Good for them. They're proving that you can get obscene valuations by using second-level advertising on the back of a low-profit, highly overvalued social network.
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.
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.
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.
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.
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.
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.
I think a modularized web will be a big part of what's coming up.
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.