Bebo and the Death of Start-Up Culture at AOL

Look how happy these Bebo users are. Smiling, listening to music, hanging out with their dog, giving sexy eyes. They may soon be forced to find another outlet, though, as AOL announced today that it is looking to sell the social networking site. And if there are no buyers? It's bye-bye Bebo, bye-bye sexy eyes.

Things seem a bit adrift at AOL, and the Bebo news makes it seem all that much more... well, drifty. AOL bought the site just two years ago for $850 million, which is nothing to scoff at. CEO Tim Armstrong, who has been on the job since last April, pledged support for Bebo during his first 100 days media tour last June (Obama envy, anyone?). "I think the Bebo team in general could benefit from being in an environment where they can purely focus on Bebo and growing Bebo," he said then. "We're trying to give them kind of a corral where they can live and grow and really act like a start-up without being constrained to the larger strategy the company has."

Bebo was placed under the AOL Ventures umbrella in an attempt to give it that feel. But can a start-up culture work in a major corporation like AOL?

"The tough decisions that are getting made are about what aligns to our strategy," an AOL spokesperson told Fast Company today. "At the end of the day, AOL is a turnaround, and you've got to place the bets where you have strength." Apparently there's no strength in start-ups.

AOL also sent us a copy of a memo sent to AOL staffers earlier today: "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."

Reports also say AOL is looking for buyers for its instant-messenger service ICQ, and though three have come forward have reportedly, AOL's representative claimed no comment on ICQ rumors.

It's all part of a strategy, AOL's PR says: "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."

Sorry, British kids. Looks like Facebook will have to do.

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3 Comments

  • Deanna McNeil

    It just seems this article is looking at the death of Bebo in the wrong way. It doesn't seem reasonable that ANY social networking site that wants to compete on the same turf with Facebook will be able to manage, so AOL's decision to simply cut their losses would be the prudent business decision.

  • Dave Jeyes

    There's a big difference between encouraging a start-up culture and pumping money into an also-ran social network. The Patch team at Aol is launching in new cities almost weekly and changing the face of local news rather than just mimicking MySpace.