Computer nerd who turned £8,000 into £417m

Three years ago, Briton Michael Birch and his American wife set up a social networking internet site with £8,000 and a great deal of optimism.

Michael and Xochi Birch, founders of Bebo.

Yesterday the creators of Bebo sold it for £417m.

The couple, along with Mr Birch's brother Paul, another co-founder, could net more than £300m between them from the deal as they still own a large part of the company.

The takeover by the U.S. computer giant AOL represents an extraordinary rags-to-riches story for the couple who met at a university bar at Imperial College in London.

Mr Birch, a self-confessed computer nerd with no hobbies, gave up his career at an insurance company in 1999 to pursue his dream of running his own firm.

Bebo launched in July 2005 and is now one of the world's largest social networking sites, with a global membership of more than 40m. This includes 11.4m in the UK, where only Facebook and MySpace exceed it in popularity.

It also has a strong following in New Zealand and Ireland and is number three in the U.S., with each user spending an average of 33 minutes a day on the free site.

It allows users their own web page on which they can display photos and a biography, and list their likes and dislikes.

They can also interlink their site with those of their friends and come up with creative designs for their sites. The takeover is the latest in a string of multi-million pound deals as firms look to tap into the boom in popularity of social networking sites.

Rupert Murdoch's News Corp bought MySpace in 2005 for £285m, while the technology giant Microsoft snapped up a stake in Facebook for £118m late last year.

Mr Birch, who was born in Cheshunt, Hertfordshire, has two children with his wife Xochi. Despite living in San Francisco, he keeps a flat in West London and describes himself as a 'true as the Queen of England Englishman'. His brother still lives in London. Michael Birch and his wife, who are chief executive and community officer respectively, will continue to be involved in the company.

Bebo has about 100 employees in the UK, its headquarters in San Francisco and in Austin, Texas. Mr Birch sold just over 15% of the company to Balderton Capital for £7.5m in May 2006.

AOL is owned by the Time Warner group. President and chief operating officer Ron Grant said: 'Bebo's dynamic management team recognises that the internet is less about destination and more about connecting people, culture and lifestyles.'

Source: dailymail.co.uk