Why would Lithium want to acquire Klout?

  • 12-Mar-2014

You know what’s interesting? While the interwebs have been buzzing for about a month now about an alleged acquisition of Klout by Lithium, the potential new parent company still hasn’t as much as peeped about this transaction. Legal terms and obligations notwithstanding, I hope Lithium changed its mind. If they really want to go IPO some day, they might need to make more careful buying decisions.

Lithium, a social CXM vendor headed up by ex-Adobean Rob Tarkoff, didn’t disclose the amount for this potential deal, even though there were reports that papers have been signed. It appears to be mainly for stock options and some cash. Why would they want Klout? Lithium’s agenda is, at best, vague here, given their current technological landscape. But it won’t be the first time they’re having troubles with their strategy and product map.

Personally, I used to like Klout. And what was not to like: usable UI, cool features, the notion of tracking your own personal worth through the (albeit debatable and not entirely scientific) Klout score (ah, vanity fair!). And then they added Klout Perks, where influencers like myself could get access to cool coupons, events, product samples. I stopped loving Klout when they offered a $5-off coupon for McDonalds as their latest perk. But this doesn’t mean others cannot still love Klout and see business value in such a service. After all, they also offer an enterprise version of their software that can supplement your CRM tracking with social attributes.

Klout, as any company who’s been raising money, was ready to sell. Another important point to consider here is that the social-importance ranking engine had started seeing some scepticism in the marketplace. This, of course, is a normal sign of growth, which any “kool kids,” Foursquare/Instagram types have and will go through. But the “break it” or “make it” (i.e., sell now before it’s too late) point is where Klout seemed to have been wavering lately.

The struggle is not simply around your typical startup growing pains and the controversy that surrounds its scoring algorithms -- not to mention the overall idea of calculating your personal worth and importance in the world of social media. Many are skeptical about the value proposition here. Even more people are in disagreement with how Klout defines and measures such a complex notion as “influence.”

In the end, all of this may be pure speculation, as neither Lithium nor Klout have uttered a single breath in denying or confirming the acquisition. Such acquisitions as part of a growth strategy might seem exciting, but as a customer, remember that more pieces does not always mean a larger whole.

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