SLIDE

Widgets, applications Slide raised $50 million

Valley Girl has learned that Slide has raised $50 million in a round of funding that values the company at more than $500 million. In this fourth round, the investors are not your typical Silicon Valley funding crew, either. This time, Wall Street heavyweights Fidelity Investments and T. Rowe Price ( TROW ) are getting behind so-called widgets, applications like those made by Slide that are all the rage on social networks and other sites these days. If you know Levchin at all, you know he's building Slide with an eye toward an initial share sale, not a quick flip. ^[1] Slide, the maker of applications for social networks, has raised another round of funding ''' $50 million from the private equity funds at Fidelity and T-Rowe Price.^[2]

Mr. Levchin said that Facebook apps may feel frivolous now, but that waves of games, security tools and productivity programs are sure to hit social networks soon. He said he'''ll use Slide'''s new war chest plus leftover funds from three previous funding rounds to expand the staff, keep up with user growth and stay ahead of the competition from rivals like RockYou. '''Being No. 1 does drive advertising and press attention, although we feel we are the smartest and most mathematically inclined anyway,''' he said.^[2] When Max Levchin started Slide, the popular tool that lets users create slide shows and other bling for social network pages, it wasn't because he felt passionately that photos needed to be surrounded by animated hearts and glitter. It was because Levchin, who co-founded and later sold PayPal, wanted to prove he could do it again--this time, generating more than the $1.5 billion PayPal fetched from eBay ( EBAY ) in 2002. As of Jan. 14, Levchin was about one-third of his way to his goal--at least on paper.^[1] Widgets are grabbing real estate off of everyone else's pages. That's an inherently riskier proposition with far fewer ways to make money. Levchin understands that risk, having built PayPal on top of eBay. But this time, he has several eBays (BusinessWeek.com, 8/23/07)--in the form of MySpace ( NWS ), Facebook, Bebo, and even more niche personal blogs and sites. For the strategy to work, Slide needs to build a jaw-droppingly huge audience--so huge that advertisers will see Slide as a way of advertising across the hottest Web sites in one move, versus advertising on each of those places.^[1]

The barriers to entry for building a widget are so low it is a Darwinian fight, and Levchin thrives in that type of situation. Levchin is one of the only people I know in Silicon Valley who actually grew more intense, more hungry after the huge Web 1.0 windfall bestowed on him and PayPal co-founder Peter Theil. That's a big reason Slide is backed by some of the best investors in the Valley already, including Thiel and Vinod Khosla.^[1] The figures were outlined in a presentation for Slide investors that was obtained by Valley Girl. As much as Levchin works tirelessly to achieve his goal--believe me, he tweaks and alters his business focus constantly--Slide faces quite a different challenge from that of many Web 2.0 sites such as Digg and TechCrunch, which focus on catalyzing loyal niches. In its own way, Slide is trying to build the next Yahoo! ( YHOO ). This is not a safe bet. It's a big, gutsy, swing-for-the-fences play, and those typically take a lot of money. Counting this round, Slide has raised at least $75 million. At this second, the answer has to be no, by any normal valuation math.^[1]

Now investors are trying to peg the next Adobe or Electronic Arts. '''It's impossible for social networks focused on scaling the network itself to build all the niche applications that bring people and keep people on these sites,''' he said. Just as consumers bought Windows to play games, organize their taxes or create documents, application makers like Slide '''add the bulk of perceived value to the consumers of these Web platforms,''' Mr. Levchin said.^[2] In that scenario, Slide almost becomes like a huge ad network, only one that's delivering advertising in a far more compelling way. It's not in a banner ad that people routinely tune out. It's ideally worked into a very personalized slide show of your memories. According to comScore ( SCOR ) data for October, Slide ranked ninth in terms of its reach on the Web, right after Amazon.com ( AMZN ). Its applications had 150 million unique users, an increase of 142% over the previous year.^[1] How could a widget company be worth half a billion dollars? What is the revenue model? How could it ever make a profit on slide shows running on other people's sites? The naysayers have a point, but I've long thought Slide was a far more valuable property than the Silicon Valley masses gave it credit for. Widgets raise doubts in large measure because they're not bound to any one site. While sites like YouTube ( GOOG ) and Facebook are struggling to wring revenue from the millions of people who come to their sites, they at least can run standard banner and display advertising to buy them some time; they control their own sites.^[1]

Call it the Facebook Funding Effect. I am still collecting details, but Slidethe San Francisco start-up whose widgets are among the most popular on Facebook and MySpaceis completing a round of funding that could value it at many times a multiple of its most recent $60 million to $80 million valuation. That would be a large leap from a round that Slide announced in November of 2006 with investors that included Khosla Ventures, BlueRun Ventures, Founders Fund and the Mayfield Fund.^[3] SAN FRANCISCO (Reuters) - Social network software maker Slide Inc said on Friday it had closed a $50 million institutional financing round, marking the rising valuations of start-ups riding fast-growing Facebook's wave of popularity.^[4] Last year, Microsoft invested $240 million for a 1.6 percent share in Facebook, betting that the rapidly growing social network could mint the next Web platform.^[2]

Investors are being sold on the idea of social networks as the new operating system and apps-makers like Slide as the next Intuit.^[2] Slide and its founder Max Levchin, as well as its investors, have grander dreams than riding on the coattails of bigger players. They consider the company to be a new kind of distributed content and application company that is not dependent on large platforms like Facebook and MySpace.^[3] Levchin said the new cash will be used to boost the size of the San Francisco-based company to about 100 employees and expand the applications it offers on the upgraded MySpace platform. Acquisitions of other so-called social software developers will be a low priority, he said.^[4]

Slide, based in San Francisco, makes what it calls tools for personal expression using rich media ''' or in other words, nifty Facebook and MySpace time-wasters that let you display photos, write cute messages on your friend'''s pages, or send the virtual gestures called '''pokes.'''^[2] A lot of Slide's current growth has been through taking advantage of the huge spike in users first at MySpace and now at Facebook.^[3]

Slide makes a wide range of software, called widgets, that have been attracting many millions of users each. They include everything from slide shows to a program called SuperPoke that allows a user to, well, poke another in a super way.^[3]

Some of the advertisers and Web analytics firms used on this site may place "tracking cookies" on your computer. Tracking cookies are small text files that can tell such companies what you are doing online, even though they usually don't record your name or other personably identifiable information. These cookies are used by these companies to try and match ads to a user's interests. They are used all over the Web, but in most cases, their presence is only disclosed deep inside privacy policies. We want you to know how to get rid of these tracking cookies if you like.^[3] The reason for getting more funding, said sources, is to be able to acquire other companies and expand, using cash and the stakes in the higher-valued company, much in the same way that Facebook has done.^[3] The company calls itself the "largest personal media network in the world, reaching more than 134 million unique global viewers each month and 30% of the U.S. Internet audience." The company recently said reports had put that number at 144 million, excluding its 50 million users on Facebook. Its competitors include other widget-makers like RockYou.^[3]

After cashing in big with PayPal, Max Levchin could be at it again with his social network tool. ^[1] Slide started in 2005, originally self-funded by Levchin and backed by PayPal co-founder Peter Thiel. These earlier rounds of funding totaled in the "low tens of millions of dollars," one of the sources said.^[4] Sources said the investment then was $20 million. Slide is reportedly using Allen Co., the media-connected New York-based investment firm, to help them in raising the latest round.^[3]

SOURCES

1. Slide: The $500 Million Widget
2. Slide Slides Into Some Cash - Bits - Technology - New York Times Blog
3. Slide Gets Big Funding? | Kara Swisher | BoomTown | AllThingsD
4. Facebook software maker Slide gets $50 mln funding: Scientific American