Shaan Puri: Special: Acquired x My First Million

The episode begins with an unusual acquisition story: Shaan Puri joined Bebo after its first, far larger exit. Michael and Xochi Birch built the social network during the MySpace era, when Facebook was still expanding beyond colleges. By 2007, Michael believed Facebook would win and began considering an exit. Bebo was especially popular in parts of Europe and New Zealand; Shaan recalls that it had more traffic than Google in Ireland. AOL bought it for $850 million in 2008, a price higher than MySpace's sale. The Birches owned 70% at exit, making it a major founder outcome, but the acquisition did not preserve Bebo's value: AOL wrote it down to essentially zero about a year and a half later as Facebook took over.

Several years later, Michael and Xochi had funded Idealab themselves, and Shaan had taken over its operations. Michael offered him a chance to buy Bebo back from bankruptcy for $1 million. The thesis was not that the old social network would regain its former scale; the team was building consumer products and wondered whether Bebo's brand, email list, or remaining infrastructure could improve distribution. That distinction matters: they were buying a bundle of residual assets and optionality, not a functioning growth business.

The asset bundle proved uneven. The 80-million-address email list was old, possibly resold, and had a poor sending reputation; roughly half was made up of obsolete Hotmail addresses. The domain and list were worth less than expected. A separate legal claim against the prior owner cost only $50,000 at the same auction and later produced a recovery of several million dollars. This unexpected claim became the more valuable asset. The contrast is a reminder that distressed acquisitions can contain heterogeneous assets whose value is hard to estimate upfront; a headline brand may be less useful than a legal right discovered in the process.

The team resisted the temptation to relaunch Bebo as another general social network. They believed Facebook had already won that market, and that reviving an old brand could create confusion rather than a durable advantage. Instead, they preserved valuable search traffic while shutting down the expensive legacy product: engineers turned profile pages into static, indexable pages, reducing operating costs by roughly 100 times. They also used a self-aware launch video to revive curiosity around the brand. The video joked about Bebo's old profile features, went viral, and helped attract a million new sign-ups even though the inherited email list was unusable.