Klout acquired for $200 million by Lithium Technologies
tech.fortune.cnn.com
tech.fortune.cnn.com
Given all our activity (direct or indirect) that is being captured on social networks and general internet activity, there was some inherent value (which we'll call a "clout score") in just knowing who was the "most popular" on these networks.
Now imagine you took in all the interest-graph related and search data, and refined that "clout score" to the niches and groups where that individual was most influential. In this hypothetical alternate universe, you can use clout scores and deduce, for example, that "so-and-so" was a more influential voice in the battery materials science community (i.e, cathodes) because her white papers were being shared more often on social networks and getting more backlinks.
But Klout didn't do that. Klout realized that to get to market quickly, they applied an arbitrary algorithm to social activity, which would encourage artificial activity on Klout to "game" the system. In another different alternate universe, this would be applauded as a successful growth hack and Klout would be filing their S-1 today. But in our universe, people saw the algorithm as hackneyed, particularly when Justin Bieber had a higher Klout score than the US president.
This go-to-market strategy was likely (I'm presuming) influenced by VC investor dollars and the perceived need to be always growing, driven by TechCrunch mentions and HackerNews front page posts. And to some extent, they were successful. They raised a lot of venture dollars, cashed out a few early employees (again, presuming) and convinced some really smart people to join and grow Klout.
But now that they've sold out, they can never do what they wanted to do. And in some ways, they've tainted that idea for others who may appreciate the "clout score." So selling out for $200M--for recurring revenue from large brands, patents associated with social activity scoring (didn't fact-check this but guessing) and great employees--is not a bad outcome for Klout or for Lithium.
But I'm sure once upon a time, Joe Fernandez (the founder), had a grander vision. This is hardly a bad consolation prize, but what if...
The problem is that they sold out, way before they sold out. They slapped together something that might make it for a social media karme engine game kind of thing but not by any metrics any real valuable personification of influence. Besides what everyone else could already see, and even that they got wrong.
Maybe Klout was wrong with this particular arrangement, or maybe your assumptions about who has more influence are wrong. Ever thought about that?
After all, "entertainment clout" can be very quickly capitalized as "political clout", as Mr. Terminator has demonstrated.
When it comes to selling products, whose endorsement will sell more products: Justin Bieber or the US President?
Remember Klout's score is used to give "perks" to influencers, the purpose of which is that they show those perks to their fans, therefore influencing them.
While I don't care about Klout at all, I have to say I'd rather bet on Justin Bieber than the US President for that specific purpose.
I think the general consensus from Klout detractors is that a single "score" cannot encompass someone's influence. Some people are more influential in certain circles than others.
Of course, there is a broad-based influence score you can apply to people, in the same manner that Super Bowl ads are expensive because they reach a broad-based group of US TV viewers. If Justin Bieber reaches that group better than President Obama, than his higher Klout score is accurate.
But under that assumption, his Klout score (and many other Klout scores) are meaningless because we don't think of ourselves in that context. This is why, for example, HackerNews karma points are not fungible to Reddit's /r/AdviceAnimals karma points.
I would argue the opposite. There is one ultimate "score" of a person's influence: their wealth.
While not all of a person's influence is delimited in dollars at any given time, almost every kind of influence is fungible to dollars. You can, for example, "spend" social capital by burning bridges asking friends for personal monetary loans.
It's actually pretty unclear to me whether President Obama's or Justin Bieber's influence would liquidate into a greater amount of money. But it's certainly a question that has a factual answer, and it's a useful answer, unlike a Klout score.
> Given all our activity (direct or indirect) that is being captured on social networks and general internet activity, there was some inherent value (which we'll call a "clout score") in just knowing who was the "most popular" on these networks.
This as I understand it, is your argument on why Klout should exist. To paint an even simpler picture, this effectively determining a signal-noise ratio for people. Unfortunately, this is flawed, because I believe that we as human beings cannot even determine our own signals. Ultimately we have to rely on 3rd party actors to do it for us (call them Mavens, pundits, curators, or what have you). More of my own thoughts on this: http://www.techdisruptive.com/2012/09/18/we-are-far-from-sol...
Instead, people like myself saw humor in gaming the system a bit, so I quickly was in the top 3 "influencers" of ridiculous things, like Whitney Houston knowledge.
It is too bad, because when I first heard of the idea, it seemed like a huge step in social media. But I think your right, this first attempt might have spoiled the concept a bit.
From a geek perspective, I hate social with an intense passion. It drags the politics and power hierarchies of real-life onto the Internet, and reinforces the status quo.
I remember a senior Twitter staff member pointing out that if Klout really proved a market, they could simply compute all of this information directly rather than inefficiently via the API platform and firehose - with better results from access to more data, and the ability to sell directly to advertisers who they already had relationships with through their sales team.
Klout were never going to gain the level of access the needed to the graphs on the various networks they utilized in order to realize their longer-term goals. Which, btw, ultimately highlights yet another fallacy of the platform economy.
I'm not sure to understand what you mean here. By directly, I guess you mean by crawling the web ? You're right about the fact that it would give access to more data, but, as Klout measure is people-centric, a social graph API is a more straightforward data source. Associating web pages to unique identity of persons is a challenge of its own.
> Klout were never going to gain the level of access the needed to the graphs on the various networks they utilized
Given their scale, access to twitter graph data should not have been a problem (they have enough users not to be bothered by the API's rate limits). Other social networks are much more trickier indeed.
Full disclosure: I'm co-founding an social media analytics tool providing more granular view of the interest graphs, using twitter as a data source.
> Given their scale, access to twitter graph data should not have been a problem
Yes, because Twitter could decide it doesn't want to provide the data or do so at costs that make it unfeasible. Like I said, this is the fallacy of the platform economy (which I was quite involved with in its infancy).
If you are co-founding anything that uses twitter platform you should consider what happens if Twitter's biz dev team decides they doesn't want you to exist. This already happened once to the Twitter Dashboards etc.
> If you are co-founding anything that uses twitter platform you should consider what happens if Twitter's biz dev team decides they doesn't want you to exist.
This is definitely a risk that must be mitigated in this type of projects, indeed.
The strange thing is - as long as advertisers pay people to Tweet, there is a need for something like this.
I feel like it doesn't matter if you build something amazing. Without the pedigree, you wouldn't be acquired for 200M by a social customer experience enterprise solution.
Klout did have a cool looking office for sure. Hard to find that in SF today.
Just for fun, a year back, I made a simple Klout clone which was dependent on just Google search results, twitter followers, retweets and total number of tweets. I used a few known Klout scores as the seed data and generated a simple Heuristic to calculate Klout scores. I then tested it with around 100 celebs and regular people. The scores were remarkably similar to Klout's actual scores.
What were the (Lithium Technologies) VC's thinking?
So Lithium I understand. They make social media monitoring, analytics, management tools make sense.
Klout on the other hand? Besides it being a joke for most of us it's also I guess a huge database of potential customers and some smart engineers.
So Lithium paid $200M for a primarily some talent and a giant online rolodex?
Hmmm
There seems to be a wave a social-related acquisitions going around. If you have a product that can be virally shared, or produces rankings or scores that people get caught up in competing for, you could be a potential acquisition target.
I think a lot of people on HN focus on solving real problems and making the world "better", which is certainly a wonderful endeavor. But that's not the path to mind-numbingly high acquisitions most of the time.