Klout, the online popularity contest startup, is poised to be sold to social customer service company Lithium Technologies.

The deal is signed but not closed, said sources. And, while the numbers are fuzzy given they account for a mix of cash and Lithium private stock, the acquisition is “in the low nine figures” — that is, at least $100 million.

It’s a dead-on fit in terms of topic focus for the two companies, but it’s also a save for San Francisco-based Klout, which had two years ago raised a $30 million Series C round from investors including Kleiner Perkins, Venrock and Institutional Venture Partners, for total funding of more than $40 million. Klout CEO Joe Fernandez has been telling a tale of redemption in recent months, after his company became a bit of a whipping boy for criticism of the vanity of social media.

Lithium provides social customer experience management software for the enterprise. In September, the San Francisco company said that it had raised $50 million in “pre-IPO mezzanine financing,” bringing its own total above $150 million from New Enterprise Associates, Benchmark, Shasta Ventures and others. Its customers include AT&T, BT, Best Buy, Indosat, Sephora, Skype and Telstra. Because it is likely to go public, the price for Klout could be more (or less).

Klout’s business focuses on analyzing who is influential in social media, which is simplified into a score on a scale of 100. The Klout algorithm has been tweaked over the years, especially after scrutiny of why tech pundit Robert Scoble had a higher Klout score than U.S. President Barack Obama. (The reason? Back in 2011, Obama needed to get himself retweeted more.)

The company has tried multiple products and business models around that idea, including “Klout Perks,” where companies give promotions to people they hope to tweet about them; data licensing deals with Microsoft’s Bing and others; and just last week a new content product that suggests stories for people to share in the hope of raising their Klout scores.

Re/code has reached out to both Klout and Lithium for comment, but have not heard back as yet.



6 comments
Si Gornick - Moovd
Si Gornick - Moovd

Hmm. A startup buys a startup at a low multiple. Not sure the broken model of the former serves the IPO goals of the latter.

TomForemski
TomForemski

Still no official news... What's up with this deal?! 

wittier
wittier

Klout was sometimes fun while it lasted, but it's obvious that it was always an unfinished idea.  Ego will get millions to look, but you gotta give 'em something worthwhile to do once they're there.  Perks were huge -- for 6 months.  Then Perks died.  +Ks gave people something to do, but never amounted to anything.  This latest model is another black hole.  And now Klout, with it's miserable customer support,  is supposed to be worth over $100 mil to a customer service company that itself is only worth $150 mil.  To what end?  A lot of supposedly smart people have been seduced by the concept for a long time...shifting gears totally every 9 months...but wait, there's more!   No there's not, really.  

Toby Beresford
Toby Beresford

Well done to Klout and Lithium! 


I think the key strand that links these two companies is their effective gamification of social media. Both Lithium and Klout offer heavily gamified services with a leaderboard at the heart, but interestingly both use an opaque form of gamification - i.e. you don't know how exactly to win, or where you are on the leaderboard, but you know that you can improve by doing more of the activities you think they are tracking. i.e. getting more retweets in Obama's case to improve his Klout score, answering more queries on a Lithium community forum


cole
cole

We can expect more Social sites with users but without IPO capable business models to get picked off by the Enterprise Web. Healthy feasting ahead.    

Marshall Kirkpatrick
Marshall Kirkpatrick

Well if nobody else is going to comment here, I'll do it: congrats Klout and Lithium! May your partnership lead to fascinating insight into the social web.   Both companies are full of really smart, nice people.  To the future!

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