Don't make too much fun unless you know the numbers. For all I know they might be generating huge profits. What makes you think their valuation is too high?
Max Levchin's name is worth a lot of money, though, so that might have been a major factor in the high valuation. Do you think they deserve half-a-billion valuation while running on the back of Facebook? I don't know their numbers, but 500 million dollars is a lot of money.
It's not overvalued at all. They could probably pull in $50M-$100M a year in revenue right now with their traffic, extrapolating a bit from the revenues we're getting from our single application.
I'm pretty surprised by how many hackers here are completely missing this boat. IMHO it would be worth it to do a little more research before dismissing the entire space - this is going to play a larger and larger role in the future of the internet IMO.
Yeah, the potential for success is huge, but you're operating on the back of FaceBook and you have to learn a new markup language. The latter problem is probably the reason so many hackers are "missing the boat."
But look at facebook right now; its arguably worse with the apps. Companies like Slide hijack your news feed and spam your friends. That's uncool and it puts me off.
A lot of those spamming tactics are how apps get so much exposure, but I don't see Facebook allowing that kind of stuff for very much longer.
My point is, relying on Facebook as your provider is pretty risky. I wish you continued luck, though.
I'm not a fan of the spammy stuff either. Those are tactical methods and apps which rely on those tactics at the expense of actual utility quickly decay. The apps that actually stay at the top are there because there's a demand for them.
Relying on Facebook is pretty risky - but so is doing a startup. The bigger picture is that they (and I) believe that applications built on SOME social platform are going to be the future of web applications. We're barely seeing the hint of that future today, and making a bet early could pay off big or we could all be wrong.
Wow, that's a huge assumption, that the applications of the future will be delivered though Facebook.
That would be an interesting and depressing future, with companies like facebook dictating the rules of the internet. I certainly hope it doesn't come to that.
I've always thought that news sites like digg would become the eqivalent of the Web OS, the gateway to the internet. I can see Bacebook filling that space easily though, now that I think about it. The difference there is that digg is pointing users to other places on the internet, while facebook in that case actually BECOMES the internet for those people.
It'll certainly be interesting to see how it all pans out in 10 years.
Slide is on MySpace too, and they probably make more money there than on Facebook. It's easy for us YC news hackers to forget about MySpace because we probably all use Facebook but MySpace is where most users are.
Let's also not forget that all other social networks are going to open up, creating a massive opportunity for Slide that probably far exceeds what Slide makes on Facebook. $500 mil may not be such a high valuation when you think about it.
So lets assume that the costs for a successful web company are a small fraction of revenue (maybe 20%?). That's profits of 100 million a year for last-year's-Facebook.
So if this company makes 1/10th the profits of Facebook, it will take 50 years to make enough profits to cover it's current valuation. Of course, if this company is as profitable as last-year's-Facebook then their total profits will exceed their valuation after 5 years.
So I guess the question then is whether social-networking apps have the potential to generate similar revenues to the big social networking sites.
Facebook was anticipating on the order of $30 million in profit, as I recall (serving out billions of pageviews is never cheap). Feel free to multiply all of your time estimates by three.
I've been frustrated lately at humorous comments and the rapid rate at which they are upmodded. A quick bit of humour can be great at cutting to the heart of the issue, but it often seems like humour comes at the expense of over-simplification. Apologies for taking it out on you though!
I really wish someone made wise estimates of their current revenue/profit numbers or at least provide the thought process that went behind coming up with $500M+ valuation.
