As a startup founder, let me take the contrarian view on this because I can see how it all went wrong. Klout, for the most part, had a very ambitious goal.
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...
Klout also realized it would never have the granular level of access to the interest graphs on the networks it was - pardon the expression - leaching off of.
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.
> simply compute all of this information directly rather than inefficiently via the API platform and firehose
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.
No, I don't mean crawl the web. I mean Twitter could just compute the data and calculate the graphs via their direct access to the data. Traversing the full corpus of all data, across all dimensions, including time, including data points not exposed via the platform.
> 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.
Ok, now I get what you meant. You're totally right.
> 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.
I don't think anyone is contesting the grander vision.
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.
I kind of agree. It really is a great idea that's super valuable. It was just too early or poorly executed. Someone will do it better in the future. For all the mocking developer folks here think of Klout as GitHub for marketers/influencers (if done correctly) It would allow you to get a view into how influential this person really was just as now days you can learn a lot about a developer by looking at GitHub. That can drive all sorts of hiring/contracting/engagement experiences per year. That's a big market.
Is the issue that it's very difficult to come up with a universal popularity score? It seems like they were trying to find the clique that rules the high school, when in the real world we listen to different people for different things. Of course one score is much easier to sell to marketers than a large series of scores based on different attributes.
The strange thing is - as long as advertisers pay people to Tweet, there is a need for something like this.
It really was a massive and admirable goal. Klout as you described could quickly become one of the most important tools of the web.
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.
Grander vision? Klout should die because it's trying to create a numeric score to measure e-popularity. Why cater to people wasting their life chasing a stupid metric? Better to leave it highly ambiguous.
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.
> "But in our universe, people saw the algorithm as hackneyed, particularly when Justin Bieber had a higher Klout score than the US president."
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 respectfully disagree with your argument because that's not the one I'm making.
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.
Any system which one party creates for a set of players will effectively be gamed by a more willing and able actor.
> 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...
Not my argument. If theoretical Klout existed, it'd take into account all signals (social, search, semantic analysis, weights based on expertise, etc.) to determine the "best" at something--a super pagerank for people search if you will. This should negate individual bias.
> a single "score" cannot encompass someone's influence
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.
This article and most folks are missing the point, Lithium hasn't raised nearly enough to pay a meaningful amount in cash, maybe enough for investors to get their money back. The $200m value was in funny-money private company stock which at inflated valuations is like buying hotels with monopoly money. Entrepreneurs deserve incredible respect for what they create but lets call things what they are, this wasn't a $200m exit.
“Lithium Technologies, a provider of social customer experience solutions for the enterprise.”
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.
Their mission might seem generic to you, but I hear they actually have synergistic agile processes with a laser focus on industry standard value-add technologies.
Klout's score leave a bad taste in my mouth. Like people actively trying to separate the cool kids by designer clothes or something. Also PG's thoughts (https://news.ycombinator.com/item?id=3887779) on it from two years ago still come to my mind because I too see powerful people skipped over completely by it. Eh.
Stock for stock deal. Price is arbitrarily set... All that matters is the percentage. If klout got ten percent, lithium just said they're value is $2B.
Klout did have a cool looking office for sure. Hard to find that in SF today.
Hard to believe that someone is willing to pay $200 million for Klout. Maybe, I am missing something?
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?
The numbers are just made up. The article says "mix of cash and private shares" but let's face it, that could mean $10 in cash. Lithium acquires Klout by giving Klout shareholders some fraction of the combined Lithium+Klout entity. Then they value the combined entity with an arbitrarily high number until everyone seems happy. This inflation factor is written down on the balance sheet as "goodwill" which is later reduced in value from billion of to zero dollars. Nobody is really harmed in this process.
Klout couldn't make money doing their score thing. Their investors told them to focus on b2c after instagram sold big. It didn't work. Lithium is quite successful in enterprise forum and support software, which is a broader market than you'd think. Enterprise companies interested in social are really into 'trending' stuff and 'brand affinity' of their audience across all channels. Lithium will book 200mm in additional revenue from Klout's tech in the next 5 years, because each of their deals are like 6 figures per year.
Honestly, yeah, you probably don't understand how the game is played if that is a legitimate question.
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.
With this acquisition I have to say that there is a technology bubble right now. Someone may make some smart arguments to justify the deal, but even with all the reasonable factors considered it is extremely unlikely that Klout is worth $200MM.
is this that trick of a "headed soon to IPO company" acquiring something largely in stock to give itself a big baseline and market justified valuation ahead of IPO. both companies are happy and the sucker is the first guy in line for IPO stock.
