Monkey Inferno Founder on a Mission

Michael Birch is best known for selling his 3-year-old social networking startup Bebo to America Online for a stunning $850 million in cash.

But Birch has been starting companies since 1999. And now that he has the financial means—his family netted roughly $600 from the sale—he’s doing it en masse.

It’s an endeavor he’s taking seriously.

Though Birch has amassed stakes in 30 startups over the last four years, he abruptly stopped sprinkling around seed capital at the end of 2010. Partly, he shifted gears because he says he thinks there’s “a bit of a bubble,” one that has made investing in nascent startups “a bit pointless.”

In addition to curbing his seed investments, Birch has dramatically slowed his investing on behalf of PROfounders Capital, a 2-year-old, European-focused venture fund that he co-founded in 2009 with numerous entrepreneur friends. Their aim at launching PROfounders was to invest between £500,000 and £2.5 million ($810,000 and $4 million) at the earliest stages of digital media startups.

Birch says that PROfounders hasn’t made “nearly as many investments as we predicted we would” two years later.

Among the six companies it has funded—at a rate of two per year —include London-based CitySocialising, a subscription-based social network that helps members find like-minded individuals to meet with offline. PROfounders led its £1 million ($1.6 million) Series A last December.

Another of its portfolio companies is the made-to-order furniture store Made.com, which raised $3.75 million in March 2010. PROfounders led that round, as well.

The reality, too, is that Birch realized at some point that investing isn’t scalable unless “your chosen path is to be an amazing investor” and Birch is more interested in bringing his own ideas to life.

Toward that end, a year ago, Birch bought a former envelope factory south of San Francisco’s financial district, turning it into an ideas lab called Monkey Inferno.

The incubator operates on his money. The projects it is developing are those of Birch and his wife Xochi, who is also Birch’s longtime creative partner.

It’s very intentionally not your average startup lab. For starters, Monkey Inferno features 12,000 square feet of horizontal glass windows, polished concrete floors, and the kind of elegant reclaimed wood pieces that have become the signature of San Francisco designer Ken Fulk, who also designed the Birches’ home. It makes some of the nicest offices in the Bay Area look second-rate in comparison.

Birch has structured Monkey Inferno in a novel way, too. Birch will never take any capital from investors, for example. Presumably, he’ll never need to.

In addition, everyone is an employee of Monkey Inferno, no matter what “sub company” or startup they are expressly hired to focus on. That means that every employee receives equal option grants in every company that springs into being.

“We want to be able to move people around without having to renegotiate options,” explains Birch. It’s also centered on positive reinforcement.

“If everyone benefits from the success of each company, everyone is going to want to help everyone else,” he says. And no one will get overly upset if his or her project tanks.

“Ultimately, it’s not an employee’s fault if we’ve put them on an idea that’s not so good,” Birch says.

Right now, the incubator houses just four startups that are being developed in tandem by a staff of 15. Birch plans to more than double the staff.

One startup is a peer-to-peer fundraising tool that Monkey Inferno will eventually hand off to charity: water, a popular nonprofit that Birch began helping several years ago.

Birch is also applying the team’s engineering muscle to Jolitics, a still-nascent political social network intent on empowering voters. It’s an idea that Birch says he had “pre-Bebo.” It’s still being beta tested in Ireland and the United Kingdom, but Birch expects to launch a U.S. version this year.

Zuno, a third mobile startup, is iterating on a startup that Birch and his wife created back in 2001 called Birthday Alarm. The latter simply invites users to pay $14 per year for birthday alerts, at which point they can send off an online greeting card. Although most people now learn of friends’ birthdays via Facebook, Birthday Alarm still nets the couple $10,000 a day.

Birch is more circumspect about Monkey Inferno’s fourth startup, characterizing it simply as “a little social network. I wouldn’t say it’s a competitor to Facebook,” he says. “I don’t think it makes sense to try and be what they are. I do think it makes sense to be what they’re not.”

Birch adds that while he doesn’t think Facebook has peaked, “what goes up must come down. I think the threat will be people getting bored of it and wanting something fresh and new. Facebook is very utilitarian, as it’s always stated. And people want something more fun and lighthearted,” says Birch, suggesting that what he’s working on allows greater “self-expression.”

I don’t feel different than I used to feel. I haven’t bought a plane or a yacht, and I don’t intend to.

Michael Birch

Whether any of Birch’s projects become another sensation like Bebo remains to be seen. But one senses that having spent the last four years thinking about his future, he’s not going anywhere now.

“We’re entrepreneurs,” he says of himself and Xochi, who he met while in London. And no amount of wealth is going to change that, he adds.

“I don’t feel different than I used to feel” before Bebo’s sale. “I haven’t bought a plane or a yacht, and I don’t intend to.”

Birch said that he enjoys a greater work-life balance than he ever did before, and that he’s having a great time with his three children. At the end of the day, though, “We don’t want to sit on the beach. We want to enjoy going to work and building cool things.”

Michael Birch at a GlanceAge: 41

Hometown: Cheshunt, Hertfordshire, England

Degree: Attended Imperial College London, where he studied for a bachelor’s of science in physics.

Career: Founder (with wife Xochi) of BirthdayAlarm.com, Ringo.com (sold to Tickle.com) and Bebo.com (sold to AOL).

Did you know? Months after Bebo’s sale, Birch found himself on the operating table, undergoing open-heart surgery for a leaky heart valve. While recovering, he resolved to adjust his work-life balance.

Investments

Mixpanel

Founded: 2010

Location: San Francisco

Mission: A real-time analytics service that tracks how users interact with Internet applications

Funding: $1.75 million, including from Y Combinator, Sequoia Capital, PayPal cofounder Max Levchin and Square COO Keith Rabois

Onalytica

Founded: 2004

Location: London

Mission: Social media monitoring

Funding: Undisclosed

ResearchGate

Founded: 2007

Location: Berlin

Mission: Social network for scientists

Funding: Undisclosed amount, including from Benchmark Capital and Accel Partners