Image: PayPal co-founder Max Levchin
Ben Margot  /  AP file
PayPal co-founder Max Levchin is also founder and CEO of the No. 1 widget maker Slide, Inc. The company hopes to make more money by inserting ads in their "widgets" — applications that are embedded into popular Web sites like MySpace.com and Facebook.com.
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updated 8/6/2007 1:03:14 PM ET 2007-08-06T17:03:14

Max Levchin already changed electronic commerce as a co-founder of PayPal, an online payment service that is expected to process more than $40 billion in transactions this year.

Now, he's tinkering with a new way to make money off Internet widgets — high-tech shorthand for the mini-applications planted on the personal pages of online social networks and other popular Web sites like Google.

Levchin's latest startup, Slide Inc., has emerged as the No. 1 widget maker so far, largely because its programming tools have made it easy for people to add more pizazz to the pictures and videos decorating trendy hangouts like MySpace, Facebook and Bebo.

Hoping to cash in, the 32-year-old Levchin will push Slide down a potentially slippery slope Monday when he injects advertising into the mix for the first time.

"On the surface, it seems like a risky idea because what if (users) don't want advertising in their widgets?" Levchin said. He concluded his idea would only work by making all the ads "user-initiated" — that is, the marketing messages only appear if users voluntarily choose to blend a marketing campaign into their own personal widgets.

Levchin and Slide's senior advertising director, Sonya Chawla, insist the approach isn't as kooky as it might sound. After all, they point out that consumers for years have willingly become walking billboards by buying clothing promoting the brands of major corporations like Nike Inc. and Coca-Cola Co.

Given that behavior, Chawla doesn't think it's that much of a leap to assume people will turn their widgets into platforms for showing off a trendy cell phone or attaching links to hot movies and television shows.

"We are really good at getting people to take things and include them on their social networking pages," Chawla said. "We think we can persuade our users to become brand ambassadors."

Lisa Weinstein, a managing director of ad agency MindShare, said Web surfers have proven they will distribute advertising online by steering their friends and family to commercial clips posted on YouTube.

For the approach to work with widgets, advertisers and their agencies "will have to do it in a way that adds value to the experience, rather than interrupting or disrupting it," Weinstein said.

The initial list of major advertisers hoping to get their commercial inserted into Slide's widgets include Viacom Inc.'s Paramount Pictures, AT&T Inc. and Discovery Communications Inc.'s Discovery Channel.

As widgets are melded into more Web sites, they are becoming a more attractive target for advertisers looking to connect with consumers who are spending less time watching television, listening to the radio, and reading newspapers and magazines.

In May, 221 million people worldwide saw at least one Internet widget, according to the latest data from the research firm comScore Media Metrix. Slide's toolbox of widgets, bearing names like "Slideshows," "Funpix," and "Skinflix," was the market leader with nearly 129 million viewers worldwide.

San Francisco-based Slide largely is piggybacking on the rapid growth of social networks, where its widgets are commonly deployed. News Corp.'s MySpace attracted 114 million worldwide visitors in June, a 72 percent increase from last year, while Facebook drew 52 million, more than tripling from the prior year, Media Metrix said.

Levchin launched Slide in early 2005, a couple of years after online auctioneer eBay Inc. bought PayPal for $1.5 billion in a deal that turned him into a multimillionaire.

Slide hasn't turned a profit yet, subsisting so for on an undisclosed amount of money raised from a group of investors that includes PayPal's former chief executive, Peter Thiel, and one of Silicon Valley's best-known venture capitalists, Vinod Khosla.

If Slide's advertising ambitions pay off, Levchin hinted that the company might be in a position to sell its stock in an initial public offering as early as next year.

"Widgets aren't just about fun and games," Levchin said. "This is a big step toward maturity for us."

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