Slide just raised some serious dough at a serious valuation. The fallout? Other widget co’s no matter how small are now updating their valuations based upon “fraction of” math.

What’s “fraction of” math? It’s the “we’re 1/10th of slide’s size so clearly we’re worth $50m” argument. An argument which I saw with YouTube and the $1.65b acquisition.

Why does “fraction of” math not work? Generally “fraction of” math doesn’t work because it’s applied when the value created was because the lead company hit a milestone or tipping point which suggests their growth will accelerate or they’re now able to do something at scale. For example, if you’re Slide perhaps now you have enough daily inventory to operate your own ad network instead of taking 55% from a 3rd party. If you’re the “1/1oth” company then, nah, you’re still at 55% rev share.

These sorts of event given the runners-up at best a place to aim for. In a tight market they help the runners-up (like RockYou), but the also rans? That’s the sound of the door closing…. unless of course Slide starts buying smaller co’s. Then you better bank on their equity being liquid down the road.