A hands-on expert in social software, Max Levchin was interviewed to a full house at Web 2.0 Expo in San Francisco last month. Following his appearance on the cover of Portfolio magazine, Levchin, the CEO of Slide.com, talked about the emerging social application economy.
Starting with his own company, Levchin explained Slide’s business as “adding the meat to the bare bones of social graph.“ Levchin, one might remember, is part of the team that built and sold Paypal to eBay, which many investors felt eBay had no choice but to buy. Levchin seems to be going for a repeat, leveraging Facebook to build Slide the same way. With the humblest expression he can muster, Levchin deadpans, “I thank my generous hosts”.
The social platforms have begun to open up their APIs, giving application developers like Slide more leverage and potentially putting them in competition with the platforms. “Social software builders compete for advertising dollars ultimately” Levchin explains. He believes it’s simply a matter of who delivers the best applications for advertisers to engage with users.
To illustrate Slide’s benefits to advertisers, “Every single campaign that we’ve run in the world of Super Poke has been nothing but a smashing success for the advertisers,” Levchin contends. This raises the question of whether the application developers will eclipse the platforms, just as Yahoo made Netscape less relevant. “Since Netscape was based on standards, it is really Internet Explorer that made Netscape irrelevant,” says Peter Yared, CEO of iWidgets. “A better analogy is Windows and Mac OS.” Yared suggests. “The more applications, the more relevant the platform — until all the apps move to another platform like the browser, which is what happened to Windows.”
When asked, Levchin dismisses any question that social applications might be fad, saying that part of Slide’s job is to make sure that doesn’t happen. He simply believes the best applications will prevail, whether they come from the social platform owner or not. “The engagement that the user has when they’re using one of our apps is close to that of television except it is fully interactive,” he explains. Levchin thus contends that Slide is in good position to serve advertisers in the new ways they are now demanding. First Levchin says he has packaged the Slide user community into various “affinity groups”. This allows Slide to deliver better campaign results but without hitting a wall of privacy issues. He says that Slide “complies with their covenant with the users” while at the same time correlating “patterns of usage” into affinity groups they can offer to the advertisers.
Levchin also says that Slide has the right stuff as “Madison Avenue becomes more concerned with engagement metrics.” Engagement must not be intrusive, since spam is the biggest complaints users have about Facebook and MySpace. As people reach attention deficit, applications like SuperPoke can become a nuisance even between friends. Levchin has some ideas about how to address the problem. “Our plan is simple and obvious and I suspect it’s a human one, to create tools or levers for the users that make it easy to control the spam.” Many aggregators like Friendfeed are also trying to solve this problem but no company yet offers an outstanding solution.
Virtual goods are also getting Levchin’s attention. “I’ve seen with my own eyes the first time in Asia for me where people make billions of dollars selling virtual goods,” he says. Whether this translates to similar opportunities in the United States is a still a matter of speculation. But it may at least be an alternative business model to the presently large focus on advertising revenue.