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Michael Birch on starting up and keeping going

Updated Thursday 30th June 2011

The OUBS' Leslie Budd talks to Bebo founder Michael Birch. Can small start-ups still outstrip big brands online, and can we avoid a second dotcom bust?

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Leslie Budd:  Michael, it’s been argued that large networks like the internet actually tend to benefit large incumbent businesses and not the smaller, more creative businesses in the longer term.  I wonder what your view is.

Michael Birch:  Well you say it benefits the large incumbents, but the large incumbents that we’re probably talking about all started as small internet businesses themselves.  What hasn’t happened is that the large traditional bricks and mortar companies, most of them have not transitioned well online.  So they actually have been threatened by startups, and I feel now that the opportunity to create a startup is probably better than ever.  Now there’s always going to be a tier of company sizes, from the very large to the middle size to small, but most of those middle and large ones are coming from the small.  Most people won't succeed, because there’s far more small companies than there are large, but I think there’s huge opportunity in mouldable platforms, very easy to create a website now, one person can certainly create a website on their own, just using a computer in their bedroom.  So I'm very optimistic about that still.

Leslie Budd:  You mentioned the quality of the product is really important in websites and search engines.  How would you advise a startup business based on the web to develop the quality of the product and sustain it?  Is there any particular rules of the game?

Michael Birch:  It’s probably the single hardest thing to do.  Most companies don’t succeed because they can't create the quality of product that’s needed.  I mean you look at the quality of clearly a big company, Apple, they make amazing products, and most other big companies relatively speaking don’t, so even large companies struggle to create that quality of product.  You’ve either got that product vision, I mean a lot of companies, small internet companies are started by developers, and there’s a lot of very good developers who start businesses, but if they don’t have that understanding of product, which is something that’s quite hard to learn - you either have an intuitive sense of product or you don’t, then it’s very hard for them to succeed if all they do is create a technically brilliant product that doesn’t actually fit the product needs of the consumer.

Leslie Budd:  Onto a more global point, we've lived through the dotcom to the dot-bomb in recent years.  I wonder what your view is about the public, the enthusiasm for social media companies going public, and whether this might represent just another bubble?

Michael Birch:  I think the internet will always go through cycles.  We clearly had the big web 1.0 bubble inflation and bust.  I don’t think it’s going to happen to the same degree but yes it’s becoming to the point where companies are going to float, and there’s quite a lot of companies which are, happen to all be at the right stage at the right time to actually potentially IPO, and one success encourages others to do so.  So there will be a series of IPOs, and they’ll probably do very well and their values will probably go up initially and then in the long term settle down a little bit.  I don’t think it’s a bad thing.  I think it’ll become trendy to IPO and then there’ll be a period where it doesn’t happen but then it’ll happen again.  It’s just the natural cycle for the evolution of the companies.

Leslie Budd:  And do you think this kind of development actually encourages entrepreneurs, new entrants to actually see that there is a trajectory of success in the future, or is it as you said that it’s the enjoyment of the development and sustaining those new businesses that actually drives people ultimately?

Michael Birch:  I think that the, it’s exciting to see these big companies do very well and I'm sure many entrepreneurs aspire to get to that point.  We did certainly when we started out, we didn’t say we’re going to be the next, at the time it would have been Yahoo I guess, we didn’t say we’re going to be the next Yahoo, we started out, and I think most people do, much more modest.  Our aim was to earn for ourselves what we used to earn by working for someone else, and I think a lot of people start out with that ambition and it’s the enjoyment of the lifestyle of being an entrepreneur in charge of your own destiny and doing something that you truly love.  If you don’t love it then you certainly shouldn’t be doing it, but I love what I do, I love thinking about websites, about product, about development and so on.

Leslie Budd:  Michael Birch, thank you very much.

Michael Birch:  You're welcome.

(4’34”)

 

 

Leslie and Michael were talking after the recording of The Bottom Line

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