Interview: Joanna Shields, President, Bebo: AOL Was First Suitor; ‘Attractive Bids'; Staffing Up

After a late night finalizing the announcement of today’s $850 million acquisition and a hectic morning, Bebo’s affable president Joanna Shields spent some time with Staci and I on a call from New York. She confirmed that Bebo’s husband-and-wife founding team has cashed out, the ad relationship with Yahoo (NSDQ: YHOO) continues for now and the money will help the site hire lots more staff – maybe around the world. Bebo hadn’t planned to sell. Only a surprise phone call from a friend following a presentation to AOL (NYSE: TWX) execs at a London hotel five months ago moved the site to seriously consider its options. Bebo engaged New York bank Allen & Co to field offers. “There was definitely a bidding process; we went out and we talked to a number of potential companies and we had a number of very attractive bids” – but the prospect of AOL’s ad network and IM protocols brought it back to its original suitor.

Why AOL? A serendipitous story: “AOL was the first company to approach us. I presented to the AOL executives off-site in London at Claridges, right at the last few days of October. I looked at it like ‘could this be another presentation to a bunch of media executives or shall I really sit down and think about Bebo and how it fits with AOL?’ I had the team running around like a bunch of lunatics creating this fantastic presentation and it really crystallized our thinking… We delivered the presentation and a couple of people came up afterwards and said ‘Time Warner should buy you.’ I just kind of laughed and then in December I got a call from Dana Dunne, who runs AOL Europe, a friend of mine, who said ‘(AOL president) Ron Grant wants to come and see you, he was in the audience that day when you gave your speech.’ I thought, well, okay – that’s the serendipity that led to our conversations.” Shields earlier today said the initial aim had been to raise more funds, but AOL’s interest seemed to have sparked a realization that Bebo’s time (and its worth) had come. More after the jump.

A bidding war?: Speaking of being linked to Google (NSDQ: GOOG), News Corp (NYSE: NWS) and others, she continued: “And then we did go through a process. We went out and we talked to a number of potential companies and we had a number of very attractive bids. But this for us was the best possible combination of assets and philosophy and that acknowledgment that the social web is emerging.”

There was definitely a bidding process. We worked with a bank, Allen & Co, in New York. It was a very interesting process. There were all kinds of people speculating and we had some great bids, the structure of this particular deal, the combination of the assets and the support we would get and the shared vision, it just made a lot of sense for us.” Was anyone other than AOL willing to pay all cash? “I don’t think it makes sense to talk about those terms.” Confirming the Birches are out, Shields said the acquisition will give AOL a full 100 percent of Bebo. Will Bebo move to America? “I think I’m going to be traveling a lot!” That includes five other European roll-outs. “We have the potential now to hire and scale the business properly and get a lot more talented people on board.”

But, really, AOL?: As the portal itself reinvents after a legacy as an ISP, and remains a possible factor in Yahoo’s roadmap, what kind of future does Shields see under its wing — and is she worried about the various reports? “I didn’t know much about AOL’s current history until I started researching it, and then I realized how much they’ve invested in Platform-A and how Platform-A is really positioned to monetize the social web. It’s all about behavioral contextual targeting and, with Advertising.com, they have the largest reach of display advertising at work. You look at the reach of AOL and ICQ and AIM then it’s a fantastic combination of assets.”

Integration: Will Bebo remain independent? “That’s the plan. I’m confident we’ll continue to do the right thing for the network and for the users.” There’s no big pay-off for AOL in Bebo’s growing video drama production – though interaction around works like Lonelygirl15 spin-off KateModern are hosted on-site, the videos will continue to be syndicated to other portals.

AIM chat: Though AOL touts close integration, Bebo already added the protocol in October and upgraded its API last week, so what’s new? “There are so many potential synergies that we’re exploring and going to look to develop. There’s a much deeper layer than we can build upon” – ie. more than the API allows. Windows Live Messenger integration added last year will seemingly continue because “Bebo is an open network”. “We’re looking forward to working with ICQ to develop the US market stronger for us” (Bebo is currently strong in the UK, Ireland and New Zealand; less so in America).”

Advertising: Bebo has been doing what Shields calls “engagement marketing” since 2006, though she sees little difference between adverts and content. “Delivering it to the place in the network that has the highest potential for people to share it.”

Yahoo already has the contract to deliver display ads to Bebo in the UK, Ireland and Australia – what happens with that now? Too soon for answers. Shields: “Yahoo has been a great partner to Bebo. This (the AOL deal) isn’t over until it’s approved, until we get regulatory approval, so it’s not closed. We’re not going to talk about partnerships, we’re going to continue business as usual.” Certainly seems logical to assume Platform-A/Advertising.com will begin to power all Bebo’s ads, however.

Timeline and approval: “(Winning regulatory approval) is standard in the US; we’re a US-based entity” – AOL-Bebo will submit its plan to the FTC as standard to the FTC under the Hart-Scott-Rodino Act, which should take about 30 days.

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