Slide's Max Levchin on making money in social media
Social networking is undoubtedly a ubiquitous feature of our online lives. But whether these platforms can make a lot of money is a big question. To this end, the business models of widgets - Slide, Flixster, iLike, RockYou - built atop of these “social graphs” seem somewhat tenuous.
Max Levchin knows this all too well. He recently raised $50 million for what many consider to be a widget company. That company – Slide – now has a market valuation of half-a-billion. With such a high bar, comes hard work. Max’s mission over the next year or two – besides continually finding more ways to iterate upon Slide’s popular SuperPoke -- is to get profitable. If Slide isn’t making money in a couple years, as Max puts it: “I’m really screwing it up.”
Before jumping into the “making money” question, first a refresher on what Slide is. Slide is a place where 18-to-34 year olds hang out and express themselves with photos and videos. It was only after Slide made an application on Facebook that it grew like a weed, much like the other popular Facebook apps, Flixster and iLike.
“So, how does Slide make money?” I asked, in this recent interview in the Vator studios.
Slide primarily makes money through advertising, though users also feel that to SuperPoke someone is worth paying some money for, said Max. SuperPoke is an offshoot of Facebook’s “poke” concept that allows someone to send another person a communication without actually communicating at all. Much like a poke in real life. It doesn’t mean anything. It just gets your attention. SuperPoke builds upon a poke by making the gestures more expressive, like a slap or hug, and adding icons. Think of SuperPokes as virtual Hallmark cards or fancier emoticons - those fun yellow smiley faces on our IM.
Max wouldn’t get too in-depth about the business model of Slide. But he did say that he needs to understand the world of Madison Avenue better. Indeed, he should. After all, without convincing Madison Ave. to consistently embrace new media companies like Slide, it may be difficult for Max to convince Wall Street that Slide is worth taking public. This exit - which is rather ambitiuous in this market-meltdown environment - is seemingly something Max is gunning for.
“It was a pretty zesty affair,” said Max to me in a recent interview in the Vator studios. Max was referring to the time PayPal, a company he co-founded, went public back in February 2002, and was sold within six months to eBay for $1.5 billion. "I wouldn't mind doing it again."
(Note: This is the first of a two-part series with Max Levchin. The next interview will be on the evolution of online expression).