Birthday Alarm Funded Bebo

A story about how a simple birthday reminder website called Birthday Alarm became a profitable e-card business that funded the creation of Bebo, which later sold for $850M.

"Michael was a programmer at an insurance company who wanted to do a startup. He created a self-updating address book, but the only feature people liked was the birthday reminder function. So he made that the product - Birthday Alarm.com.

He had no marketing budget, so he created a viral loop: when someone added their birthday, they'd be asked to save their friends' birthdays and invite others. He kept improving the virality by simplifying the process, eventually creating one of the first scrapers for Hotmail that could import entire contact lists.

The site exploded from tens of thousands to hundreds of thousands of members. It was still free until his friend Morgan suggested adding e-cards as a business model. Once they added e-cards, it immediately started making serious money.

The business was run lean - just him, his wife, sister-in-law doing books, and a cousin handling customer support. At its peak, it was making $4-5 million a year with about 80% profit margins.

He used that profit to self-fund his next startup, Bebo. Because he self-funded it with Birthday Alarm money, when Bebo sold for $850 million, he and his wife owned over 70% of the company.

Even years later when nobody was working on it, Birthday Alarm was still generating $2 million a year in profit, which funded his next ventures."