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Bebo, lessons from the edge of the deadpool

Apr 8th, 2010
by Farhan.

So news came out recently that Aol was looking at either shutting down or selling of Bebo, the UK based social network that they bought a couple of years ago for about $850 Million for. I used bebo for about a day, but nevertheless I’m quite sad about how this is turning out.

Aol and Bebo are not alone, there’s a ton of similar situations that have happened, including the Yahoo! acquisition of Kelkoo, the CBS acquisition of LastFM, the Google acquisition of Dodgeball and many other’s by lot’s of different internet companies. Post acquisition it’s really difficult for a product or service to keep it’s edge and it’s appeal, especially if it gets sold to a company that doesn’t see the new acquisition as contributing to it’s core.

The Telegraph has a great report on the Aol situation and I especially liked this bit towards the end

“The lessons for the likes of MySpace and Facebook are clear: unwavering investment in product development, audience and niche focus and continual evolvement, are the key ingredients Bebo, certainly in its latter years, seemed to be lacking.”

It’s not just Myspace and Facebook that need to pay attention to product and audience and continual evolvement. It’s every company in every industry. You can see which companies are the ones who pay attention to this in different industries, Salesforce.com, Amazon, Zappos, Apple, all continue to evolve, update product lines, cannibalise existing businesses to grow future revenues and all are likely to be around for sometime because of it.

You need product champions and innovators who can look into any market and see the needs and develop products accordingly regardless of the market. Otherwise companies will go the route of Bebo or worse.

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Posted in: business, entrepreneurship, internet, marketing, technology.

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  • http://twitter.com/freyfogle Ed Freyfogle

    I agree with your conclusion, but why do you include last.fm in this list? Yes, Spotify is the pretty new thing, but seems to me last.fm is still thriving and doing very cool things product wise.

  • http://www.fiftybyfifty.com/lifeoffarhan/ farhanlalji

    Interesting, I haven't used Last.fm in a while and haven't heard much about it since Spotify started showing some leg. Not sure if they're doing enough, or as much as they would be doing had they not been acquired. Imagine you're an independent company and a competitor comes out and starts taking market share, odds are you'd be competing pretty aggressively, don't think Last.fm has been competing like they should.

  • http://blog.silentale.com/ Shannon Ferguson

    been trying to think of examples other than Flickr where startups with traction have thrived in bigger companies, and can't! Yahoo! Music did well for awhile, but ultimately died the death of must monetize vs. invest in product development and future revenue streams. Altho acquired companies benefit from immediate access to larger consumer base and marketing/promotion, IMHE don't believe the benefit of that outweighs the downside of bureaucracy, constant fighting for resource allocation (product dev, mktg/promo etc). Flickr somewhat of an exception because it was “siloed” within Y!, without interference in product, cross-promoting other Y! products etc etc. altho as you point out, maybe it could have been more successful standalone.

  • http://www.fiftybyfifty.com/lifeoffarhan/ farhanlalji

    Agree and disagree Shannon, I think if a company isn't core when it's acquired without an integration strategy and benefits that are defined before acquisition then in makes sense to keep it separate (like Flickr – and possibly like LastFM), but if a company is core to the business the integration can work. I think Y! did a good job integrating Right Media, Goog integrated YouTube, Double Click fairly effectively as well. But in any case you need the people who are passionate about the product around to keep innovating, and you need to keep them motivated.