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Klout acquired for $200 million by Lithium Technologies

105 pointsby mikegreenspanabout 11 years ago

21 comments

yidabout 11 years ago
I, too, have a random number generator that I am willing to part with on very reasonable terms, cash/equity split negotiable.
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dpcheng2003about 11 years ago
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.<p>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&#x27;ll call a &quot;clout score&quot;) in just knowing who was the &quot;most popular&quot; on these networks.<p>Now imagine you took in all the interest-graph related and search data, and refined that &quot;clout score&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 &quot;so-and-so&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.<p>But Klout didn&#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 &quot;game&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.<p>This go-to-market strategy was likely (I&#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.<p>But now that they&#x27;ve sold out, they can never do what they wanted to do. And in some ways, they&#x27;ve tainted that idea for others who may appreciate the &quot;clout score.&quot; So selling out for $200M--for recurring revenue from large brands, patents associated with social activity scoring (didn&#x27;t fact-check this but guessing) and great employees--is not a bad outcome for Klout or for Lithium.<p>But I&#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...
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cmisabout 11 years ago
This article and most folks are missing the point, Lithium hasn&#x27;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&#x27;t a $200m exit.
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seivanabout 11 years ago
“Lithium Technologies, a provider of social customer experience solutions for the enterprise.”<p>I feel like it doesn&#x27;t matter if you build something amazing. Without the pedigree, you wouldn&#x27;t be acquired for 200M by a social customer experience enterprise solution.
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dude_abidesabout 11 years ago
200 million wow! When I think of Klout, I can only think of this brilliant XKCD: <a href="https://xkcd.com/1057/" rel="nofollow">https:&#x2F;&#x2F;xkcd.com&#x2F;1057&#x2F;</a>
27182818284about 11 years ago
Klout&#x27;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&#x27;s thoughts (<a href="https://news.ycombinator.com/item?id=3887779" rel="nofollow">https:&#x2F;&#x2F;news.ycombinator.com&#x2F;item?id=3887779</a>) on it from two years ago still come to my mind because I too see powerful people skipped over completely by it. Eh.
petercooperabout 11 years ago
Finally, an acquisition whose numbers make Whatsapp and Instagram look sane in comparison.
mulliganabout 11 years ago
I was pretty sure this happened a month or two ago, but I guess it is now official: <a href="http://www.businessinsider.com/klout-acquired-2014-2" rel="nofollow">http:&#x2F;&#x2F;www.businessinsider.com&#x2F;klout-acquired-2014-2</a>
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chadrsabout 11 years ago
This makes me feel like my similar site, Klout Penis should be worth at least $1M, right?<p><a href="http://kloutpenis.com/" rel="nofollow">http:&#x2F;&#x2F;kloutpenis.com&#x2F;</a>
jdhabout 11 years ago
Stock for stock deal. Price is arbitrarily set... All that matters is the percentage. If klout got ten percent, lithium just said they&#x27;re value is $2B.<p>Klout did have a cool looking office for sure. Hard to find that in SF today.
redmaverickabout 11 years ago
Hard to believe that someone is willing to pay $200 million for Klout. Maybe, I am missing something?<p>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&#x27;s actual scores.<p>What were the (Lithium Technologies) VC&#x27;s thinking?
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amorphidabout 11 years ago
Klout&#x27;s Klout score just went up. They&#x27;d have gotten an even higher valuation if they&#x27;d authorized access to their to Klout&#x27;s Facebook page.
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ThomPeteabout 11 years ago
Ok trying to make sense of this,<p>So Lithium I understand. They make social media monitoring, analytics, management tools make sense.<p>Klout on the other hand? Besides it being a joke for most of us it&#x27;s also I guess a huge database of potential customers and some smart engineers.<p>So Lithium paid $200M for a primarily some talent and a giant online rolodex?<p>Hmmm
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gobengoabout 11 years ago
Klout couldn&#x27;t make money doing their score thing. Their investors told them to focus on b2c after instagram sold big. It didn&#x27;t work. Lithium is quite successful in enterprise forum and support software, which is a broader market than you&#x27;d think. Enterprise companies interested in social are really into &#x27;trending&#x27; stuff and &#x27;brand affinity&#x27; of their audience across all channels. Lithium will book 200mm in additional revenue from Klout&#x27;s tech in the next 5 years, because each of their deals are like 6 figures per year.
cordieabout 11 years ago
I really can&#x27;t understand this. Do I just not understand how the &quot;game&quot; is played. OR am I just missing something? Someone please enlighten me!
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thkimabout 11 years ago
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.
thescrewdriverabout 11 years ago
Glad to see another successful startup which uses Scala :) <a href="http://engineering.klout.com/" rel="nofollow">http:&#x2F;&#x2F;engineering.klout.com&#x2F;</a>
dexcsabout 11 years ago
$200M for ~150M Users. Bad deal if you compare it with for example, whatsapp... But hey, at least they landed a exit.
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kartmanabout 11 years ago
is this that trick of a &quot;headed soon to IPO company&quot; 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.
Alohaabout 11 years ago
I&#x27;m somewhat amazed at a 200m valuation.
rabinoabout 11 years ago
Some investor got his klout score up today