Is Klout really worth $200 Million?

Last month, Re/Code leaked the news that social customer service company Lithium Technologies was in discussions to acquire Klout, the social leaderboard tool. Today, JP Mangalinden of Fortune announced that Klout was acquired for $200 million by Lithium.

Klout got a great deal of flack since its founding in 2008 by Joe Fernandez and Binh Tran, basically because the algorithms powering its scores seemed strange. The worst might have been Adriaan Pelzer’s twitterbots (see Klout is broken), which automatically tweeted the output of the Unix fortune app. The bots gained followers proportionally to the number of tweets posted (Pelzer programmed four, which tweeted once every minute, once every five minutes, once every fifteen minutes and once every thirty minutes respectively). Many of the followers seemed to be bots, too.

Screenshot 2014-03-27 06.55.07

I find Klout suspect because of stories like this, and many others do too.

Klout raised over $40 million in several rounds of financing, and Lithium has raised over $150 million. Lithium is on track to a 2014 IPO, it is said.

In recent months, though, Klout has been pivoting to a different model. The company shifted the emphasis away from  its leaderboard/vanity orientation towards more of a publishing/sharing of content model:

Screenshot 2014-03-27 06.59.46

And the recently developed Klout for Business is an effort to offer up access to Klout influencers to businesses, with a content marketing spin.

Maybe somewhere in that combination of business models Lithium has found something worth $200 million. I am scratching my head, though.

Relevant Analyst
Stowe Boyd

Stowe Boyd

Lead analyst, future of work Gigaom Research and stoweboyd.com

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