<story><title>Klout acquired for $200 million by Lithium Technologies</title><url>http://tech.fortune.cnn.com/2014/03/26/klout-acquired-for-200-million-by-lithium-technologies/</url></story><parent_chain><item><author>dpcheng2003</author><text>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.&lt;p&gt;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&amp;#x27;ll call a &amp;quot;clout score&amp;quot;) in just knowing who was the &amp;quot;most popular&amp;quot; on these networks.&lt;p&gt;Now imagine you took in all the interest-graph related and search data, and refined that &amp;quot;clout score&amp;quot; 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 &amp;quot;so-and-so&amp;quot; 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.&lt;p&gt;But Klout didn&amp;#x27;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 &amp;quot;game&amp;quot; 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.&lt;p&gt;This go-to-market strategy was likely (I&amp;#x27;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.&lt;p&gt;But now that they&amp;#x27;ve sold out, they can never do what they wanted to do. And in some ways, they&amp;#x27;ve tainted that idea for others who may appreciate the &amp;quot;clout score.&amp;quot; So selling out for $200M--for recurring revenue from large brands, patents associated with social activity scoring (didn&amp;#x27;t fact-check this but guessing) and great employees--is not a bad outcome for Klout or for Lithium.&lt;p&gt;But I&amp;#x27;m sure once upon a time, Joe Fernandez (the founder), had a grander vision. This is hardly a bad consolation prize, but what if...</text></item></parent_chain><comment><author>dotBen</author><text>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.&lt;p&gt;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.&lt;p&gt;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.</text></comment>
<story><title>Klout acquired for $200 million by Lithium Technologies</title><url>http://tech.fortune.cnn.com/2014/03/26/klout-acquired-for-200-million-by-lithium-technologies/</url></story><parent_chain><item><author>dpcheng2003</author><text>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.&lt;p&gt;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&amp;#x27;ll call a &amp;quot;clout score&amp;quot;) in just knowing who was the &amp;quot;most popular&amp;quot; on these networks.&lt;p&gt;Now imagine you took in all the interest-graph related and search data, and refined that &amp;quot;clout score&amp;quot; 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 &amp;quot;so-and-so&amp;quot; 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.&lt;p&gt;But Klout didn&amp;#x27;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 &amp;quot;game&amp;quot; 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.&lt;p&gt;This go-to-market strategy was likely (I&amp;#x27;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.&lt;p&gt;But now that they&amp;#x27;ve sold out, they can never do what they wanted to do. And in some ways, they&amp;#x27;ve tainted that idea for others who may appreciate the &amp;quot;clout score.&amp;quot; So selling out for $200M--for recurring revenue from large brands, patents associated with social activity scoring (didn&amp;#x27;t fact-check this but guessing) and great employees--is not a bad outcome for Klout or for Lithium.&lt;p&gt;But I&amp;#x27;m sure once upon a time, Joe Fernandez (the founder), had a grander vision. This is hardly a bad consolation prize, but what if...</text></item></parent_chain><comment><author>ThomPete</author><text>I don&amp;#x27;t think anyone is contesting the grander vision.&lt;p&gt;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.</text></comment>