Giving up control of your company is tough. Watching it subsequently crash and burn under new ownership is tougher.

For Michael Birch, who co-founded the social network Bebo with his wife Xochi back in 2005, that's an all too familiar story. Just three years after launching Bebo, the Birches sold the start-up to AOL for a whopping $850 million. It looked like a fairytale ending for the company, but Bebo floundered under AOL's ownership, and in 2010, with user numbers dwindling, AOL offloaded Bebo, reportedly selling it for less than $10 million to a newly formed hedge fund called Criterion Capital Partners. Birch reinvested in the company, believing Criterion could turn Bebo around. But last year, the Birches and several other shareholders filed a lawsuit against Criterion and Bebo's new CEO Adam Levin, accusing them of fraud, withholding financial details from shareholders, and failing to hold a single board meeting in 20 months of operations. It appeared all was lost for Bebo when, this May, the company filed for bankruptcy.

Birch, however, was not about to let Bebo go down without a fight. Just weeks ago, he made headlines announcing via Twitter that he was buying Bebo back for a mere $1 million, making one final effort to revive the company he started. Now, the task of reinventing the failed social network will fall to the 21-person staff of The Monkey Inferno, a San Francisco-based business incubator that the Birches founded, and its current CEO Shaan Puri. I recently spoke with Birch about his decision to buy the company back, and why he's cautiously optimistic that there's hope for Bebo yet.

When did you start thinking about buying Bebo back?
Ever since the company filed for bankruptcy, really. There wasn't really an opportunity to buy it before that, at least not without paying a lot of money, which we didn't think it was worth. The network has such little activity on it, relatively speaking, so we were excited about the opportunity to reinvent it, but that in and of itself takes money to do. To pay a lot for the business and then put money in to reinvent it was too big a risk.

Now that you know the sale to AOL went south, do you regret selling Bebo to begin with?
Not really. Back then, we were struggling to compete with Facebook. It was very competitive, and we ended up realizing that we couldn't beat them. They were better funded. They started before us. Bebo was a little too similar. We weren't like Twitter, which was a very different business. We were analogous to Facebook, and it was clear they were going to take our membership from us. 

When AOL sold Bebo to Criterion, you became an investor. Why?
A guy named Akash Garg had joined Bebo as CTO. He's someone I knew personally and had a lot of respect for, so I was excited about his ability to execute. Unfortunately, he wasn't given enough freedom to do what he wanted to do. He chose to leave, and I'm not surprised he chose to leave. I didn't know [Adam Levin], the guy running Criterion, well at the time, and I don't think he was the right guy to lead a turnaround like that. He should have let go of control a little more.

Given how far Bebo has fallen since you sold the company, why not just let it die?
Part of the reason we bought it is just to see if we can turn it around successfully. Apple was turned around when Steve Jobs came back. I'm fascinated by that challenge of reinventing a brand. It would be lovely for it to actually make a comeback. It'd be a proud moment, but in the grand scheme, it's also a relatively small gamble on our behalf. We're building new things at The Monkey Inferno, anyway. This time, we're just choosing to spend $1 million to give us a leg up on at least the initial marketing of an idea.

So how do you plan on reinventing Bebo?
We were a relatively teenage network when we first became successful five years ago. Those teenagers are now in their 20s. So we have about 45 million people in their 20s who used Bebo for the first time as their first social network. There is a nostalgia element we can play off. The hope is they're curious enough about the original place they hung out online that they'll try it again. That being said, if the app itself doesn't stand on its own two feet, it's not going to work. We have to start something that's a viable business in its own right, irrespective of Bebo's history.

What new features can users expect?
I can't share too much, but I can say we're starting off mobile-only. It will be less of a social network and more of a social media app. It'll be a lot less analogous to Facebook, and we'll be seen as a direct competitor only in so far as we're competing for consumer's time. But I don't see us being a direct competitor in the way we used to be.

What leads you to believe you can be successful this time around?
People are willing to use many different social media services. The initial hope from Facebook was everyone would end up using Facebook because they wouldn't need anything else. The reality is people now have four or five different apps they're constantly using on a daily basis, and depending on what they want to do, and who they want to do it with, they'll use different services. I think there's more of an opportunity for launching multiple services now than in the period when people thought it might be a winner-takes-all scenario.

How involved will you be in the day to day management of Bebo?
I don't see myself in the CEO role again. I'll mostly be helping on product brainstorming and so on. Shaan Puri, the CEO of The Monkey Inferno is 25. We hired him as a product manager when he was 24. I'm kind of old now, and I'm doing too many things. I'm starting a members-only club in San Francisco. I'm doing investing. I have three children. You can't be a part time CEO. It's important to find someone who has the energy and enthusiasm I used to have. I still have it, but I can't channel it into one thing like I used to.

Do you have high hopes that Bebo will make a full turnaround?
It would be a little arrogant to say we’re definitely creating the next big thing on the Web. We're excited that what we have created may be of interest to people, but there's only one way to find out, and that's to build these things and launch them.