Tuesday, May 23, 2006
Bebo at roughly 24m users/enormous views gets a $15m round from Benchmark.
What's the play here?
Well, here's a very nice quote from one of the Benchmark guys:
..."User-generated content is creating all these online communities. It is a huge market for online advertisers to exploit, particularly in terms of the profile of the users."
Bolding's mine. Basically, Benchmark wants to place bet on the new revenue streams social networks are unlocking, largely based around revolutionizing branding - which I think is a great idea.
But comparisons to MySpace are off target. If you don't already know, Bebo is more like Facebook. It's trying to leverage extant networks across colleges and universities. And this is the real source of it's advantage; the institutional structure of education is so different in the UK and Europe that Facebook would have a tough time cracking the nut.
Hence, a fairly good bet by Benchmark; more than likely to realize a very nice exit within the year to a major Euro media player.
But there's a lot not to like about this bet as well. For one thing, it's another me-too play in the vastly overcrowded social space. For another, Bebo hasn't really proven that they understand how to really tap the hypersocial or the hypercultural; they've had a good run essentially imitating Facebook, but how long can they continue doing that?
Finally, I think Benchmark sees this as a bit of a MySpace, but they might not be able to tap the revenue streams they want to tap on Bebo. On MySpace, the context for interaction is music; on Bebo and Facebook it's school-related stuff.
We've already discussed in detail why the market size for the former is likely to be much bigger; in short, because the number of students is limited, and because it's harder to make totally new connections on Facebook. Though you might use it scope out the hottie in your Latin 601 Seminar, odds are you would have met her anyways (you dog), and so social value creation isn't really that great.
That said, Bebo is ultimately an example of Euro VC at it's best - and worst. A good investment, but one predicated on imitation, rather than innovation.
Hmmm... Bebo is more similar to FriendsReunited than Facebook - most people on it hook up around current/former secondary (as in high) schools not Universities (as in Colleges). Facebook is winning the war for University networking-its already taken over in Oxford/ Cambridge following the same elite-down diffusion model as in the states. US/ UK university systems are actually quite similar - more so than Europe vs UK and Facebook slots in quite happily as far as I can see without much localisation required at all.
Those are very good points.
It's exactly the high-school level diffs I was referring to - I think that's what gives Bebo the edge in this mkt.
From what I understand, Bebo is already much more popular than Facebook for the masses - mostly at schools. Though I have heard Facebook is doing well at the better universities, my understanding is Bebo muuuuch stickier. Though I could be very wrong - if you're on both, let us know what the deal is!
Thx for the comment.