Slide: Max Levchin's Next Act

Can the founder of PayPal strike gold again with his new company, which helps MySpace and Facebook users connect to friends?

by Aaron Ricadela

Compared with his last Internet venture, Max Levchin's latest company could be seen as frivolous. PayPal, which Levchin sold to eBay (EBAY) for $1.5 billion in 2002, helped spur the e-commerce boom by letting consumers buy products without credit cards. His current endeavor, Slide, helps MySpace and Facebook users make sparkly slide shows.

But the 32-year-old Ukrainian expects the lighter side of the Web to generate serious money, even more than PayPal did, for himself and his investors. "As the competitive type, I compete with myself, so to exceed PayPal in scale and success is important," says Levchin, dressed in shorts, a T-shirt, and baseball cap in his spartan office in San Francisco's South of Market district.

Slide investor David Weiden, a general partner at Khosla Ventures, puts a finer point on it. If Slide cashes out for $1.5 billion, Levchin "would regard it as abject failure," he says.

That's a lofty goal for a company that only entered many Internet users' consciousness a few months ago and generated its first dollars of revenue even more recently.

Fast Off the Block

Slide got its start in 2005 building software widgets for News Corp.'s (NWS) MySpace and other social networks. The small applications let users add pizzazz to their MySpace pages by posting photos with glittery backgrounds and music (see BusinessWeek.com, 7/23/07, "The Next Small Thing"). But Slide and other widget makers got their big break in May, when Facebook opened its pages to third-party applications, and with fewer restrictions than MySpace.

Three months later, Slide lays claim to the two most popular widgets on Facebook: Top Friends, downloaded nearly 13 million times, lets users install a quick link to their closest virtual buddies on their Facebook pages. My Questions, downloaded 7.4 million times, lets Facebook members pose debate-provoking queries.

Awareness of Slide is taking off. In June, it rang up 134 million individual viewers of its widgets, according to market researcher ComScore. As of May, 29% of U.S. Internet users had seen a slide show or other program someone created with Slide, ComScore says.

Delicate Balance

But there's been almost no money in it because there's no charge for Slide's widgets, and there were never any ads attached to them until just recently. Since it's unlikely users will pay for them, the No. 1 supplier of widget software needs to figure out how to turn that traffic into ad sales without alienating the teens and twentysomethings who have made it popular. Whether it succeeds could provide other entrepreneurs and investors clues as to whether there's a sizable ad market to be claimed by asking users to embed corporate brands in the glitter and flash that adorn their profile pages.

"Will these widgets have the same utility if they have ads associated with them?" says Linda Boland Abraham, an executive vice-president at ComScore. Web users age 18 to 24 "are just nuts about these things." But Slide might lose some of its juju if users view it as just another ad medium. "There are certainly a lot of unanswered questions around monetization," she says.

Hearing Music

In July, Slide ran its first ad campaign, for the movie Bratz. On tap now are campaigns for Paramount Pictures (VIA), AT&T (T), the Discovery Channel (DISCA), and Activision (ATVI). These campaigns will enable users to embed characters and music from movies, reality shows, and other media properties into their slide shows. The Paramount ads, for example, will showcase the studio's animated Bee Movie, due out Nov. 2 and featuring the voice of Jerry Seinfeld.

In mid-August, Slide began testing sales of premium features for $4 a pop. These include special effects for slide shows transitions and online photo frames that look like the covers of fashion magazines, news weeklies, and supermarket tabloids.

And now it's pursuing bigger game: Slide wants to strike a deal with a record label that could bring licensed music sales to its widgets. Whether Slide has enough cachet to win over the always-Web-leery music industry is unclear. In May, the company hired PayPal alum Keith Rabois from LinkedIn as vice-president of strategy and business development to negotiate such deals.

Deal Frenzy

But is it really conceivable that Slide could eclipse PayPal's eye-popping value? Aside from Google's (GOOG) $1.65 billion buyout of YouTube, few recent Internet deals have flirted with that kind of money. "Absolutely," says Levchin. "One and a half billion dollars is a very important mark. Once we pass it, I'll feel very happy about what we've done…We should be able to beat PayPal by a large margin."

One way could be through an initial public offering, which Slide is eyeing, though not in 2008, as has been reported. "Max is committed to building a public company," says Rabois. Levchin says an IPO could happen, but he thinks he can keep Slide growing while keeping investors and employees happy, all without pulling the trigger too soon.