All Things Digital

Starting Tuesday this week, all the major players in the Yahoo-Microsoft-Everyone-And-Their-Mother circus will line their private jets up in Sun Valley for the high-powered 26th annual Allen & Co. confab of tech and media moguls.

Specifically, that would be bigwigs from Microsoft (Co-Founder Bill Gates, deal guy Hank “Hankrosoft” Vigil), Yahoo (CEO Jerry Yang and President Sue Decker), News Corp. (Chairman and CEO Rupert Murdoch), Time Warner (CEO Jeff Bewkes, who runs the conglomerate that owns AOL), as well as Google (the three amigos: Co-Founders Larry Page and Sergey Brin, along with CEO Eric Schmidt).

It could be like that five families sitdown in the “Godfather” movies, except none of the parties can even seem to metaphorically whack each other, as the Yahoo saga drags on interminably.

While BoomTown’s invitation seems to have been lost in the mail–Herb Allen Trois, what gives, Walt and I invited you to our conference! We’re too mean for your pampered poobahs, right?–so we can’t give you an on-the-ground report.

But the Allen & Co. event might be the perfect place to finally make a deal–any deal–this situation surely needs.

So to help, here is BoomTown’s unsolicited advice for the players of this messy mess.

YAHOO: Clearly, Yahoo (YHOO) needs a big break from the drama–and a good first step is to stop its own silly deal-making antics.

First off, the company needs to stop leaking about an AOL merger deal, because it has a been-there-done-that quality that now looks more like a way to look busy.

But it remains a bad idea and feels desperate and employees still don’t like it.

More to the point, there is probably only one true option right now–Yahoo needs to quickly make a deal with Microsoft to outsource its ad search business and/or ad search business.

In addition, spinning in assets from News Corp. (NWS), like MySpace, is not the worst idea and could be a way to juice up social networking on the site.

After all, more top Yahoo employees will soon be headed out the door, unless there is a significant change of direction and, probably, leadership soon.

MICROSOFT: Oh, get over it.

Microsoft (MSFT) is not going to catch up to Google (GOOG) without Yahoo’s search share and that’s that.

It’s not going to be able to grow it organically (Project Granola!), it’s not going to get there with AOL and it’s not going to get there wishin’ and a-hopin’ Google will stumble.

At this point–though it seems juicy to wait as Yahoo’s shares drift downward and as the company moves to its annual meeting and a likely ugly proxy fight with activist investor Carl Icahn looms–waiting is a mistake as it only damages an asset Microsoft should value.

While Microsoft and Yahoo are periodically talking, they also periodically get in snits with each other–the latest due to Microsoft pique over Yahoo’s posting of a regulatory presentation dissing the software giant (see one such slide below; click on it to make it larger).

As I said, get over it.

NEWS CORP./AOL: Make a deal, any deal.

While News Corp. (owner of Dow Jones and of this site) wrinkled its nose over Yahoo’s one-time offer of $4 billion for MySpace (it wanted $8 billion), despite a commitment by News Corp. of also investing $3 billion in Yahoo, if it should do all it can to spin its social networking site out.

Why? With Facebook pressing on MySpace’s momentum, a pending new music service that could use Yahoo’s massive traffic and the plus of being an independent company to compete better, such a move for News Corp. makes a lot of sense.

For AOL, a need for a deal is clear–a dwindling property with some good assets that cannot and should not live within Time Warner. If it gets anywhere north of $8 billion, Time Warner (TWX) should jump at the chance.

GOOGLE: It’s in Google’s best interest to keep the soap opera going, of course. As this situation has developed, it has only underscored exactly how dominant the search giant is.

And, more importantly, just how dangerous to all the rest gathered there Google truly has become.

So, if Larry, Sergey and Eric offer to help the other players work it all out over a roaring campfire, they should all consider themselves warned.

Please see this disclosure related to me and Google.

First, Google and News Corp. are not about to buy Bebo for $1 billion to $1.5 billion.

Second, Bebo–as has been reported and is easy to find out about by anyone who can pick up a phone and ask around like a reporter is supposed to–has been working on raising a round of funding with Allen & Co. over the last few months. Google and News Corp. (owner of Dow Jones, which owns this site) are potential investors, along with a long list of strategic and institutional investors.

Third, in the course of that funding effort, sources tell me that there has been some interest expressed by some potential investors–namely, Yahoo and Microsoft–about possibly buying the whole social-networking company. But this interest has been, shall we say, preliminary. This is completely typical in these funding rounds.

Fourth, now that Microsoft has forcibly engaged Yahoo in an actual bidding tango for its heart and soul, the prospect of either of them paying any attention to Bebo has now been minimized.

Fifth, Bebo is still at work raising that round, trying to take advantage of the same fair-weather mood that has gotten recent paydays for similar companies like Facebook ($240 million from Microsoft) and Slide ($50 million from T. Rowe Price and Fidelity in another Allen & Co.-brokered deal).

Sixth, Bebo, whose major strength is in England where it is on top, might be valued at $1 billion or more in the round. It had about 21 million unique visitors in a recent month and is a very interesting and highly innovative social network, well worth investing in.

And, finally, seventh, BoomTown is simultaneously incredulous and in awe of the way TechCrunch’s fanciful story on the Bebo sale yesterday managed to both loudly hawk the rumor and also madly backpedal away from it: “We put the chances of this rumor being true at a solid 50%.”

Well, maybe not so solid.

Please see this disclosure related to me and Google.

With all the noise about Microsoft’s $41 billion offer to buy Yahoo, I dropped the ball on posting about a chat I had about a week ago with Slide’s Max Levchin (pictured here) about the recent $50 million investment that valued the widget maker at an astonishing $500 million.

To say I was dumbstruck by the market value, given that the profitless start-up has only about $10 million to $12 million in annual revenue and a still unproven business plan, would be wrong.

Incredulous, yes. Gobsmacked, indeed. Feeling like I was back in 1999, most definitely. But not dumbstruck!

Thus, I queried the always voluble Levchin, who agreed to talk to me readily (no Jerry-Yang-cave-dwelling behavior for this 32-year-old Web 2.0 serial entrepreneur!) about the investment by two old-line institutional investors–Fidelity and T. Rowe Price–and its implications for Slide.

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It’s Bubble Time!

As BoomTown broke the news in its post earlier today, Slide grabbed a big pile of cash from new investors–$50 million from Fidelity and T. Rowe Price–which puts the value of the company at $550 million.

In our post, we said the San Francisco start-up, whose widgets are among the most popular on Facebook and MySpace, was completing a round of funding that could value it at many times a multiple of its most recent $60 million to $80 million valuation.

The investment from the pair of private equity funds gives them a 9% stake in the maker of widgets and other social-networking applications.

Allen & Co., the media-connected New York-based investment firm, helped Slide execs in raising the latest round.

Don’t think we did not notice that the venture investors already in Slide did not pony up more funds at this–let’s just say it, shall we?–crazy valuation.

But it is noticeable that such mainstream investors are jumping into the giant pool of Kool-Aid that the social-networking industry has been swimming in over the last year.

Slide’s last round–an investment of $20 million–took place in November of 2006 with investors that included Khosla Ventures, BlueRun Ventures, Founders Fund and the Mayfield Fund.

So Slide’s investors, of course, were smart to get in on the ground floor to take advantage of the bubble that is expanding at alarming rates.

The ground-zero of that trend came when Facebook got a $240 million investment from Microsoft that valued the company at $15 billion.

Of course, while garnering revenues, neither Facebook nor Slide has the kind of business yet to deserve being worth this lofty amount, except for the fact that investors are counting in its potential and recent quick growth.

Slide’s business plan includes making money from selling premium versions of its widgets, as well as selling advertisers on its large, although disparate, audience.

The company calls itself the “largest personal media network in the world, reaching more than 134 million unique global viewers each month and 30% of the U.S. Internet audience.”

But the company recently said reports had put that number at 144 million, excluding its 50 million users on Facebook. Its competitors include other widget-makers like RockYou.

Slide makes a wide range of software, called widgets, that have been attracting many millions of users each. They include everything from slide shows to a program called SuperPoke that allows a user to, well, poke another in a super way.

A lot of Slide’s current growth has been through taking advantage of the huge spike in users first at MySpace and now at Facebook, which is promising, but also not certain.

To say that we have seen this story of fast growth, insane valuations and then the inevitable drop-off would be an understatement.

But Slide Founder and CEO Max Levchin and his team consider the company to be a new kind of distributed content and application company that is not dependent on large platforms like Facebook and MySpace and has huge potential.

Minor blogging annoyance: Of course, in a fit of pique since we revealed the funding without their help, Slide hand-fed the details of the deal to the New York Times and BusinessWeek, both of which somehow forgot to link to our post that said Slide was landing the deal. (Brad, Sarah: Please, please don’t tell us you figured it all out on your own this morning over eggs.)

UPDATE: A New York Times deputy tech editor just wrote an email to tell me its reporter already had a “previously scheduled” meeting with Slide about the deal–like I said, hand-fed!–this morning, which “inspired” its post and did not know of BoomTown’s news of the funding (even though it was up since 12:06 a.m. and noticed by everyone else, including Slide). Also, they had the hand-fed details! They did! I admit it! I went hungry, since I did not agree to an embargo! “In light of this we didn’t feel that a link was warranted,” he wrote me.

But we’re not bizarrely ungenerous like that, so here is the link to the New York Times story, in which Slide’s Levchin said his company makes Facebook and MySpace worth using. (And here is the BusinessWeek link too.)

“It’s impossible for social networks focused on scaling the network itself to build all the niche applications that bring people and keep people on these sites,” Levchin said, noting Slide widgets “add the bulk of perceived value to the consumers of these Web platforms.”

He also said he would use the money to expand its repertoire, but said Slide would try to develop in-house.

But others close to Slide said this was not exactly so, and that the company would also look around for good acquisition targets, using stakes in the newly valued Slide as currency.

Call it the Facebook Funding Effect.

I am still collecting details, but Slide–the San Francisco start-up whose widgets are among the most popular on Facebook and MySpace–is completing a round of funding that could value it at many times a multiple of its most recent $60 million to $80 million valuation.

That would be a large leap from a round that Slide announced in November of 2006 with investors that included Khosla Ventures, BlueRun Ventures, Founders Fund and the Mayfield Fund. Sources said the investment then was $20 million.

Slide is reportedly using Allen & Co., the media-connected New York-based investment firm, to help them in raising the latest round.

The reason for getting more funding, said sources, is to be able to acquire other companies and expand, using cash and the stakes in the higher-valued company, much in the same way that Facebook has done.

The social-networking universe was recently shaken up, when Facebook got a $240 million investment from Microsoft that valued the company at $15 billion.

Slide makes a wide range of software, called widgets, that have been attracting many millions of users each. They include everything from slide shows to a program called SuperPoke that allows a user to, well, poke another in a super way.

The company calls itself the “largest personal media network in the world, reaching more than 134 million unique global viewers each month and 30% of the U.S. Internet audience.”

But the company recently said reports had put that number at 144 million, excluding its 50 million users on Facebook. Its competitors include other widget-makers like RockYou.

A lot of Slide’s current growth has been through taking advantage of the huge spike in users first at MySpace and now at Facebook.

But Slide and its founder Max Levchin, as well as its investors, have grander dreams than riding on the coattails of bigger players.

They consider the company to be a new kind of distributed content and application company that is not dependent on large platforms like Facebook and MySpace.

More to come about the funding, but here is a post of a visit I made to Slide in September of 2007 and also a video interview I did with Levchin: