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AOL to sell or shutter Bebo

$850m mistake

Top three mobile application threats

It's uncertain whether Bebo will or will not survive into June, but one thing is certain: the declining social networking website will no longer be under AOL's wing.

In a memo obtained by PaidContent and published by Silicon Alley Insider, AOL Ventures' Jon Brod stated the obvious:

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.

Brod then upped the obviousness ante by saying: "AOL is not in a position at this time to further fund and support Bebo in pursuing a turnaround in social networking."

Exactly two years and three weeks ago, AOL bought Bebo for a hefty $850m. At that time, Bebo was in competition with MySpace and Facebook for top social networking site. We all know which Web2.0rheic property won that battle.

At the time of the acquisition, AOL's then-prez Ron Grant enthused: "Bebo's dynamic management team recognizes that the internet is less about destination and more about connecting people, culture and lifestyles," and added that: "This acquisition supports our key objectives – accelerating the growth, engagement and monetization of one of the world’s most engaged online communities."

Grant was shown the door one year later. Two months after that, AOL exec Joanna Shields, who came to AOL as part of the Bebo acquisition, was gone as well - "to reunite her family and explore her entrepreneurial interests", as explained in a memo from AOL's then-new CEO Tim Armstrong.

Jon Brod's recent memo is less euphemistic. After announcig the "sale or shut down of Bebo," Brod notes: "Obviously this is significant news - particularly for the Bebo team." Indeed.

According to Brod, AOL is "committed to working quickly to determine if there are any interested parties for Bebo." The company's self-imposed deadline for either finding a buyer or shuttering the once-promising site is the end of next month. ®

Top three mobile application threats

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