In 2008, Michael and Xochi Birch sold Bebo, which is some kind of social networking company, to AOL—for 850 million dollars.
Things didn’t go too well, and in 2010, AOL sold Bebo to a private equity firm for 10 million dollars.
Things continued to not go so well, and Michael Birch has bought the company back–for 1 million dollars. He doesn’t know exactly what he’s going to do with Bebo now, but plans to have fun trying to reinvent it.
I think what often happens in such situations is this: if a company is so clueless about its market that it fails to either develop internally the product for which there is a critical emerging need…or to acquire the product externally before the prices go out of sight…then it winds up paying an exorbitant price. The price will be one that makes sense economically only if the acquiring company is able to obtain truly stellar results on its new property…but typically, the same cluelessness that led to the product shortfall in the first place will also lead to an inability to successfully integrate or even effectively manage the acquisition.