has it, though, that Shields has effectively run the company for some time. Bebo was originally launched in 2005. Bebo is the second largest social network in the U.K. (its largest market) after Facebook. Recent Comscore data says Bebo has 22 million unique visitors and 11 billion page views; AOL said Bebo users spend an average of 40 minutes a day on the site in a press briefing. The company claims 40 million users.
The deal must clear U.S. and EU antitrust hurdles before it closes. Bebo had raised just a single $15 million round of capital from Balderton Capital (formerly Benchmark Capital Europe) in May 2006.
As an aside, and despite rumors of their possible sale, AOL is clearly putting a massive effort into transforming the company from a dial up broadband provider into a company that has the competitive fire. The opening of AIM, mentioned above, is just one indication. The company has been releasing genuinely innovative new products and has also made a number of smaller strategic acquisitions over the last year or so. And there are lots more to come, apparently.
15 reasons Facebook may be worth $15bn
Microsoft has invested $240m (£117m) in social networking site Facebook in exchange for a 1.6% share of the company. That puts a value of $15bn (£7.3bn) on a firm that has only been in existence three and a half years.
So why does Microsoft think Facebook is worth $15bn? Here are 15 possible reasons....
- 1.The network has gone viral in the last 12 months, with more than 50 million users worldwide and a user base that is growing faster than great rival MySpace. According to Facebook, it adds 200,000 new users each day.
- 2.The average user spends 3.5 hours a month on Facebook - more than the average user on rival MySpace - which is increasingly attractive to advertisers.
- 3.Facebook is the current Web 2.0 darling - popular with ordinary users and "tech heads" alike.
- 4.US research reveals that Facebook users come from wealthier homes and are more likely to attend college than MySpace users - increasing that attraction for advertisers.
- 5.Microsoft's investment makes them a serious player in the growing market of "social advertising". Social network profiles are full of personal data that users voluntarily hand over, which is very useful for targeting adverts.
- 6.Sixty percent of Facebook users are outside of the US - so Microsoft's investment buys access to a global audience quickly and simply.
- 7.Facebook is the new web: The decision to open up the network to outside developers turned Facebook into a destination for many uses, like messaging, photos and video. Of course, as Facebook is on the web it could never really be the new web.
- 8.Every major content firm with an online presence is either working on a Facebook application or has already launched one - from Google to the BBC.
- 9.According to a report, 233 million hours of work are lost each month in the UK due to staff looking at social networks. Advertisers can now target people when at their desks.
- 10.The openness of Facebook is attracting a wealth of talented developers who can launch their applications to millions of users quickly.
- 11.Facebook messaging is the new e-mail. Everyone feels stressed from a deluge of e-mail from unwanted people and companies. But Facebook messages are always from friends.
- 12.Facebook's "status updates" have become the easiest way to let friends know what you are doing and how you are feeling at any given moment.
- 13.Facebook thrives on playful applications such as Pirates, Zombies, Super Wall and Top Friends, which have made the network a place to play as well as communicate.
- 14.Facebook is the acceptable face of blogging - you can reflect your life and personality online without being seen as a "blogger", which often carries a geeky stigma.
- 15.Facebook is worth $15bn only because Microsoft says so. The value of Facebook is based on a 1.6% share of the firm being worth the $240m Microsoft paid for it. Microsoft and Google were in a bidding war for a slice of the firm and both companies have large pockets. This was not just business, this was personal, according to some analysts.
'The Internet Is Becoming the Main Medium'
Marc Andreessen, the 36-year-old co-founder of Netscape, discusses Microsoft's attack on Yahoo, the latest trends in the Web business and the search for the next big thing in a SPIEGEL interview.
A view of a billboard for Yahoo Inc. under a news ticker in Times Square in New York City displaying a headline about Microsoft.
From the Magazine.
SPIEGEL: Mr. Andreessen, does the idea of a huge Microsoft-Yahoo firm scare you?
Andreessen: No, not at all. If the merger happens, it will require two years of integration. In the end, it will be a combined company that will do some things good and other things badly. In the meantime, there is a tremendous amount of work to be done by other companies like us. And that means there will be lots of opportunities.
SPIEGEL: Do you think that would leave only two major players on the Internet -- Microsoft-Yahoo and Google -- who would dominate the industry?
Andreessen: It is totally impossible to predict the consequences of this merger, or to predict the position of the companies involved. And it is impossible to predict what start-ups will emerge during that time. And that is precisely what makes this industry so much fun.
SPIEGEL: What went wrong at Yahoo? Why did they keep losing market share to Google and thus allow themselves to become a takeover target?
Andreessen: One of the consequences of being a public company is that stuff like this happens. I started two companies and took them public, but my third, Ning, is not public. That's one of the nice things about my company, and I think Facebook is also enjoying this, is that nobody can attack you in that way. You also get to focus completely on what you are doing -- there are no earnings calls and no hostile takeovers. I enjoy not being a public company.
Money and relationships: It's love 3.0
Thursday, February 14, 2008
There are millions of lonely hearts looking for love on the Internet, but you won't find the majority of them on Facebook or MySpace.
Relationship sites - the pioneers of online social networking - are waging a pitched battle for members, employing new technologies from video conferencing to voice over Internet protocol (VoIP) to bring Google-like results to their niches. Their new secret? Scientific algorithms based on detailed surveys that connect users after matching and weighting dozens of specific criteria ranging from a love of Chinese food and a penchant for long walks in the rain to spirituality and communication style.
For Vancouver-based plentyoffish.com, the emergence of love 3.0 has generated what its creator Markus Frind admits is a global cash machine. More than 600,000 people log on to his site every day to send messages to potential mates with the possibility of romance hanging in the balance. In less than five years, after signing a deal with Google Inc.'s adWords service, Plenty of Fish is generating $10-million a year in revenue. "I just captured a market here in Canada and it spread to the rest of the world," said Mr. Frind, the brains behind plentyoffish.com, one of the most heavily trafficked relationship sites on the Internet. Unlike Facebook and MySpace, whose values are based largely on their potential to generate future revenues, online dating sites are making millions from user fees and advertisers now.
For Mr. Frind, it was a lucky break for something that started on a bit of a lark. "I was working for all these different companies and every six months they would go bankrupt," he said. "I wasn't learning anything new and it turned out that making a dating site was the quickest and easiest way to learn a new programming language. "Sites such as eHarmony.com - which was founded by a clinical psychologist - are dedicated to applying scientific algorithms that would make Google blush in an effort to find match users up with the perfect mate. In fact, matchmaking algorithms are the backbone of the industry; Mr. Frind estimates he spends 95 per cent of the time he dedicates to the business tweaking the back end of the website to both improve user searches and keep out potential scammers and solicitors.
Facilitating online hookups has become a billion-dollar industry; companies that own a portfolio of sites, such as Spark Networks, are ringing up revenues of between $15-million (U.S.) and $18-million every quarter. Various Inc., a U.S. operator of about 25 online properties including the sex and swingers personal site adultfriendfinder.com, was bought by Penthouse Media for about $500-million in December. But unlike the social networks space, which is dominated by a small number of big players, romance-seekers have hundreds of options to choose from in online dating, and the pie is big enough that just about all potential players can have a slice.
AdultFriendFinder Acquisition Update
Techcrunch is now saying that the potential suitor for adult dating site AdultFriendFinder and scores of other sites owned by parent company Various, Inc., may be Penthouse, and that the price was closer to $500 million.
On Saturday I mentioned Michael Arrington wrote that AdultFriendFinder may have been acquired for more than the $1 billion. This is a juicy rumor that continues to be embellished by various sources.Mark Brooks at Onlinepersonalswatch posted a transcript with AFF CEO Andrew Conru, who denied that the company is for sale.His response was to be expected.
This would easily be the largest largest transaction ever in the online personals space. It also helps put a number of PlentyOfFish, which is also most likely positioning itself to be acquired. Stay tuned for more details.
Yahoo! May Buy Bebo for $1 billion
Remember the Bebo acquisition talks that swept through a few months ago? Well, here’s round two. UK news giant Telegraph reports that Yahoo! may be in talks with Bebo for a possible $1 billion acquisition.
Bebo is a social network which (while being San Francisco-based) failed to gain traction in the U.S. but has heavily managed to capture the European/Australian/New Zealand market. Currently with over 25 million users, roughly 1/6th of the size of MySpace, the service has popularly grown in recent months — offering features which compete with everything from Twitter to YouTube.
While the $1 billion evaluation does seem high, it is notable that MySpace had less than 16 million users at the time of its acquisition, and the industry being much smaller than it is now that seemed absurd to people. Yahoo!, like with the products they’ve acquired in the past, has had an attempt at this market with their Yahoo! 360 product which never seemed to gain any traction at all.
Opinion
To recall, Bebo turned down a $550m offer from British Telecom Group back in June last year stating they were ‘asking for the billion.’ Another recall, Yahoo! offered to buy Facebook for a billion a couple months back (and said they’d go as high as $1.6b), which Facebook happily turned down as well. Put the two together, and I think there’s a really strong chance this is going to happen. Bebo has been looking for a buyer for a while now (and $1 billion!), and Yahoo!’s been looking for a social network as well (with $1 billion in their pockets!). Put the two together, and we have a deal.
