Page last updated at 11:57 GMT, Thursday, 23 October 2008 12:57 UK

Valley Girls: Xochi Birch

By Maggie Shiels
Technology Reporter, BBC News, Silicon Valley

xoch and isabella
Xochi Birch: "Technology is changing the world and the way we live."

In the second of a regular series of features profiling influential women in Silicon Valley, Maggie Shiels talks to Xochi Birch - co-founder of social networking site Bebo.

The tale of Xochi Birch's success is common to Silicon Valley.

As a serial entrepreneur, alongside husband Michael, she has spent years starting companies, building them, scrapping them, moving on, beginning all over again. They have even sold some for real cash.

Their biggest success was with social networking site Bebo (Blog Early, Blog Often).

In March 2008 AOL bought Bebo for $850m (523m).

The teen favourite now has than 40 million international users. Third to Facebook and MySpace in the US it is the number two social networking site in the UK and number one in Ireland.

"It's such a big sum and it's hard to get your head around it. There comes a time when you think, 'well how much can that really buy?' and you don't really know," she said. "It's just hard to imagine."

Hard work

The success with Bebo stands in sharp contrast to Xochi and Michael's early years when they lived from payday to payday while coming up with a winning business.

This was in 1999 when Xochi left a job as a computer programmer at an insurance company to go self-employed.

"I was never a big company type of person and my ideal job was to be self employed. The ironic thing is you work a lot harder for yourself than you do for anybody else.

Bebo faced scepticism when it launched as social networking site

"You heard about all these other internet companies succeeding by starting off in a bedroom or a garage and I felt 'yes, we can do this.'"

1999 was bad time for net entrepreneurs as the dotcom bubble burst, venture capital dried up and lots of companies faced ruin.

"It was definitely one of the most stressful times for us. We were living month to month in London not knowing where the next mortgage payment was going to come from," Xochi said.

"There were times when I thought I should just go get a job," she said. "Life would be so much easier working nine to five for someone else.

"It was a hard time to be in the industry but luckily at the time it was just Michael and I working in our bedroom so we had very little debt. Because we had to be cheap, it helped us innovate."

Big decision

Their first start-ups included online address book LemonLink as well as sites called Babysitting Circle and Friendly Wills. All failed.

Next they tried to which users subscribed to get reminders of loved ones' birthdays. It is still owned by the Birch's.

ComScore claims Facebook attracts more than 123 million users worldwide

Things changed in 2003 when Xochi noticed Friendster - a site seen as the forerunner of social networking sites.

"I was so intrigued I spent probably an hour just looking at it. I thought this is just a really cool site," she said.

It inspired the pair to set up a similar online business called Ringo which was sold to for an undisclosed amount.

"Ringo was growing so fast but we couldn't afford to get the next batch of servers in so we were at a crossroads," she said. "We either had to sell it or raise money. At the time we had three offers and it just seemed like an easy thing to do to sell it, so we did."

At the same time MySpace was emerging and Xochi watched it's crazy growth. She kept an eye on the space because she felt it was a new era for the internet.

"It fascinated me the way people would go online and connect with their friends, with people they didn't know and communicate via these sites."

Game over

The first iteration of Bebo emerge in 2005 and looked very like LemonLink said Xochi.

"It was really a self updating address book and photo sharing site," she said "The first month we got a million members and I think that's when we realised we had something but we didn't know then what to turn it into because we had a million members but nobody was coming back."

Bebo sign
Bebo is designed to appeals to those aged 14-24

The next six months were like walking a tightrope as they worked to persuade people to come back and see what their friends were doing and upload photos.

"When we first started Bebo people thought: 'Why bother?' Game's over. MySpace and Facebook have won the game and there is no point even trying."

The cash from the Ringo sale helped them keep afloat, Xochi said they faced prejudice from the VC community.

"A lot of VC's don't like investing in husband and wife teams. I guess because they think you are going to divorce or something and its seen as an added risk

This just made the Californian native more determined to succeed. A trait she said she got from her dad - a now retired junior college financial aid advisor.

"My dad is Mexican and he grew up as a normal chauvinistic Mexican and he expected my mom to do everything for him.

"I think what really shocked him was having five girls and that changed his attitude completely. So I would say my dad instilled in me a sense of accomplishing things for yourself. Trying to be as independent as possible."

Ideals and dreams

But work is not Xochi's sole motivation. She is now a mother to three young children, including a newborn. Her plans for them, despite her wealth, are simple.

"One of my concerns for my children is growing up with your parents having a lot of money. I know that my happiness has been definitely tied with my achievements.

birch family
10 months after inception, Bebo was voted Best Social Networking Site

"I hope they have goals and ideals and dreams for themselves. I hope they are hard working," she said. "I feel there is a big sense of accomplishment and achievement and self worth through what you do no matter what the job, no matter what you decide to dedicate your life to."

Xochi's daughter Isabella and son Joseph have no real idea of the family's wealth.

"I think they were very disappointed when we sold Bebo," she said.

"They had it in their minds that they would come work for Bebo. As a result they were concerned for our future. My son said: 'It's okay Mom you can learn to sew and that can be your new job.' And Michael is going to be a janitor at their school.

"They have no real concept of the magnitude of what has just happened."

Neither she said do they.

"If I was 20 I would be spending the money completely differently from the way I am now. There is no Ferrari, no private jet. We are buying two homes: one big one in London and one in San Francisco."

Selling out

But there are other plans. Michael has talked of launching a new online dictionary, Xochi is keen to take some time out and work out what's next. Undoubtedly that will involve the net.

"I just could not imagine my life without the internet. I am constantly on it and excited to see how it is going to change our lives and what the next phase is.

och and isabllea
"The best lesson for a business is you don't need a lot of money," says Xochi Birch

"I find with social networking and with Bebo and the internet in general it just really follows humanity. Whatever problems you have offline you have online as well."

Eventually she would like to buy a building in San Francisco where start-ups can come and work and collaborate.

Unusually for founders who sell up, both Michael and Xochi decided that with the AOL deal completed they would walk away.

"I do feel like a sell out," she joked.

"I suppose part of me would have like to continue to grow the company. But I could not have worked for anyone else. No way. When you are used to having the last say and when that changes there is bound to be a conflict of interest."

She acknowledged that walking away from the Bebo family she helped to start was one of the hardest things she has done, it was for the best.

"It is probably the healthiest thing that happened to us."

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