Photo-sharing startup Slide received a new round of venture capital today from Khosla Ventures and Mayfield.  I chatted with Slide founder Max Levchin (also a co-founder of PayPal) about the company.  He was tight-lipped about the actual amount he raised (speculation puts it at north of the $8 million he got in his last round, or more than a total of $20 million raised so far).  He was also tight-lipped about exactly how many people are using Slide. 

But the numbers must be pretty good if ex-Kleiner rainmaker Vinod Khosla decided to invest (moreover, Khosla does not typically invest in consumer plays).  comScore ranks Slide as the No. 11 most visited photo site with 3.9 million visitors in October, after Shutterfly (No. 10), SnapFish (No. 9), Flickr (No. 6), and Photobucket (No. 1).  Even Slide’s Alexa graph shows steep growth.  But Levchin does not see Slide as competing with other photo-sharing sites.  He tells me:

The service is fundamentally about self-expression, about letting people express themselves online.  It gets confused with photo sharing. What we do is give you the ability to customize your photos—and perhaps other forms of media in the future—by letting you take what you produce and turn it into a story.  You can think of a slide show as the poor man’s video.

Slide lets you take your digital pictures and present them as a slide show on the Web or your desktop.  The slide shows (which can be either private or public) are all available on Slide.com, but you can also show them on other Websites such as your blog or MySpace page.  What Levchin really wants you to do, though, is download Slide’s desktop software, which lets you make your slide shows into a screen saver.  (Convince your mother to download it and she can get streaming pics of the kids all day long). 

Explains Levchin:

The business model is rooted in this desktop strategy.
The thing we had in mind in the beginning was to build a system that
lives on your desktop that you really want to see. It is
consumer-centric, person-to-person. But it does not need to stop with
what I made for my parents. RSS has made it possible for me to see any
stream of content. 

We are trying to understand what our users are trying to do.  Ultimately, we are building a discovery engine that helps people find
all kinds of content on the Web and deliver it to them.  We
want it to become a delivery engine for content you did not know even existed.

The way this discovery engine will work basically is to look at what slideshows you watch, see who else watches those same slideshows, and then recommend slideshows the other people watch but you don’t.  It will be like Amazon’s "People who bought this book also bought that book" feature, which Levchin says someone from Amazon once told him was the "single best revenue-enhancing feature they ever had."

Okay, but how does Levchin eexpect to make money?  There are no traditional ads on Slide today.  But there is nothing stopping marketers from creating their own slideshows.  And about 80 or 90 of these are featured on the site’s directory and the desktop software, where they function essentially as visual catalogs.   But in order to work as advertising, they must work first as content because no one is forced to watch them.  Once people who are looking for them do find them, reports Levchin:

The odds of you actually buying something from one of these after you choose to go to it is 9 out of 10.  By the time you find the Zappos shoe catalog you are probably in the mood to buy shoes. 

That’s the same attitude YouTube CEO Chad Hurley (another former PayPaler) has about advertising.  I interviewed Hurley a few weeks ago, and he told me almost the exact same thing:

What ads are becoming, even the Superbowl ads, are great pieces of content potentially, if done the right way. If people enjoy those ads it should rise to the top like any other piece of content.

It is a much more organic way to market yourself. We really believe you don’t need to force your message on the community, With all of these ads, with what Wendy is doing, advertisers are putting these videos into our system like a piece of content. If the viewer does not want to watch it, they don’t have to watch it.  It is a democratic way for the community to determine what is interesting to them and what will continue to rise to the top. Advertising in the past has not been optional.

I like the idea of optional advertising.  But where Levchin and Hurley need to be careful with is to make sure the proportion of advertising to content never gets out of hand.  Otherwise, people using these services will stumble upon advertising thinking it is something else and feel cheated when they realize what they are watching is just a dumb ad for Wendy’s (or Zappos).