• PaidContent.org, Thursday, January 8, 2009 11:15 AM

In an interview with PaidContent writer Tameka Kee, Norwest Venture Partners principal Tim Chang expressed concern about two well-known Silicon Valley startups that he thinks will find it hard to grow their revenues or raise new money this year. "I'm concerned about Facebook," Chang said. "Microsoft isn't likely to renew its search-advertising contract--at least not at the same rate--and Facebook makes a significant amount of money from that deal. Imagine if you lost $300 million worth of revenue--how would you make it up? It's not going to come from advertising, even if they have other ad platforms." As Kee points out, that also raises questions about what happens to News Corp's MySpace when Google renegotiates its search deal.

Chang added that Facebook wouldn't be able to recoup the lost money through the sale of virtual goods, either. "They didn't figure out the value in virtual goods until it was too late, and now third parties are doing it instead. That's money they've left on the table."

Chang also expressed concern about Slide, the largest widget maker on Facebook. Despite raising a whopping $50 million one year ago, Chang said the company is the "poster child of the Web 2.0 bubble. And if Slide spends through that money and has to raise again--I'd hate to be in their shoes. The onus is on them to find a business model beyond just advertising right now."

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