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Calling the next Web cycle

May 27, 2008 11:50pm
by Richard Waters

max-levchin.jpg“This is the perfect time to start a company.”

At least that is what Max Levchin had to say when I dropped by to see him in Slide’s SoMa office last week. But isn’t creating an internet company at the tail-end of the last start-up boom a disastrous idea?

This is Levchin’s reasoning. Members of the last crop of start-ups - many of them Web 2.0 companies created two-three years ago - are fast approaching their date with destiny. A slowing US economy and worsening financing environment will force those that haven’t already proven they can make money to consider a sale (we reported at greater length today on the general scarcity of revenue in Web 2.0 land and the slow start to the much-hyped “widget economy”.)

When that happens, Levchin hopes to be around to pick up the pieces. He says it was a hunch about the economic slowdown that prompted him to raise a pile of cash at the end of last year as a “warchest” for the tough times ahead. (He won’t comment on the details, but a reliable source says Slide got $50m, putting an eye-popping valuation on the widget-maker of $500m.)

The acquisition game makes sense. Slide is still early in trying to find ways to make money from its widgets, but one that Levchin says is starting to work is the use of corporate sponsorship on SuperPoke: next time you get an urge to throw a sheep at a friend on Facebook, why not send a promotion for Pimms instead? (OK, that one doesn’t sound like it would work, but you get the idea.) SuperPoke wasn’t Slide’s idea: it was started by three young developers in Seattle but Levchin bought it when he realised last summer that it was starting to take off.

And that is apparently why it’s time to think about starting a company again. By the time the coming shake-out is over, a whole new generation will be starting to find its feet. As they say in Silicon Valley: the best time to start a new business is when things turn down.

May 27, 2008 11:50pm in Internet | Comment

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