Rumor: Slide’s Venture Round Was $20 million

Silicon Valley is a weird place indeed. Its crazy how some of these companies with no revenue can get so much money.

Maybe it’s time VC’s started in investing in ideas AND people, not just people. It’s very frustrating to see all these people with “clout” found what basically appear to be less-than-intelligent companies, and get huge amounts of VC money. There are a lot of ideas that are brilliant out there being started by young entrepreneurs with a lot more drive, since they haven’t made it big yet.

Slide is a neat site, but it’s hardly a business. I’m sure they have some great ideas for revenue, but $20mm is asinine. You should be able to build their entire system for less than $1mm, plus maybe another $1mm to cover bandwidth costs.

Typo *that. Should get a spellcheck plugin for your WP: http://matthew.delmarters.com/.....pellcheck/

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20 million dollars. LOL.

Having a VC buying in 1/3 of your company wouldn’t give you much latitude at running the show would it? So it’s like taking a forbidden fruit.

slide is a widget. how can a widget be valued 80 mill??????

if myspace decides to ban 3rd party widgets and come out with their own line of widgets (which they can make for a few mill at the most), then slide is done.

how can you have a business valued at 80 mill based on that scenario?

Michael,

Go to Slide web site, click on “About Us” at the bottom, then click on “Press”, and watch the KGO (KABC7) video report about Slide. One minute into the video, you’ll get a surprise.

If you’ve already seen it, never mind.

@Dick:

Dude, I don’t know what is going on in the Web/business world these days. An $80M valuation is BS.

Slide is making no money. And, it will probably never make any money. Something tells me they’re waiting for a MySpace buyout - but MySpace don’t need to do that.

$20M in VC money - there are just no words. Someone noted perhaps $1M for dev, and another for bandwidth costs. Even then they would be grossly over-funded.

When did investors stop caring about ROI?

Im Guessing a VC would not only inject cash into the business but also take a decision making position.

Thus it takes away a piece of your company it can also be good in that you get cash to kick start things and you also have access to a VC’s team ( and all that it includes ie PR, Experience , Management team , Lawyers etc ) aswell as their contacts in the industry.

As they say 0% of nothing is nothing. Sometimes best to get investment.

Very much like Google or Skype . These two companies would never have grown had they not received funding and help from their investors. The same could go for thousands of other companies ie Yahoo etc

P.S Mike There appears to be still problems with your Forum software . Registered ages ago but still not had confirmation email .

Cheers fella
Aflao.blogspot.com

Forgetting for a minute what a company like this could possibly do with $20M, what it tells me is that the VCs seem to think that Slide could sell for $500M. VCs don’t normally invest unless there is a potential 10x payoff.

Besides, Slide is a product, not a company. Either there is some huge money to be made the next couple of years on stuff like this, or we’ve entered 1999 all over again. Frankly, I don’t like seeing this amount of money being spent for me-to products with no discernible business model. That kind of money could fund 10 to 20 companies like ours.

Any one know how to set up the auto-inserts for myspace, if you do contact me at “autoinsert at gmail.com” Thanks for any help you can provide.

Another thought on the subject: a typical VC fund is $100M or more. If you want a few partners and a few MBAs doing due dilligence, you need that size fund so the 3% mgmt fee covers your costs. You only make 15 to 20 investments out of a fund, so an average investment is $5M. Then you hate to be the only VC in a deal, so you get two others to participate, now you’re talking a $15M investment.

The problem is that most companies in this space that TechCrunch covers only need $500K to at most $2M. VCs, by how they are setup, just can’t make such small investments. The system clearly has broken down.

This company will join your deadpool soon. It’s a trivial solution that just about anyone can create (and many have already offered similar things as part of their bigger solutions). Even myspace offers something very similar along with 300 photos now.

There is zero revenue to date, and if they start adding ads to all these slideshows, people will turn them off in a NY minute.

I led Lightspeed Venture Partner’s invesment in Rockyou, and am also a friend of Max’s at Slide. I can’t comment on the substance of this rumor, but wanted to respond to some of the comments.

Looking at Rockyou and Slide as pure technology, and considering their worth as simply the engineering time to duplicate their code, substantially undervalues them. Both companies serve up over 100 million total widgets, and create more than 100k new widgets, every single DAY. Thats a lot of adoption.

Users of social networks don’t decide who to create a slideshow with by issuing an RFP, or by doing an exhaustive feature comparison of vendors. They use what they see others using, what they see their friends using. In that sort of decision making environment, size matters in generating further growth. A great user experience and good technology are antes to play, but they are not enough to win the hand. Both Rockyou and Slide have scale and that is a key driver of the value that they’ve created.

I think skeptical comments about business model are understandable. I posted in my set of 2007 Consumer Internet Predictions that this year widgets will find a business model (if you’re interested in reading more, click my name in this comment). But it’s also fair to say that they haven’t demonstrated a business model yet.

Youtube was able to generate a destination browsing site and monetize traffic directly. Photobucket drives enough traffic through creation and editing to make very substantial advertising revenue. But many other widget companies (and I’d include both Slide and Rockyou in this category) have not yet crossed this bridge.

However, I think that there are a number of promising business model avenues that have not yet been fully explored, some ad based, some sponsorship based, some freemium models, some likely requiring a revenue share with the social networks. But I wouldn’t have invested if I didn’t think that!

I can reproduce slide.com within $10k budget outsourcing it. Then $500 per month for a good server with 20-40mbps bandwidth.

Then what else? I might need one programmer to fix few bugs once in a while and have Arrington review it so I get some geeks using it.

if I had money in a VC fund and knew my money was being invested in dog crap like this I would go absolutely INSANE.

Both companies serve up over 100 million total widgets, and create more than 100k new widgets, every single DAY. Thats a lot of adoption.

Is this info available anywhere? 100M total widgets would take 3 years to get to even at the rate of 100k a day, which I find hard to believe in the first place.

What I can’t believe is that there’s any money invested into a company that’s sole existance is governed by another entity (FOX) overlooking an item in their terms of use. All FOX has to do is tell Slide that they are violating it and they’ll shut them down — unless they’ll be willing to sell out for $5M which is what this company will be worth w/o myspace.

“if myspace decides to ban 3rd party widgets and come out with their own line of widgets (which they can make for a few mill at the most), then slide is done.”

My immediate guess is that they wouldn’t want to do that. After all, the community of users is what’s made MySpace cool & taking away tools users utilize would probably be a bad step for MySpace.

Slide ain’t no YouTube. End of story.

It’s all a sell out, they sell the companies to some friends at M&A in some big corp and later put them on the board of the new round etc. At the end of the day the public pays the bill.

Many internet companies that start out without clear revenue models become successful. Two examples that come to mind are Google and Yahoo.

That’s what the PayPal alumni does best… circulate new cash among themselves. Slide is a pointless product, but with former PayPal execs heading it - of course it will get funded. The rich get richer!

Jeremy what happens when myspace shuts them down and does their own widget like they have tended to do in the past?

The point is if you are aiming for 10x return it’s a pipe dream - the points of failure are many and highly probable and the revenue or buyout can’t be that high.

I could never stand every widget on any one of my pages (not that I’d use myspace) having an ad. Is it self-expression or advertising central at that point?

Sponsorship? So themed widgets with coke on them? I thought this was self expression not corporate branding?

Freemium? So what, I have to pay photobucket/flickr for archiving, and I have to pay slide or rockyou for display?

I agree with the sentiments above - perhaps consider the idea as well as the team? Look at the roadmap/beta’s a little closer - you might find some surprises.

Traction only gets you so far - if you want to go on adoption rates then maybe Cigarettes are a great business to get into too.

I think FOX’s strategy is to cast FUD with myspace widget cos until they begin to monetize. As soon as they monetize, they will twist the widget cos arms and demand revenue splits (presumably, on ads inserted into a very small % of impressions on these free widgets) between the widget owner, social networking site, and user. Different social networks already have different strategies here: Bebo, for example, is carefully managing widget co relations with RockYou etc. Facebook doesn’t really have widget adoption.

It might be the case that FOX + other social networks develop every single one of the top 10 widgets themselves (Myspace video is a pseudocopy of Youtube etc) in the same way MSFT developed their top 10 PC apps (given evidence of popularity, copy or buy, then pump into distribution channel). So outright banning them would be like eliminating free R&D: Not sensible.

Most widgets for social networks are written in Flash (because JS banned for security, not for FUD). So when the Flash widget cos monetize by inserting ads into Flash, who will step up and do the targeted Flash ad insertions and give the social networks, widget cos (and users) something to split?

Certainly GYM, the newer behavioral ad networks and the “rich media” ad networks will try, with widget cos leading the way, with social network in hand, arm twisted.

I will restate here what I did about the filmloop post. How can any investor justify buying into a company that relies completely on another company for success, without any type of agreement or partnership. When myspace decides to flick the switch or offer that widget themselves, all of these companies are taking a dip in the dead pool.

WOW, a widget that files through a bunch of pictures, how original, how cutting edge. Oh wait, online photo galleries have been around for years and years, now they are just idiot proof. There are so many more innovative original companies out there, I wish VC’s would “VENTURE” out a little more.

I don’t get it: With an $80M valuation, the VCs are expecting an exit of >$400M. If they start to monetize on MySpace, I imagine FIM would cut them off (or at least demand a substantial share). Also, I can’t imagine FIM would pay $400M for it. If G, Y, or M were to acquire them, I imagine FIM would cut them off.

Do they have some plan they’re not disclosing yet? Otherwise, it makes no sense. While I’ve been underwhelmed by some Mayfield investments, Khosla and FF are very smart folks.

I think it is simplistic to assume that MySpace will block them or create their own.

Blocking would mean MySpace is preventing its users from importing new and innovative content, the very thing that blew them right past Friendster which tried too hard to be a walled garden.

MySpace has created their own but that is no guarantee of success. For example, their addition of video uploads hasn’t impacted YouTube in anyway.

The only question that nobody can answer (yet) is the monetization. I think the investment is speculative and the goal may well be an acquisition. Not that there is anything wrong with that :-).

Slideshows on MySpace. As if it didn’t already look the part of a circus.

Sorry Mr. VC, a widget is a widget, Slides’ adoption has nothing to do with the community thats adopting it, its just the widget du jour. Shutterfly shows this is a hard hard biz, yet with its own $300M valuation, 80M+ in and lots and lots of users-how on earth do you justify 20M to a widget like Slide…go home!! Cant believe Vinod did this.

I will also repeat what I said about FilmLoop…

Creating a product or company with no revenue and expecting to be acquired is a horrible idea. I think the VC’s are all drinking the same Kool-Aid.

Maybe it would be a good idea to venture outside of the valley for the next big thing…

Also, the enormous amounts of money being poured into the creation of these small web apps is pure comedy. The bubble is back and lots of people are going to get hurt.

Someone above said that the value of the company is alot more than the cost of duplicating the engineering effort. Basically that the size of the community (even leaching off myspace) is what is really valuable. That is the way of these social networks, it is the community, not the software that is valuable. This goes for digg, myspace, youtube, etc…

But, what I have a hard time figuring out is

- what is slide going to do with $20M bucks ?
- for that matter, what is digg going to do with $14M bucks

I don’t even understand what the potential revenue sources for this could be. Can someone enlighten me?

I think I agree with the permanent hater.

I would love to see the business plan.

I think I am going to start hanging out at golf courses that are near VC’s in the Valley, as it’s seems that’s where all the deals are made nowadays. Who needs a good idea or a business plan, just fund your golf buddy’s son cause he said it’s really sick, and he throws around some key phrases like ajax, and web 2.0, and it’s really” sick”. Did I mention he said it’s really “sick”? And this is how a web company gets funded in 2007…

My opinion on Slide is somewhere in the middle, I do know that they serve many users and make up a large percentage of photo-hosting across the social networks. Alexa puts them in the top 800 websites.

To me what would be interesting is if Slide has brand recognition or not. ie. are users adopting Slide because it has a good name, or are they taking up ‘that slideshow thingy’ they saw on a friends page. If Slide has recognition and respect amongst users, then they will be able to use this to branch out into other areas. If not, then users won’t be able to tell the difference between a Slide widget and a MySpace widget, and in that battle MySpace would have the upper-hand since they can better integrate their own offering within the network.

Those that mention that FIM can easily shut slide down, you might remember that they tried that with YouTube long ago, and there was such a backlash that the blocking only lasted a little over 24 hours - though the official story was that YouTube widgets didn’t work because of a bug in MySpace (which is possible).

The big difference between YouTube and Slide is that YouTube took advantage of their reach within the social networks to become a destination unto itself, I don’t think Slide has taken off as a destination.

Those that think that the value of Slide is simply the cost of replicating the technology are also wrong, it is a very flawed argument. Getting to the level that Slide is at takes a lot more than just technology, and it is often shown that successful companies are often not those with the better technology but are those with the best user experience, market strategy, etc. etc.

As for the funding, this is just a sign of a very healthy VC market. It is hard to judge this deal as an outsider since we don’t know the specifics nor do we know about their strategy. The reason for the $20M could be to branch out into other products and to hit other markets.

Having said that, I do agree that users won’t accept advertising in their widgets. Even with the most targeted advertising, the user will always have an option to switch to an ad-free alternative. Perhaps a rev share on the ads in a widget *might* be an incentive for users to accept advertising.

Auto-insertion is right out of the PayPal playbook. PayPal is the premier incubator of entrepreneurs in the 2000s.

I bet a chunk of that $20m must have been used to grease the right palms at myspace.

On a sidenote. VC’s are very smart people. They see from the top floor of the highrise; yet tell the tale as visible from the first floor.

There have been some good points raised above, especially by Sundar and Sourabh on FIM. I think there are also some misunderstandings about the degree to which some of these widget companies depend on Myspace. As a result, I’ve posted on the Lightspeed blog on some of my thoughts on this matter - you can click on my name in this comment to read it if you’re interested.

On a side note, I am not privy to Slide’s business, nor to Filmloop’s, but I know that Rockyou has built its business on capital an order of magnitude lower than some of the numbers being bandied about here. This isn’t a reflection of the high quality Slide and Filmloop engineering teams. From the outside in, I would guess that this is a function of the much higher level of difficulty of building client software than building web apps.

huh? did you actually just use the term “pre-revenue” with a straight face? i’m going to just assume that you’re drinking…

If I actually didn’t work for RockYou and compete with Slide on a daily basis, I would probably have agreed with many of your sentiments above. That said, Slide has probably north of ten million users a month coming to their site at this point (which may come as a surprise to some).

If you doubt this, take a random sampling of MySpace profiles. I’ve done over 3,000 at this point. Both RockYou and Slide each average over 10% of profiles with a slideshow or other widget on them. MySpace has 100MM users. Now take a look at Bebo which has integrated Slide and Rockyou. Do a random sampling of Bebo profiles and you’ll see very strong adoption. Bebo has north of 25MM users. Across every large (and open) social network, you can do the same analysis. These users make lots of changes to their slideshows and widgets regularly (i.e. they come back to RockYou and Slide a lot). Once you add up the numbers, the monthly user numbers start making sense.

The real question is what value massive consumer adoption is worth. Google didn’t generate ANY meaningful revenues and was described as a search ‘feature’ not a product for quite a while. But once they attained a massive user base, building Adsense to a revenue juggernaut was actually realizable.

The same could be said for Skype. A free VOIP product charging 2 cents a minute for landline calls? A lot of folks thought that had little value. Except that there’s now over 100MM registered users and nearly 10MM users live at any one time. This year revenues will cross $200MM (a basis for eBay’s multi-billion acquisition) based on MASSIVE user acquisition.

Ultimately if any ‘feature’ generates the interest of 10s of millions of users and becomes part of their daily, weekly or monthly interaction with the Internet, it’s valuable. Real revenue is very realizable by giving away free services and content to users — think Google, Yahoo and eBay. All three offer the bulk of their services (mail, search, news, finance, shopping, voip, payments) for absolutely free. All three charge for access to their users (through ads) and have premium paid for services.

Finally, the doubts related to technology are very logical. There are a lot of slideshow providers in the space. The only issue is that the top 3 providers (RockYou, MySpace and Slide) make up 80% of the market and new competitors with great technology (ala Filmloop or Slideroll) don’t get anywhere in the space. Why? It’s the viral effect. I have a post on my blog about that, so I won’t repeat it here.

Ro

they got money b/c its owned by Max Levine (?) of PayPal fame; just like the guys who did youTube. Lots of PayPal people are big-time, Peter Theil for example.

in my view, slide is a smart investment and will bring a great return for the investors soon.

it is impressiv how fast they got from nummer 1000 to nearly 500 top sites of the world. (less than 3 weeks)

i expect them to get on the top 20 sites of the world within the next view months!

how much did you spent to get on the top 20 sites of the world?
i think the investment was much cheaper than your budget

take a look:

http://www.alexa.com/data/deta.....=slide.com

here as well:

http://hitwise.com/registratio.....report.php

cu

p.s.: why should myspace block embeded systems? they made myspace big in bringing more value into myspace. if they block slide, they kill some mil. slideshows within profiles. impossible! hope you all know the facebook story in the same time they kill all partner business cases they built up!
this is a feature of myspace not a bug :->